This property management agreement is between
The Owner is the owner of the certain apartment building located at
The Owner wishes to engage the Manager as manager of the Property and the Manager wishes to provide these services.
The parties therefore agree as follows:
1. ENGAGEMENT; SERVICES.
- (a) Engagement. The Owner retains the Manager to provide and the Manager shall provide exclusive operational, management, maintenance, and leasing services at the Property (the "Services").
- (b) Services. Without limiting the scope of Services described above, the Manager shall:
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- (i) collect all rents issuing from the Property as they become due and disburse funds
by ordinary mail in person by overnight delivery or , by ordinary mail in person by overnight delivery or , by ordinary mail in person by overnight delivery or by ordinary mail in person by overnight delivery as instructed by the Owner on or before the of the current month (if the Owner has not already received the rent from the tenant);
- (i) collect all rents issuing from the Property as they become due and disburse funds
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- (ii) deposit all funds collected on the Owner's behalf (less any sums deducted under this agreement or otherwise) in one or more accounts (the "Trust Accounts") at a duly qualified national or
banking institution, separate from the Manager's own accounts;
- (ii) deposit all funds collected on the Owner's behalf (less any sums deducted under this agreement or otherwise) in one or more accounts (the "Trust Accounts") at a duly qualified national or
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- (iii) refund tenants' security deposits at the expiration of leases;
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- (iv) maintain accurate records of receipts, expenses, and accruals in connection with managing the Property;
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- (v) execute and serve, in the Owner's name, notices and demands on delinquent tenants;
- (v) execute and serve, in the Owner's name, notices and demands on delinquent tenants;
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- (vi) institute, settle, or compromise, in the Owner's name, any legal action against a delinquent tenant or a delinquent tenant's property to enforce the collection of rent or other amounts due, to enforce any conditions of a lease or month-to-month rental agreement, and to recover possession of all or any part of the Property. However, no other form of legal action maybe instituted and no settlement, compromise, or adjustment of any matters involved made without the prior written consent of the Owner
, except when the Manager determines that immediate action is necessary ;
- (vi) institute, settle, or compromise, in the Owner's name, any legal action against a delinquent tenant or a delinquent tenant's property to enforce the collection of rent or other amounts due, to enforce any conditions of a lease or month-to-month rental agreement, and to recover possession of all or any part of the Property. However, no other form of legal action maybe instituted and no settlement, compromise, or adjustment of any matters involved made without the prior written consent of the Owner
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- (vii) buy supplies, make contracts for, and otherwise furnish electricity, gas, fuel, water, telephone, window cleaning, garbage collection, pest control, and any other utilities and services required to operate the Property;
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- (viii) maintain the Property in an attractive condition, and repair its interior, exterior, and landscaping of the Property;
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- (ix) for expenditures for repairs, alterations, decorations, or furnishings in excess of $
, obtain the Owner's prior written consent, except (A) in case of emergency, (B) if the Manager in good faith determines that the expenditures are necessary to protect the Property from damage, to prevent injury to persons or loss of life, or to maintain services to tenants, or (C) if the expenses are monthly or recurring;
- (ix) for expenditures for repairs, alterations, decorations, or furnishings in excess of $
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- (x) hire, discharge, and supervise any labor and employees required to operate and maintain the Property, and arrange for bonding for employees who will handle cash on behalf of the Owner and the Manager;
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- (xi) advertise the Property and any vacant units by reasonable means, including the placement of "For Lease" signs or other signs on the Property in accordance the law and owners' association rules, although the Manager may not incur advertising expenses greater than $
during any without the Owner's prior written consent;
- (xi) advertise the Property and any vacant units by reasonable means, including the placement of "For Lease" signs or other signs on the Property in accordance the law and owners' association rules, although the Manager may not incur advertising expenses greater than $
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- (xii) investigate references of prospective tenants, and approve new tenants based on legal criteria, including job security and creditworthiness;
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- (xiii) sign month-to-month tenancies of units and negotiate extensions and renewals of these tenancies and leases, although the Manager may not enter into leases with terms less than
month(s) or more than month(s) without the Owner's prior written consent;
- (xiii) sign month-to-month tenancies of units and negotiate extensions and renewals of these tenancies and leases, although the Manager may not enter into leases with terms less than
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- (xiv) terminate leases, negotiate lease terminations,and sign notices of termination;
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- (xv) place a keybox on the Property;
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- (xvi) duplicate keys and access devices to facilitate convenient and efficient showings of the Property and to lease the Property;
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- (xvii) complete and sign any lead-based paint/hazards certifications on behalf of the Owner;
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- (xviii) make reasonable efforts to lease any available units at the Property, and to negotiate with prospective tenants, including making concessions as an inducement to prospective tenants to occupy a unit on the Property; and
- (xviii) make reasonable efforts to lease any available units at the Property, and to negotiate with prospective tenants, including making concessions as an inducement to prospective tenants to occupy a unit on the Property; and
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(xix) continuously maintain a real estate license in ; (xix) continuously maintain a property management license in ; (xix) continuously maintain a(n) license in ; (xx) (xix) provide the Owner with aweekly semi-monthly monthly accounting of rents received and expenses paid in the form of itemized financial statements, which statements shall, at a minimum, include (for the relevant period) the amount of security deposits received or refunded, the amount of rent or receipts, itemized by unit, an itemized description of disbursements, and end of the period balance of the Trust Accounts;(xxi) (xx) remit all income, less any disbursements and accruals for future expenses, or amounts otherwise deposited in the Trust Accounts, to the Owner; and
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(xxii) (xxi) perform any other necessary services related to the leasing or management of the Property.
