Commercial Property Management Contract Template

COMMERCIAL PROPERTY MANAGEMENT CONTRACT TEMPLATE

1. Document Preamble & Recitals

THIS COMMERCIAL PROPERTY MANAGEMENT CONTRACT (the "Agreement") is entered into and made effective as of this [Day] day of [Month], [Year] (the "Effective Date"), by and between:

OWNER: [Legal Name of Property Owner], a [State of Incorporation/Organization] [Corporation/LLC/Partnership/Individual], having its principal place of business at [Owner Street Address, City, State, ZIP] (hereinafter referred to as the "Owner"), and

MANAGER: [Legal Name of Property Management Company], a [State of Incorporation/Organization] [Corporation/LLC/Partnership], having its principal place of business at [Manager Street Address, City, State, ZIP] (hereinafter referred to as the "Manager").

RECITALS

WHEREAS, Owner is the fee simple owner or lawful lessee with the power to lease of certain commercial real property located at [Property Street Address, City, State, ZIP], more particularly described in Exhibit A attached hereto (the "Property"); and

WHEREAS, Owner desires to retain Manager to provide comprehensive commercial property management, leasing, operational, and financial administration services for the Property, and Manager desires to accept such appointment, subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants, promises, and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties hereto agree as follows:

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2. Operational Definitions

For purposes of this Agreement, the following terms shall have the meanings ascribed below, and such meanings shall be equally applicable to both the singular and plural forms of the terms defined:

1. "Affiliate" means any legal entity directly or indirectly controlling, controlled by, or under common control with a Party, where "control" means the ownership of more than fifty percent (50%) of the voting securities or equity interests of such entity.
2. "Annual Operating Budget" means the comprehensive projection of all anticipated operating revenues, capital expenditures, operating expenses, and cash flow for the Property for a specific calendar or fiscal year, prepared by Manager and approved in writing by Owner pursuant to Section 3.
3. "Base Fee" means the primary management compensation payable to Manager as consideration for the performance of its standard administrative and operational duties hereunder, as set forth in Section 3.
4. "Claim" means any and all liabilities, losses, damages, demands, suits, penalties, judgments, fines, costs, and expenses (including reasonable attorneys' fees and court costs) of any kind or nature whatsoever.
5. "Force Majeure Event" means any act of God, war, terrorism, civil commotion, labor dispute, strike, fire, flood, earthquake, epidemic, pandemic, governmental action or restriction, utility failure, or any other cause beyond the reasonable control of the affected Party, which renders performance commercially impracticable.
6. "Gross Receipts" means all actual cash revenues and income of any kind collected from the operation of the Property, including without limitation base rents, percentage rents, escalation payments, common area maintenance (CAM) recoveries, utility reimbursements, parking fees, storage fees, and forfeiture of security deposits, but explicitly excluding security deposits held in escrow until applied, tenant improvement allowances, insurance proceeds, and condemnation awards.
7. "Operating Account" means the designated, segregated bank account established by Manager in the name of Owner, or in the name of Manager as agent for Owner, into which all Gross Receipts shall be deposited and from which authorized Property disbursements shall be made.
8. "Property" means the land, buildings, improvements, fixtures, and appurtenances located at [Property Street Address, City, State, ZIP], including all common areas, structural elements, mechanical systems, and parking facilities.
9. "Tenant" means any individual, corporation, partnership, or other legal entity leasing space within the Property pursuant to a valid Lease Agreement.

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3. Substantive Terms & Obligations

3.1 Appointment and Authority

Owner hereby grants to Manager the exclusive right and authority to manage, operate, lease, and maintain the Property, and Manager hereby accepts such appointment, subject to the fiduciary duties owed to Owner. Manager shall act as Owner’s sole and exclusive agent in all matters pertaining to the physical operation, maintenance, leasing, and financial accounting of the Property.

3.2 Term

The initial term of this Agreement shall commence on the Effective Date and shall continue for a period of [Number, e.g., three (3)] years, expiring on [Expiration Date] (the "Initial Term"), unless sooner terminated in accordance with Section 4. Following the Initial Term, this Agreement shall automatically renew on a year-to-year basis (each an "Renewal Term") unless either Party provides written notice of non-renewal to the other Party at least ninety (90) days prior to the expiration of the Initial Term or then-current Renewal Term.

