2021: The summer of vacation home rental nightmares

When is the real estate market too hot? How about when it pulls the rug out from under your vacation rental. That's what happened to JacLyn Ashby of Bowling Green, Kentucky, earlier this year.

Anticipating a long-awaited family vacation to Northwest Florida along scenic Highway 30A, she and 14 family members were looking forward to reuniting this summer at the same beach house they'd rented a few years earlier through a local vacation rental company in the Panhandle.

The family booked the home in Seacrest Beach a full year before their July 2021 vacation, relieved to have secured a place for their large group that ticked all the boxes — seven bedrooms, a big pool for the kids and within walking distance of the Gulf of Mexico beaches.

Then, in March 2021, just four months before their family vacation was to kick off, Ashby says she received an email from the rental company letting her know that the vacation home had been sold.

Vacation rentals canceled because the houses have been sold

The email explained that their reservation would be canceled and their deposit refunded, said Ashby, but didn't offer a replacement home or any other course of action when it came to finding a new place to stay.

Since she wasn't even aware the house was for sale, she said, the news was a shock -- especially considering how in-demand the summer vacation rental market is in Florida and elsewhere around the country this year.

The family went into panic mode, said Ashby, wondering if they would be able to find a replacement home in time for their getaway.

"I knew as long as we were together, it would be fine, but I was disappointed it happened," said Ashby, who searched VRBO for a new property and eventually landed on one that ended up working out well for the family in nearby Rosemary Beach.

But the original cancellation still stings.

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"My biggest shock was that they wouldn't honor reservations for at least that upcoming summer," she said.

Vacation rental sales are booming

The sale of and demand for vacation homes from buyers is soaring in today's hot real estate market, according to a recent study by the National Association of Realtors — and that particularly applies to vacation rental markets in Florida, Maryland, Massachusetts, Michigan and North Carolina.

"Vacation homes are a hot commodity at the moment," said Lawrence Yun, NAR's chief economist in a news release on the topic.

"With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers," he said.

NAR's 2021 Vacation Home Counties report showed the purchase of vacation homes rising more than 16 percent in the U.S. in 2020 compared to the previous year — a trend that appears to be following a similar trajectory in 2021.

And sometimes, of course, those vacation rental homes sell to buyers who might be ready to go on vacation themselves rather than honor existing holiday reservations agreed upon by the previous owner.

Tracy Louthain of Newman-Dailey Resort Properties Inc. in Miramar, Florida, says these situations are unfortunate. When they happen, she says, Newman-Dailey works with owners and guests to resolve things as smoothly as possible.

"If the new owner is not planning to use the property as a vacation rental, we call each guest reservation and work to move them into another vacation rental that is a similar size and location," Louthain said in an email to TPG.

In the event the new owner does plan to keep the property in the vacation rental pool, she says, the company works to transition the guest reservations (the new owner buys them, in effect) so there is no disruption to the guest.

TPG's own Summer Hull has already dealt with two vacation rental mishaps during the pandemic. The first was a rental property she booked for a stay for three families earlier this year through VRBO in Telluride, Colorado, and had to rebook for a 2022 date due to Colorado's then-restrictions around shared housing during the pandemic. Hull recently received an email from the owner through VRBO saying the house had sold and the reservation would be canceled.

"She was very nice about it and let us know she was selling the house and we got the whole refund," said Hull. "But we had booked it so long ago; there's nothing remotely comparable in price and size available now for that time next year. So we just aren't even going to go to Telluride."

Then, just last week, said Hull, she realized that a vacation rental she'd booked with extended family for an August 2021 trip in the Florida Panhandle had been changed unbeknownst to her, too.

"I went to look in the company's online portal at our rental and it was a completely different house," said Hull. "It was the same amount of bedrooms, the same town, but never one we would have selected on our own. The house isn't nearly as nice."

When she called the rental company, they insisted they'd sent her an email months before about the change since the original home she'd booked had been sold, although Hull never received it. They also made it clear a refund would not be possible, Hull said.

And while she never planned to cancel anyway, since her family members are already on their way to the destination by now, "people need to know this is happening," Hull said.

"Families put a lot of time picking out a vacation rental, emailing all kinds of links. And there's not a lot of recourse besides getting your money back when the host cancels."

Last-minute vacation rental cancellations are nothing new

TPG reported earlier this summer on last-minute cancellations by hosts on Airbnb and VRBO, sometimes within mere days of a reservation starting.

On its website, Airbnb says it will "automatically give you a full refund" if a host cancels.

VRBO outlines its policies on its website, too, going so far as to say it will "determine if we can cover a portion, or possibly all, of the additional cost of a new rental" if a host cancels less than 30 days from your stay.

In general, in the event your host cancels on you -- and as long as you've gone through a reputable company (and take the time to chase things down, if necessary) — you're not likely to lose your deposit.

That said, it's not a bad idea when booking to ask if a vacation rental home is currently on the market to be sold (or if the homeowners plan to sell it soon); forewarned is forearmed. Also, consider asking what the rental company does in the event a reservation needs to be suddenly canceled due to a home sale.

Consider casting a wide net

Going through rental companies with a vast portfolio, like Homes and Villas by Marriott, which allows you to use Marriott Bonvoy points to pay for your stay (and refunds them if you need to cancel within the policy's parameters), might make the re-booking process smoother in some ways, considering the larger network.

According to the Homes and Villas by Marriott website, "In the unlikely event that we need to change your reservation, we will find an alternative accommodation that you are happy with or provide a full refund."

And while travel insurance is unlikely to cover you in the event of a host canceling your vacation rental and the rare instance they refuse to give a refund, says Michael Giusti of InsuranceQuotes, you can always call, explain your situation and ask.

"Travel insurance really covers things like getting sick and not being able to travel, natural disasters — things that are beyond your control and are covered in the policy," he said.

"But it doesn't hurt to give your travel insurance a call and explain the circumstances if you're having trouble getting a refund," he said.