Contract Template for Property Management

CONTRACT TEMPLATE FOR PROPERTY MANAGEMENT

1. DOCUMENT PREAMBLE & RECITALS

This Property Management Agreement (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 / Entity], having its principal place of business at [Owner Address] (hereinafter referred to as the "Owner"), and

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

RECITALS

WHEREAS, Owner is the lawful owner or authorized representative of the real property described in Exhibit A attached hereto (the "Property"); and

WHEREAS, Manager possesses the requisite expertise, licensure, and personnel to operate, manage, and maintain residential and/or commercial real estate properties; and

WHEREAS, Owner desires to retain Manager to provide professional property management services for the Property, and Manager agrees to accept such retention under the terms and conditions set forth herein;

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 acknowledged, the Parties 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 definitions shall apply equally to the singular and plural forms of the terms defined:

1. "Affiliate" means any legal entity that directly or indirectly controls, is controlled by, or is 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 financial projection of anticipated Revenues, Operating Expenses, Capital Expenditures, and reserve allocations for the Property for a specific calendar or fiscal year, prepared by Manager and approved by Owner pursuant to Section 3.
3. "Capital Expenditures" means expenditures for major repairs, structural alterations, replacements, or improvements to the Property that extend its useful life or increase its value, exceeding the operational maintenance threshold defined in the Annual Operating Budget.
4. "Default" means the failure of either Party to perform, observe, or comply with any material covenant, agreement, obligation, or condition contained in this Agreement after the expiration of any applicable notice and cure period.
5. "Gross Receipts" means all monies, funds, rents, issues, profits, and revenue of every kind and nature derived directly or indirectly from the operation, leasing, and use of the Property, including base rents, percentage rents, utility reimbursements, parking fees, laundry income, forfeiture deposits, and insurance proceeds recovered for business interruption, but explicitly excluding security deposits until forfeited in accordance with applicable law and lease terms.
6. "Management Fee" means the compensation payable to Manager for its services rendered hereunder, as expressly calculated and set forth in Section 3 and Exhibit B.
7. "Operating Expenses" means all reasonable, necessary, and direct costs and expenses incurred by Manager in the ordinary course of managing, operating, maintaining, and servicing the Property in accordance with the Annual Operating Budget, excluding Manager's corporate overhead and general administrative expenses.
8. "Property" means the real property located at [Street Address, City, State, Zip Code], including all buildings, improvements, fixtures, personal property, common areas, and appurtenances situated thereon.
9. "Revenues" means all cash receipts collected from the operation of the Property, synonymous with Gross Receipts.
10. "Working Capital Reserve" means the initial and ongoing cash reserve fund established by Owner and maintained by Manager in a designated operational account to fund day-to-day Operating Expenses and emergency repairs.

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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. Manager accepts this appointment and agrees to use its commercially reasonable efforts, skill, and judgment in the execution of its duties. Manager shall act as the legal agent for Owner solely for the purposes expressly set forth herein. Nothing in this Agreement shall constitute a partnership, joint venture, or employer-employee relationship between Owner and Manager.

3.2 Leasing and Tenant Relations

1. Marketing and Advertising: Manager shall market available units or spaces within the Property, utilizing commercially reasonable advertising channels, signage, and listing services to secure creditworthy tenants.
2. Tenant Screening: Manager shall evaluate prospective tenants through credit checks, criminal background investigations, employment verification, and rental history audits, all conducted in strict compliance with federal, state, and local fair housing laws.
3. Execution of Leases: Manager is authorized to negotiate, execute, renew, and terminate residential and/or commercial leases on behalf of Owner, provided that all lease forms and material deviations therefrom have been pre-approved in writing by Owner.

3.3 Financial Management and Accounting

1. Collection of Revenues: Manager shall demand, collect, and receive all rents, charges, and revenues due from tenants and other sources connected with the Property. All collected funds shall be deposited promptly into a dedicated, segregated custodial trust account ("Property Operating Account") established by Manager in a federally insured financial institution, separate and apart from Manager’s corporate accounts.
2. Disbursement of Expenses: From the Property Operating Account, Manager is authorized to pay all lawful Operating Expenses, debt service (if specifically directed by Owner in writing), utility charges, contractor invoices, and taxes.
3. Financial Reporting: Manager shall deliver to Owner, no later than the [Day] day of each calendar month, a comprehensive financial statement detailing the prior month’s cash flow, income statement, balance sheet, rent roll, aged receivables report, and reconciliation of the Property Operating Account.

3.4 Maintenance, Repairs, and Capital Improvements

1. Routine Maintenance: Manager shall maintain the Property in a clean, safe, and habitable condition, performing routine maintenance, painting, janitorial services, landscaping, and prompt repairs as necessary.
2. Emergency Repairs: In the event of an emergency posing an immediate threat to life, safety, structural integrity, or significant property damage, Manager is authorized to incur and pay emergency repair expenses without prior Owner consent, provided Manager notifies Owner as soon as practicable thereafter.
3. Contractor Procurement: Manager shall competitively bid, negotiate, and execute service contracts for routine maintenance, security, waste management, and specialized repairs, ensuring all third-party contractors maintain adequate general liability and workers' compensation insurance naming Owner and Manager as additional insureds.

