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What is a Property Management Agreement?
A property management agreement is a legally binding contract between a landlord and a property management company. Typically, the landlord has a property or multiple properties they want professionally managed. The agreement is intended to govern the relationship between the landlord and property management company, outlining obligations, fees, and other important terms to make sure the relationship is a success.
A property management agreement is in written form, so it is important to have the agreement signed by all parties. Management companies who agree to manage properties expect to receive compensation for their services as long as they deliver on the obligations outlined in the contract.
What to Include in a Property Management Agreement
A property management agreement lays out the responsibilities assigned to each party and details all relevant aspects. Below is a description of sections that are strongly advised to always include in a property management agreement:
- Service Fees. It is crucial to clearly state in the agreement what fees will be paid to the property management company for performing services. Services tend to consist of finding a tenant for the property owner, collecting and disbursing rent payment, addressing maintenance concerns, enforcing evictions, and being the point of contract for the tenants.
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Property Owner Responsibilities.
You as a landlord will have responsibilities just like the management company will have theirs. The tasks that you have to keep up with need to be written out so there is no confusion as to which party is obligated to take care of something specific. You may be tasked with:
- keeping funds available for the management company to withdraw from if maintenance repairs or other charges are due.
- having insurance on the properties being managed and making sure the coverage is sufficient.
- signing a residential lease agreement or commercial lease agreement despite the management company finding the tenants because you still hold the title of ownership.
- Equal Housing Opportunity. The Fair Housing Act regulates fairness and equality in the housing market in order to prevent and address discrimination. Since this Act is composed of many federal and state laws it is highly suggested that it be included in a property management agreement.
- Liabilities. To prevent the management company from having liability issues you may be restricted from doing certain things that are being cared for by them such as finding tenants and entering properties. There is usually an entire section that discusses what a property management company will not be held accountable for. For example, the management company will not take the blame for something such as poor work being done by a third party hired by the landlord.
- Term. The length of time that a property management company agrees to manage properties for a property owner must be specified in the contract so that once again disputes can be avoided. The management company is expected to fulfill their end of the bargain until the agreed upon time has concluded.
- Termination. There are many reasons why you or the management company may wish to terminate your contract early. The various reasons that would justify an early ending to the agreement need to be stated clearly on the contract. If there will be a fee for an early termination then that needs to be included in the property management agreement.
View this article to get more information on what to include in a property management agreement.
Purpose of a Property Management Agreement
The purpose of a property management agreement is to create a legal document that is enforceable by the law that outlines the rights and obligations of the landlord and property management company. The agreement makes it clear what is expected from each party and what remedies may be sought if one fails to do what they promised.
In real estate, things inevitably break and all tenants are different. Creating a property management agreement will create an objective framework for managing the relationship and the property.
Image via Pexels by David
When a Property Management Agreement is Needed
Aside from a property management agreement solely being needed to cover the responsibilities of each party, it serves as the base of a potentially long-term business relationship. Reasons that you may need a property management agreement range from simple to complex and some are explained below:
- Laws & Regulations - Most states require that residential real estate and commercial real estate is managed by an individual or company with a real estate agent license or property management license. The only six states excluded from this requirement are Kansas, Maryland, Maine, Massachusetts, and Vermont.
- Education - Certifications are available for property managers to provide them with knowledge in the field although they do not have the same authority as an actual license. A certified property manager is said to hold the highest ethical standards for managing properties so it seems likely this type of management will prove to be beneficial opposed to others with less education specific to the industry.
- Clarity - Some management companies may assume things are done a certain way but you may have a different view or preference for services that should be provided. A property management agreement is likely to guarantee expectations are met on both ends and will ensure that you and the management company are on the same page. The agreement will also be available for reference if you or the management company cannot remember something.
- Protection - A property management agreement protects the interests of an owner as well as the management company from being held at fault for something that was not their responsibility. You may find it worthwhile to invest in an agreement because the management company is going to be handling sensitive data and will have access to some of your finances. Having direct permissions spelled out will prevent mishandling and abuse.
A property management agreement is a standard document to have anytime property owners want to hire someone else to manage properties for them.
Get Help With a Property Management Agreement
Getting help with a property management agreement is a sensible thing to do given the complexities of managing property and value of real estate. The owner and property management company will be protected by executing an agreement. If you need help with a property management agreement, post a project in ContractsCounsel’s marketplace to receive bids from vetted lawyers. Our lawyers can help you draft a property management company from scratch or review an existing agreement.
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Meet some of our Property Management Agreement Lawyers
Samuel R.
My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, Tax, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the 2024 Super Lawyers Southwest Rising Stars list. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.
Donya G.
I am a licensed and active NY and CT Contracts Attorney, with over 20 years of diverse legal and business experience. I specialize in reviewing, drafting and negotiating commercial agreements. My practice focuses on working with small business clients as well as clients from international brokerage firms on acquisitions, especially in the Ecommerce space; drafting, negotiating, reviewing and advising on business agreements; ; breach of contract issues, contract disputes and arbitration. I am licensed to practice in New York and Connecticut, and am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. This entails reviewing, updating and drafting contracts such as employments agreements, asset purchase agreements, master services agreements, operating agreements and a variety of business and commercial contracts. Additionally, I assist clients with business strategies, contract disputes and arbitration. My diverse experience allows me to give my clients a well-rounded approach to the issues they face. I have been at top AML law firms; a Vice President at an Investment Bank, a Civil Court Arbitrator presiding over cases in contract law, commercial law, a Hearing Officer, presiding over cases and rendering written decisions, and a Judicial Clerk to a Civil Court Judge. It would be a privilege to assist you and your business with my services.
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My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.
Amber M.
Amber Masters has over 9 years of experience as a contracts attorney, helping small businesses with an array of agreements, such as purchase agreements, master service agreements, and employment contracts. She has an extensive background in employment agreements for dentists, doctors, and other health care professionals. She is a highly rated and acclaimed estate planning attorney and personal finance expert, who has been featured on CNBC, NBC, and Yahoo Finance. She successfully launched and sold a fintech startup and can empathize with the issues small and mid-size businesses face. Licensed in Oklahoma and Arizona.
Kendall C.
Kendall is a data privacy attorney by trade, and is an active member of the Bar in Texas and Georgia. In litigation, he handled thousands of cases to final disposition in litigation throughout the United States, Latin America, & Europe. As corporate counsel, he guides companies through the marketing and advertising industry and, by extension, many other industries. Further, Kendall is an adherent to the Ben Hogan school of swing thought and, by natural extension, is a proponent of accurate wedge play through residential neighborhoods. He occasionally aspires to a career in turf management.
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Alex F.
I am a small business attorney licensed to practice in Colorado and Texas. I focus on commercial lending and outside general counsel services.
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Debra G.
I have been a business and real estate attorney for 38 years. I handle both transactional and litigation matters.
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