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A Property Management Agreement is a contract between a property manager and a property owner that outlines the expectations of their professional relationship, typically as a way to manage a rental property. Property Management Agreements often cover details such as specific management responsibilities, how payments are made, items the owner is responsible for, and insurance requirements.
Property Manager Agreements help property owners ensure that property managers protect their interests by collecting rent, maintaining properties, and managing vacancies.
You own property that you want someone else to manage.
You are a property manager contracting with a property owner.
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Property Manager Agreement
This Agreement is made effective as of , by and between of , , , (Hereinafter called "Owner") and of , , (Hereinafter called "Manager").
The Manager is experienced in the operation and management of real estate and has the necessary staff and is otherwise completely able to competently manage real estate properties, and is willing to undertake the management and operation of the real estate properties of the Owner under the terms set out in this agreement:
. DESCRIPTION OF THE PROPERTY. This Agreement is made with respect to the following properties:
, , ,
. RESPONSIBILITIES OF THE MANAGER. The Manager will serve, as an independent contractor, as the Owner's exclusive agent. Beginning on , Manager will provide to Owner the following services (collectively, the Services):
| a. | Collection and Disbursement: Manager agrees to collect all rents as they become due; to render to Owner a monthly accounting of rents received and expenses paid; and to remit to Owner all income, less any sums paid out. Manager agrees to collect the rents from the tenant and to disburse funds by ordinary mail or as instructed by the Owner on or before the day of the current month, provided, however, that the rent has been received from the tenant; |
| b. | Maintenance and Labor: Manager agrees to decorate, to maintain, and to repair the property and to hire and to supervise all employees and other needed labor. |
| c. | Advertisement and Legal Proceedings: Manager agrees to advertise for tenants, screen tenants and select tenants of suitable credit worthiness. Manager will set rents that, in the opinion of the Manager at the time of the rent negotiations with the tenant, reflect the market conditions of that time and approximate rents of comparable rental properties, unless expressly instructed in writing by the Owner to the Manager to the contrary, as to the amount of the initial rent and any subsequent increases as may from time to time be appropriate. Manager agrees to rent and to lease the property; to sign, renew and to cancel rental agreements and leases for the property or any part thereof; to sue and recover for rent and for loss or damage to any part of the property and/or furnishings thereof; and, when expedient, to compromise, settle and release any such legal lawsuits or proceedings. |
| d. | The following other services: |
| - |
. AUTHORIZATION. The Owner hereby grants full power and authority to the Manager to do and perform each and every act which is reasonably required, proper, or necessary to be done in the exercise of any and all of the powers, responsibilities, and obligations granted to the Manager under this contract, as fully to all intents and purposes as the Owner could do if personally present.
. EQUAL OPPORTUNITY HOUSING. The Owner is committed to compliance, and the Manager is hereby required to comply, with Title VIII of the Civil Rights Act of 1968 ("Fair Housing Act"), which prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, religion, sex, national origin, disability, or familial status. The Manager shall comply with all applicable federal and state anti-discrimination laws and regulations now in effect or that take effect during the course of this contract.
. PAYMENT. The Manager is entitled to withhold a standard % from each monthly rental payment for payment of Manager's services under this contract. For any services rendered other than those set out in this agreement, the Manager may be compensated at such a rate and on such terms as may be agreed between the Manager and the Owner. The payment indicated above does not account for payment for materials, labor or other costs which may be incurred in order to maintain or advertise the property. In addition to the % payment the Manager is entitled to withhold, the Manager may also withhold any sums necessary to cover fees and costs the Manager has incurred in regards to the property. The Manager will notify the Owner of any tenant who is over 30 days behind in paying their rent. In the event the rental payments in any month do not cover the total fees and costs owed to the Manager, the Owner will remit payment of the remaining balance within 15 days of notification by the Manager. The Manager is required to provide the Owner with an itemized monthly statement reflecting all rents received, owed, and all disbursements made from the rental payments.
. RELATIONSHIP OF PARTIES. It is understood by the parties that Manager is an independent contractor with respect to the Owner, and not an employee of the Owner. Owner will not provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefit, for the benefit of the Manager.
. WARRANTY. Manager shall provide its services and meet its obligations under this Agreement in a timely and workmanlike manner, using knowledge and recommendations for performing the services which meet generally acceptable standards in Manager's community and region, and will provide a standard of care equal to, or superior to, care used by service providers similar to Manager on similar projects.
. TERM. This Agreement will terminate automatically on . However, the Agreement may be terminated at any time by either party with or without cause provided at least days' prior written notice is delivered by the terminating party to the other party.
