Avenue Rental Agreements Explained
A venue rental agreement is a legally binding contract between a host hiring out a venue to use for an event and the owner (frequently called the "lessor") or manager of the venue itself. It will detail the terms of hiring the venue out, including when it needs to be returned and whether it will be used just once or over a period of time.
A venue rental agreement exists primarily to protect both parties in the event one or other is in breach of the terms . For example, if a venue is not returned to the condition in which it was received, the owner may seek recompense. Equally, the owner may be sued for damages after cancelling the booking.
These agreements may seem intimidating at first, especially for someone hiring out a venue for the first time. However, for both parties, they are incredibly important and can save time and money when it matters. It is always a good idea to try and keep any simple agreement as concise as possible while covering all areas of your agreement for added peace of mind.
Elements of a Basic Venue Rental Agreement
A simple venue rental agreement should ideally have the following sections:
Basic Information
At a minimum, the agreement should identify the names of the parties (who is renting the space and who is providing the space), as well as a description of the facilities to be rented (i.e., the address and any relevant details like how many people the space can accommodate, whether or not it has kitchen facilities, etc.). This section should also include the date and time that the venue is being rented, as well as the rental fee structure (i.e., is there a flat fee or are there any additional hourly charges? If extra charges are assessed, are there overtime fees as well? Does the facility provide a deposit, such as a security deposit or a deposit for use of any facilities like the kitchen?). Any extra charges need to be clearly described in this section of the agreement.
Conditions of Use
This section of the agreement should outline the conditions under which the facility is to be rented to a user. For example, does the user have to supply any of his own equipment (like tables and chairs) for the event, or does the facility owner supply everything? Will the user be responsible for cleaning up afterwards, or does the facility owner have that covered? Also, what is the cancellation and refund policy, and how long does the user have after making the reservation to cancel and obtain a full refund?
Responsibilities of the Parties
This section should outline the duties and responsibilities of each party under the contract. For example, who is refunding what charges to the other if either of them cancels the agreement? Is there a security deposit that either party is responsible for paying, and what portion is returned after the event has taken place? Further, if a user is responsible for breaking down equipment and/or cleaning up after an event, this section should state exactly what needs to be done, as well as any stipulations outlined by the owner of the facility or any relevant local ordinances.
Legal Aspects of Venue Rental Agreements
When it comes to legally binding agreements, there are a number of important legal considerations that you should keep in mind when drafting your venue rental agreement. First and foremost, it is essential to use precise and unambiguous language in your agreement. While laws do not generally require contracts to be in writing, for ease of administration and enforceability, it is advisable that even less formal agreements be put in writing. Furthermore, written agreements should be clear and specific enough so that there is no room for misinterpretation of terms or intent. With respect to venue rental agreements, some important considerations are:
• Specificity. The venue rental agreement should be as specific as possible with regard to the description of the space being rented, the fees being charged, the length of the rental, and any other terms which apply.
• Written Agreements. While a written agreement is not strictly required, it is advisable and makes it easier to enforce the terms of the agreement and avoid misunderstandings.
• Fees and Compensation. It is important to ensure that the terms of the agreement clearly specify the amount of the rental payment, how the fees can be paid and whether any deposits are required. While rental fees should be capable of being calculated at the outset of the rental, the agreement should also provide for circumstances where additional fees may be incurred, such as late fees for payment, damages to the rental space and overtime.
• Compliance with Licensing Laws. Depending on the type of venue involved in the agreement, the venue may be subject to licensing with local authorities. Restaurants, hotels, bed & breakfasts and other venues may be subject to health and safety regulations, liquor licensing regulations, parking regulations and employment and wage regulations. If such regulations apply to the venue, the venue and renters must comply with the respective local laws and regulations, which may also be incorporated into the agreement. For example, the site which is rented from the venue may be subject to noise regulations or occupancy limits.
Advantages of a Pre-Made Template
For most businesses, hiring an attorney to draft every contract they ever sign is simply not an option – especially when they’re constantly required to enter into new agreements or contracts for goods or services that would cost them a small fortune if a lawyer had to draft them all. Furthermore, owners of rental venues are often incredibly busy people, with little time to hire a lawyer to draft a unique contract every time they have someone interested in renting out their space. By using a standard template, you can avoid the hassle of paying lawyers to create contracts or creating them yourself entirely from scratch – ensuring that the agreement is more formal and powerful in the eyes of the law than an informal email or conversation with the other party.
Using a standard template for a venue rental agreement streamlines the negotiation process by providing a clear-cut blueprint for the agreement and its terms. Your standard agreement should include everything that is standard for your type of venue – including standard cancellations and refunds, additional costs for last-minute changes, and any types of behavioral codes that you may have in place for the safety of you, your employees, and your guests. Having all of this information clearly laid out in your standard venue rental agreement makes it easier to negotiate with the other party and move forward with the deal itself in a timely fashion, as you both already understand exactly what will be expected of you.
Finally, the benefits of using a standard venue rental agreement stretch far into the future. The agreement you provide to your customer when the agreement is signed will be the same as the agreement you provide to your customer 5 years from now, ensuring that past customers treat new customers fairly and respectfully when negotiating with your venue, since everyone recognizes that the terms of the contract are the same for every occasion. This will also save you time, as with a standard agreement you don’t have to change the terms, add to them, or negotiate them again, making it easier to onboard your customers quickly and accurately with minimal disruption to your schedule.