3.3 Management Services and Duties

Manager shall perform the following operational services with professional diligence, skill, and care in accordance with institutional commercial property management standards:

1. Personnel: Employ, train, supervise, and discharge all on-site and off-site personnel necessary for the operation, maintenance, and servicing of the Property. All such personnel shall be employees or independent contractors of Manager, and not of Owner. Manager shall be solely responsible for payroll, taxes, workers' compensation, and employment benefits related to such personnel.
2. Maintenance and Repairs: Cause the Property to be maintained in a clean, safe, and operable condition, consistent with the standard of a first-class commercial property within the [Jurisdiction] market. This includes routine cleaning, painting, groundskeeping, and structural and mechanical maintenance. Manager is authorized to incur routine maintenance expenses up to [Dollar Amount, e.g., $5,000.00] per occurrence without prior Owner approval, provided such expenditure is within the Annual Operating Budget.
3. Emergency Repairs: Notwithstanding the limits in Section 3.3(2), Manager is authorized to incur immediate expenses for emergency repairs necessary to prevent imminent danger to life or property, or to avoid the suspension of essential services, regardless of budget availability. Manager shall notify Owner of any such emergency expenditure within twenty-four (24) hours.
4. Contracts and Utilities: Negotiate, execute, and supervise contracts for electricity, gas, water, telephone, security, trash removal, window cleaning, landscaping, and other utility and service contracts necessary for the operation of the Property, in Owner’s name.

3.4 Financial Administration and Budgeting

1. Operating Account: Manager shall establish a separate, federally insured bank account designated as the "Operating Account" for the deposit of all Gross Receipts. Manager shall not commingle Owner funds with Manager's corporate or operational funds.
2. Annual Budget: Not later than sixty (60) days prior to the commencement of each calendar or fiscal year, Manager shall prepare and submit to Owner an Annual Operating Budget for Owner’s review and written approval. Upon approval, Manager shall operate the Property in strict accordance with the Annual Operating Budget, subject to a permitted variance of up to [Number, e.g., ten percent (10%)] in any individual line item, provided total operating expenses do not exceed the aggregate budget by more than [Number, e.g., five percent (5%)] without prior written consent from Owner.
3. Financial Reporting: Manager shall deliver to Owner, on or before the twentieth (20th) day of each calendar month, a complete financial package for the preceding month, including a balance sheet, income statement, rent roll, aged accounts receivable report, general ledger, bank reconciliation, and a narrative summary of operations.

3.5 Leasing and Tenant Relations

1. Leasing Administration: Manager shall use commercially reasonable efforts to lease vacant space within the Property. Manager shall market the Property, conduct property tours, negotiate lease terms in accordance with Owner’s approved leasing guidelines, and prepare lease agreements utilizing Owner's standard lease form.
2. Execution of Leases: All commercial leases, renewals, and amendments negotiated by Manager shall be subject to the final review and written execution of Owner. Manager lacks the unilateral authority to bind Owner to any leasehold interest without such prior written authorization.
3. Rent Collection: Manager shall bill, collect, and deposit into the Operating Account all rents, escalations, CAM charges, and other sums due from Tenants. Manager shall exercise diligent commercial efforts to collect delinquent accounts and shall issue notices of default as required under individual lease agreements.

3.6 Compensation and Reimbursements

1. Base Management Fee: As compensation for the services rendered hereunder, Owner shall pay to Manager a monthly Base Fee equal to the greater of: (a) [Dollar Amount, e.g., $5,000.00] per month; or (b) [Number, e.g., three percent (3%)] of the Gross Receipts collected during the immediately preceding calendar month. The Base Fee shall be payable on or before the first (1st) day of each month.
2. Leasing Commissions: If Manager successfully procures a new Tenant or executes a lease renewal in accordance with Owner's leasing guidelines, Manager shall be paid a leasing commission in accordance with the fee schedule attached hereto as Exhibit B.
3. Expense Reimbursement: Owner shall reimburse Manager for all direct, out-of-pocket operational expenses reasonably incurred by Manager on behalf of Owner pursuant to the approved Annual Operating Budget, including on-site payroll, administrative costs directly attributable to the Property, and pre-approved legal or collection expenses.

3.7 Representations and Warranties

1. Manager Representations: Manager represents and warrants that: (a) it is duly organized, validly existing, and in good standing under the laws of its state of organization; (b) it possesses all requisite licenses, permits, and credentials required by [Jurisdiction] to perform commercial property management services; and (c) the execution and performance of this Agreement does not violate any contractual obligation or legal restriction binding upon Manager.
2. Owner Representations: Owner represents and warrants that: (a) it has full legal capacity and authority to enter into this Agreement and to encumber or operate the Property; (b) the Property is in compliance with all applicable local, state, and federal environmental, zoning, and accessibility laws (including the Americans with Disabilities Act, where applicable) as of the Effective Date, to the best of Owner's knowledge.

