Red Rental Legal Issues

[Tim D]

I've talked to several of you over the last year and have received a wide range of answers as to how you vet who you're dealing with, resolution of problems, breach of contract, and other issues that affect all of us. I see no thread in this section referring to any of these issues, so perhaps we can all learn something.

I work by appointment only and then only after I've received an application telling me who they are, how long in business, familarity with Red and image capture, type of job, who the producer is, where the job is, how long needed, etc. Once that's done, we meet. I don't ship.

What surprises me is how many of you seem to ship your cameras to strangers out of state with the most modest of deposits for jobs you have no idea of how the equipment will be treated, etc. Responses I've gotten is that "you have to have faith," "you have to give the benefit of a doubt," "it's worked OK for me so far," etc. Anyway, that's me and I'm a very cautious person. But I sleep at night.

What I would like to hear from you guys is how you check your renters out, how large a deposit do you take and how many periods do you take in advance (ie: if a day rate, do you take one day payment plus one day deposit [that's in addition to the equipment deposit], do you do as hotels do by charging the cc for a very large deposit, releasing it when the equipmet is returned, etc.

How do you handle damage and how do you define damage that is normal wear and tear? And what is normal wear and tear for you.? A studio rental is going to be a lot less stessful on your equipment than photographing a lunar eclispe in the middle of a Sahara sand storm.

How many of you are set up to do your own repairs or lens adjustments that are needed after a shoot. And is this figured in to your rental cost? To me back focus adjustments go with the territory. But I'm surprised at the number of guys who rent their equipment and have never done a back focus check when checking in equipment.

How do you handle complaints that after the rental period, you get the complaint that this or that didn't work properly so they want a credit? Have any of you had the credit card company deny your charge based on complaints by your customer and how have you resolved them?

What about lost items? Are you charging for a new LED if lost or the depreciated value? What about time to get a new LED? What about an item that is on back order? It's one thing to have this covered in your rental agreement, it's another to tell your renter that the new 35mm Red prime you have rented at $45 dollars a day is going to cost him $8,000 because you can't get a replacement for six months, etc.

Please add your own horror stories or, conversely, how you have managed to keep your rental equipment out in the field with no or minimal problems and happy renters. Hopefully, this thread will be helpful to all of us.

 

[Andrew J.]

Heres what I do,

1) Accept only a reputable insurance company and deposit for the insurance deductible.

2) Always call the insurance company and the broker who sold the insurance to verify coverage, deductible, authorization and authentication, make sure even the insurance certificate is legitimate that the client sent you. You could go as far as requesting a certified policy of the client's coverage however this somehow takes forever for any insurance company that I have dealt with to provide... (I have in the past turned down many rentals due to the fact they provided fraudulent information.)

3) Use a rental / lease contract that has your choice of replacement value, repair value and loss of use / down time.

4) Collect information from the client such as a CDL, SS#, TAX ID, Corp ID, etc, you could even go as far as to ask for a current bank statement from the client however this may be considered over the top. . .

5) Take a liquidated damages deposit if the client will be using your rented equipment on dangerous equipment or in dangerous areas.

6) Try to always take cash for a deposit / payment, provide a invoice/receipt to your client when deposit or payment is made, try to evade taken credit cards by offering your client a discount on the overall rental.

7) Consult a business attorney to assist in your business contractual needs.

8) Any abusive damages should be billed to the client via a "Estimated Loss and Damages Form". (If you rent a car and scratch it they will charge you for the repair.)

 

[MikeHedge]

the feature film Lean Like a Cholo rented my camera... and never paid...

I trusted a friend of mine who trusted the DP on the shoot (also a RED owner) I went and gave my camera over, met the people etc... the next day, I was supposed to have a check.... but nope... long story short the film "Lean Like a Cholo", has not paid me for my camera rental.

 

[Shawn Booth]

First - why are you renting a lens out for $45/day?

What I would like to hear from you guys is how you check your renters out, how large a deposit do you take and how many periods do you take in advance (ie: if a day rate, do you take one day payment plus one day deposit [that's in addition to the equipment deposit], do you do as hotels do by charging the cc for a very large deposit, releasing it when the equipmet is returned, etc.

Well, I don't rent out per say. I get hired and then rent my package to production. I go with package. Period. (I know this doesn't help those who DO rent...)

How do you handle damage and how do you define damage that is normal wear and tear? And what is normal wear and tear for you.? A studio rental is going to be a lot less stessful on your equipment than photographing a lunar eclispe in the middle of a Sahara sand storm.

All use is stressful... Well, you need to determine wether it's worn or damaged. Damaged is cracks, missing pieces/parts, scratches on LCD/lenses (not camera)......

How do you handle complaints that after the rental period, you get the complaint that this or that didn't work properly so they want a credit? Have any of you had the credit card company deny your charge based on complaints by your customer and how have you resolved them?

