Try our easy to use form builder to create a property management agreement tailored to your specific commercial or residential property needs. A property management agreement is between a landlord and a property manager Version; Property Management Agreement Sample; Management Forms. FREE 8+ Sample Commercial Property Management Agreement Templates in PDF | MS Word | Google Docs | Pages. Ad.
Commercial property management agreement template -
When a Property Management Agreement is Needed If you own a property and want to hire a company or an individual to manage it, you need this agreement.
If you were working as a management company, you would also need this contract in order to protect your company. Not all management companies perform the same services. For instance, some management companies will take responsibility for the marketing of rental properties.
Others leave that duty solely to the owners. The contract will reflect exactly what duties the management company will provide throughout the life of the agreement. If you own a property and would like to retain a company to manage the building, this agreement will protect your interests. If you own a property management company, this contract will protect your interests and provide written proof of negotiated terms with the property owner.
Why You Should Have a Property Management Agreement Trying to figure out all the little and big legal responsibilities which come with homeownership can be stressful. It is possible to enter into a verbal agreement for this type of partnership. Verbal agreements can be enforceable by law, but it can be difficult to prove what the agreement was without any written record. A handshake agreement works fine as long as the business partnership goes smoothly. Benefits of Having a Property Management Agreement: Lays out reasons why either party might want to terminate the business partnership.
Provides a definite time frame once either party serves the other with notice of termination. Provides clauses that itemize the fees associated with terminating the agreement prior to the end of the contract. Answers questions that might arise from liability issues, such as personal injury on the premises. This agreement is essential to protect you from liability. What to Include in Your Property Management Agreement Each agreement should be designed to best fit the two parties and the property itself.
For instance, an agreement for a commercial property housing multiple businesses will need specific considerations for the businesses located in the building. A residential property might have different considerations.
Commercial property management agreements state that the owner of the building must purchase Commercial General Liability Insurance. That contract can then be personalized for specific properties or kept largely intact. Your property manager can take care of a range of property management aspects — so long as they are clearly stated in your property management agreement.
This area of the contract will lay out exactly what the management company is responsible for under the contract. All of these duties are included in the fees that are agreed to within the contract. Services Not Covered: Often services that are never covered will be stipulated in the contract, as well. This very clearly indicates what the management company will not take responsibility for in regard to the property.
This section may include things like major repairs to the building. In some instances, it may be a flat rate per rental until per month. It will also lay out the cost for any additional services that might be added to the arrangement. Those responsibilities would be stipulated within the extra fee section.
There should also be a section discussing the responsibilities of the owner. This will often include a clause discussing the exact type of insurance that the property owner needs to carry at all times. Other issues that may be covered in this section include fund allocations.
It may be stipulated that the property owner maintains a fund available to the management company to cover repairs and emergencies in the building. Fees may be raised over time and there may be new services to consider. This clause protects both parties in the event that the relationship is not mutually beneficial. There may be fees stipulated for an early termination of the contract. There will also be a set time of notice for termination. Either party would need to let the other party know of their intent to sever the relationship in advance.
Some contracts include specific reasons that need to be met for termination. This section will also include clauses about liability should tenants break their lease, causing financial distress to the building owner. This section of the agreement will determine the exact responsibility of the property management company in this regard.
This is the section where you would find the verbiage about equal opportunity housing and may discuss specific local codes and laws. This section might also include a section on advances. In some cases, property management companies will advance money to cover costs for a building at the behest of the owner.
In that case, there may be fees associated with repayment of funds and there will be a set timeline as to when the full payment needs to be returned to the management company.
Use this contract to help define responsibility in the management of the property so there are no miscommunications.
Related Real Estate Documents.
Commercial property management agreement template -
The Property Owner desires to engage the Property Manager to supervise, manage, lease, operate, and maintain the Project. Commencement and Termination Dates. Notwithstanding the above, the Property Owner and the Property Manager may elect to extend this Agreement beyond the term set forth above by mutual written agreement.
The Property Owner and the Property Manager do not intend to form a joint venture, partnership or similar relationship. Instead, the parties intend that the Property Manager shall act solely in the capacity of an independent contractor for the Property Owner. Nothing in this Agreement shall cause the Property Manager and the Property Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except as expressly provided in this Agreement.
Nothing in this Agreement shall deprive or otherwise affect the right of the parties to this Agreement to own, invest in, manage or operate, or to conduct business activities that compete with the business of the Project.
At the expense of the Property Owner, the Property Manager shall keep the Project clean and in good repair, and shall order and supervise the completion of such repairs as may be required, provided that the Property Owner, in a manner reasonably satisfactory to the Property Manager, makes available to the Property Manager sufficient sums to pay the costs thereof.
The Property Manager shall employ, directly or through third party contractors e. All matters pertaining to the supervision of such employees and independent contractors shall be the responsibility of the Property Manager. The Property Manager may implement such procedures with respect to the Project as the Property Manager may deem advisable for the efficient and economic management and operation thereof. However, the Property Manager shall not be obligated to remedy any violations of Law if sufficient funds are not available in the Operating Account or if the Property Owner does not provide sufficient additional funds to do so.
