What Is An Event Space Rental Agreement?
Both event space rental agreements and event space rental contracts are used in the commercial events industry, and it is important to understand the difference when negotiating your agreement for use of a venue for a special event, such as a wedding or anniversary party. While these terms are often used interchangeably, they have different meanings.
The rental agreement with the owner of the venue for your event is the document that describes any payment you are required to provide to the venue owners, including the date and time of the event, guidelines for use of the venue, and agreed upon fees, charges and deposits . It is the first step in renting a venue for a function and covers everything up to and including the day of the event. After an event has taken place, landlord tenants can still be held to the terms of their original rental agreement for any additional rent, utilities, late fees, etc.
By contrast, an event space rental contract is legally binding, and covers everything that takes place after the day of the event, including payments, guarantees, penalties and claims. For example, if a guest damages your venue during a wedding reception, the subsequent payment requirements of the contract would be covered.
The Terms Of A Rental Contract
It might seem obvious, but you should know what you are signing and make sure that you and the facility owner are both on the same page about the obligations being assumed under the Rental. The Rental is important because it will set forth in detail the specific terms and conditions for your use of the facility. With a Rental, the event professional should know what their options are, and more importantly, know what the limits are. All too often, key elements of the Rental are overlooked. The basic provisions should include:
- Dates / Times / Term – This section will set forth the specific dates and times the facility is to be used by the event professional.
- Payment Terms / Schedule / Amount – What is the cost associated with the Rental and when is payment to be made? Will pre-payment be required, or payments from time-to-time with outstanding balance to be paid shortly before event? Perhaps the facility wants a security deposit or an upfront advance. It is important to have the amount of the payment, as well as the dates such payments are to be made, set forth in this section.
- Taxes – You need to know whether the Rental is subject to taxes. If so, how are the taxes computed and will a final accounting of the actual taxes be provided to you shortly after the event?
- Cancellation – You also need to know whether the event can be cancelled, the time frame for cancellation and whether there is any recourse in the event you must cancel the event. Are there any fees, deposits, etc. that may be forfeited in the event of cancellation?
- Liability – Does the facility maintain liability insurance in the event of injury to a person or loss of property and what are you responsible for? You should also know that you are responsible for any taxes, fines, fees, etc. that the facility sustains as a result of your breach or unlawful act.
- Indemnification – Will the facility indemnify you should the facility be sued for breach of the contract? If the facility is negligent or in breach, then you are entitled to be indemnified.
Legal Rights Regarding An Event Rental Agreement
A contract is a legally binding agreement between at least two parties which states the rights and obligations of the parties. Rental agreements and contracts can be used for many things, but in the event planning world, more often than not, they are used as booking documents for various venues, services, or rental equipment.
Rental agreements and contracts often contain three essential elements: 1) an offer, 2) acceptance, and 3) consideration. Where these three elements exist, you have yourself a contract. Contracts must also meet legal requirements, or they are void. Legal requirements related to an event rental agreement may include the contract being in writing and signed by the responsible party, that the contract be written in a way that is easy to read and understand, and that the subject matter of the contract be legal.
There are certain legal requirements which, if present, require the contract to be in writing and signed to be enforceable. Oral agreements are just as valid as written contracts; yet, generally speaking, it might be a good idea to use a written agreement since it will likely be much easier to determine when each party has fulfilled their obligations to the contract. The statute of frauds requires certain contracts, or agreements to be in writing. Generally, if the contract will take longer than one year to complete, it requires written documentation to be enforceable. Rental agreements that will take less than a year will generally not require a written contract. Two examples of events or services that should be in writing are a wedding or corporate function lasting a whole weekend, and a tent rental, respectively. If parties intend for the contract to last past one year, the contract should be in writing.
Depending on the type of event and the items involved, certain licenses and permits may be required in order to comply with local laws. A restaurant or bar may require a license to serve alcohol, food or beverages. In addition to permits or licenses, it is important to have liability insurance for events. Not only is liability insurance often required by local jurisdictions, it is also an essential step that should be taken to protect against liabilities which might arise from slip and fall incidents, intoxication, or other dangers present at the event.
