Example of a Property Management Agreement

PROPERTY MANAGEMENT AGREEMENT

1. DOCUMENT PREAMBLE & RECITALS

This Property Management Agreement (the "Agreement") is entered into and made effective as of [Effective Date] (the "Effective Date"), by and between:

Owner: [Owner/Company Name], having its principal place of business at [Owner Address] (hereinafter referred to as the "Owner"), and

Agent: [Agent/Management Company Name], having its principal place of business at [Agent Address] (hereinafter referred to as the "Agent").

RECITALS

WHEREAS, Owner is the legal titleholder or lawful lessee with power to lease of that certain real property described in Exhibit A attached hereto (the "Property"); and

WHEREAS, Owner desires to retain Agent to exclusively manage, operate, maintain, and service the Property, and Agent represents that it is duly licensed, qualified, and experienced to provide such professional property management services;

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 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 interest of such entity.
2. "Applicable Law" means all federal, state, county, and municipal statutes, codes, ordinances, regulations, administrative rulings, and judicial decrees having jurisdiction over the Property, its operation, or the Parties.
3. "Default Rate" means the lesser of eighteen percent (18%) per annum or the maximum rate permitted by applicable usury laws in the governing jurisdiction.
4. "Gross Receipts" means all actual cash revenues collected from the operation of the Property, including without limitation tenant rents, utility reimbursements, parking fees, laundry receipts, and forfeiture of security deposits (to the extent permitted by law), excluding security deposits held in trust until forfeited or applied, and net proceeds from the sale or refinancing of the Property.
5. "Maintenance Threshold" means the maximum expenditure Agent is authorized to incur for single, non-emergency repairs or replacements without obtaining prior written approval from Owner, which threshold is established at [Dollar Amount, e.g., $5,000.00].
6. "Operating Account" means the segregated, dedicated bank account established by Agent in the name of the Owner pursuant to Section 3.2 for the deposit of Gross Receipts and payment of Property operating expenses.
7. "Property" means the real property, improvements, fixtures, and personal property located at [Property Street Address], more fully described in Exhibit A.
8. "Working Capital Reserve" means the initial and ongoing cash balance required to be maintained in the Operating Account by Owner, set at [Dollar Amount, e.g., $10,000.00], to ensure uninterrupted payment of operational liabilities.

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3. SUBSTANTIVE TERMS & OBLIGATIONS

3.1 Appointment and Authority

Owner hereby grants to Agent the exclusive right and authority to rent, lease, operate, manage, and maintain the Property. Agent accepts such appointment and agrees to use commercially reasonable efforts, in accordance with professional property management standards, to perform all duties set forth herein. Agent is granted the power to execute, renew, or cancel leases on behalf of Owner, collect rents, institute legal proceedings for unlawful detainer or rent collection, and contract for necessary maintenance services.

3.2 Financial Management and Operating Accounts

1. Establishment of Account: Agent shall establish a separate, designated fiduciary bank account (the "Operating Account") insured by the FDIC in the name of Owner, completely segregated from Agent's corporate funds.
2. Collection of Funds: Agent shall collect all Gross Receipts, rents, and other charges due from tenants and deposit same into the Operating Account.
3. Disbursements: Agent is authorized to pay from the Operating Account all operational expenses, utility charges, maintenance costs, taxes, insurance premiums (if directed by Owner), and Agent's management compensation as outlined herein.
4. Working Capital: Owner shall fund and maintain the Working Capital Reserve within the Operating Account at all times. If funds are insufficient to cover liabilities, Agent shall notify Owner, and Owner shall wire required funds within five (5) business days.

3.3 Leasing and Tenant Relations

1. Marketing and Advertising: Agent shall actively market vacant units, list the Property, process rental applications, conduct credit, criminal, and background checks, and select tenants in strict compliance with Applicable Law, including fair housing statutes.
2. Lease Execution: Agent shall prepare and execute standard lease agreements approved by Owner's legal counsel. All leases shall be in Owner's name or Agent's name as disclosed agent for Owner.
3. Security Deposits: Agent shall collect, hold, and disburse all tenant security deposits in a separate security deposit trust account in compliance with state laws, refunding or claiming against same upon lease termination as legally required.

3.4 Maintenance, Repairs, and Capital Improvements

1. Routine Maintenance: Agent shall maintain the Property in a clean, safe, and habitable condition, engaging third-party vendors and contractors as necessary.
2. Emergency Repairs: Notwithstanding the Maintenance Threshold, Agent is authorized to incur any expense immediately required to preserve life, protect the physical structure of the Property, or prevent immediate financial or legal liability.
3. Capital Improvements: Major capital expenditures exceeding the Maintenance Threshold require Owner’s prior written authorization, except where necessitated by sudden emergencies.

