What Are Common Landlords Concerns in Property Management Agreements?
A property management agreement defines how the property owner and management company operate regarding fees, termination, rights, obligations, and more.
ContractsCounsel data has found the top concerns clients have about property management agreements include termination clauses, costs and fees, liability and legal protections, clarity, and fairness to both parties. Read on for these and more concerns, as well as how a legal review of the contract can help.
Note: Our research comes from ContractsCounsel’s real, anonymized project data. ContractsCounsel is an online legal marketplace that connects clients to lawyers for contract drafting and review.
Termination Clauses and Renewal Terms
Concern 1: It’s common for owners to fear being tied to long agreements. They don’t want automatic renewal that doesn’t give them notice.
How lawyers help: Lawyers will review the contract, checking for termination, notice, and exit clauses. This gives owners the flexibility to terminate the agreement without being highly penalized.
Cost and Fee Transparency
Concern 2: A leading concern for lawyers is that the contract contains vague or secret fees, repair markups, and vendor expenses.
How lawyers help: A lawyer will check that all terms and clauses are fair, transparent, and legal. Vendor relationships must also be clearly defined.
Liability and Legal Protections
Concern 3: Property owners don’t want to be liable for what’s not their responsibility, such as actions taken by management or tenant disputes.
How lawyers help: A lawyer will define the liability and indemnification terms in the agreement. This appropriately allocates liability while protecting parties, such as if there is misconduct involved.
Clarity and Procedural Details
Concern 4: We’ve found that clients worry about any unclear details, such as regarding property repairs and rent collection.
How lawyers help: Lawyers will check all processes in the contract are clear and in line with state laws for landlord-tenant relationships.
Fairness and Ethical Considerations
Concern 5: There could be conflicts of interest that arise, which is something many owners tend to worry about. For example, management companies might transfer jobs to their vendors or keep fees paid by the tenants.
How lawyers help: It’s common for lawyers to include provisions for how to deal with conflict of interest. For example, any vendor relationships need to be clearly included in the agreement.
Rent Increases and Deposit Terms
Concern 6: Managers and owners want clarity about rent increases and deposits, or they might have arguments.
How lawyers help: Lawyers will check all clauses for local-regulation compliance. They’ll ensure the deposit clauses are legal and everyone understands them.
Professional Legal Review for Compliance and Fairness
Concern 7: Our data has shown that clients want to know their agreement is legally compliant, both with industry standards and state laws.
How lawyers help: Attorneys conduct a comprehensive review, highlight risk areas, and ensure the agreement protects the owner’s financial and legal interests.
Concerns for Long-Distance Property Owners
Concern 8: There could be issues that arise for remote property owners, such as a lack of communication or accountability.
How lawyers help: To deal with long-distance arrangements, lawyers will add communication policies and termination rights that will come into play if the manager doesn’t meet reporting requirements or perform as specified.
Key Takeaways
- ContractsCounsel’s data has found that clients’ top concerns include termination rights, clarity on fees, and liability protection.
- Property owners want protocol transparency and accountability measures.
- Legal review keeps the property management agreement legally sound while protecting both parties’ financial interests.
Need help with your property management agreement?
Visit ContractsCounsel, where you can post your property management agreement review request and connect with vetted real estate lawyers. They’ll help you review your contract so it’s reasonable, ethical, and legal.
