Property Management Agreement
This Property Management Agreement (the "Agreement") is made between [Owner (person or entity holding title)] ("Owner"), whose address for notices is [Owner address for notices and distributions], and [Manager (person or company)] ("Manager"), real estate license number [Manager’s real estate license number (or "Not required")], whose address for notices is [Manager address for notices]. Owner owns the rental property at [Property address], consisting of [Number of rental units] rental unit(s) (the "Property"), and wishes to engage Manager to manage it on the terms below. Owner and Manager are each a "Party" and together the "Parties".
1. Appointment
Owner appoints Manager as Owner’s sole and exclusive agent to lease, manage and operate the Property during the Term, and Manager accepts the appointment. Manager shall act in Owner’s best interest, with the care and skill of a competent professional property manager, and in compliance with all laws that apply to the Property and to Manager’s activities, including fair housing, landlord-tenant, security deposit, privacy and real estate licensing laws. Manager represents that Manager holds any license the law of the State of [Governing law (state)] requires to manage property for others for compensation, and shall maintain it throughout the Term. Manager is an independent contractor and not Owner’s employee or partner.
2. Term and Termination
This Agreement begins on [Start date] and continues for an initial term of [Initial term (months)] months (the "Initial Term"), after which it continues month to month until either Party terminates it on at least [Notice to terminate after the initial term (days)] days’ written notice (together, the "Term"). During the Initial Term, Owner may terminate on the same notice by paying Manager a fee equal to one month’s management fee for each unit, unless termination is for cause.
Either Party may terminate immediately by written notice if the other materially breaches this Agreement and fails to cure within ten (10) days after notice; Owner may terminate immediately if Manager loses its license, commingles or misapplies Owner’s funds, or commits fraud or gross negligence. This Agreement also ends on the sale of the Property, on thirty (30) days’ notice from Owner, subject to Section 6 for leasing fees already earned.
3. Leasing Authority
Manager may, without further approval: advertise the Property and show it to prospective tenants; establish written screening criteria and screen applicants in compliance with fair housing and consumer reporting law; negotiate and sign, as Owner’s agent, residential leases at a rent of not less than [Minimum monthly rent Manager may accept (per unit)] per unit per month and for a term of not more than [Longest lease Manager may sign without approval (months)] months; collect application fees, security deposits and rent; sign renewals and month-to-month extensions on the same or better terms; and serve notices and enforce leases. Pets: [Pets].
Manager shall obtain Owner’s written approval before signing any lease below the minimum rent or above the maximum term, granting a rent concession of more than one-half month’s rent, agreeing to an option to purchase or a right of first refusal, leasing to Manager or a person related to or employed by Manager, or altering the use of any unit. Owner may change the minimum rent, maximum term or pet policy by written notice, effective for leases signed after receipt.
4. Rent Collection; Trust Account; Distributions
Manager shall collect rent and other charges when due, pursue late payments promptly, and deposit all funds received for the Property, including security deposits, into a trust or client account at [Bank holding the trust account] maintained in Manager’s name as agent for its clients, separate from Manager’s own funds and from funds of Manager’s other clients where the law requires (the "Trust Account"). Manager shall never commingle Owner’s funds with Manager’s own, shall hold and account for security deposits as the law of the State of [Governing law (state)] requires, including any separate account, interest or disclosure requirement, and shall keep the deposit ledger current.
Manager shall hold an operating reserve of [Operating reserve held by Manager] in the Trust Account to pay expenses between distributions, and Owner shall replenish it on request. By the [Owner distributions sent by the (day of month)] day of each month Manager shall pay to Owner, by electronic transfer to the account Owner designates, all rent and other income collected in the preceding month, less Manager’s fees under Section 6, approved and permitted expenses under Section 5, and any amount needed to restore the reserve, together with a statement under Section 8. If expenses exceed income, Owner shall pay the shortfall within ten (10) days after Manager’s statement.
5. Maintenance and Repairs
Manager shall keep the Property in a safe, clean and habitable condition as the law requires, arrange routine maintenance, respond to tenant repair requests within a reasonable time, and inspect the Property at move-in, at move-out and at least once each year, with a written report to Owner. Manager may contract for and pay from the Trust Account any repair or service costing not more than [Repair spending limit per item without approval] per item without Owner’s approval, and shall obtain Owner’s written approval, with at least one estimate for work over twice that limit, before committing Owner to anything greater, except that Manager may spend what is reasonably necessary in an emergency that threatens life, safety or the Property, notifying Owner within twenty-four (24) hours. Manager shall use licensed and insured contractors where the law requires, shall not receive any undisclosed commission, rebate or markup from a vendor, and shall disclose in writing any vendor in which Manager has an interest. Manager may pay from the Trust Account, without approval, recurring bills that Owner directs Manager to pay, such as utilities, association dues, insurance premiums and property taxes, if funds are available.
