A property management agreement is an essential document that outlines the responsibilities and expectations between a property owner and a property manager. This agreement is a legally binding document that protects both parties in the event of any misunderstandings or disputes. Property management agreements are vital because they ensure that the property owner`s investment is maintained and managed professionally while giving the property manager clear guidelines on what is expected of them.
So, what do property management agreements normally include? Here are the essential elements that should be included in such an agreement:
1. Scope of Services: This section outlines the services to be provided by the property manager and the specific tasks they will perform. This could include rent collection, tenant screening, property maintenance, and repairs, among others.
2. Fees and Payment Terms: This section contains the fees charged by the property manager for their services and the payment terms agreed upon by both parties. This could be a percentage of the monthly rent collected or a flat fee.
3. Term of Agreement: The agreement should specify the length of time the property manager will manage the property on behalf of the owner. It could be a year, two years or longer, depending on the agreement between both parties.
4. Termination: This section outlines the conditions under which the agreement could be terminated by either party. It could be due to a breach of contract, non-payment of fees, or other reasons specified in the agreement.
5. Communication: This section outlines how communication between the property owner and manager will be conducted. It could be through emails, phone calls, or face-to-face meetings.
6. Insurance and Liability: This section outlines the insurance requirements for the property, who is responsible for obtaining insurance coverage, and the liability of the property owner and manager in case of any accidents or incidents on the property.
7. Governing Law: The agreement should state the governing law of the contract and the jurisdiction where any disputes will be resolved.
In conclusion, a property management agreement is a crucial document that outlines the expectations and responsibilities of both the property owner and the property manager. With a clear and comprehensive agreement, both parties can operate with confidence, knowing that their interests are protected. As such, it is critical that property owners seeking property management services pay attention to the terms contained in such an agreement and ensure that they are comfortable with them before signing on the dotted line.