- (c) Owner Obligations. The Owner shall:
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- (i) give copies of all keys, entry codes, leases, and rental agreements to the Manager;
- (i) give copies of all keys, entry codes, leases, and rental agreements to the Manager;
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(ii) provide the Manager with loan payment coupons and envelopes, property tax bills, and insurance premium billings;
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(iii) pay all taxes and mortgage payments on the Property;
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(iv) (ii) cooperate with the Manager to facilitate the showing, marketing, and lease of the Property;
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(v) (iii) provide all documentation and records required by the Manager to manage and operate the Property, including all known facts that materially affect the value of the Property;
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(vi) (iv) inform the Manager before conveying or leasing the Property;
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(vii) (v) carry and pay for public and premises liability, property damage, and any other insurance adequate to protect the interests of the Owner and the Manager and name the Manager as an additionally-named insured. The Owner shall provide a copy of such insurance policy to the Manager for the Manager's records; and
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(viii) (vi) pay any late charges, penalties, and interest imposed by lenders or other parties because of a lack of Owner funds held by the Manager and available for payment to those parties.
2. TERM AND TERMINATION.
- (a) Term. This agreement will become effective as described in section 17. Unless it is terminated earlier in accordance with subsection (b), this agreement will continue for an initial period of
years (the "Term"). This agreement will extend automatically for terms of the same length as the initial term unless a party provides notice to the other at least days before that renewal. However, this agreement may not remain effective for more than years. - (b) Termination Procedures. This agreement may be terminated:
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- (i) by either party for a material breach of any provision of this agreement by the other party, if the other party's material breach is not cured within
days of receipt of written notice; or
- (i) by either party for a material breach of any provision of this agreement by the other party, if the other party's material breach is not cured within
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- (ii) by the Owner at any time and without prior notice, if the Manager is convicted of any crime or offense, fails or refuses to comply with the written policies or reasonable directives of the Owner, or is guilty of serious misconduct in connection with performance under this agreement
. ; or
- (ii) by the Owner at any time and without prior notice, if the Manager is convicted of any crime or offense, fails or refuses to comply with the written policies or reasonable directives of the Owner, or is guilty of serious misconduct in connection with performance under this agreement
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(iii) automatically, on the death of the Manager.
- (c) Management Fees After Termination. Following the termination of this Agreement for any reason, the Owner shall promptly pay the Manager any fees earned under section 3 for Services rendered before the effective date of the termination. No other compensation, of any nature or type, shall be payable after the termination of this agreement.
- (d) Funds Received by Manager After Termination. If the Manager receives any funds on the Owner's behalf after the end of the Agreement (e.g., rent, damages, past due amounts, etc.), the Manager shall (i) retain
% of the funds received as compensation for Services rendered (i.e., for research, accounting, communicating, and processing) at that time and (ii) pay the balance of the amount received to the Owner. - (e) Owner Responsible for Further Payments. After termination of the agreement, the Owner shall assume the obligations of any contract or outstanding bill incurred by the Manager under this agreement. The Manager may withhold funds for
days after the end of the month in which the agreement is terminated in order to pay bills that were previously incurred but not yet invoiced and to close accounts. The Manager shall deliver to the Owner, within days after the end of the month in which the agreement is terminated, any balance of monies due to the Owner or tenant security deposits, or both, that were held by the Manager with respect to the Property, as well as a final accounting reflecting the balance of income and expenses with respect to the Property as of the date of termination or withdrawal.
