What is Property Management Agreement Drafting?
A property management agreement is a contract signed by a property owner and management company. It clarifies how a manager will look after the property, such as by outlining their duties so there are no misunderstandings between parties.
There are various situations in which you might need a property manager, such as if you live overseas and need a manager to look after the property or you own multiple rental properties and seek professional oversight.
Read the rest of this article to explore common types of property management agreements, how to draft them, and why you should work with a qualified lawyer for help with the process.
What are Common Property Management Agreement Types?
There are various types of property management agreements, depending on how much control the owner wants during the process. These are some of the most common:
- Full-service property management agreement. This is when the property management company runs daily operations. Their duties can include tenant screening or leasing in the case of rentals.
- Asset property management agreement. In this agreement, the manager provides oversight instead of managing daily operations, such as by drafting annual budgets and reports.
- Consulting property management agreement. The property manager offers analysis or advice, instead of other types of support.
What are Key Terms in a Property Management Agreement?
A property management agreement usually contains the following core components:
- Service scope. The services provided by the manager should be clearly specified, such as admin support or maintenance.
- Pricing and fees. This section of the agreement clarifies any charges or fees, such as project management fees.
- Financial reporting. The agreement should explain how regularly financial statements should be provided.
- Compliance. It’s important for the property manager to be compliant with all local and state laws as well as relevant regulations.
- Contract term. The agreement should specify how long it will last and if it can be renewed. Some agreements will be automatically renewed.
- Rent collection. This management duty for rentals will include how rent is collected and how late payments are managed.
What are Tips for Drafting a Property Management Agreement?
When drafting a property management agreement, there are some things to bear in mind.
Include Legal Compliance
The property owner must ensure that all terms in the agreement are aligned with local, state, and federal laws. They also need to consider zoning laws and building codes. This protects both the owner and management company from legal disputes.
Consider Your Needs
When deciding how long your property management agreement should last, you should consider your needs. Longer agreements will provide stability for both parties, but you’ll have to ensure they cater to your changing needs over time.
Think About Termination Notice
To enable either party to end the agreement when required, there should be a clause that specifies notice periods for termination. This is usually approximately between 30 and 90 days, but it varies for different parties.
Outline Authority to Make Repairs
The contract should specify the exact amount a management party is authorized to spend for property repairs. Include tips for how emergency repairs should be handled.
Consider Liability
You might want to include a hold-harmless clause in your property management agreement that prevents managers from taking on excessive legal risks, such as when working with vendors. That said, it’s important for managers to work with qualified professionals.
Mention Management Exclusions
While the property management agreement should specify services that are included, it should mention what services aren’t included. These explain certain tasks that the manager won’t fulfill, no matter what circumstances occur. Examples can include refinancing, remodelling, and more.
How Does a Lawyer Help with Property Management Agreement Drafting?
Hiring a lawyer to write your property management agreement is highly advisable. A lawyer will draft clear, legally enforceable clauses that will protect both parties from disputes.
Other things a lawyer will do to help you include:
- Explaining your duties and rights so that you know exactly what’s required of you.
- Aligning the agreement with all laws and real estate regulations, which can vary quite a bit in different jurisdictions.
- Settling on detailed payment terms that include all fees, such as maintenance expenses, and late-payment policies.
- Providing liability protection so that you don’t take on responsibility for tenant claims, property damage, or other issues that can arise.
- Including limitations for what a manager is allowed to do without first gaining author approval, such as repairs.
- Including dispute-resolution clauses so that both parties know how to handle disagreements and prevent escalation. These outline a specific method for resolving disputes, such as arbitration and mediation.
- Reviewing a property management agreement that’s already been drafted, to give you peace of mind that it’s transparent and balanced.
Where to Find a Lawyer for Property Management Agreement Drafting
If you need to hire a lawyer to draft your property management agreement, you might not know where to find one. You can locate a qualified lawyer on an online legal platform, such as ContractsCounsel.
ContractsCounsel is one of the largest online legal marketplaces that gives you access to a curated network of vetted lawyers, right from the comfort of your home. The lawyers have the expertise required for drafting and reviewing contracts.
To request that a qualified lawyer on the ContractsCounsel platform drafts your property management agreement, follow these easy steps.
1. Go to the ContractsCounsel marketplace and post your project for free. You can include some details of what you require, or your reason for requesting the drafting, so that you’re matched with the most suitable lawyers.
2. Wait for lawyer bids. You’ll receive multiple bids from lawyers directly on the platform.
3. Review the lawyers' profiles. The platform provides extensive lawyer data, such as location, client ratings, years of experience, field of expertise, and previous projects completed on the platform.
4. Connect with a lawyer who matches your legal requirements. Hire them to draft your property management agreement.
