PROPERTY MANAGEMENT AGREEMENT

Owner:

Manager:

Property:

Date:

I. The Manager’s services, obligations, duties and responsibilities to the property owner are:

  1. To act in a fiduciary capacity as the Owner’s agent;
  2. To collect and receive rent from each tenant;
  3. To arrange for, contract for, and/or pay for maintenance, repairs, utilities and other usual and customary property expenses (see Exhibit PX for list, and see par. IV below);
  4. To serve as the primary contact for all tenant inquiries and requests for services, and to respond to those reasonable requests in a timely manner, as long as Owner’s funds are available to satisfy such requests;
  5. To provide owner with reports and accounting monthly. (see par. IV below)
  6. Manager is not a construction manager for tenant improvements, unless there be a separate agreement for that purpose.

II. The term of this agreement shall begin ____________, and shall end ______________________________. This agreement shall automatically renew, if the property management firm sends the owner a reminder notice at least thirty days before the renewal date. This notice of renewal does not negate any other cancellation provision in the next paragraph or the Exhibit: Termination.

III. Cancellation:

  1. This agreement may be canceled by the Manager or the Owner without cause, with 35 days notice prior to the first of any month.
  2. Manager or Owner may also cancel the agreement, for substantial and good cause, with 48-hour notice.
  3. See Exhibit "Termination" for other terms of termination.

IV. Disposition of all monies collected by the property management firm: the manager shall collect checks payable to the owner and shall either (owner to elect one):

A. [ ]deposit them in a brokerage Trust Account for this property, in the name of Owner, but under the control of Manager. See Exhibit TA: Trust Account.

B. [ ]deposit them in the owner’s bank account.

If Owner elects option B, Manager is not obligated to either pay bills nor to prepare financial reports.

Owner’s Initials: _______

V. Reports to Owner: By the 20th day of each month, Manager shall provide monthly reports to the owner, indicating status of rent collection from each tenant, a detailed summary of cash receipts and disbursements, a summary of all tenant requests and manager responses in that month, as well as any other actions taken by the Manager on behalf of the Owner, or recommendations of the Manager to the Owner. If the property account has funds on deposit exceeding one month’s anticipated usual expenses, plus the manager’s fee, Manager shall disburse the excess to the Owner monthly, as instructed by the Owner.

VI. Owner agrees to pay Manager either (check one) [ ] the sum of $______ per month, or

[ ] __ % of rents collected for property management services, in addition to the actual costs of property expenses (see Exhibit PX), which management fee broker may deduct from any account to which Manager is a signatory.

VII. Leasing agent: Owner agrees to pay to Manager leasing commissions for any space leased in the property during the term of this agreement, in addition to, and not as a credit toward the monthly management fee. The amount of the leasing commissions shall be six percent of the sum on the lease payments agreed upon by the tenant in the signed lease. Payment of the commission to the broker shall be first deducted from security deposits received from tenant and/or rents received, until paid in full. No other agent shall be authorized by owner as the property leasing agent, and Manager is hereby appointed as the Owner’s exclusive agent.

VIII. Owner agrees to add Manager and its agents and employees as additional insured parties under the property and liability insurance policy(ies).

IX. Assignment. This agreement shall not be assigned to another licensee or licensed entity without the express written consent of the property owner.

X. Exhibits. The following Exhibits are attached hereto and are hereby incorporated as an integral part of this Agreement:

Exhibit PX (Property Expenses)

Exhibit TA (Trust Account)

Exhibit General Terms and Conditions

Exhibit Termination

XI. Authority. Both individuals whose signatures appear below represent and warranty that they each have full authority to enter into this agreement.

OWNER:

By: ___________________________ date: _______

Its:

MANAGER:.

By: ________________________ Date: _______

Its: Designated Broker

 

 

 

EXHIBIT TO PROPERTY MANAGEMENT AGREEMENT:

Termination

A. Immediately on termination of a property management agreement, the property management firm shall provide the owner with:

1. All originals or other copies of all rental agreements or related documents in the property management firm's possession for current and previous tenants. These documents shall include any applications, property inventories, leases, pet permits, default notices, lease amendments or addenda in the property management firm's possession. The broker is not required to keep copies of residential rental lease agreements or related rental lease documents after termination of the property management agreement.

2. All building plans, environmental studies, conditions, covenants and restrictions, inspection reports, contracts, keys, warranties, personal property or other documents in the possession of the property management firm.

B. On termination of the property management agreement the property management firm shall provide the owner with a final accounting of the property's financial status that includes at a minimum:

1. Within five days, a list of all tenant security obligations.

2. Within thirty-five days, reimbursement for all monies remaining in the property accounts maintained by the property management firm, except for monies needed for unpaid obligations incurred during the term of the property management agreement.