3. COMPENSATION.
- (a) Management Fee. The Owner shall pay the Manager a management fee equal to
$ per month % of the gross rental receipts collected from the operation of the Property , or $ a month, whichever is greater. . "Gross rental receipts" means all revenues collected plus refundable deposits . The Owner shall pay these amounts to the Manager withindays after the end of each month. - (b) Additional Fees. Normal property management does not include property sale, refinancing, preparing property for sale or refinancing, modernization, fire, or major damage restoration, rehabilitation, obtaining income tax, accounting, or legal advice, representation before public agencies, advising on proposed new construction, debt collection, counseling, attending Owner's association meetings, or insurance claims. If the Owner requests the Manager to perform services not included in normal property management or specified above, a fee shall be agreed upon for these services before any such work begins.
4. REIMBURSEMENT OF EXPENSES.
The Owner shall promptly reimburse the Manager for the following expenses related to the leasing or management of the Property:
- (a) copy charges;
- (b) charges for long-distance telephone calls or faxes;
- (c) regular, express, or certified mail charges;
- (d) notary fees;
- (e) photos and videos;
- (f) advertising costs to promote the Property, regular pool maintenance through a licensed and bonded pool service company, and lawn maintenance service, including fertilization and pest control;
- (g) reasonable travel expenses, including mileage reimbursement, parking expenses, and tolls; and
- (h) any other expenditures the Manager is authorized to make under this agreement or that Owner otherwise authorizes the Manager to make behalf.
5. INDEMNIFICATION.
The Owner shall indemnify the Manager from all claims, charges, debts, demands, and lawsuits and pay the Manager's attorneys' fees related to the Manager's management of the Property and any liability for injury on or about the Property that may be suffered by any employee, tenant, or guest on the Property.
6. NATURE OF RELATIONSHIP.
The relationship of the parties under the agreement is one of independent contractors, and no joint venture, partnership, agency, employer-employee, or similar relationship is created in or by this agreement. Neither party may assume or create obligations on the other party's behalf, and neither party may take any action that creates the appearance of that authority.
7. REPRESENTATIONS.
- (a) The parties each represent that they shall comply with all responsibilities under state property law, fair housing and antidiscrimination laws, and any other statutes, administrative rules, ordinances, or restrictive covenants applicable to the use, leasing, management or care of the Property.
- (b) The Owner hereby represents that:
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- (i) it has fee simple title to and peaceable possession of the Property and all its improvements and fixtures, unless rented, and the legal capacity to lease the Property;
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- (ii) there are no written or oral agreements affecting the Property other than disclosed tenant leases, copies of which have been furnished to the Manager;
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- (iii) there are no recorded easements, restrictions, reservations, or rights of way that adversely affect the use of the Property for the purposes intended under this agreement;
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- (iv) the Property is zoned for the intended use;
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- (v) all permits for the Property's operation have been secured and are current;
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- (vi) the building and its construction and operation do not violate any laws or orders;
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- (vii) any pool or spa and any required enclosures, fences, gates, and latches comply with all applicable laws and ordinances;
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- (viii) it is unaware of any condition concerning the Property that materially affects the health or safety of an ordinary tenant
except for the following: ; and
- (viii) it is unaware of any condition concerning the Property that materially affects the health or safety of an ordinary tenant
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- (ix) all loans, notes, mortgages, dues, or trust deeds are fully paid and are current without defaults.
8. CHOICE OF LAW.
- (a) Choice of Law. The laws of the state of
govern this agreement (without giving effect to its conflicts of law principles). - (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
, .
9. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by both parties.
10. ASSIGNMENT AND DELEGATION.
- (a) No Assignment. The Manager may not assign any of its rights under this agreement, except with the prior written consent of the Owner. All voluntary assignments of rights are limited by this subsection.
- (b) No Delegation. The Manager may not delegate any performance under this agreement, except with the prior written consent of the Owner.
- (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made, or if both are made, in violation of this section, it is void and they are void.
11. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
12. SEVERABILITY.
If any provision in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if the invalid, illegal, or unenforceable provisions had never been contained in this agreement, unless the deletion of those provisions would result in such a material change that would cause completion of the transactions contemplated by this agreement to be unreasonable.
