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  • Writer's pictureSeth Flora

What is a property management agreement?

Updated: Oct 22, 2023

A Property Management Agreement is a legal document that establishes a relationship between a property owner and a property management company. This agreement outlines the terms and conditions under which the property management company will provide services to the property owner in managing and maintaining the property.


What is a property management agreement?

Key components of a Property Management Agreement may include:


Scope of Services

Clearly defines the responsibilities and services that the property management company will provide. This can include tasks such as marketing the property, screening tenants, collecting rent, handling maintenance and repairs, and managing tenant relations.


Duration of Agreement

Specifies the duration of the agreement, including the start date and, if applicable, the end date or conditions for termination.


Compensation

Outlines how the property management company will be compensated for its services. This can be a percentage of the rental income, a flat fee, or a combination of both.


Termination Clause

Describes the conditions under which either party can terminate the agreement. This may include provisions for termination with or without cause and the notice period required.


Responsibilities of the Property Owner

Clearly outlines the responsibilities and obligations of the property owner, such as maintaining the property in compliance with local laws and providing necessary information to the property management company.


Tenant Relations

Details how the property management company will handle tenant-related matters, including the screening process, lease agreements, and dispute resolution.


Maintenance and Repairs

Specifies how maintenance and repair issues will be addressed, including the authority of the property management company to make decisions on repairs within a certain budget.


Insurance

Addresses insurance requirements for both parties, such as liability insurance and property insurance.


Indemnification

Outlines the responsibilities of each party in case of legal disputes, including indemnification clauses.


Governing Law

Specifies the jurisdiction and governing law under which any disputes will be resolved.


Property Management Agreements are crucial for establishing clear expectations and protecting the interests of both the property owner and the property management company. It's advisable for both parties to carefully review and understand the terms of the agreement before entering into such a relationship. Legal counsel may be sought to ensure that the agreement is comprehensive and in compliance with relevant laws.

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