3.5 Management Compensation

Owner shall pay Agent, and Agent shall accept as full compensation for its services rendered under this Agreement, the following fees:

1. Management Fee: A monthly fee equal to [Percentage, e.g., 6%] of the monthly Gross Receipts collected from the Property, payable on or before the [Day, e.g., 10th] day of each calendar month.
2. Leasing Commission: A fee equal to [Percentage, e.g., 50% of one month's rent] for each new lease executed, and [Percentage, e.g., 25%] for each lease renewal.

3.6 Representations and Warranties

1. Owner Representations: Owner represents and warrants that it holds marketable title to the Property (or lawful leasehold interest), has full corporate or legal authority to enter into this Agreement, and that the Property complies with all Applicable Laws, environmental regulations, and building codes as of the Effective Date.
2. Agent Representations: Agent represents and warrants that it is duly organized, validly existing, and licensed as a real estate broker or property management entity as required by the jurisdiction in which the Property is located, and possesses the requisite skill and staff to perform its obligations hereunder.

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4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

The occurrence of any of the following shall constitute a material breach and "Event of Default" under this Agreement:

1. Failure of Owner to pay any management fee, reimbursement, or fund the Working Capital Reserve within ten (10) days following written demand.
2. Failure of Agent to remit collected rents to Owner or account for funds in accordance with Section 3.2 within five (5) business days of reconciliation dates.
3. Breach by either Party of any material covenant, representation, or warranty contained herein.
4. The filing of a petition in bankruptcy or insolvency by or against either Party, or an assignment for the benefit of creditors.

4.2 Notice and Cure Periods

Except where a shorter period is specified for financial funding or emergencies, the non-defaulting Party shall provide written notice of default detailing the specific violation. The defaulting Party shall have thirty (30) business days from receipt of such notice to cure said default. If the default is curable but cannot reasonably be cured within thirty (30) business days, the defaulting Party shall commence cure within said period and diligently pursue completion within an absolute maximum of sixty (60) calendar days.

4.3 Termination Rights

1. Termination for Cause: Either Party may terminate this Agreement immediately upon written notice if the other Party commits an uncured Event of Default following the expiration of the cure period outlined in Section 4.2.
2. Termination Without Cause: Owner or Agent may terminate this Agreement without cause upon providing [Number, e.g., 60] days prior written notice to the non-terminating Party.

4.4 Obligations Upon Termination

Within thirty (30) days following the effective date of termination:

1. Agent shall deliver to Owner all books, records, tenant files, keys, access codes, and unexpended funds (including security deposits and operating reserves) held by Agent relating to the Property.
2. Agent shall render a final accounting report of all receipts and disbursements.
3. Owner shall pay to Agent all unpaid management fees, reimbursable expenses, and earned commissions accrued up to 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 of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable. If modification is impossible, the provision shall be severed, and the remaining provisions shall remain in full force and effect, provided that the foundational commercial intent of the Parties is not materially frustrated.

5.2 Entire Agreement

This Agreement, including any attached Exhibits, constitutes the entire agreement between Owner and Agent with respect to the subject matter hereof, and supersedes all prior oral or written negotiations, commitments, term sheets, and understandings. This Agreement may only be amended, modified, or supplemented by a written instrument duly executed by authorized representatives of both Parties.

5.3 Force Majeure

Neither Party shall be held liable for any failure or delay in performing obligations under this Agreement if such failure arises from acts of God, war, terrorism, civil unrest, epidemics, pandemics, government restrictions, severe weather events, utility failures, or other causes beyond the reasonable control of the affected Party (each, a "Force Majeure Event"). The deadline for performance shall be extended for a period equal to the duration of the Force Majeure Event.

5.4 Governing Law and Jurisdiction

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of [Jurisdiction State], without regard to its conflict of laws principles. Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located within [County Name] County, [Jurisdiction State] for the resolution of any legal proceedings arising out of this Agreement.

5.5 Dispute Resolution

Any controversy, claim, or dispute arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the [Arbitration Body, e.g., American Arbitration Association] in accordance with its commercial arbitration rules. The place of arbitration shall be [City, State]. The arbitrator(s) shall apply the substantive law of [Jurisdiction State]. Judgment on the award rendered by the arbitrator(s) 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 costs, and administrative expenses.

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6. FORMAL EXECUTION BLOCK

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

OWNER:

[Owner Legal Entity Name]

By: _________________________________________
Name: [Signatory Name]
Title: [Signatory Title]
Date: [Execution Date]

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AGENT:

[Agent Legal Entity Name]

By: _________________________________________
Name: [Signatory Name]
Title: [Signatory Title]
Date: [Execution Date]