How I Avoided Illegal Squatters at My Monthly Rental

How I Avoided Illegal Squatters at My Monthly Rental

Please note that none of this is legal advice but rather an in-depth play-by-play account of my guest turned squatter (or more technically guest that overstayed, as squatters have more rights than guests do). It is best to consult an attorney if you’re experience a similar situation.

Whether you call it monthly rentals, extended travel or even slow travel, there are several factors you may want to consider before renting out your property for 30+ days. We'll first go through the different nuances of what a short-term rental vs medium-term rental. This will give  you more context into the outcome of my situation with an illegal squatter, or more accurately an unwelcome guest.

Differences in regulations for STR and MTR

A short-term rental (STR) is defined as any home rental that is less than 30 days. This means that all STR's are categorized as hospitality and is considered a residential hotel. Depending on your city, you may have to have a short-term rental permit as well as pay hotel occupancy taxes for each stay.

Medium-term rentals (MTR) or monthly stays get a bit more complicated as they are considered stays that are 30 days or longer. This legally excludes MTR's from regulations that include STR permitting and hotel taxes. This is where it gets tricky. If it is not considered as hospitality anymore, would it be categorized as a renter-tenant relationship?

The short answer is, it depends. I'll explain my recent interaction with a guest who overstayed their reservation and go over how Texas law affected the outcome.

Here Comes A Scam

I'm a proud condo owner and resident in Austin, Texas. I've been renting out my top loft to Homads users for the last several years. I've met so many people from such different walks of life that I never would have gotten to know had it not been for Homads. I've had everyone from successful Bitcoin investors traveling as digital nomads, university/nursing students, to individuals looking for a safe haven after leaving an abusive relationship. I've been fortunate to personally get to know these people and continue to love medium-term stays even after this incident.

Previous to Homads, I spent a lot of my time as a Super Host on Airbnb. As an introvert, I tend to interact with short-term rental guests with an introductory greeting and then retreat to my room. As a result, Homads afforded me the time to truly relate and build a relationship with the people staying with me. I've actually found some of my closest friends this way!

Occasionally when I know I'll be traveling a lot, I'll rent out my property for the month. With the holidays around and my plans to get married, I knew I wouldn't need to stay at my condo much for the next month. Perfectly enough, I had a request from Tyler (name changed to protect the user's identity) to stay for a month as she'll be renovating her home and needed a place to stay until it was done. I thought nothing of this as we often had local residents out of a place as they improve their own home.

When Tyler first booked for her month long reservation, there were issues with her payment (red flag #1). Homads had just switched their payment provider from WePay to Stripe so I assumed that it had something to do with this. Eventually, she was able to use a card that successfully went through. With Homads, if you're a subscribed user, you have the choice to use their payment provider or go offline and handle it however you'd like. I typically stay online as I feel I'm the most protected with documentation through public, online platforms. Tyler had already spoken about getting offline and using Venmo because it would be easier for her. I gave her my handle for Venmo and said we can talk about it once it's close to the end of her reservation.

About two weeks after Tyler moved in, I was notified that she had disputed the rental charge. I questioned her about it and she said that she often travels and that her bank likely auto flagged it as fraud. She assured me that she has called her bank and reverse the action (red flag #2). Tyler then sent me money to Venmo as good faith that the dispute was a mistake. I immediately sent the money back to her but she told me not to send it back because it charges her $25 each time I send it back. I thought this was strange as I've never been charged $25 for sending back money on Venmo but thought maybe it was a new feature (red flag #3).

During this time, Tyler had asked if I could get pest control in because she saw spiders. I thought this was odd as I've been living there and never noticed anything. To make things easier, I agreed to send in pest control. While having this conversation to understand the problem, Tyler got very litigious about the pest control and threatening code compliance issues and proof of photos. It was extremely odd and escalated in an instant (red flag #4). I was taken aback but assumed she was just having a bad day and ignored her behavior and assured her that pest control would be out that week.

As the 20th day came about, I messaged Tyler about sending in the next month's payment if she wanted to extend. Typically Homads will pull the payment 10 days prior to the next month/30 days. This allows homeowners the security of knowing that rent is paid and that they won't have a guest staying on days unpaid for. Tyler agrees and says she will pay it by the designated date.

During this time, Tyler also discloses to me that I should be getting a check from the City of Austin for rental assistance. I thought this was strange as she had already told me that she was renovating her property. Therefore, it wouldn't make sense that the city would offer rental assistance for a 2nd rental (red flag #5). I then think it would be a good idea to get Tyler on a lease if she intends to stay longer than 30 days and wants to go off the platform. With most leases, you take a security deposit equal to the first month's rent. I offered to provide a lease for her if she can get a security deposit in place. With hindsight, I realize Tyler wants this lease because she feels she can get rental assistance. She tells me that she can't provide the security deposit but will give that to me once she gets rental assistance (red flag #6). I would not give Tyler a lease until the security deposit is paid for so Tyler gets hostile again threatening that she can find any other place to stay and that any homeowner would be happy to have 6 months of guaranteed rent (red flag #7). I tell her she is welcome to find another place to stay and she backs off.