13. NOTICES.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Owner:
, - If to the Manager:
, - (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
14. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
15. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement with respect to the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
16. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
17. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
18. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
| Date: _____________________________ | By: _________________________________________________________ |
| Name: |
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| Date: _____________________________ | By: _________________________________________________________ |
| Name: |
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How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Property management agreement: How-to guide
You’ve found the building. You’ve made your investment. Now it’s time to put your asset to work. If you don’t have the time or experience to manage your own rental property, hiring a property manager to perform these tasks can be a smart and profitable idea.
A property manager (sometimes called a real estate manager) is a person or company that oversees the performance of your income-producing property, ensuring that your investment provides you with maximum revenue and minimum headache.
A property manager can take on many responsibilities, including marketing open units, leasing apartments, maintaining and improving the property, collecting rent, negotiating agreements, addressing tenant problems, and much more.
Instructions for a property manager and property owner
1. License requirement for property managers
Most states require that property managers have either a property management license or a real estate license. These rules vary based on the state and the management type (e.g., property vs. association).
Unfortunately, there is no national clearinghouse for confirming these registrations and no single way to check across the country. Search on the internet for the term “real estate commission” and the name of your state. The links that come up should allow you to confirm that the company or individual you’re considering is licensed. For example, type “real estate commission” and “Arizona”, and you'll find the site of the Arizona Department of Real Estate.
2. Property manager’s obligations
The property manager is an agent of the property owner and is, therefore, subject to all of the legal obligations generally imposed on agents (in addition to those specifically included in the contract). These include good faith and loyalty to the owner, performance of all duties with skill, care, and due diligence, full disclosure of all important details, avoidance of commingling of funds, and refraining from personal profits without the owner’s full knowledge and consent.
3. Awareness about real estate and governing law
The manager must also be familiar with laws concerning real estate licensing, contracts, agency, fair housing, employment, property protection, and tenant/landlord relationships.
4. Appointing property manager as power of attorney
It’s a good idea for the property owners to execute a special power of attorney in favor of the property managers. This may be required if the manager will be signing leases or other contracts on the owner’s behalf.
5. Real estate obligations for commercial and residential properties
Commercial properties will have different considerations than residential ones. Residential tenants have many more rights and fewer obligations than commercial tenants, which will determine how your property can be run.
6. Speak to a tax expert to manage rental income
Talk to your tax professional about deducting the cost of property management from the income you’re earning on the property.
7. Allow involved parties enough time to review the property management contract
Allow each party to spend time reviewing the agreement. This will reduce the likelihood, or at least the efficacy, of a claim that a party didn’t understand any terms or how those might affect the agreement as a whole.
Both parties should review the completed agreement carefully to ensure that all relevant deal points have been included. It is better to be over-inclusive than under-inclusive. Don’t assume that certain expectations or terms are agreed to if they aren’t stated expressly in the document.
8. Keep copies of the signed document
Sign two copies of the property management agreement, one for you and one for the property manager. Keep a copy of the signed agreement for your records. At the end of its term, you and the other party can revisit its provisions and consider whether to renew.
9. Need for a notary
Depending on the nature of its terms, you may decide to have your agreement witnessed or notarized. This will limit later challenges to the validity of a party’s signature.
10. Seeking attorney help
If your agreement is complicated, contacting an attorney to help you draft a document that'll meet your specific needs is better.
Essential clauses of a property management agreement
The following instructions will help you understand the terms of your property management agreement.
1. Introduction
The intro part identifies the document as a property management agreement. You need to provide the effective date on which the agreement will become valid (the effective date is the date on which the agreement is signed).
Identify the parties and, if applicable, what type of organization they are. Whether the rental property is commercial or residential, the agent is a property management company or individual property manager. In the agreement, the property owner is called the “owner,” and the property manager is called the “manager.”
If the property is owned by a partnership, each partner’s name should be stated in the agreement, and each should sign the document. If the property is owned by a corporation, the corporate name should appear on the agreement, and (where required) the corporate seal should be on the document as well.
2. Recitals
The “whereas” clauses, referred to as recitals, define the world of the agreement and offer key background information about the parties. In this agreement, the recitals include a simple statement of your intent to enter into a property management arrangement.
3. Description of rental property
Describe the property that is being managed. You don’t need to include a full legal description, but provide enough information so it can be clearly identified. For individual houses, the address will usually be sufficient. If the property has a specific name (e.g., “Lincoln Towers”), include that as well.
4. Property manager’s duties; obligations
This section lists the manager’s rights and responsibilities under the agreement. A list of tasks that the manager is specifically permitted by the owner to do. The following provides a broad range of ideas, some of which may not be relevant to your arrangement or local rules.
