Monday, March 16, 2009

The Robber Baron State


Calling All Criminals: Come on up, down, or over to Tennessee! Are you currently running a Rob Peter To Pay Paul operation? Hey, that's no problem, here.

We've got the 'blurb'. The 'paragraph'. The 'notice to the public in a timely manner'. The "Dear Guest ~ In accordance with TCA-62-13-104(D)(i), your monies are going into my operating account, blahblahblah..."

When a property manager receives money from a guest in anticipation of an upcoming rental, that guest believes that they will get full credit for every penny paid on their behalf.

What does the Guest really have? Oh yeah, a belief.

When an owner places their property with a licensed (or license poseur) vacation rental manager, they trust the manager to diligently turn over all monies due to them from that vacation rental.

What does the Owner have? A belief ~ and a little more. The Owner and the Manager have a fiduciary relationship. It was created when they all signed an agreement for the Manager to rent the Owner's property.

But some Managers act like Robber Barons. They think it's OK to use the Guests' deposits and the Owners' net profits any way they see fit, as long as they have enough to cover the Guests' refunds and the Owners' checks :::::::drum roll:::::: when the time comes.

This concept of trust and accounting due an Owner from a Manager was re-affirmed in Tennessee by a judge in 1998 when Vacation Lodging Service locations were moved from Consumer Affairs to the Tennessee Real Estate Commission. The VLS licensees were required to keep the guests' and owners' money in an audited escrow account. Of course, that was watered down when it passed without the bonding requirement. But at least it passed.

Things seemed to rock along OK ~ until along came the (D)(i) insertion in 2003. Ah, the Barons.


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