Should have complained during the rental period at time of problem. Not after the fact, after the job is complete...

What about lost items? Are you charging for a new LED if lost or the depreciated value? What about time to get a new LED? What about an item that is on back order? It's one thing to have this covered in your rental agreement, it's another to tell your renter that the new 35mm Red prime you have rented at $45 dollars a day is going to cost him $8,000 because you can't get a replacement for six months, etc.

Time to replace is tough luck, goes with being in the rental business. Now, if they lose or damage, they pay to fix/replace.

 

[J. Bernard Vallon]

A good thing to remember, is even a modest amount of fact checking will usually scare off would-be-thieves. Crooks look for easy marks, and if you dont make yourself an easy target, they'll usually go elsewhere.

Check insurance certificates, keep an ongoing dialog with lots of people with production, and if at all possible send out personnel with the gear.

Also, make sure you aren't last in line to get paid. The business model for independent film often involves forming an LLC around the film, and if the entire project goes belly up, the LLC can declare bankruptcy, negating any real legal recourse for any outstanding debt-ees.

 

[Jeff Kilgroe]

Some good advice being posted here. I just want to re-state the importance of a good rental agreement. Always require verifiable insurance and be sure the insurance covers the entire period that the gear will be in the possession of those renting it!!! I see it lots of times where ULB productions are covered just for their scheduled shooting dates, yet they want to pick up gear a day or two before and drop off a day or two after. Gets real frustrating. Take down drivers license info, credit card, etc..

It's not unrealistic to demand payment in full for rentals at the time you deliver the equipment. If nothing else, take a partial payment and credit card info.

John makes a good point about LLC's above. And in this regard, anyone renting gear to a production , especially for a large price, should handle any credit extended the same way any finance company, bank or lender would. Demand a personal guaranty. This can be part of the rental agreement. If handled properly, not only is the production LLC responsible, but so is whoever signed the agreement on a personal level, should the LLC fail to meet its obligations and pay the rental bill.

Some general practices I use...

Take 10% deposit to reserve rental dates in advance.

Payment in full at the time rented gear is shipped or leaves my hands. Exception to this would be larger rental contracts where payment terms are structured and are part of a separate contract or payment agreement. Typically amounts over $5000.

Initial deposit and often the full payment are taken with a credit card. If not, a credit card is usually held on file for additional peace of mind / insurance.

If rental client is not a private individual, but a limited liability company or corporation with limited responsibility should they fold up shop, I take a personal guaranty and credit card.

I take a copy of a state-issued ID and sometimes a license plate whenever possible.

Rental agreement specifies that all damaged equipment will be repaired and or replaced solely at the renter's expense.

I charge the renter's credit card each day over the agreed upon rental period if they're late.

All that said, I actually don't rent my gear out much at all. Doesn't seem to be huge demand for rentals in this area (or at least not from legitimate paying clients) and I'd much rather make a return on the gear using it myself.

 

[SirGear]

RENTAL 101

RENTAL 101

Trying to feel your pain. But anybody who plunges into the motion picture camera rental business without having worked in it first (for at least 5 years) or been a professional customer of the rental business for some time is in for a rough ride.

It takes YEARS to learn the ins and outs of actually owning and running such a business competently. Nearly every independent owner-operator is tempted one day to "dry hire" his gear (as the Brits say). Every single person I know of who has done this without thoughtful preparation has been badly burned at least once. Yes, even when you hand your expensive shiny gear to a friend. Things go wrong because your friend then turns around and hands your baby to someone who is not your friend. Then bad things happen.

Be clear: Equipment rental-even on a small scale- is a serious business, filled with unexpected pitfalls and potentially serious liabilities. It seems breezily profitable at first, but in fact is brutally competitive and full of "gotcha" moments.

Woe to he/she who has not:
-Developed a business plan (and analyzed how Return on Investment in the rental game works).
-created comprehensive rental terms (aka a freakin' contract)
-created credit and insurance policies (make customers' insurance primary)
-secured a large bank loan (or independent funding)
-Learned to keep meticulous business and technical records.
-fostered strategic relations with service providers and other rental companies
-married an entertainment insurance broker
-purchased a large caliber handgun (and practiced regularly at the range)

Go to this website for a start and JOIN the Production Equipment Rental Association. Among other things, they will provide you with standard rental terms and access to a "hot sheet " which tracks stolen equipment. (Did I not mention the rampant theft ?) Add to the boilerplate PERA rental terms the EXACT legal statute citation in your state describing the penalties for failure to return rented equipment.
Make all renters initial at the bottom of said terms.
http://peraonline.org/index

If you approach your nascent enterprise as if you had just founded the next Plus8 Digital, you may have a small chance of not firebombing your own genitals.