- Collect rent and forward it to creditors or the owner.
- Deposit money. Note that some states require the manager to maintain at least one trust account to deposit money collected from various sources.
- Give back security deposits at the end of a tenancy.
- Give notice to (and demand payment from) tenants who're late in their rent and are violating their lease agreement.
- Start legal proceedings against a tenant or his property to collect unpaid rent. Note that the owner must be notified of the manager’s intent to do this.
- Buy all necessary materials to operate the property.
- Repair or maintain the property. Generally, the manager is given leeway in this regard, but if the repair will cost more than a certain amount, the owner has the right to be informed. Enter the amount over which the owner must be notified of the spending.
- Hire employees.
- Advertise the property and any vacant apartments. This section also allows the owner to put a cap on the amount the manager can spend without prior approval.
- Review prospective tenants.
- Sign leases on the owner’s behalf. If there are specific types of leases that the manager may not enter into (e.g., more than 4 years, less than one week), enter those details as well.
- End leases and give tenants notice of that termination.
- Put a box for rent payments on the property.
- Make copies of keys to make it easier to show the property to prospective tenants.
- Provide information about lead paint and other hazards. This is an optional provision required in some states.
- Raise or lower the rent to persuade someone to rent a unit.
- Obligations. This is the other side of the managerial coin. In addition to the things the manager can do, there are also things they must do.
- Try to rent out the property.
- Maintain and manage the property.
- Keep good records.
- Provide itemized statements of the property to the owner, including amounts earned and money spent. Write in how often you want these reports to be made.
- Pay any money that’s not deposited to the owner.
- Maintain whatever license (property management, general real estate, etc.) is required by state law.
5. Owner’s obligations
This segment covers the duties the owner agrees to fulfill. Some of them are:
- The property owner should give all relevant information regarding the property. The owner shall also provide document copies to the property manager.
- The property owner needs to provide document copies only if the manager will be making payments for loan, tax, and insurance coverage on behalf of the owner. If this doesn’t describe your arrangement, the manager won't need copies of the documents needed to pay these bills.
- If the property manager doesn’t pay the taxes, then as the property owner, you must pay all the taxes and other additional payments on the property.
- The property owner should help the manager in any way possible to fulfill their obligations.
- Provide any further documents that may be needed to the manager.
- Tell the manager if he is going to sell the property.
- Determine what kind of insurance coverage is necessary for the property, and get and pay for that insurance.
- Reimburse the property manager for any out-of-pocket payments they make for advertising or other managerial tasks.
- Pay for the expenses incurred by the manager because the owner didn’t provide the manager with sufficient funds to pay for property-related bills.
6. Reimbursement of expenses
Allows the parties to specify which expenses the manager will be reimbursed for. If there are additional items the owner will pay for, enter the details as well.
7. Term
Allows you to specify how long you want the first term of the agreement to last. By calling it the “initial term,” you're not obligating yourself to any additional terms – it may be the only one. Enter the number of years you want the initial term to last.
Some property management agreements will renew automatically unless the parties take action. The party who desires to end the agreement should provide a written notice of the same. In this section, you must mention the number of days advance notice the parties must give to end the agreement.
8. Compensation
The fees that'll be charged for property maintenance. It'll vary depending on the size of the property, its location, and the management needs of the building. In this, there are two most common arrangements. They're flat fees and percentage fees.
- Flat fee (or fixed fee): In a flat fee arrangement, a set amount will be paid to the manager on a regular basis. It is most appropriate in the management of a condominium or cooperative complex.
- Percentage fee: Under percentage fee arrangements, managers are compensated by payments of some fraction of the rental income from the property. This serves as an excellent incentive for the manager to increase the income of the building. Some contracts call for a minimum amount per unit or account to ensure a consistent (or relatively steady) income stream for the manager. If this fits your arrangement, you need to provide the minimum amount that the manager will be paid. Consider that larger complexes and smaller complexes may take the same time and effort to manage. To account for this, owners sometimes set management percentages at higher rates in smaller properties than in large ones. Ensure that both parties agree on everything that'll be included in this percentage fee and (if applicable) everything that'll cost extra.
- Additional fees: This optional section allows you to designate additional fees for other activities. For example, some management agreements allow the owner to provide an additional fee to the manager for the signing of a new lease or a bonus for reaching a pre-set goal.
9. Liabilities and indemnification
This segment states that the owner promises to bear the financial cost of any injury the manager suffers as a result of its management and any lawsuits that may arise from those activities.