Making Amendments To Your Rental Contract
When customizing your rental contract, consider the amount of time your Renter will occupy the premises. This is a solid starting point for determining their additional rights and obligations. How long you allow events to run (or don’t) can create all sorts of headaches during your rental period if you do not think it through and put some constraints in place.
For example, a four-hour limit should give a Renter enough time to get their guests in and out, register them, and host their event. Including a contractual provision limiting your liability for events that run longer than that period is usually advisable. This language could read something like, "Tenant hereby assumes responsibility for controlling access to the Building following the end of the Rental Period on the date or dates specified above, which responsibility includes expeditiously emptying the hallways and common areas of all guests and attendees, and Tenant hereby indemnifies Landlord for any claims, cost, liability or expense suffered by Landlord as a result of Tenant’s failure to do so."
If a specific guest list with capacity limitations is provided (for example, if it is an invitation-only party), it is very important to make sure your Renter understands that even one more person at the door could cause major problems for you – including liability in the event of a fire or other emergency, damage to your building before and after the event, or undesirable publicity (think drunken bartender fights breaking out in the hallway or people smoking outside your doors). It is not uncommon for even good friends to allow the "wrong" person to crash an event. It is worth adding contractual language noting that you reserve the right to turn away any guest who does not have an invitation.
Speak with any venues in your area that host large events, and you likely will hear several stories of no-shows – often in the dozens! Sometimes this is because the Renter’s officials rack up very long bar tabs that encourage "regrets," but that isn’t usually the case. Most often, it just comes down to ignorance and arrogance (or simply being social butterflies) that leads to people missing out.
This is why it is helpful to stipulate that the entire Renter-auditorium fee is due at the time of booking, with either a very small non-refundable deposit or a full contract attached when the parties sign. This way, the Renter loses the entire amount of their rental when they neglect to show, no matter what the reason might be. And then, you could simply sell the space to anyone wanting to take same-day advantage of any empty spots!
Event venues with historical usage often dedicate huge blocks of time to one or two parties over an extended period. This could mean that once the hall has been officially booked, the Renter doesn’t have any obligation to ensure the run goes smoothly, since they have the room until 4 AM whether they use it or not. Sometimes they will sign a secondary contractual document agreeing to be responsible for any damage or problems caused throughout the length of the agreement, or to pay "after-hours" fees if they do not leave the premises immediately following the end of the event. At first glance, this seems to be a good compromise for your Renter, but it has real potential for abuse and may not be a long-term solution for your facility.
This is because there are always people who arrive hours before the comped person, or often several hours after, for one reason or another. That means that they now require a comped room in the facility to hang out in (and sometimes play cards, listen to loud music, etc.), and will likely disturb other guests and staff members. In addition to potential issues with security, safety, and noise, this could lead to potential liability, loss of business from other guests, and the undesirable situation of being that hotel/motel/event space that everyone makes fun of on sitcoms and social media when capacity crowds get out of control.
One way to avoid these expenses is to encourage full day rentals, especially on busy weekends. A reasonable price for an early-morning-to-late-night booking is usually enough to dissuade these types of late-night guests from wreaking havoc in your establishment (or at least prevent you from having to pay for their food, drink, and other incidentals).
In the end, regardless of how you decide to deal with a breach of the contract by your Renter or their guests, you can never "unsign" the original agreement.
Common Errors To Avoid
Even the most astute party can fall victim to mistakes in drafting and/or entering into an event space rental agreement or contract due to the excitement and anticipation of the event. As a result, it is critical to be aware of the most common errors that are made regarding event space rental contracts. The first piece of advice is to not let excitement over getting a venue overcome your sense of caution. Make sure that you carefully read all of the fine print, as important information is often hidden in the details. For example, you could enter into a rental agreement for a significant amount of money only to find out later that a popular conference room is not included in your package. Also, if tear-down occurs later than the scheduled time in the rental agreement, such as in the case of extended business meetings , then you may be charged additional penalties, which could significantly impact your budget and be a source of frustration and embarrassment to your organization. In some cases, last minute changes to the agreement can also result in penalties, so communication is critical. Even if you think that simple changes will not significantly impact the agreement, make sure that those changes are mutually documented in advance of the event and in accordance with the contract terms. Because issues can arise at any time during the planning process, make sure that contingency plans are ideally documented into the contract. This could include how the parties will handle issues like inclement weather, extended hours or late fees, and damaged or lost items. It is much harder to negotiate these types of changes after the contract has been signed and the event is imminent.
