Property Management Agreement

Property Management Agreement

A Property Management Agreement is a legally binding contract between a property owner (often referred to as the "principal" or "landlord") and a property management company or individual (the "manager") that outlines the terms and conditions under which the manager will oversee the rental or maintenance of a property.

The agreement typically includes several key components:

1. Scope of Services: This section details the specific responsibilities of the property manager, such as advertising rental units, screening tenants, collecting rent, handling maintenance and repairs, and managing tenant relations.

2. Duration of Agreement: This specifies the length of time the agreement will be in effect, which can range from a few months to several years. It may also outline conditions for renewal or termination.

3. Compensation: The agreement outlines how the property manager will be compensated, often including a management fee percentage of the rental income, tenant placement fees, and additional charges for maintenance or repairs.

4. Owner Responsibilities: This portion clarifies the obligations of the property owner, such as maintaining property insurance, providing necessary funds for repairs, and complying with local laws and regulations.

5. Termination Clause: This section describes the conditions under which either party may terminate the agreement, including notice periods and grounds for immediate termination.

6. Legal Compliance: A statement that the property manager will comply with all applicable laws and regulations related to property management and tenant rights.

An example of a Property Management Agreement in practice would be a landlord who owns multiple rental units in a residential building hiring a property management firm to handle day-to-day operations. The agreement would ensure that the property manager is responsible for finding tenants, collecting rents, and maintaining the property to keep it in good condition while the landlord receives a steady income without the hassles of direct management.