The rental business is grinding and meticulous. It is not fun.
The horror, the horror.....

 

[Tim D]

Follow=up on legal/rental

Follow=up on legal/rental

Some of this information is invaluable to any of us renting or considering renting our equipment. As I said when I started this thread, I personally only deal with people I can see in front of me (at least for the first rental). One reason for this (among many) is to get an actual hard swipe of the credit card and to verify that it belongs to who’s name is on the card.

I agree completely with getting the card holder to sign the contract, not only on behalf of the renter’s production company, but individually as well. I always get home addresses as well as business addresses and the name, contact person, address and phone numbers of the production company if applicable, advertising agency–everyone who might benefit from the use of my equipment. I need a chain of people I can try to go after if necessary.

WARNING: people tap out on the credit card caps all the time. I always get my payment up front or negotiate a charge schedule allowing me to add charges to the cc either daily or weekly as the case may be. If there is a problem, I can always call the producers and let them know that I’m coming over to the shoot to pick up my equipment for non-payment. I’ve never had to do this, but it’s a hammer I always have available to me.

WARNING 2: you cannot automatically charge someone’s card another time unless they have given you permission to do this in writing. Although you may use electronic credit card swipes, always get a hard copy and write on the items purchased that this is a continuing charge and that you have the right to charge up to X or for future purchases, etc. Then your client must sign the hard copy. Staple your copy to the contract immediately and don’t lose them. You are at the mercy of the credit card company when it comes to disputes. You need a strong paper trail to protect yourself as to whether or not this was an authorized charge.

Credit. I’ve heard that some studios are running 90-120 pay. I’m still waiting 6+ months for payment where I reluctantly allowed credit for a "name" producer. Get the money up front at all times. Your time is valuable. It takes time to keep sending out invoices and statements to slow pays not to mention telephone calls. You don’t see Red giving us credit, do you?.

So far, I have known the people I’m dealing with for the most part. This is a business. My experience is that if you have your rental agreement presented in printed form, people usually don’t question your boiler plate. If they do and after you have explained your reasoning for the terms and they begin to argue with you, be very cautious with these people. Some people don’t know and are inexperienced with contracts and will be good future customers. Others know what a contract means and are tying to minimize their liability to you

Please give us your thoughts, tips and even horror stories so we can all learn from each other.

 

[Stephen Williams]

I agree completely with getting the card holder to sign the contract, not only on behalf of the renter’s production company, but individually as well. I always get home addresses as well as business addresses and the name, contact person, address and phone numbers of the production company if applicable, advertising agency–everyone who might benefit from the use of my equipment. I need a chain of people I can try to go after if necessary.

Hi,

Bearing in mind many people collecting the equipment will be freelancers working for the producer for 1 or 2 days, the chance of them agreeing to underwrite the production co are slim, I had a hotel try that on once! I always sign for & on behalf of the production co.

FWIW I have never paid up an front deposit or left a credit card deposit. I have been renting equipment in different countries for over 30 years.

Stephen

 

[Dominic Jones]

I can only speak for the UK, but within that frame of reference, in answer to some of the questions I can say this:

The standard here is no deposit, payment upfront on first rental from given company, on account (generally 31 days grace) after that. Most rental companies will ask for a business name, address, incorporation and tax details plus references from two previous suppliers in order to start up an account, and will often require your bank details as well.

Insurance from the client should cover replacement or repair cost as appropriate for loss/damage/theft, up to the full value of all the kit they hire. Loss of earnings/continuation of hire (i.e. cover for the time it takes to repair or replace your kit to rentable state) should cover each kit in part and in whole (in other words, if part of a kit that rents as a package is damaged, lost or stolen the charge to insurance is for the package as a whole). This is determined by how the rate card lists packages, or sometimes by what comes in a case together. Maximum term for loss of earnings is - here at least - always 13 weeks. It should be at full rate-card rental rate, regardless of any discounts offered for the original period of rental. All of this should be stated unequivocally in your rental contract. Make sure you check that continuation of hire is covered in the insurance documentation.

Have a solicitor write up your rental contract. If you write it yourself using pseudo-legalise, don't expect it to hold up in court.

That's as much as I can think of for now - hope that helps...
Dom.

 

[Charles Nader]

I think if some RED Owners should REALLY think about renting their gear and camera should talk to Rental house before venturing in this as a business. I've now dealt with over 10 owners who are renting their gear and each one has these riduclous needs to rent their precious R1. If you are so worried of your gear getting broken or mishandled or whatever the renter is doing to your camera...don't rent your camera. Period.

That's the reason why you get insurance for to protect your gear and camera. I understand that its a good practice to call the insurance company up to verify the insurance policy to make sure.