. INDEMNIFICATION. Manager agrees to indemnify and hold Owner harmless from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted against Owner that result from the acts or omissions of Manager and/or Manager's employees, agents, or representatives.
. INSURANCE. Manager shall maintain General Commercial Liability Insurance and Errors and Omissions (E&O) Insurance and provide proof thereof to Owner upon request. Furthermore, Owner agrees to add Manager as an additional insured on Owner's Public Liability Insurance Policy and shall provide proof thereof to Manager upon request.
. DEFAULT. The occurrence of any of the following shall constitute a material default under this Contract:
| a. | The failure to make a required payment when due. |
| b. | The insolvency or bankruptcy of either party. |
| c. | The subjection of any of either party's property to any levy, seizure, general assignment for the benefit of creditors, application or sale for or by any creditor or government agency. |
| d. | The failure to make available or deliver the Services in the time and manner provided for in this Contract. |
. REMEDIES. In addition to any and all other rights a party may have available according to law, if a party defaults by failing to substantially perform any provision, term or condition of this Agreement (including without limitation the failure to make a monetary payment when due), the other party may terminate the Agreement by providing written notice to the defaulting party. This notice shall describe with sufficient detail the nature of the default. The party receiving such notice shall have days from the effective date of such notice to cure the default(s). Unless waived by a party providing notice, the failure to cure the default(s) within such time period shall result in the automatic termination of this Agreement.
. FORCE MAJEURE. If performance of this Agreement or any obligation under this Agreement is prevented, restricted, or interfered with by causes beyond either party's reasonable control ("Force Majeure"), and if the party unable to carry out its obligations gives the other party prompt written notice of such event, then the obligations of the party invoking this provision shall be suspended to the extent necessary by such event. The term Force Majeure shall include, without limitation, acts of God, fire, explosion, vandalism, storm or other similar occurrence, orders or acts of military or civil authority, or by national emergencies, insurrections, riots, or wars, or strikes, lock-outs, work stoppages, or other labor disputes, or supplier failures. The excused party shall use reasonable efforts under the circumstances to avoid or remove such causes of non-performance and shall proceed to perform with reasonable dispatch whenever such causes are removed or ceased. An act or omission shall be deemed within the reasonable control of a party if committed, omitted, or caused by such party, or its employees, officers, agents, or affiliates.
. ARBITRATION. Any controversies or disputes arising out of or relating to this Agreement shall be resolved by binding arbitration in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association. The parties shall select a mutually acceptable arbitrator knowledgeable about issues relating to the subject matter of this Agreement. In the event the parties are unable to agree to such a selection, each party will select an arbitrator and the two arbitrators in turn shall select a third arbitrator, all three of whom shall preside jointly over the matter. The arbitration shall take place at a location that is reasonably centrally located between the parties, or otherwise mutually agreed upon by the parties. All documents, materials, and information in the possession of each party that are in any way relevant to the dispute shall be made available to the other party for review and copying no later than 30 days after the notice of arbitration is served. The arbitrator(s) shall not have the authority to modify any provision of this Contract or to award punitive damages. The arbitrator(s) shall have the power to issue mandatory orders and restraint orders in connection with the arbitration. The decision rendered by the arbitrator(s) shall be final and binding on the parties, and judgment may be entered in conformity with the decision in any court having jurisdiction. The agreement to arbitration shall be specifically enforceable under the prevailing arbitration law. During the continuance of any arbitration proceeding, the parties shall continue to perform their respective obligations under this Contract.
. NOTICE. Any notice or communication required or permitted under this Agreement shall be sufficiently given if delivered in person or by certified mail, return receipt requested, to the address set forth in the opening paragraph or to such other address as one party may have furnished to the other in writing.
. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties, and there are no other promises or conditions in any other agreement whether oral or written concerning the subject matter of this Agreement. This Agreement supersedes any prior written or oral agreements between the parties.
. AMENDMENT. This Agreement may be modified or amended in writing, if the writing is signed by the party obligated under the amendment.
. SEVERABILITY. If any provision of this Agreement will be held to be invalid or unenforceable for any reason, the remaining provisions will continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision will be deemed to be written, construed, and enforced as so limited.
. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.
. ASSIGNMENT. Neither party may assign or transfer this Agreement, or its rights or obligations thereunder, without the prior written consent of the non-assigning party, which approval shall not be unreasonably withheld.
. GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Commonwealth of .
. SIGNATORIES. This Agreement shall be signed on behalf of the Owner by , and on behalf of the Manager by , and shall be effective as of the date first written above.
