Boat Rental With Lake House

[Tyler Rowley]

I own a STR lakefront home. My neighbor from across the street (not lakefront) approached me with this idea: he will buy a pontoon boat to dock at my house. Renters can pay extra to rent the boat. Simple enough.

How would you structure this type of deal assuming that he alone purchases the boat. I will manage the boat rentals. 

[Ricky A.]

Has anyone mentioned insurance/liability yet?  Yes?  Well, let me mention it again.  

I would walk through the exact set up in excruciating detail with my insurance agent and get their feedback regarding how to best structure it to limit my liability.  I'd have questions like:

- Can I (even) insure myself against liability for renting (or facilitating rental of) a boat that I don't own?

- What liability do I have if the owner of the boat doesn't have proper or adequate insurance (even though he assured me that he did!)?

- What liability do I have for allowing a boat I don't own docked on my property (that I happen to be renting to 3rd parties)?

Hopefully, you have a good insurance agent who can knowledgably assess your true risk.  Best case is that he's also the agent for the neighbor, so he's seeing and managing the risk from both your sides (which would provide adequate but also balanced advice).

Personally, given my risk tolerance, I'd want to be the actual rental contract to be between the neighbor/owner and the guest, and I receive a commission.  That way, the risk liability could be contractually between the guest and the neighbor.  The commission could still be 50% (because the neighbor doesn't have a business without you), and you could still facilitate the transaction (i.e., provide the docs so the neighbor isn't understating the revenue).