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Set parameters with a simple property management agreement.
Discover what property owners should include in their property management contract, and learn how to find the right property manager.
What is a property management agreement?
A property management agreement is a contract offered to an individual on behalf of the owner, which outlines the property’s management, whether commercial or residential. Depending on the type of property, this agreement may cover details for leasing units, the collection of rent from current inhabitants, and how to address current renters’ needs. It should align with your state’s housing laws, and it can also outline marketing efforts to prospective tenants.
The value of a property management agreement.
A property management agreement is useful whether you’re a property owner or homeowner hiring someone to take care of your property or you’re being offered a property management role. It identifies the guidelines of a property manager’s position, but it also clearly states the operational costs, leaving no confusion about how resources are allocated in the management of the property. Additionally, this agreement should outline management fees, or what property managers charge for their services. Some managers might charge extra for different tasks that fall outside their traditional duties, and a property management contract addresses this upfront.
As a legally binding document, it’s crucial that the terms and provisions of this agreement are customized to fit your needs. If you're a property owner with a specific set of tasks in mind for the space, a property management agreement clarifies what those tasks will be and if they’ll be performed at the owner’s expense. It ensures written consent for property managers to act on behalf of the owner, preventing legal action against the individual. But be sure to consult an attorney before you finalize and sign the agreement to ensure no problems arise.
What to include in your property management agreement.
Every property management agreement is different, but here’s a list of information to include when you draft your own:
- Include an introduction with identifying information, like contact info for all parties and the date the agreement is signed.
- Outline the services a property manager agrees to perform with prior approval, such as collect rent, advertise to new tenants, and handle evictions.
- Identify the management fees, and determine whether those are payable as a percentage, a flat fee, or on a case-by-case basis.
- List the property owner’s restrictions and responsibilities, including the setup and maintenance of a reserve fund for daily operations and emergencies and an outline of the insurance coverage.
- Spell out the stance the property takes on fair housing under the applicable laws of the state.
- Include a clause about liability insurance, protecting the property manager except in cases of extreme negligence. The property manager is not responsible for the negligence of independent contractors that they hire.
- Identify the duration of the contract. For most management services, a year-long contract is standard.
- Add a cancellation clause clearly stating when and why the property manager and property owner each has the right to terminate the contract.
There are multiple elements within the termination clause: notice to terminate, an early termination fee, a reason to terminate, and obligations upon termination. Each of these goes far in specifying how the termination of this agreement will unfold, including determining how many days’ notice the property manager must give before terminating their contract and in which cases their fee for early termination is required.
With Adobe Acrobat Pro, you can:
E-signed, sealed, and delivered.
With Acrobat Pro, it’s intuitive and straightforward to get your property management agreement signed. Of course, when either signing or preparing a document like this, reach out for legal advice before ensuring that all provisions of this agreement meet your expectations.