Oil spill will benefit Georgia rentals

By John Adams

For the AJC

From a real estate perspective, the tragic Gulf coast oil spill will have wide-reaching effects.

Tens of thousands of private property owners along the gulf coast rent their homes to vacationers every year, and they count on summer income to carry them over the following winter, when visitors are scarce. This year, things are very different.

Many of those who already have reservations at affected shorelines envision an Exxon Valdez disaster in front of their hotel, and are simply not willing to take the chance. Likewise, many who have vacationed in the same location for years have changed their minds about this summer, looking instead to east coast beaches.

As a licensed broker in Georgia, I manage several waterfront cottages on Saint Simons Island, and my phone rang off the hook as news of the spill worsened. Some inquirers were able to get refunds from their Louisiana reservations, while others were willing to abandon deposits in order to avoid the specter of dead sea turtles and oil-soaked birds.

Interestingly, such a mass exodus of visitors is not unusual in these parts of the country. Any mention of the dreaded word "hurricane" causes all major roads to be manned by rifle-toting National Guardsmen directing traffic anywhere away from the coast. Some vacationers are so focused on sun-worshipping that they will walk away from the remainder of their stay if persistent rain occurs. They head off in search of fair weather.

Owners and property managers have responded to this tendency in two ways:

* Renters are often strongly encouraged to purchase "vacation insurance," which can reimburse the unhappy vacationer if certain calamities occur. The more expensive the policy, the more events that are covered. Of course, in most cases the vacation goes as planned and no claim is ever filed. Such is the nature of the insurance industry.

But potential renters of vacation property need to read the fine print in their rental agreements, because the second owner protection may come as a surprise to the unwary:

* Most vacation rental agreements contain provisions that prohibit refunds if the vacation is cut short due to any reason other than the owner's inability to offer occupancy. That means even in the event of a category 5 hurricane, there will be no refund unless there is damage to the dwelling that would preclude occupancy.

And don't think you can "ride it out" just because you paid for the week. The lease goes on to say that you are required to follow the instructions of local law enforcement in case of a forced evacuation, but even that does not trigger a refund.

The good news for Georgia's Coastal Empire is this: we have not experienced a truly serious hurricane in over a century, and it is unlikely to happen anytime soon. Keep your fingers crossed.

John Adams is an author, broadcaster and investor. He answers real estate questions on radio station WGKA (920am) every Saturday at noon. For more real estate information or to make a comment, visit www.money99.com.