3. Within seventy-five days, a final accounts receivable and payable list.

4. Within seventy-five days, a final bank account reconciliation.

C. If there is an on-site management office and any of the records or documents described in subsection B of this section are located on site, the property management firm may leave the items there for the benefit of the owner on termination of the property management agreement. The property management firm shall inform the owner in writing immediately as to the location of these records.

1. All originals or other copies of all rental agreements or related documents in the property management firm's possession for current and previous tenants. These documents shall include any applications, property inventories, leases, pet permits, default notices, lease amendments or addenda in the property management firm's possession. The broker is not required to keep copies of residential rental lease agreements or related rental lease documents after termination of the property management agreement.

2. All building plans, environmental studies, conditions, covenants and restrictions, inspection reports, contracts, keys, warranties, personal property or other documents in the possession of the property management firm.

D. If there is an on-site management office and any of the records or documents described in subsection B of this section are located on site, the property management firm may leave the items there for the benefit of the owner on termination of the property management agreement. The property management firm shall inform the owner in writing immediately as to the location of these records.

E. In the event of termination without good and substantial cause, the Owner will pay to Manager, or the Manager may deduct from funds held for Owner, the sum of three month’s management fee, plus Manager’s account set-up costs, and any other reasonable out-of-pocket Manager’s costs resulting from termination, including costs for copying, file storage and delivery to Owner.

Owner’s initials: ______ Manager’s initials: _______

 

 

 

EXHIBIT TO PROPERTY MANAGEMENT AGREEMENT: PX

(Property Expenses)

The following are usual and customary property expenses. Manager may contract for and incur these expenses on behalf of the Owner. If funds are available to the Manager from rents collected or Owner’s funds, Manager may pay such expenses including, but not necessarily limited to:

Electric service

Water and sewer service

Telecommunications service (phone, cable, high speed internet, etc.)

Trash collection

Janitorial service (if landlord is obligated to pay under the leases)

Building supplies

Landscaping and lot maintenance

HVAC maintenance and repairs

Structural (including glass) and roof maintenance, and minor repairs

Parking lot sweeping and maintenance

Accounting services

Legal services for collections or eviction or lock-out

Locksmith services

Advertising to rent vacant space

Property Insurance

Property Tax

Rental tax

Any other local or state licenses or permits required by law in order to operate the property.

PAYMENT OF ANY PROPERTY DEBT SERVICE, SUCH AS A MORTGAGE PAYMENT, IS NOT A PROPERTY EXPENSE TO BE PAID BY MANAGER, unless Owner has elected Option IV. B.1.

 

 

 

EXHIBIT TO PROPERTY MANAGEMENT AGREEMENT: TA

MANAGER’S (BROKER’S) TRUST ACCOUNT

TA 1. Initial Deposit: Owner does hereby deposit with Manager the sum of $_______ as the anticipated monthly expenses of the property plus one month’s management fee. Owner agrees to replenish this deposit, as needed, within 5 days of request and accounting documentation from Manager.

Owner’s initials: ______ Manager’s initials: _______

TA 2. Location of Trust account: The Manager shall open a Trust account in the Owner’s name at ________________, address: _____________, _____ , and shall provide Owner with an actual copy of monthly bank statements with each monthly Manager’s report, and shall request copies of cancelled checks upon request (pass-through bank charges plus, plus $3 per check handling fee). Owner hereby expressly authorizes and acknowledges Manager to establish such trust account in accordance with applicable state or local laws.

TA 3. Signators on Trust account: all signators on the Trust account shall be licensed real estate agents in the State of Arizona, and no other. The Designated Broker of the Manager may elect to require two signatures on checks for this account. Owner shall not be a signatory on the trust account.

TA 4. The account may be audited by the Arizona department of Real Estate, or the owner, or a properly authorized Owner’s CPA.

TA 5. Manager is authorized to pay for any and all usual and customary property expenses from the Trust account, NOT including debt service.

TA 6. If the Owner has authorized the Manager to open a trust account with rents received, the Manager shall:

    1. Pay all usual and customary Property expenses from the trust account; (See Exhibit PX for list of such expenses.)
    2. Shall provide the Owner with monthly accounting of all income and expenses, using generally accepted accounting principals and practices;
    3. May hold up to $__,___- as an operating reserve for emergency repairs, payment of the monthly management fee, and other management expenses. If the Owner has NOT authorized a brokerage trust account for collections, then the Owner does hereby deposit with broker the sum of $__,____ to be deposited in the broker’s Trust account for these purposes, and agrees to replenish this deposit monthly, or more frequently as needed or requested by Manager.

