A PROPERTY MANAGEMENT AGREEMENT: WHAT EXACTLY SHOULD IT CONTAIN?
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When a property owner hires a professional property management company to oversee their assets, the first step is signing a property management agreement. This document is more than just a formality, it's the foundation for a successful partnership.
But what should a property management agreement include to ensure transparency, accountability, and mutual benefit? Let's delve into the essential components. By the end of this guide, you'll also be able to download a free sample agreement template to use for your next property management deal.
1. Parties Involved.
The agreement should clearly identify the parties involved: the property owner and the property management company. It's crucial to include full legal names and contact details to avoid ambiguity.
2. Property Description.
A detailed description of the property (or properties) being managed must be included. This typically covers the address, type of property (residential, commercial, mixed-use), and any specific features or unique aspects.
3. Scope of Services.
This section outlines the responsibilities of the property management company. Commonly included tasks are:
- Marketing and advertising vacant units.
- Tenant screening and selection.
- Rent collection and deposit management.
- Property maintenance and repairs.
- Lease agreement management.
- Handling tenant complaints and disputes.
- Financial reporting and record-keeping.
Being as specific as possible helps both parties avoid misunderstandings.
4. Duration of the Agreement.
The agreement should specify its start date and duration. Whether it's a one-year term, month-to-month, or an open-ended contract, clarity is essential. Additionally, include terms for renewal or termination.
5. Management Fees and Payment Terms.
One of the most critical sections, this outlines:
- Management fees (flat rate, percentage of rental income, or a hybrid model).
- Additional fees for specific services (e.g., tenant placement, maintenance oversight).
- Payment terms, such as frequency and methods of payment.
Transparency here is vital to avoid disputes later.
6. Owner Responsibilities.
The agreement should highlight the responsibilities of the property owner, such as:
- Providing adequate funds for property maintenance.
- Ensuring property compliance with local laws.
- Disclosing all property-related information.
7. Maintenance and Repairs.
A detailed plan for handling maintenance and repairs must be included. Questions to address:
- Who is responsible for minor repairs vs. major renovations?
- What is the financial threshold for repairs that require owner approval?
- Does the property management company have an in-house maintenance team or subcontractors?
8. Tenant Relations.
Outline how tenant-related matters will be handled, including:
- Lease enforcement and eviction procedures.
- Handling security deposits and refunds.
- Policies on tenant communication.
9. Termination Clause.
An agreement should specify how either party can terminate the contract. Include:
- Notice period (commonly 30-60 days).
- Penalties or fees for early termination.
- Conditions under which the agreement can be terminated immediately, such as breach of contract.
10. Liability and Insurance.
This section should address:
- Liability limitations for the property management company.
- Required insurance coverage for both the owner and the manager (e.g., liability insurance, property insurance).
11. Dispute Resolution. It's wise to include a plan for resolving disputes, whether through mediation, arbitration, or legal proceedings. Clear terms save time and money if conflicts arise. 12. Compliance with Laws. Ensure the agreement reflects compliance with local real estate and rental laws, including fair housing laws, landlord-tenant regulations, and property codes. Why This Matters. A well-drafted property management agreement provides a clear roadmap for collaboration. It minimizes risks, prevents disputes, and ensures the property owner and management company are on the same page. For property owners, this document safeguards their investment. For property managers, it defines their role and protects their business interests. Need Help Crafting Your Agreement?At Blue Orbit Property Management Services, we understand the intricacies of property management agreements. Our team is here to help you navigate these details and ensure your properties are in expert hands. Contact us today to start the journey toward seamless property management! Click here to download a free sample property management agreement.
Kind Regards
Julius Czar
Author: Julius Czar
Company: Zillion Technologies Ltd
Mobile: +256705162000 / +256788162000
Email: Julius@RealEstateDatabase.net
Website: www.RealEstateDatabase.net
App: Install the RED Android App
Follow me on: Twitter, LinkedIn, Facebook.
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OTHER PAGES
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appartments
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Location -
Kiwatulee
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District -
Wakiso
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Type -
Apartment block
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Size -
three bedroom
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Status -
For Sale
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Code - 217277
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$ 950,000
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appartments
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Location -
Bbunga
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District -
Wakiso
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Type -
Apartment block
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Size -
two bedroom
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Status -
For Sale
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Code - 217272
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Ugx 1,200,000,000
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stored
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Location -
Lubowa
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District -
Wakiso
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Type -
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Size -
five bedroom
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Status -
For Sale
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Code - 217281
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$ 250,000
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