The Property Manager shall furnish to the Property Owner, promptly after receipt, any notices of default received from a Lender. The Property Owner shall furnish to the Property Manager, promptly after receipt, any notices of default received from a Lender.
The Property Owner agrees to use its best efforts to approve the Budget. The Property Manager shall provide the Property Owner with such information regarding the Budget as may be, from time to time, reasonably requested by the Property Owner. The Property Manager shall have the authority to negotiate and execute new and renewal Leases on behalf of the Property Owner.
In connection with its leasing efforts, the Property Manager may advertise the Project for lease. The Property Manager shall not lease any space in the Project to itself or to any of its affiliates or subsidiaries.
The Property Manager may, in its discretion, obtain a credit check for all prospective tenants through LexisNexis or a similar service. The Property Manager shall retain such information for the duration of the tenancy, and shall make it available to the Property Owner upon reasonable notice, subject to compliance with any confidentiality restrictions required by any credit check company and any applicable Laws.
The Property Manager does not guarantee the accuracy of any such information or the financial condition of any tenant. Unless otherwise required by any Loan Documents affecting the Project, the Property Manager shall bill all tenants and shall use its commercially reasonable efforts to collect all rent and other charges due and payable from any tenant or from others for services provided in connection with the Project.
The Property Manager shall maintain the buildings, appurtenances and common areas of the Project other than areas that are the responsibility of the tenants, including, without limitation, all repairs, cleaning, painting, decorations and alterations, for example electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Project subject to the limitations of this Agreement.
The Property Manager shall pay actual and reasonable expenses for materials and labor for such purposes from the Operating Account.
The Property Manager, on behalf of the Property Owner, may make any capital expenditure within any Budget approved by the Property Owner without any further consent, provided that the Property Manager follows the bidding procedures prescribed below. All other capital expenditures other than Permitted Expenditures shall be subject to submittal of a revised Budget to the Property Owner. The Property Manager shall accept the bid of the lowest bidder determined by the Property Manager to be responsible, qualified and capable of completing such improvements on a reasonable schedule.
Any interest in such supplies and equipment shall be the property of the Property Owner. All such supplies, tools, and equipment generally shall be delivered to and stored at the Project and shall be used only in connection with the management, operation, and maintenance of the Project. The Property Manager, if requested by the Property Owner, will prepare an application for correction of the assessed valuation in cooperation with the Property Owner to be filed with the appropriate governmental agency.
The Property Manager shall pay, within the time required to obtain discounts, from funds provided by the Property Owner or from the Operating Account, all utilities, Taxes and payments due under each lease, mortgage, deed of trust or other security instrument, if any, affecting the Project. To the extent contemplated by the Budget as may be revised from time to time , the Property Manager may make any such payments and pay customary rates to tax professionals for related tax services without the additional approval of the Property Owner.
All such records are the property of the Property Owner and will be made available to the Property Owner upon request. Such insurance shall be obtained for the Property Owner and shall include the Property Owner as a named insured. The Property Manager shall be a named insured on all property damage insurance and an additional insured on all liability insurance maintained with respect to the Project.
In the event the Property Manager receives insurance proceeds for the Project, the Property Manager will take any required actions as set forth in any Loan Documents affecting the Project. Any insurance proceeds distributed to the Property Owner will be distributed subject to any fees owed to the Property Manager pursuant to this Agreement. Accordingly, the Property Manager shall be entitled to rely on the advice of a reputable insurance broker or consultant regarding the proper insurance for the Project.
Subject to the provisions of any Loan Documents, the Property Manager shall settle all claims, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money.
The Property Manager may waive such requirements in its reasonable discretion. The Property Manager shall obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured.
To the extent available at commercially reasonable rates, all property damage insurance policies required hereunder shall contain language whereby the insurance carrier thereunder waives any right of subrogation it may have with respect to the Property Owner or the Property Manager.
Financial Reporting and Record Keeping. The Property Manager shall maintain adequate and separate books and records for the Project with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Project. The Property Owner agrees to provide to the Property Manager any financial or other information reasonably requested by the Property Manager to carry out its services hereunder.
On or about the 20th day following the end of each calendar month, the Property Manager shall furnish to the Property Owner a report of all significant transactions occurring during such prior month.
These reports shall include a cash flow statement, a current rent roll and a Property Manager update on the status of the Project. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accrual basis and in compliance with all reporting requirements relating to the operations of the Project and required under any Loan Documents.
If requested by the Property Owner, the Property Manager shall provide financial statements prepared on an accrual basis according, to the extent possible, to generally accepted accounting principles. The Property Manager shall also provide to any lender under any Loan Documents copies of all applicable reports required thereunder that relate to the Project. The Property Manager shall provide the Property Owner with sufficient information so that the Property Owner can prepare its income tax returns on the cash method of accounting or, if requested, with appropriate adjustment to convert the information to an accrual basis.