Negotiating The Terms Of An Event Space Contract
Don’t be afraid to ask for what you want. If your event is also going to stand out, you need to find ways to negotiate a better deal with the venue.
One of the best and worst things about finding an event rental space is that every venue manager is different. Some managers are flexible and open to negotiating the fine points of the contract, while others stick rigidly to the letter of the law. You will find that managers fall somewhere in the middle of this spectrum. You need to understand their expectations so that you can find a way to reach an agreement on what you want.
Here are some tips for negotiating the terms of your rental agreement: Being civil and polite goes a long way when you are asking for something. If you try to push the issue too far or act unreasonably, you are likely to be met with little more than lukewarm indifference to your pleas. Treat the venue manager and staff with respect, and they will treat you the same way. If you expect to be rewarded for your civility, you should be willing to respond in kind.
If you really like a venue but the costs of renting it are too high for your budget, try to find a way to work around your inability to afford the space. If you can’t afford the premium rental fee charged for a Saturday wedding, consider moving your date to a Thursday or a Monday. This will allow you to enjoy reduced rates that are often times 30% lower than the ones charged on Saturdays.
Another option is to break your event into smaller events that are each relatively inexpensive. If you can secure a smaller room at the venue for fewer people, you may be able to rent the area for a significantly lower rate than you would have paid otherwise. As long as the smaller space meets your needs, you should be able to get what you want for significantly less.
It helps to be flexible about the requirements that you are placing on the venue. If you are a new business owner who is hosting the grand opening of your space, for example, you may want to throw a huge party in July. However, this may not suit the venue’s requirements. If you can be flexible about when you want to hold an event, it may help you secure more affordable rental terms.
Willingness to be flexible about the venue space you are using may also help you save money on your rental terms. You may not be happy about sitting your guests in the basement because it is the only space available. However, managing a large crowd is sometimes necessary to saving money. Remember that other clients may be fighting against you for space during the busiest days, such as noon on a Thursday.
One of our clients is a large insurance provider that was opening a new office. They wanted to host a huge open house in July to celebrate the opening of the business but paying for the small area that the venue had left over was far too expensive. We ended up working out a deal with the event manager that allowed the company to hold the open house on a Monday at lunchtime for half the cost to accommodate the venue’s requirements. Rather than getting a hundred people on the mailing list, the company was able to send out a good wealth of a few thousand. Flexible thinking in this instance saved the company thousands of dollars.
In this day and age, it never hurts to ask.
Complete Your Event Space Contract
A rental contract is final once all parties to the contract have executed it, with each having a fully executed copy in their respective files. For either party, once you have signed and returned the contract, the next step will be to wait until you have a fully signed copy in your files. Only then should you begin planning for your event.
This may seem obvious, but both parties regularly admit to passing the time while waiting to hear back from the other party. Even after you have been assured verbally or by electronic communication that the contract is final, you should not begin planning for your event until you have a fully executed, hard copy of the contract in your possession. Thus, if the caterer or the venue has called to say, "We are now booked," ignore that call. You – or they – are not done yet.
Obtaining a fully executed copy of the rental contract requires both you and the renter to sign the contract. After the contract is signed, it should be returned to the other party by hand, by mail, or electronically. Then, the other party has to return a fully signed copy to you . The signing of the contract need not be in-person. Generally, a contract is signed in-person when each party is on the subject premises. But this is not always the case, as a catered event is now often planned remotely, with most negotiations, contracts, and electronic correspondence taking place between people who have not met in person. A rental contract signed by a person remotely is perfectly valid, but must be executed according to the laws of the jurisdiction where the subject premises are located.
In those instances where an in-person signing does not occur, the signed contract may be delivered by hand, by mail, or electronically. Either party may deliver the contract to the other party at any of the following times: The event planner may also want to ask for a signed copy of the contract before sending the initial deposit or payment. Again, obtaining another party’s signature – and returning a signed contract – can take time because the person doing the signing cannot afford to dedicate themselves completely to this task. A rental contract is usually signed by an authorized agent or attorney-in-fact of the party.