Owner:
| By: | Date: |
Manager:
| By: | Date: |
Final Checklist for Property Manager Agreement
Manager:
Owner:
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Next Steps: Make it Legal
| _____ | Look over the Agreement to ensure it matches your intentions. If you need to make changes to the Agreement outside of the interview, you will be able to make changes online in the Document Manager at the end of the process or downloaded to any word processor. |
| _____ | Use the easy e-signature service to sign electronically without having to print, sign and deliver hard copies. Or, print and sign hard copies of your Agreement in duplicate. |
| _____ | Share or deliver a copy of the Agreement to the other Party. |
Copies
| _____ | Keep a copy of all documents for your own records and in case there is a problem. |
| _____ | Each Party should receive an original signed copy of the Agreement. Your copy should be kept in a safe place. If you signed a paper copy of your document, you can use Rocket Lawyer to store and share it. Safe and secure in your Rocket Lawyer File Manager, you can access it any time from any computer, as well as share it for future reference. |
Other Information
| ____ | It is not necessary that the signatures be witnessed or notarized. |
| An original copy should be kept in a fire-proof and secure location. |
Reasons to Update
| ____ | The same parties are involved in another transaction involving different services. |
| ____ | To correct or amend terms of an existing contract. |
Members can always consult an attorney at no extra cost!
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Our Property Manager Agreement includes all common provisions and the legal language to make a comprehensive real estate business contract. While in many cases the property owners may initiate making the contract, often property managers will make their own contract and present it to the owner. Some key points of consideration include:
Duration of the contract
While ideally, you are looking to create a beneficial long-term agreement, many limit the first agreement to one year. This is viewed as a trial period to see if both parties work well together and it allows time to figure out what improvements may need to be added to the next contract.
Responsibilities of the manager
The manager's responsibilities will need to be listed in the contract. Most often this includes collecting rent, managing building maintenance expenses, finding and hiring labor, finding and screening tenants, and signing and renewing contracts.
Manager payments
Often the manager will receive payment as a percent of the collected rent. Ongoing expenses may also be taken out of the collected rent or the property owner may fund a separate account just for additional expenses such as repairs and advertising. The contract also outlines how the owner wants to be paid and when rent money is due.
Termination with notice
If either party wants to terminate the agreement, it can be done with notice. The agreement includes a provision for ending the contract and how many days' notice must be given. Usually, you will also build into the contract the actions that need to be taken before the termination date, such as paying the remaining rents, providing expense documentation, submitting last reports, and so on.
Termination by default
If either party does not hold up their end of the agreement, the contract can be terminated. Most often you will include in the document how many days a party has to fix issues before termination is considered.
Insurance
You'll want to outline what kind of insurance each party must have to protect all interests. This may include Liability and Errors and Omissions insurance. An indemnification section is also included in this agreement.
Reviewing the cancellation policy is the first step to ending a Property Manager Agreement. Typically, the cancellation policy will include information regarding any associated cancellation fees and cancellation notice requirements (for example, 30- or 60-day notice).
After reviewing the cancellation policy, you may want to send your cancellation notice in writing and ensure the management company notifies any tenants of the management change.
This agreement does allow property managers to sign Lease Agreements for the property owner. Often property owners are located far from the properties or simply do not have the time to sign every agreement so the property managers act on their behalf. This includes lease renewals and lease terminations. Managers may also have the power to submit legal paperwork for processing evictions.
Property managers are usually paid a percentage of the rent collected. Five to ten percent is common. Since rent varies, the property manager will need to decide what percent is worth the amount of work it will take to perform their duties. Owners should note that if a manager under bids, that may be a sign that they may not have the experience you are looking for.
Many states require professional property managers to either have a Real Estate Broker License or another type of state certification. A Real Estate Broker License gives the manager the right to advertise property, collect rent, negotiate leases and show property. Some areas also offer training for Property Manager Licenses. In most states, these licenses are not difficult to obtain. If you need more information about local real estate laws, contact a real estate lawyer.
In this Agreement, the Property Manager will be required to maintain General Liability Insurance and Errors and Omissions (E&O) Insurance.
Property managers have a lengthy list of responsibilities and are critical to your success as a property owner. You want someone you can trust with your property, income and reputation. Before you enter a contract with a property manager, you'll want to attempt to find the best candidate.
To learn more about the property manager, you may consider asking:
When you meet with them, you'll want to try to trust your first impressions. Do they seem unorganized? Are they preoccupied? Do they seem to listen to your concerns? You may also benefit from visiting some of the properties they manage to see if the buildings are well maintained and occupied. Some owners will even call on their vacant properties posing as a potential renter to test customer service skills and responsiveness.
If you need additional real estate agreements, see our Essential Documents for Landlords.
