Issue Date: May 7, 2006

Ethics

Summer rentals

Contract disputes. Taxes. Ethical questions can complicate your vacation. Relax: Our trusted expert is on the job.

It's an ethical quagmire -- a place so murky with conflict that only the strongest of character can survive there. No, we're not talking about the boardroom; we're talking about the summer vacation rental. After all, it can amount to a plethora of hotly contested debates over deceptive advertising, business deductions and lease agreement terms. With that in mind, we once again bring in ethics guru David Batstone for guidance. Batstone is a University of San Francisco professor of ethics and author of "Saving the Corporate Soul & (Who Knows?) Maybe Your Own." Here, Batstone, whose own summer plans entail a vacation home rental on the coast of England, shares his thoughts on three rental scenarios that are sure to come up this summer:

Dilemma 1: Picking your battles
Tom organized a family reunion with his two siblings and their parents, along with their respective kids, spending a week at the Outer Banks in North Carolina. The property was advertised as being just a short walk from the beach, with a heated pool plus PS2 consoles on all three large-screen TVs. None of the game consoles worked, but fortunately, some of the kids brought GameCubes with them. Also, even though the walk to the beach wasn't long, it wasn't exactly short or convenient -- about 1/3 of a mile, requiring everyone to cross a busy street. Oh, and the pool heater didn't work.

The family enjoyed the week, but Tom feels the property fell short of what was advertised. None of these individual problems was hugely significant, but when lumped together, he feels a rebate is due. Is it?

Our expert says: "It depends. Tom needs to distinguish what is a serious misrepresentation and what is trivial. As far as the game consoles go, it sounds to me like the combined families' children arrived at the place intending to sub out the PS2 system anyway, so I can't see making a stink about this. With regard to the pool heater: Was it so hot outside that it wasn't needed? Or was it unseasonably chilly, and was the family unable to use the pool because it lacked a working heater? Was crossing the street a major inconvenience or a minor adjustment in the routine? In other words, pick the battles here wisely, Tom. You, as a contractual guest, have the right to renegotiate as you please. But how far do you push it? Certainly not enough for a huge rebate -- probably one night's stay, at most."

Dilemma 2: A business deduction?
Juan is a self-employed, brand-awareness consultant for growing companies in Milwaukee. He takes his family to Lake Superior for a week. During the vacation, he checks e-mail every day and voice mail every four hours. He spends the better part of Tuesday putting out two separate fires with two separate clients. He conducts a teleconference with a potential new client on Thursday morning. Can he deduct the entire week's rental on his taxes? Or at least a portion of it, given that he spent a solid two days of his seven-day vacation actually working?

Our expert says: "No. Unfortunately, Juan will just have to face the reality of the modern-day virtual office. Pretty much everybody can conduct business on the road -- whether you're at a vacation property or at a Kinko's. As for deductions, you need to ask yourself: Was the vacation property's location relevant to the actual business you were conducting? If Juan were trying to expand his business by targeting medium-sized companies in the Lake Superior region and he spent the week pitching new clients, then he would have a case. Otherwise, he needs to eat the cost like any other vacationer."

Dilemma 3: The more, the merrier (or not)
Jane booked an amazing place at Cape Cod for her family and her best friend's family. It was advertised as fitting up to 10 people. However, once their co-workers and friends found out about their rental of this prime property, a few of them dropped in for extended visits, including sleepovers. The teenagers had plenty of their friends crash on the living room floor, sleeping bags in tow. At the end of the week, Jane turned in the keys, and the rental agent asked how the week went. In her heart, Jane knows they exceeded the capacity by at least two people every night. Is she obligated to disclose this information?

Our expert says: "Well, I hate to sound like the vacation police, but I'd say yes. The lease terms clearly specified that 10 people per night was the maximum. And the rental was billed with that limit in mind. Even if the teenagers spent the night on the floor and the co-worker of Jane's best friend slept on the couch, this was a technical violation of the agreement. Perhaps going into the week, Jane had no idea all of these people were going to show up. But, after the fact, she knew darn well what happened. When asked about the week, she has no alternative but to come clean. Besides, it's quite possible that some of her neighbors for the week would call her out when they turn in their keys, so complete disclosure is best."