In the following days, Tyler continues to stall and says she'll pay for the next month's payment in time and to check with The City of Austin Rental Assistance to confirm she has an application in. I give them a call and confirm she has an application and also confirm that she would be disqualified if this is not her primary residence (red flag #8). I'm pretty sure I have a scammer on my hands but yet there was still this small amount of hope it was a misunderstanding. It really goes to show how much we'll go through to avoid a confrontation!

I get a few more threats from Tyler that I quiet by disclosing that I'm getting married that day and would get to writing up a lease soon after. The following day, and the night before going to a remote getaway for my honeymoon, I am back and forth with Tyler as she keeps on suggesting that she will have the next payment sent to me that day. By 6pm, the time we discussed and agreed she will have paid, Tyler has not made any payments. My now husband (welcome to the family and my problems 😂) and I  come to the property to tell her she needs to leave.

How Texas Law Helped Us Escort My Guest Out

Quick definitions:
Tenant - (it depends on your state but Texas defines a tenant as) - A person authorized by a lease to occupy a dwelling to the exclusion of others and, for the purposes of Subchapters D, E, and F, who is obligated under the lease to pay rent.

Squatter - A squatter is a person who settles in or occupies a piece of property with no legal claim to the property.

Boarder/Lodger - Boarders are people who rent a room in a residential structure that is shared with either other boarders or with the owner of the residence.

Holdover tenant - A holdover tenant is a renter who remains in a property after the expiration of the lease.

Adverse possession - Sometimes colloquially described as "squatter's rights",[a] is a legal principle under which a person who does not have legal title to a piece of property — usually land (real property) — acquires legal ownership based on continuous possession or occupation of the property without the permission of its legal owner. Note: for Texas, a squatter needs to stay in the property for 10 years to claim adverse possession.

The first issue we ran into was whether this was considered a criminal or civil issue. Why this matters is because the police cannot do anything if it is considered a civil matter. When we initially called 911, the dispatcher told us that they could not come out unless there was a threat. Eventually they said that it was considered a civil matter based on what we told them.

"However, if the holdover tenant receives a notice to quit (or move out) and refuses to leave, they may be subject to a lawsuit for unlawful detainer. A holdover tenant will not be able to make an adverse possession claim if they have already been asked to leave. At this point, they are considered a criminal trespasser instead."

We decided to proceed with our honeymoon and to address matters when we got back. On the way out, I reached out to the Austin Tenant's Council to make sure we weren't breaking any laws and to better understand our situation. It wasn't until I did more digging and talking to more authority that I realized that we didn't have a tenant-landlord issue at all. Based on R. Scott Alagood, the guest is granted a "license" not a "lease" to use the land.

"However, a guest of a hotel or inn is not afforded the same rights and estates which are created in a lease, regardless of the type.  In Texas, the guest of a hotel or innkeeper is only granted a privilege or authority to use the property for a short period of time and in accordance with the rules and regulations set forth by the hotel or innkeeper.  The guest holds a “license” as opposed to a “lease” and is not entitled to exclusive possession of the areas in which the guest is allowed to conduct its activities.  A license does not create an interest in the land or the buildings in favor of the guest, but only allows the guest the right of use."

When I came back 5 days later, I was driving down the street and spotted a police officer in his car. I cautiously walked up to him and asked if the police typically help in a situation like ours. He told me that they would treat it as if it were a guest overstaying at a hotel and that sometimes dispatchers don't always understand the difference nuances of the law. Understandably, this is a new area as MTR's are just becoming more mainstream so laws have struggled to keep up.

The next afternoon, we had more confidence in getting a police officer sent out with the new knowledge we had. In hindsight, it would have been helpful to get the officer's information. Apparently they have business cards they can give out. Regardless, I had my husband call and we had 3 officers come out to the property. We were notified from our neighbors that our guest had brought in several 2x4 wood planks into the property so we had no idea what they were doing. We were worried to go into the property without an officer just in case they had boarded up the walls or were in for a fight.

Once the police arrived, we spoke with them and showed them that it was indeed my primary place of residence- driver's license, current mail, Homads' booking information and even the guest's primary residence address. We stayed downstairs while all three police officers knocked on the door. Two loud knocks and an authoritative "POLICE, open up!" Nothing. They try again, "this is the police, open up!" and yet nothing.

They come back to tell us that no one is home so we decide it's safe to enter the building. I still have a key to the property which Tyler is unaware of. We're told to open the door and to take a step back and allow the police officers to walk in. Right as my husband gets the door open, we see Tyler rushing over to the door.

There is no other word to describe this other than "privilege". When minorities, predominately African-American, have been shot for being in the wrong place, wrong time, wrong mood, wrong color. To have this person purposely ignore the police was just appalling and a shameless portrayal of ignorance and privilege. Fortunately the APD were professional from the beginning to end with everyone and we are grateful for that.