6. Compensation
Owner shall pay Manager: (a) a management fee of [Management fee (% of rent collected)] percent of gross rent actually collected each month, or [Minimum monthly management fee per unit (or $0)] per unit per month, whichever is greater, payable from the Trust Account when rent is collected; (b) a leasing fee of [Leasing fee for a new tenant] for each new lease Manager signs with a tenant Manager procured, payable when the tenant takes possession; and (c) a renewal fee of [Lease renewal fee (or $0)] for each renewal or extension of at least six (6) months. No management fee is payable on a vacant unit or on security deposits, and no fee is payable on rent that is not collected. Manager may charge tenants late fees, application fees and similar charges as the lease and the law allow, and shall remit them to Owner unless this Agreement or a written fee schedule attached to it provides that Manager keeps them. Except as stated in this Section and in any attached fee schedule, Manager receives no other compensation, and any fee schedule change requires Owner’s written agreement.
7. Owner’s Obligations
Owner shall: maintain property and liability insurance on the Property with limits of not less than one million dollars ($1,000,000) per occurrence, naming Manager as an additional insured, and provide a certificate on request; disclose to Manager every known condition of the Property affecting health or safety, every existing lease, deposit and tenant dispute, and any mortgage, association or governmental requirement affecting the Property; fund the operating reserve and any shortfall; not communicate with tenants about leasing, rent or repairs except through Manager or with Manager’s knowledge; and comply with all laws applicable to the Property as owner, including habitability, registration, inspection and lead-based paint disclosure requirements. Owner represents that Owner holds title to the Property or is authorized by the title holder to sign this Agreement.
8. Accounting; Records; Tax Reporting
Manager shall keep complete records of all income, expenses, deposits, leases, notices, inspections and correspondence for the Property, shall deliver to Owner a monthly statement of receipts and disbursements with copies of invoices over one hundred dollars ($100) within ten (10) days after each month ends, and shall deliver an annual statement and IRS Form 1099 or its equivalent by January 31 of each year. Owner may inspect and copy the records at Manager’s office on reasonable notice. Manager shall retain the records for the period the law of the State of [Governing law (state)] requires, and not less than three (3) years after this Agreement ends, and shall deliver copies to Owner on termination.
9. Legal Proceedings; Compliance
Manager may, in Owner’s name and at Owner’s expense, serve notices, file and prosecute actions for possession, rent and damages, and settle tenant claims of not more than one month’s rent; Manager shall obtain Owner’s written approval before filing any other action, settling any larger claim, or engaging an attorney at an hourly rate. Manager shall promptly notify Owner of any lawsuit, governmental notice, inspection, citation or claim involving the Property and shall cooperate with Owner’s insurer. Manager shall not discriminate in leasing on any basis prohibited by federal, state or local fair housing law, shall keep screening criteria in writing, and shall comply with the Fair Credit Reporting Act in obtaining and using consumer reports.
10. Indemnity; Limitation
Owner shall indemnify and hold Manager harmless from claims, losses and expenses, including reasonable attorney fees, arising from the condition or operation of the Property or from Manager’s acts within the authority of this Agreement, except to the extent caused by Manager’s negligence, willful misconduct, breach of this Agreement or violation of law. Manager shall indemnify and hold Owner harmless from claims, losses and expenses arising from Manager’s negligence, willful misconduct, breach of this Agreement, violation of law, or any act outside Manager’s authority. Neither Party is liable to the other for lost profits or consequential damages, except for indemnified third-party claims and Manager’s misapplication of funds.
11. Handover on Termination
Within ten (10) days after this Agreement ends, Manager shall deliver to Owner or Owner’s new agent all keys, access devices, leases, applications, tenant files, security deposits with their ledger, inspection reports, warranties, vendor contracts, and the balance of the Trust Account for the Property after deducting fees and expenses earned or incurred through the termination date, together with a final accounting within thirty (30) days. Manager shall give tenants written notice of where to pay rent and return deposits as the law requires, shall cooperate in transferring utilities and vendor accounts, and shall remain entitled to leasing fees earned for tenants who signed leases before termination. Manager’s obligations under Sections 8 and 10 survive termination.
12. General
This Agreement is governed by the laws of the State of [Governing law (state)]. It, together with any attached fee schedule or exhibit, is the entire agreement between the Parties about management of the Property and supersedes all prior proposals and discussions; it may be amended only in a writing signed by both Parties. Manager may not assign this Agreement or delegate its duties, other than to employees and vendors under its supervision, without Owner’s written consent. Notices shall be in writing and delivered by hand, by mail to the addresses above, or by email to the addresses in the execution record. If any provision is unenforceable, the rest remains in effect. The prevailing Party in any action arising out of this Agreement is entitled to reasonable attorney fees and costs. This Agreement may be signed electronically and in counterparts, each an original and together one instrument, and the electronic execution record kept by the signing platform is conclusive evidence of execution.
Signatures
Owner · Manager