TA 7. The Brokerage Trust account, if above authorized, shall not bear interest. The Brokerage shall pay monthly net proceeds to the owner, after first paying usual and customary monthly property expenses. (See Exhibit PX for list of such expenses.)

TA. 8. No funds of agent shall be deposited in this Trust account, except as authorized by law, and there shall be no co-mingling of funds in this account. Manager will exercise reasonable and prudent controls to assure that there will be no payment of trust accounts funds for any use not related to the Property.

Owner’s initials: ______ Manager’s initials: _______

 

 

 

EXHIBIT TO PROPERTY MANAGEMENT AGREEMENT:

General Terms and Conditions

GEN. 1. Owner to pay expenses. Owner agrees to pay for property operating expenses within 10 days of payments due, in the event funds are not sufficient to pay such expenses from rents collected. Owner does hereby hold Manager harmless from, and indemnifies and will defend Manager from, any claim by any party for payment for services provided to the Property, which are not paid timely as the result of insufficient funds. Any non-compliance with this paragraph shall constitute substantial and good cause for termination by the Manager. Likewise, Manager agrees to pay all expenses within 10 days of payments due, from rents collected or Owner’s funds, if Owner has elected either option IV. A. or IV. B. 1, above, and does hereby hold Owner harmless from, and indemnifies and will defend Owner from, any claim by any party for payment for services provided to the Property, which are not paid timely and there were sufficient funds to have made timely payment.

GEN. 2. Manager’s payment of expenses. Manager is not obligated to, nor shall, advance Manager’s funds to pay for property expenses.

GEN. 3. Indemnification. Owner shall indemnify and save the Manager harmless from any and all costs, expenses, attorney’s fees, suit, liabilities, damages from or connected with the management of the Property by Manager, or the performance or exercise of any duties, obligations, powers, or authorities specified or implied herein or as may be afterwards granted to Manager as Owner’s agent.

GEN. 4. Legal or Tax Advice. Manager is not an attorney nor a CPA. Manager will not intentionally give, nor will Owner will seek or accept any advice from Manager as legal or tax advice. Owner will obtain legal and tax advice from properly qualified persons.

GEN. 5. Insurance. Owner agrees to carry and pay for Worker’s Compensation Insurance for Manager, its agents and employees. Owner also agrees to carry and pay for bodily injury, property damage, and personal injury public liability insurance in the amount of at least $1,000,000 combined single limit for bodily injury and property damage. The plicy shall be written on a comprehensive general liability form and shall name the Manager, its Designated Broker, and managing agent as additional insured.

GEN. 6. Agent. Owner hereby appoints Manager as its sole and exclusive agent to lease and manage the Property. Manager accepts this appointment and represents that it is a licensed real estate broker in the State of _________, and is legally permitted to provide such services.

GEN. 7. Surety losses. Manager’s liability for surety losses shall be limited to a maximum of one month’s income and expenses for the property.

GEN. 8. Additional charges to Tenants. Manager may collect from the tenants the following items, which may be accounted as an Owner’s expense, or Manager’s expense, at the choice of the Manager: rental or sales tax, credit report charges, bank charges for returned or non-negotiable checks.

GEN. 9. Security Deposits. Manager shall handle tenant’s security deposits in a manner as prescribed by applicable local or State law.

GEN. 10. Compensation and payment to Manager. Manager is authorized to pay itself, its agents and employees for management services and leasing services as authorized by this Agreement, without further authorization or approval by Owner.

GEN. 11. Audit. Owner shall have to right to conduct, or to have an Owner’s CPA firm conduct, periodic audits of the Manager’s accounts and files relating to the management of the Property.

Owner shall pay for such audits with funds not administered by Manager.

GEN. 12. Signs and advertising. Manager is authorized to place signs "For Lease" or "Available" at or about the property at Broker’s discretion and expense. Manager may advertise space for rent, as an Owner’s operating expense.

GEN. 13. Lease forms. Owner is advised to, and shall, provide to Manager a standard form lease approved by Owner’s attorney to use in leasing vacant space. If Owner does not provide such a form, Manager may use any form in its discretion, but Manager is not an attorney and is not legally liable for the form used at Manager’s discretion.