But all this extra stuff is ridiculous. Deposit to book your gear. Deposit for the deductible? Com'on. I understand your worried...but darn it that's why their is insurance..!!!

Everything should be in the contract including if their are broken or scratches on gear.

If you want to rent your camera...you have to understand your gear may get broken or damaged. And all you DP's that refuse to rent your gear without you coming on the job or be assistant is ridculous too. Don't rent your gear then. Period. I must of gotten 20-30 Red Owners/ DP that won't rent out the gear since you don't want to hire them. Sorry, you're not that talented if so, I would hire you on your own talent & merit. If I want rent a camera...that's all I want from you. "No, I can't rent the camera without me coming on the job or hire my DIT". I have a DIT already or I really don't need one. Gees.

I'm know I'm going to piss off some because of this but I'm just little frustrated from some of you owners that think of renting your gear is easy pesy...its not...go talk to a rental house...ask them how they protect themselves and rent their gear out.

 

[Jeff Kilgroe]

Charles, your right on pretty much every account. I think some of the deposits people charge (deposit to cover the deductible?) are a little silly. I take a deposit to book rental dates in advance, it's my assurance that the rental client isn't as likely to just cancel on me and it gives me a reason to reserve the camera for them on those dates instead of committing it elsewhere.

I know too many RED One owners who bought the camera with some dream of shooting a feature or whatnot and the camera just sits around while they hope someone rents it from them to help pay off some debt. So I think there's a fair amount of desperation to rent out gear within this community. I rarely rent out my gear. Most every time I've rented out gear alone, I wish that I had not done so because something else comes along or I wish I had the camera or particular lens for something else, etc..

Another reason why a lot of owner/ops feel the need to accompany their camera is because they're under-insured, don't get proper insurance from the renting party, or they have a policy that only covers them if they are on-site with their gear!!! I've run across that a few times trying to rent extra gear. Granted, some are a bit paranoid over their gear, but like you say, if they're that paranoid then WTF are they "renting it out" for anyway? In the early days, many RED owners, including myself would always go with or send someone with the camera. Just because the cameras were scarce, theft was of higher concern and replacement cameras could take months to get, regardless of how great our insurance coverage was.

Additionally, a side effect I'm seeing of the desperation of R1 owners to rent out their gear, are people contacting me looking for "cheap" R1 rental. They even say that right up front in their email or it's one of the first thing out of their mouth when on the phone. I don't whore out my gear for whatever I can get, as some do, so most of these people never call or email back after I give them a price. My rates are reasonable and I like to think they are competitive. But they're not a bargain basement, it has to be worthwhile to me. AFAIK, I also have the most extensive RED package available for hire in the area, possibly in the whole damn state. But most people who call aren't looking for that... They want a camera and as cheap and minimal package as I can give them and they want it for the same rate as what the local rental houses charge for an HVX200 w/ 35mm adapter.

So... Here are my thoughts....

* Get a solid rental agreement to cover your ass.

* Get a good insurance policy.

* Don't blackmail a production by attaching yourself to the rental, you're just dead weight.

* Accept the risks of the rental business -- damage, theft, non-payment, clients who don't return gear on time or cancel last minute..

* If you can't do all of the above, don't rent out your gear.

* Go use your camera and produce something. You'll eventually make more money that way than trying to rent out a single camera package and accessories.

 

[Paolo Tinari]

So... Here are my thoughts....

* Get a solid rental agreement to cover your ass.

* Get a good insurance policy.

* Don't blackmail a production by attaching yourself to the rental, you're just dead weight.

* Accept the risks of the rental business -- damage, theft, non-payment, clients who don't return gear on time or cancel last minute..

* If you can't do all of the above, don't rent out your gear.

* Go use your camera and produce something. You'll eventually make more money that way than trying to rent out a single camera package and accessories.

Killer. Holy words. Tx.

 

[David Ellison]

Something else to bear in mind which I've mentoned in another topic is the use of specific equipment.
We used to use Lexar 300x CF cards but have heard recentely that certain production insurances will refuse to pay out if you don't use Red products and someone I heard about had to restage a Red shoot at their own cost because of such an issue so we've now bought red CF cards.
The same can be said for DIT equipment R3D manager could cause similar issues if it isn't with the DIT kit to do checksum's on the rushes.

 

[Andrew clemson]

In general we ask for a 50% advance payment, and on occasion 75% from people we REALLY know nothing about. Im fairly sure this isnt something that would work in the states, although I could be wrong. We dont really do shoots longer than a few days at a time.

The camera is never entirely dry hired (They always go with either a tech, Op or DIT) so at least we can sleep safe knowing someone is looking after the equipment. As far as I know, that means our insurance covers the equipment with a member of our staff present.

 

[JosephArthur]

Hey thanks these are all great new look of how I view rentals. And appreciate it from both sides now.