Help! This rental deposit is nonrefundable — and now I’m being muzzled

By | June 26th, 2016

After Kim Thomas rented a five-bedroom home in Dallas this spring through, she made three troubling discoveries:

First, the deposit was nonrefundable. Period.

Second, she wasn’t allowed to criticize the deposit’s nonrefundability or she would face litigation.

And third,, would not do anything to help her.

“I would like for this owner to return this questionable reservation deposit,” she says.

How did this happen? Interesting question, and it really underscores one the biggest problems with the rapidly expanding, “anything goes” vacation rental market. In order to make an extra buck, owners are throwing “gotcha” clauses into their contracts for everything from nonrefundable deposits (which technically isn’t even a deposit, come to think of it) to gag clauses that effectively prevent an unhappy tenant from publicly complaining about the arrangement.

Thomas forwarded the the agreement from her property. It was, at best, murky. It mentions a deposit, and suggests it might be refunded under certain circumstances, but then says “the entire payment is nonrefundable” and also says the tenant agrees “to take no action to harm [the owner] or her reputation or which would reasonably be expected to lead to unwanted or unfavorable publicity.”

Here’s the entire agreement if you’re curious.

“We arrived as planned and stayed in this property for three nights, departed as scheduled, leaving the home in good condition,” she says.

About a week later, she sent a message to the owner asking about refunding the deposit, assuming she had processed it.

Her response? “She had no intention of refunding or returning a deposit because this is not refundable, nor applied to the rental cost, as I understand is usually the case with this type of deposit,” she says. “We had several messages exchanged, where I do not believe I was disrespectful at all, just stating my disappointment with this seemingly unreasonable policy, and effectively $1,050 in fees, including cleaning, which is normal, and reservation deposit, which seems to be a fee, rather than a deposit, since it went toward nothing. Her communications were abrupt, and she maintained that nothing would change in her policy.”

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At that point, Thomas said she felt frustrated.

“After attempting to resolve with owner I submitted a negative review about the experience,” she says. “I rated it two stars, which I would reduce to zero at this point, given further unpleasant communication and accusations from owner.”

After several more messages, Thomas had had enough. She asked the owner to stop communicating with her. The owner responded by saying she was “harassing” her and violating her lease agreement.

“The next message I received, within moments of the exchange where she accused me of harassment, was a message that she had filed a claim with property damage company about a damaged Baccarat crystal champagne flute,” she says. “Nothing had been mentioned about any damage to anything for a month, and upon this unpleasant exchange about her ‘no refund’ reservation deposit, she came up with damage at that moment.”

Thomas insists she didn’t damage anything in the home.

“Given the timing of this damage claim, and her previous accusation of harassment, I suspect that the owner is somehow building a case to make a reason to refuse the deposit, and possibly pursue legal action against me,” she says. “I likely cannot prove that the damage did not occur, but the timing and failure to mention such damage until I questioned the deposit seem questionable.”

Thomas wants our advocacy team to wade into this morass. There’s a lot going on here. We’ve covered gag clauses and the challenges of industry consolidation and the growing pains of the vacation rental industry. You really can’t blame owners for adding these fees and gag clauses — they are just trying to protect their businesses.

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But it’s also true that there’s little regulation, and owners can make the rules up as they go. This particular owner could have inserted any clause in the contract, and someone like Thomas would have signed it. No one reads the contract.

I’m just not sure who to turn to. Would HomeAway help? So far, it hasn’t, insisting this is a matter between Thomas and the owner. And it’s not as if HomeAway can impose a standard contract on its homes. It can’t even force its owners to use a single payment system.

Thomas says the owner has pocketed her entire deposit over a trumped-up damage claim. I’ve reviewed the correspondence between the two parties, and needless to say, the owner disagrees.

Should our team try to mediate this case?

Should we take Kim Thomas' case?

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Update: We contacted HomeAway about this case. Also, we’ve received several threatening emails and a phone call from the owner, who has accused us of publishing “private” information about her. We have done no such thing. We simply linked to a Dropbox file that we believe she herself posted online.

Here’s the HomeAway response:

Unfortunately the traveler submitted payment before fully understanding the terms of the rental agreement. She contracted directly with the owner and the withheld amount is a fee charged by the owner. However, we contacted the owner and the ambiguous language about the fee has since been updated to be more clear that it is non-refundable.

We recommend travelers speak with owners to clarify any outstanding questions and fees before paying for or placing a deposit on a rental.

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