10. Representations and warranties
Details the parties’ promises under the agreement. Each party agrees to enter into the arrangement based on the conditions listed in this section (e.g., that each can enter the agreement and satisfy its terms).
Although each of these is important, one may note a special provision in which the owner is obliged to disclose any property condition that could affect a tenant's health and/or safety.
11. Termination
Explains that certain actions or events, including written notice or material breach, will cause the agreement to end out of time (i.e. before the services are completed or the end of the term, if any).
- Termination procedures: Provide the notice period a party must give of its intent to terminate or to notify the other of a breach.
- Management fees after termination: This part explains that the property manager will be paid for its pre-termination services after the agreement is ended.
- Funds received by the manager after termination: After the end of the agreement, the manager is still bound by its duty to return any funds received (e.g., rent or security deposit refunds) to the owner.
- Owner responsibility for further payments: This part mentions that the owner will take over all of the manager’s payment and other obligations after the termination. In other words, the manager will no longer be responsible for paying bills or addressing tenant concerns.
12. Additional agreement terms
If there are additional terms you’d like to add to the property management agreement form, use this space to include those.
13. Indemnification
Provides that if problems arise in the future and lawsuits are brought based on the manager’s work as a manager, the property owner will pay for all legal fees and any related damages.
14. Modification
Indicates that any changes to the document are ineffective unless they're made in writing and signed by both parties.
15. Assignment
This explains that each party must obtain the other’s written permission before assigning its obligations and interests.
16. Successors and assigns
States that the parties’ rights and obligations will be passed on to heirs or, in the case of companies, successor organizations or organizations to which rights and obligations have been permissibly assigned.
17. No implied waiver
This section explains that if either party allows the other to ignore or break an obligation under the agreement, it doesn't mean that the party waives any future rights to require the other to fulfill those (or any other) obligations.
18. Notice
Lists the addresses to which all official or legal correspondence should be delivered. Write a mailing address for both the owner and the manager.
19. Governing law
Allows the parties to choose the state laws that’ll be used to interpret the document. Note that this isn’t a venue provision. The included language won’t impact where a potential claim can be brought.
20. Counterparts; electronic signatures
The title of this provision sounds complicated, but it is simple to explain: it says that even if the parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties aren't often in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
21. Severability
Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it won't undo the entire document. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the agreement enforceable.
22. Entire agreement
The parties’ agreement that the document they’re signing is “the agreement” about the issues involved. Unfortunately, the inclusion of this provision won’t prevent a party from arguing that other enforceable promises exist, but it’ll provide you some protection from these claims.
23. Headings
It states that the headings at the beginning of each section are meant to organize the document and shouldn't be considered operational parts of the agreement.
Use a property management agreement form for all your property management services
Having an all-inclusive property management agreement helps in managing your rental properties better. However, it is hard to decide whether the property management contract you create from scratch includes the nitty-gritty of a management agreement. That’s where a template becomes a good reference point for your property management arrangement.
If you’re looking for an online property management agreement template, then LegalZoom can be of assistance. At a very affordable price, LegalZoom offers easy-to-use and professionally vetted property management agreement templates.
The templates come with fillable placeholders. All you need to do is provide information wherever required by answering the simple questions. To customize the template further, use LegalZoom’s rich editor to edit your document. Once your document is complete, download it in .pdf format.
LegalZoom also offers other agreement form templates that can be used for other property management services.
Before signing the contract, you and the property manager must continue to discuss the terms of your agreement, settling questions about work parameters, payment, and responsibilities. Once you have agreed on contract terms and have signed it, each party can focus on its area of expertise—the property owner on the development of its business and the property manager on the tasks assigned.
Frequently asked questions
What is a property management agreement?
As a landlord, having tenants in your building is exactly what you want. However, showing the property, negotiating lease terms, collecting rent, addressing maintenance and repairs, and managing the property can take a lot of time.
A professional property management agreement gives a manager the authority to address all these things, relieving you of dealing with day-to-day property issues. That way, you can focus on the larger picture of building your business.
What essential information is required to complete a property management agreement?
To complete a property management agreement, you’ll need the following details:
- Who it's coming from: Determine if a business or individual is sending the document and have their name and contact information ready
- Who it's going to: Know who this document is going to and have their name and contact information ready
- Responsibilities: Be clear about the duties the manager will perform, such as advertising, showings, rent collection, maintenance, and remodeling
- Timelines: Be ready to agree on lease terms and payment schedules
- Payments: Remember what the manager will be paid and how often
Free Property Management Agreement Template
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