What Is a Property Management Agreement?
A Property Management Agreement is a document that outlines the business relationship between a property owner and the entity or individual hired to manage this property. It covers all the responsibilities of the parties, their legal liabilities, and insurance coverage for the property.
- Property Management Contract.
A simple Property Management Agreement will protect your interests if:
- You own a property and wish to retain a company or person to manage the building or apartment;
- You own a property management company and want to have written proof of negotiated terms and conditions with the owner of the property.
What Items Must Be Included in a Property Management Agreement?
Every Property Management Agreement form must contain the following information:
- Purpose. Briefly describe the subject of the contract;
- Manager's responsibilities. You may include several duties in the agreement, for example, advertising of the property, collection of rent, repair, and maintenance, legal proceedings;
- Compensation. State the sum of money the manager will receive for the work;
- Duration of the agreement;
- Termination clause. The parties may negotiate this provision adding conditions they deem necessary, for instance, reimbursement for any expenses incurred before the date of termination;
- Severability. If any provision of the agreement becomes unenforceable or invalid, that part will be severed from the rest of the contract and other provisions will continue in full force;
- Liability. Indicate the responsibility in cases regarding injuries or personal claims against the property - for example, when the manager was aware of a health hazard and did not fix it;
- Signatures of the parties. The manager and the owner must also write down their names and the date the deal is made.
Benefits of drafting a Property Management Contract:
- It sets the standard of performance for both participants;
- It provides a definite time frame once a party chooses to terminate the contract;
- It is essential to protect you from liability;
- It provides a structure for a beneficial partnership between the property manager and the owner.
How to Get out of a Property Management Agreement?
There are several steps you need to take to properly terminate a Property Management Contract:
- Reread your agreement to find a specific reason to end the contract. Some agreements will allow you to cancel the agreement without a just cause;
- Understand the costs that may occur - some agreements will charge a fee for early termination;
- Give advance notice to the other party of the contract. The termination clause usually requires between thirty- and ninety-days-notice to terminate the deal. Make sure your notification is sent by certified mail, not by e-mail;
- Notify the tenants about the change in property management and let them know the whereabouts of their security deposits;
- Get copies of all the paperwork - records of security deposits, and possible expenses.
Looking to find out more? Check out these related contracts and agreements:
This is a contract between the owner of a property and an On-Site Property Manager. An On-Site Manager performs property management functions on a premises and is responsible for the day-to-day operations of a particular property.