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4. Default, Termination, and Remedies

4.1 Events of Default

The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:

1. Failure to Pay: Failure by Owner to pay any management fee, reimbursement, or undisputed sum due to Manager within ten (10) business days following written notice of non-payment.
2. Breach of Covenant: Failure by either Party to observe, keep, or perform any other material term, covenant, or condition of this Agreement, continuing for a period of thirty (30) business days after receipt of written notice specifying the nature of the breach from the non-defaulting Party.
3. Insolvency/Bankruptcy: The filing of a petition in bankruptcy or insolvency, or for reorganization or arrangement under bankruptcy laws, or the appointment of a receiver or trustee for all or substantially all of the assets of a Party, or the execution of an assignment for the benefit of creditors.
4. Fraud or Gross Negligence: The commission of fraud, embezzlement, willful misconduct, or gross negligence by Manager, or any of its corporate officers or directors, in connection with the performance of its duties hereunder.

4.2 Termination Rights

1. Termination for Cause: If an Event of Default occurs, the non-defaulting Party may terminate this Agreement immediately upon written notice to the defaulting Party, subject to the applicable cure periods set forth in Section 4.1.
2. Termination Without Cause: Owner reserves the right to terminate this Agreement without cause at any time by providing at least sixty (60) days prior written notice to Manager. In the event of termination without cause, Owner shall pay to Manager all earned and unpaid Base Fees, leasing commissions, and reimbursable expenses accrued up to the effective date of termination.

4.3 Post-Termination Obligations

Upon the effective date of termination or expiration of this Agreement:

1. Turnover of Funds and Records: Manager shall immediately deliver to Owner, or to its designated successor property manager, all Operating Account funds, security deposit balances, tenant files, lease agreements, keys, access cards, books, records, unexpired service contracts, and any other property belonging to Owner.
2. Final Accounting: Manager shall deliver a comprehensive final accounting statement within thirty (30) days following the date of termination, reconciling all income, expenses, security deposits, and outstanding accounts receivable.
3. Cooperation: Manager shall reasonably cooperate with Owner and any successor management company to ensure a seamless, uninterrupted transition of property operations.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable. If modification is impossible, the offending provision shall be deemed excised, and the remaining provisions of this Agreement shall remain in full force and effect.

5.2 Entire Agreement

This Agreement, together with Exhibit A and Exhibit B attached hereto, constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, of the Parties. No amendment, modification, or supplement of this Agreement shall be binding unless executed in writing by both Parties.

5.3 Force Majeure

Neither Party shall be held liable for any failure or delay in the performance of its operational obligations under this Agreement if such failure arises directly or indirectly from a Force Majeure Event, provided that the affected Party gives prompt written notice to the other Party detailing the nature and expected duration of the event. The time for performance shall be extended for a period equal to the duration of the delay incurred by reason of the Force Majeure Event.

5.4 Governing Law and Venue

This Agreement shall be construed, interpreted, and governed by the laws of the State of [Jurisdiction], without regard to its conflict of laws principles. Any legal action, suit, or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the state or federal courts located within [County], [State], and each Party hereby irrevocably submits to the personal jurisdiction of such courts.

5.5 Dispute Resolution

1. Negotiation and Mediation: In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, the designated senior executives of Owner and Manager shall first attempt to resolve the matter through good-faith negotiations. If the dispute is not resolved within fifteen (15) business days, the Parties agree to submit the dispute to non-binding mediation administered by a mutually agreed-upon mediation service provider in [City, State] before resorting to litigation or binding arbitration.
2. Attorney's Fees: In the event of any litigation, arbitration, or other legal proceeding arising out of this Agreement, the prevailing Party shall be entitled to recover from the non-prevailing Party all reasonable costs incurred, including reasonable attorneys' fees, expert witness fees, and court costs.

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6. Formal Execution Block

IN WITNESS WHEREOF, the Parties hereto have caused this Commercial Property Management Contract to be executed by their duly authorized representatives as of the Effective Date first written above.

OWNER:

[Legal Name of Property Owner]

By: _____________________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title, e.g., Managing Member / President]
Date: [Date]

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MANAGER:

[Legal Name of Property Management Company]

By: _____________________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title, e.g., Chief Executive Officer]
Date: [Date]

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EXHIBIT A: LEGAL DESCRIPTION OF THE PROPERTY

(Attach complete metes and bounds description or formal survey legal description of the commercial real property)

[Insert Legal Description Here]

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EXHIBIT B: LEASING COMMISSION SCHEDULE

(Detail the precise commissions payable to Manager for new leases, renewals, and expansions)

[Insert Commission Schedule Details Here]