Right to Audit. The Property Owner and its representatives, including the lender under the Loan Documents, may examine all books, records and files maintained for the Property Owner by the Property Manager. Should the Property Owner discover defects in internal controls or errors in record keeping, the Property Manager shall undertake with all appropriate diligence to correct such discrepancies either upon discovery or within a reasonable period of time.
The Property Manager shall inform the Property Owner in writing of the action taken to correct any audit discrepancies. Bank Accounts. To the extent funds are not required to be placed in a lockbox pursuant to any Loan Documents affecting the Project, the Property Manager shall deposit all rents and other funds collected from the operation of the Project in a reputable bank or financial institution in a special trust or depository account or accounts for the Project maintained by the Property Manager for the benefit of the Property Owner.
The Property Manager shall maintain, with funds from the Property Owner, the Operating Account so that an amount at least as great as the budgeted expenses for such month is in such Operating Account as of the first of each month.
The Property Manager shall pay from the Operating Account, on behalf of the Property Owner, the operating expenses of the Project and any other payments relating to the Project as required by this Agreement. If more than one account is necessary to operate the Project, each account shall have a unique name, except to the extent any Lender requires sub-accounts within any account.
All rents and other funds collected in the Operating Account after payment of all operating expenses, debt service and such amounts as may be reasonably determined by the Property Manager to be retained for reserves or improvements, shall, unless otherwise provided by any Loan Documents, be paid to the Property Owner. The Property Manager shall open, on behalf of the Property Owner, a separate account at a reputable bank or other financial institution for the purpose of segregating security deposits.
The Property Manager shall use the account only to maintain security deposits on behalf of the Property Owner. The Property Manager shall require the bank or financial institution to hold the funds in trust for the Property Owner. The Property Manager shall maintain detailed records of all security deposits deposited, and allow the Property Owner or its designees access to such records.
Subject to any contrary terms of any Loan Documents, the Property Manager may return such deposits to any tenant in the ordinary course of business in accordance with the terms of the applicable lease and applicable Law. As authorized by signature cards, representatives of the Property Manager shall have access to and may draw upon all funds in the accounts described in Sections 6. Payment of Expenses. In the alternative, the Property Manager may charge a monthly flat fee for the above services, which flat fee is subject to the approval of the Property Owner.
All other amounts not directly related to the Project or the Property Owner shall be payable solely by the Property Manager, and shall not be paid out of the Operating Account or reimbursed by the Property Owner. The Property Manager and its Affiliates will receive the compensation set forth on Schedule 1. This Agreement shall automatically terminate upon the sale of the entire Project. In addition, the Property Manager shall cooperate with the Property Owner in notifying all tenants of the Project of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with the Property Owner to accomplish an orderly transfer of the operation and management of the Project to a party designated by the Property Owner.
The Property Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the Property Manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.
All debts and obligations to third parties incurred by the Property Manager or its affiliates, in relation to the Project, shall be the debts and obligations of the Property Owner, and neither the Property Manager, nor its affiliates, shall be liable for, and shall be indemnified by, the Property Owner for any such debts, liabilities or obligations.
The Property Manager and its affiliates shall have no obligation or responsibility to make payments with their own funds on any indebtedness incurred on behalf of the Property Owner or the Project, whether secured by the Project, or any portion thereof. Furthermore, this Agreement shall not be terminated by the Property Owner until all existing debts, liabilities and obligations arising out of any loan or the payment for goods or services on behalf of the Project are paid in full or assumed by a successor property manager; any guarantees entered into or made by the Property Manager, its affiliates, principles or officers on behalf of the Project are extinguished; and all fees owed to the Property Manager and its affiliates have been paid in full.
The Property Manager shall not deal with or engage, or purchase goods or services from, any subsidiary or affiliated company of the Property Manager in connection with the management of the Project for amounts above market rates. All notices, demands, consents, approvals, reports and other communications to the Property Owner as provided for in this Agreement shall be in writing and shall be given to the Property Owner as set forth below, or at such other address as they may specify hereafter in writing.The Property Manager shall retain such information for the duration of the tenancy, and shall make it available to the Property Owner upon reasonable notice, subject to compliance with any confidentiality restrictions required by any credit check company and any applicable Laws. The Property Manager may implement such procedures with respect to the Project as the Property Manager may deem advisable for the efficient and economic management and operation thereof. All other amounts not directly related to the Project or the Property Owner shall be payable solely by the Property Manager, and shall not be paid out of the Operating Account or reimbursed by the Property Owner. The Property Manager, if requested by commercial property management agreement template Property Owner, will prepare an application for correction of the assessed valuation in cooperation with the Property Owner to be filed with the appropriate governmental agency. Should the Property Owner discover defects in internal controls or commercial property management agreement template in record keeping, the Property Manager shall undertake with all appropriate diligence to correct such discrepancies either commercial property management agreement template discovery or within a reasonable period of time. All such records are the property of the Property Owner and will be made available to the Property Owner upon request.
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