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.
The benefits of drafting a Property Management Contract include the following:
- 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.
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.
- Period. Specify the duration of the agreement.
- Termination. 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. The manager and the owner must also write down their names and the date the deal is made.
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 document puts into detail the responsibilities that the property managers are accountable for.