After some conversation with the guest, us, and their superiors, the police found Tyler to be criminally trespassing and told her she needed to start packing. We were ecstatic to be done with all the drama and to have a clean resolution. That's what we thought at least.

An hour after leaving the property to let Tyler pack up her things, our neighbors let us know that Tyler had called Austin Code Department to complain. They had told Tyler that based on what she has told them, she is protected by the eviction ban and has tenants rights. Thankfully my neighbors were on it and approached the men who came out while they were walking to their car to let them know what was going on. They spoke with me on the phone and I let them know everything that had happened and clarified that I was the primary resident of the property. After providing proof of the Homads booking and proof of ownership, they walked right back up to let Tyler know that she does not have any tenants rights in this situation. Unsurprisingly, the men discussed that this is new territory and something they've not dealt with before--owing to the fact that MTR's have become more popular with restricted travel.

The moral of the story is to know the laws and regulations in your city. Understand that these laws can be interpreted differently by the courts and that each state is different.

5 Things That Helped My Situation

  1. Get everything in writing
    More often than not, texts and verbal commitments are not recognized by the courts. You'll need to have formally written to your guests, whether that be by snail mail letter or by email. This is why we've made sure that all communication through Homads is recorded in the message thread and sent to each recipient via email (this includes the text threads you use on Homads). This means everything is timestamped and permanent. When working with the police and Austin Code Department, and Stripe (against the dispute) it was really important to provide evidence that was formally written.
  2. Don't give out personal information
    Homads does not share personal information such as your email or phone number. Instead, every text message is a Homads private number that's dedicated to specific users. Therefore, if there are any conflicts between you and your guest or homeowner, you do not have to worry about the user contacting you off platform.
  3. Booking invoices
    Having a booking invoice that specifies exact move in and move out dates and the amounts paid is extremely helpful. This allowed the police and Austin Code Department to quickly understand the situation and differentiate between a renter vs a guest.
  4. Know your neighbors
    I am grateful for my neighbors who were always in communication with me. It pays off to be friendly with your neighbors but you just don't know how helpful they can be in situations like this. It was easy in my situation as we had a Facebook group for our condo owners already established. If it weren't for several of my neighbors, I would not have known about Tyler calling Austin Code Department out and we would have had a much more prolonged process of getting these guests out.
  5. Lax tenant rights in Texas
    Texas is well known to have lax tenant rights. Based on Title 8, Chapter 92 of the Texas Property Code, the definition to be a tenant in Texas is that they are "authorized by a lease to occupy a dwelling to the exclusion of others and, for the purposes of Subchapters D, E, and F, who is obligated under the lease to pay rent." One of the key differences in Texas from other states is that there isn't a set amount of time that a guest must stay to obtain tenancy rights.
"For example, in California, a hotel guest automatically becomes a tenant after staying at a hotel for more than 30 consecutive days. However, in New York and many other states, a hotel guest does not become a tenant after 30 days if it's evident that they have another residence and their stay was not intended to be permanent."

California has always been a difficult city to offer medium-term rentals as the laws there are very different. Airbnb shied away from monthly rentals for some time as their home state provided many opportunities for squatters to take advantage of tenant rights--like that of the Pashanin brothers in 2014.

I was really fortunate to be able to know Diya Liu, a STR and MTR expert in Austin and a long-time Homads homeowner, who referred me to Dan Castro, a master in Texas real estate law. Through his consultation, I was able to better educate myself with my local laws.

Things I Would Have Done Differently

Having someone overstay their welcome and damage your property is a violating experience. One of my biggest regrets and something that could have been done rather quickly was to have the guest do a screening report. Only in hindsight did I uncover public records of court cases for similar issues with Tyler. It was with bad timing that Homads introduced online screening reports for homeowners just a week after booking Tyler!

I also know I should have acted faster when my gut was telling me that this was a scam. Terrible as it may seem, the discomfort of having to confront someone about a problem is often times more painful than finding yourself in a "squatter" situation.

Please note that none of this is legal advice but rather an in-depth play-by-play account of my guest turned squatter (or more technically guest that overstayed, as squatters have more rights than guests do). It is best to consult an attorney if you’re experience a similar situation.

The Ultimate Guide to Setting Up and Managing Your Monthly Rental Property

A common question we get from property owners and managers is “What exactly is the difference between short-term rentals and medium-term rentals?” MTRs are a new area of real estate investing that has emerged after the advent of Airbnb. The level of involvement and risk vary amongst short-term, medium-term, and annual leases.

This guide walks you through, step-by-step, everything you need to know from finding the right property and understanding the laws and regulations to setting up and managing your monthly rental property. We'll give you tips and hacks to help automate your property so that you can save time and make more money. There's tons of resources out there on short-term rentals but with the pandemic pushing people to stay home, extended stays or monthly bookings are here to stay as well! Whether you're a seasoned real estate investor building an empire or a beginner house hacking your way to financial independence, you'll want to know all the different nuances that affect you and your rental property.

For reading this far, we'll send you The Ultimate Guide to Setting Up and Managing Your Monthly Rental Property for FREE!

Email My eBook

* indicates required