GEN. 14. Manager’s subagents. Manager may appoint subagents of the Owner for services arising from the operation of the Property, such as, but not limited to, attorneys, accountants, contractors or subcontractors. Manager shall provide Owner with a list of any and all subagents as and when they are engaged for services to the property, at least monthly with the monthly report to Owner. If Owner objects to any such selected subagent, Owner shall so notify Manager within 10 days, and Manager will thereupon make arrangements for a substitute service provider. Owner is responsible for the acts of such subagents as though Owner had selected them directly. This paragraph shall survive termination of this Agreement.

GEN. 15. Compliance with law. Manager will make best efforts to assure property compliance with applicable laws known to Manager, and will immediately notify Owner of any known non-compliance with any public law that comes to the attention of Manager. Manager is not an expert in building Code compliance, nor environmental regulations, nor any other law other than real estate licensing laws. Owner, likewise, will notify Manager of any known laws, or violations of laws, that may be applicable to the Property. Owner agrees to hold the Manager harmless from, shall indemnify and defend Manager from any claims, investigations, suits, settlements, judgments, damages, liquidated damages, penalties, forfeitures, back pay awards, court costs, litigation expenses, and attorneys’ fees, relating to or resulting from any non-compliance with any public law.

GEN. 16. Ordinary repairs and maintenance. Manager will, in the name of Owner, select, arrange for, and contract for, all ordinary maintenance and repairs to the property that are the obligation of the Owner under the terms of the leases affecting the property. Such expenses shall be paid for by Owner’s funds (including, if authorized the Trust Account funds), and not by Manager’s funds. Manager does not need to obtain specific authorization or approval from Owner to conduct such ordinary repairs and maintenance.

GEN. 17. Extraordinary repairs, or property improvements. Manager will seek Owner’s authorization for any unusual or extraordinary repairs, including any tenant improvements needed to accommodate the needs of a new tenant. Manager shall be compensated at a rate of $125 per hour for oversight and management of any such extraordinary repairs or improvements, in addition to the regular management fee.

GEN. 18. Emergency repairs. In the event the property suffers an extraordinary event that would be considered an emergency (either by public, local, state, federal, or common law, or in order to maintain and preserve the safety of the premises or to avoid danger to life, personal safety, or the property), Manager does not need to first obtain Owner’s approval to initiate emergency response measures, including repairs and filing insurance claims, but shall notify Owner at the first available opportunity of such emergency responses. Manager shall be compensated at a rate of $175 per hour for oversight and management of any such extraordinary repairs or improvements, in addition to the regular management fee, and may pay for such repairs and management fees out of funds under the control of Manager.

GEN. 19. Manager liability. Manager is not liable for any acts or omissions of owner, owner’s employees or other agents, previous owners, or previous managers. Manager is not liable for failure to pay rent or any other charges due and payable from any tenant. Manager is not liable for non-compliance with any law or violation of any law not known to Manager.

GEN. 20. Litigation. Owner is liable for all expenses arising from or related to, any litigation related to the Property.

Gen. 21. Sale of property. If the Property is sold or otherwise a majority interest in the Property is conveyed to any party during the term of this agreement, Owner will pay Manager a termination fee of 1% of the total consideration or price. The property is not currently for sale. If the owner decides to offer the property for sale to any party unrelated to the Owner, Owner shall list the property for sale with Manager.

GEN. 22. Survival of indemnifications. All indemnifications contained in this agreement shall survive termination of this Agreement.

GEN. 24. Force Majeur. Any delays in the performance of any obligation of Manager under this agreement shall be excused to the extent that such delays are caused by wars, national emergencies, natural disasters, power interruptions, strikes, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within the control of Manager, and any time periods required for performance shall be extended correspondingly.

GEN. 25. Complete Agreement. This agreement and its exhibits constitute the entire and sole agreement between the Owner and the Manager respecting the management and operation of the Property. No changes shall be binding on either party unless it is in writing and signed by both parties. Neither party has made any warranties or representations other than as spelled out in this Agreement.

GEN. 26. Rights cumulative; no waiver. No right or remedy of either party shall be exclusive of any other right or remedy, and all such rights are cumulative. Any lack of demand for strict adhesions shall not be a waiver.

GEB. 27. Applicable law and severance. The performance of this agreement shall be controlled and governed by the laws of the state in which the property is located. If any part of this agreement is declared void or invalid or unenforceable, the remainder shall remain in force.

GEN. 28. Notices. Notices to Manager shall be sent to:

Notices to Owner shall be sent to:

 

 

Notices may be made by certified US Postal service priority mail, or personal delivery.

 

 

GEN. 29. Successors and assigns. Manager shall not assign this agreement without Owner approval, which shall not be unreasonably withheld. This agreement shall inure to Owner’s successors and assigns.

Owner’s initials: ______ Manager’s initials: _______