Summertime in Alaska attracts many tourists that hope to see everything Alaska has to offer. For many Alaska residents, renting personal property, such as a house or all-terrain vehicle, can be a lucrative proposition. With the summer upon us, now is the time to understand the rights and responsibilities that come with renting personal property.
A property owner must have a business license before leasing a home or investment property. If a property owner is collecting rental income then he or she is engaged in business activity and an Alaska Business License is required. Moreover, short-term, non-commercial rental properties need to adhere to the Alaska Landlord & Tenant Act. This law provides structure to the rental process and protects both parties. The first, and arguably most important item, is an agreement. An agreement between a landlord and a tenant, even for a short rental period, can be verbal. The best practice is to memorialize the agreement in a written document, so there is no question to what both parties intended. This agreement will be the foundation for landlord and tenant responsibilities. Alaska Statute 34.03.080(a) details all of the items that should be included in the agreement such as deposit requirements, restrictions, rent amounts, etc. Rental agreements CANNOT require a waiver of any legal rights outlined in the Alaska Landlord & Tenant Act: allow for “automatic” court judgments in favor of the landlord, mandate payment of attorney fees, limit liabilities, or allow for the landlord to collect rent even if the property is not maintained in accordance with the law or confiscate a tenant’s property.
Security deposits are collected and kept by the landlord as financial protection against any damages that might be caused by the tenant; however, the total amount of the deposit cannot exceed two month’s rent (exception for property rented for $2,000 or more per month).
Deposits must be kept in a “trust account” at a bank. Exceptions can be made for remote or rural areas where there are no banking institutions in the proximity of the landlord. The terms of the deposits must be clear to the tenant, which is another reason a written agreement is a safer option than a verbal agreement. At the end of the agreement, if the tenant violated any of the terms, the landlord does have the right to recoup some or all of the deposit to pay for damages. This applies to short-term vacation rentals as well.
The Alaska Landlord & Tenant Act also describes in detail the inherent legal responsibilities of both the landlord and tenant. The landlord must keep a well maintained and safe property that meets or exceeds all public codes. In turn, the tenant must maintain the property by accomplishing routine cleaning, ensuring the unit is free of garbage, etc. Even though these requirements are covered by law, it is a good idea to codify them in the rental agreement to avoid confusion and establish responsibility if either party is negligent. Another protection for both the landlord and tenant is insurance. The landlord should have homeowners insurance; however, homeowners insurance does not normally cover the tenant’s property. If someone is renting a long-term vacation unit, and has anything of value that could be lost or damaged, it would be prudent for them to get rental insurance coverage (most landlords will put this as a requirement in a long-term rental agreement).
Rental property is not the only allure for visiting tourists. Renting equipment such as all-terrain vehicles, boats, bicycles, etc. can be a successful business practice if done right.
As with renting a home, there are rules and regulations mandated by the State of Alaska that any rental entrepreneur must follow to legally protect themselves. Unlike rental properties that are primarily governed by the Alaska Landlord & Tenant Act, rental businesses must maintain specific requirements to stay within the confines of the law.
The first requirement one must have to rent equipment to patrons is a State of Alaska business license, which is renewed annually. Next, depending on the type of rental equipment or location in Alaska, local or state law may require fire department permits. Check with your local fire department for this requirement. Finally, insurance is the most important protection for a person that rents out equipment to others. Property insurance, much like homeowner’s insurance, will protect rental equipment from loss or damage. Liability insurance, is a separate policy that will protect a business owner from lawsuits stemming from client injuries. The type of equipment rental (all-terrain vehicles vs. bicycles) will dictate how expensive the liability insurance will be.
One item that is not mandatory, but highly recommended, is a rental agreement.
Just like renting out property, a written agreement that outlines the responsibilities of both parties protects everyone. It makes responsibilities clear and is a lawful, binding document, that can be used to seek civil damages if either party fails to meet their legal obligations. A qualified attorney can and should assist with drafting rental agreements for either housing or equipment rentals in Alaska.
The beautiful seasons of Alaska are a great opportunity for residents to make money through property rentals. If done lawfully, both the owners and visitors will reap the benefits of our beautiful state.
Disclaimer: This article is for informational purposes only. It is not intended to convey legal advice or establish an attorney-client relationship with the readers of the article.
About the Author: Brad Carlson is the Principal Attorney at the Law Office of Bradly A. Carlson, L.L.C. His practice is focused on providing legal solutions for Alaskans throughout Alaska. He lives in Eagle River with his wife and children. You can reach Brad at 907-264-6721 or email@example.com.