Errors to Beware Of
Common Pitfalls to Avoid in Venue Rental Agreements
When crafting or reviewing a venue rental agreement, be wary of the following common pitfalls: Allowing too few days between agreeing to the terms and the rental date. We recommend having no less than three (3) business days between the signing of the rental agreement and the rental date. For smaller organizations that may be able to provide the facilities at a moment’s notice, a lesser amount of time may be a better option. We also recommend confirming the date and time with the end user more than two days before the event to ensure the facility will be available (an event may have been scheduled for that date prior to the end user booking the facility). Failing to have your venue rental agreement pre-printed with your organization’s name and policies. For example, signing the agreement as "First Baptist Church" rather than as "Smithville Baptist Church" would be a mistake that is easy to avoid. Our programs can assist you with pre-printing this information if you are unable to do so. Failing to have the entire agreement and all attachments printed on one side only, with a header identifying your group as "First Baptist Church." This is a common mistake that prevents the program from being used in conjunction with AssemblyLegal(TM) . Not requiring all parties to initial the bottom of each page of your venue rental agreement to ensure the intentional acceptance of the terms and conditions in the agreement. Some signers may overlook provisions on pages that they did not know they already initialed. Allowing a current or past end user to utilize your facilities without first reviewing a written and signed contract. Many groups fail to put an agreement in place for members or former members who may have done business with them for a long time. However, even if you have a friendly relationship with this person or entity, it is important to put an agreement in place prior to the rentor’s use of the facility. An agreement prepared by AssemblyLegal(TM) can be helpful in providing the warranty of payment, your requirements for overhead costs and what happens in the event of cancellation by your group as well as what happens if the end user does not abide by the terms of the agreement. Not providing a written agreement and accepting payment via phone, e-mail or text. While a friendly note works well for those you know very well, the portion of your rental agreement that addresses warranty of payment, damages, and indemnity is also for your protection – even if you do not intend to enforce it, the provisions are there to protect you from disclosure of your group’s operation and procedures.
How to Personalize Your Venue Rental Agreement
After you have reviewed this template and made any necessary adjustments, the next step is to customize the following sections for your specific venue.
Rental Period
You will need to specify the rental period in order to come to an agreement with the renting party. If you have the company name of the renting party, you can use it here. Specify whether or not the agreement is based on a block of time or actual time spent. Be clear on the matter, as it is one of the most common way for issues to occur between venue operators and those renting the space on a contract basis.
Legal Compliance
Make sure to follow all local business formatting guidelines. Venues often require a business license that is specific to the industry, be sure to check your state and local laws that apply to renting commercial space, regardless if it is short-term or long-term.
Indemnification
If there is any specific liability that you want to outline, such as:
Indemnification
In this case, you may want to consider indemnifying yourself or your venue by adding an additional clause that specifies liability for damages to the venue space/property. You may also want to outline liability for any intentional acts that cause damage to the property. It is common practice for many venues to outline this clause, is somewhat common in premise liability cases where intentional acts are causing injuries on the premises. Be sure to also address the parties that will be covered by the binding agreement before it is signed.
There are a lot of venue owners and operators that may face legal issues with lessors because they did not have a detailed enough agreement. Be sure to review your contract thoroughly to make sure that it outlines the responsibilities of everyone involved in the private event. The last thing you want to happen is for someone to sue you by claiming that you were partially responsible for a slip and fall accident because you did not have proper signage and warnings alerting customers to the dangers of the slippery floor during your event.
The Bottom Line
Your venue rental agreement needs to include basic details such as the rental period, including start and end dates, the fee for using the venue and how and when—within reason—you can increase the pricing.
Frequently Asked Questions About Venue Rental Agreements
Can I use my wedding venue’s rental agreement to rent my wedding venue?
The general rule of thumb is not to use the wedding venue’s agreement. This document is exceptionally skewed in favor of the wedding venue. In most situations, a prospective client finds themselves in a position of having to agree to all of the wedding venue’s terms and conditions because otherwise they have no other options. Therefore, if you wish to protect your interests, it is best to speak with an attorney to review the document and discuss whether or not any changes are warranted prior to signing the document.
Are deposit payments taken indirectly (via a third party such as the caterer, florist, etc.) also refundable if the event is cancelled?
Unless the agreement specifically provides that these payments are refundable upon cancellation, they are generally not refundable. Even if the agreement does provide that the funds are refundable, the venue may not have possession of the funds to return them and as such it is recommended to speak to the vendor who received the funds to determine whether a refund is available.
I cancelled my event but the hotel refuses to refund my deposit. Is there anything I can do?
If the hotel has not mitigated its damages, you can step into the shoes of the hotel and sue the new group which booked the same date. You can recover up to the amount you paid the hotel. It is also possible to seek equitable damages from the group which booked the same date. An example of this was discussed in a case entitled ‘Simmons v . Skyline Hotel, New York.’ In this case, the hotel sold out 40 hotel rooms reserved for a group whose event was cancelled. The group which cancelled their event sued the hotel for not making an attempt to re-book approximately 40 rooms they cancelled with a final head count of fewer than 100 people. The court held the hotel could have booked the cancelled room. There was a reasonable prospect of obtaining at least a partial recovery of damages and granted the group which cancelled their event equitable damages of $11,500.
What should I do if the venue has paid the florist, caterer, or other vendors from my deposit?
If payment has already been made to the florist, caterer or other vendor, you should contact the vendor to inquire as to whether or not it will be able to refund the deposit it received from the venue after the cancellation. If the vendor is using a cancellation policy, they will likely decline. The venue may have paid the vendor directly pursuant to the contract between you and the venue. Under the contract between you and the venue, if the venue provides that the payment it made to the vendor is non-refundable, you do not have recourse to recover the deposit paid to the venue by you.
Is the venue required to mitigate its damages?
The majority of courts recognize the duty to mitigate, so they will generally require that, once a plaintiff notifies the defendant of the cancellation, the defendant will be required to take reasonable steps to reacquire the financial benefits lost by the cancellation.