3.5 Compensation and Fee Structure

1. Management Fee: Owner shall pay to Manager a monthly Management Fee equal to [Insert percentage, e.g., 6%] of the gross monthly Revenues collected from the Property, or a flat fee of [Dollar Amount], whichever is greater. The Management Fee shall be deducted directly by Manager from the Property Operating Account upon the reconciliation of monthly statements.
2. Leasing Commissions: For each new lease or lease renewal executed, Owner shall pay Manager a leasing commission calculated as [Insert leasing fee structure, e.g., 50% of one month's rent for new leases].
3. Reimbursement of Expenses: Owner shall reimburse Manager for all reasonable out-of-pocket operational expenses incurred on behalf of the Property, including postage, legal document preparation fees, electronic payment processing fees, and specialized software licensing directly attributable to the Property.

3.6 Representations and Warranties

1. Owner Representations: Owner represents and warrants that it holds fee simple title to the Property (or valid leasehold interest), possesses the full legal power and authority to enter into this Agreement, and that the Property complies with all applicable zoning, environmental, building, and safety codes.
2. Manager Representations: Manager represents and warrants that it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation, holds all requisite real estate broker and property management licenses required by the State of [Jurisdiction], and possesses the operational capacity to perform its obligations hereunder.

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4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Termination for Convenience

Either Party may terminate this Agreement without cause upon providing at least [Insert number, e.g., 60] days' prior written notice to the other Party.

4.2 Termination for Cause

Either Party may terminate this Agreement immediately upon written notice if the other Party commits a material breach of any provision hereof and fails to cure such breach within thirty (30) business days following receipt of written notice detailing the specific nature of the default (the "Cure Period"). If a default cannot reasonably be cured within thirty (30) business days through the exercise of diligent efforts, the defaulting Party shall not be in breach if it commences curing within such period and continuously prosecutes the same to completion within an agreed extended timeframe not to exceed sixty (60) days.

4.3 Immediate Termination Events

This Agreement shall terminate automatically, without notice or right to cure, upon:

1. The filing of a petition in bankruptcy or insolvency by or against either Party, or the appointment of a receiver or trustee for all or substantially all of a Party's assets.
2. The revocation, suspension, or lapse of Manager’s required real estate brokerage or property management licenses.
3. The total condemnation, eminent domain taking, or physical destruction of the Property rendering it permanently uninhabitable or unusable.

4.4 Obligations Upon Termination

Upon the effective date of termination of this Agreement:

1. Manager shall immediately cease all operations on behalf of Owner and deliver to Owner all keys, access codes, books, records, tenant files, lease agreements, and unexpended funds held in the Property Operating Account within fourteen (14) business days.
2. Manager shall provide a final accounting of all Revenues and Operating Expenses up to the date of termination.
3. Owner shall pay to Manager all unpaid Management Fees, undisputed accrued expenses, and earned commissions due through the effective date of termination.

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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 or tribunal of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions of this Agreement shall remain in full force and effect.

5.2 Entire Agreement

This Agreement, including any attached exhibits, schedules, and amendments executed in writing by both Parties, constitutes the entire agreement between Owner and Manager regarding the subject matter hereof, and supersedes all prior oral or written negotiations, representations, understandings, or agreements.

5.3 Force Majeure

Neither Party shall be held liable for any failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by acts of God, flood, fire, earthquake, explosion, war, terrorism, invasion, riots, national emergencies, pandemics, epidemic outbreaks, electrical grid failures, governmental actions, or any other cause beyond the reasonable control of the affected Party (a "Force Majeure Event"), provided that the affected Party gives prompt written notice to the other Party and uses commercially reasonable efforts to resume performance as soon as practicable.

5.4 Governing Law and Jurisdiction

This Agreement, and all claims or causes of action arising out of or relating to it, shall be governed by, construed, and enforced in accordance with the substantive laws of the State of [Jurisdiction], without regard to its conflict of laws principles. The Parties irrevocably submit to the exclusive personal jurisdiction of the state and federal courts located within [County] County, [Jurisdiction].

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, breach, termination, or validity, shall be resolved through mandatory binding arbitration administered by the American Arbitration Association (AAA) in accordance with its Commercial Arbitration Rules. The place of arbitration shall be [City, State], and the proceedings shall be conducted by a single neutral arbitrator. The award rendered by the arbitrator shall be final and binding, and judgment upon the award may be entered in any court having jurisdiction thereof. The prevailing party in any such arbitration or litigation shall be entitled to recover its reasonable attorneys' fees, expert witness fees, and costs.

5.6 Amendments and Waivers

No modification, amendment, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument executed by authorized representatives of both Parties. No failure or delay by either Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof.

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6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have executed this Property Management Agreement by their duly authorized officers as of the Effective Date first written above.

OWNER:

[Legal Name of Owner Entity]

By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title]
Date: [Date of Execution]

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MANAGER:

[Legal Name of Manager Entity]

By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Signatory Title]
Date: [Date of Execution]