Property Management Service Contract Template

PROPERTY MANAGEMENT SERVICE CONTRACT TEMPLATE

1. Document Preamble & Recitals

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

PROPERTY OWNER: [Owner/Entity Legal Name], having its principal place of business or residence at [Owner Address] (hereinafter referred to as the "Owner"), and

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

RECITALS:

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

WHEREAS, Manager is engaged in the professional business of operating, maintaining, and managing real estate properties of the type and nature of the Property; and

WHEREAS, Owner desires to retain Manager to provide comprehensive property management services, and Manager desires to accept such retention under the terms, covenants, and conditions set forth herein;

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

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2. Operational Definitions

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the meanings set forth below:

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. "Applicable Law" means all federal, state, county, and municipal statutes, codes, ordinances, regulations, rules, orders, and decrees of any governmental or quasi-governmental authority having jurisdiction over the Property, including environmental, health, safety, and accessibility laws.
3. "Default" means the failure of either Party to perform, observe, or comply with any material covenant, agreement, obligation, term, or condition of this Agreement after the expiration of any applicable notice and cure period.
4. "Disbursement Account" means the segregated commercial 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 operating expenses shall be paid.
5. "Force Majeure Event" means any act of God, war, terrorism, civil unrest, labor strike, fire, flood, earthquake, pandemic, epidemic, governmental restriction, utility failure, or any other cause beyond the reasonable control of the affected Party, which renders performance impossible or commercially impracticable.
6. "Gross Receipts" means all actual monies, rents, issues, profits, revenues, security deposits (to the extent forfeited or applied in accordance with lease terms), and income of any kind derived directly or indirectly from the operation, leasing, and use of the Property.
7. "Management Fee" means the compensation payable to Manager for its performance of services hereunder, as specifically calculated and set forth in Section 3 of this Agreement.
8. "Operating Budget" means the annual projection of anticipated Gross Receipts and operating expenses for the Property, prepared by Manager and approved in writing by Owner pursuant to Section 3.
9. "Property" means the real property and improvements commonly known as [Property Name/Street Address], more particularly described in Exhibit A, including all fixtures, equipment, common areas, and appurtenances.
10. "Working Capital Reserve" means the minimum cash balance that Owner is required to maintain in the Disbursement Account at all times to fund ongoing operations, emergency repairs, and short-term liabilities.

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3. Substantive Terms & Obligations

3.1 Appointment and Authority

Owner hereby grants to Manager the exclusive right, power, and authority to manage, operate, lease, and maintain the Property, and to act as Owner’s exclusive agent in connection therewith. Manager accepts such appointment subject to the terms and conditions of this Agreement. Manager shall have the power to execute leases, collect rents, issue notices, institute legal proceedings for the eviction of tenants or collection of rent (utilizing counsel approved by Owner), and contract for necessary goods, utilities, and services, all in accordance with the approved Operating Budget.

3.2 Leasing and Tenant Relations

1. Marketing and Advertising: Manager shall use commercially reasonable efforts to market and advertise vacant spaces within the Property, display "For Rent" or "For Lease" signage, and list the Property on relevant commercial or residential listing services.
2. Tenant Screening: Manager shall screen prospective tenants through credit checks, criminal background checks, employment verification, and rental history reviews, exercising professional prudence in tenant selection.
3. Lease Execution: Manager is authorized to negotiate, execute, renew, and terminate residential and/or commercial leases on behalf of Owner, provided that all lease forms materially conform to standard templates approved in writing by Owner.

3.3 Rent Collection and Financial Management

1. Collection of Funds: Manager shall demand, collect, and receive all Gross Receipts, rents, and other charges due from tenants or other third parties. All collections shall be deposited promptly into the Disbursement Account.
2. Account Management: Manager shall maintain complete, accurate, and separate books of account for the Property in accordance with generally accepted accounting principles (GAAP).
3. Financial Reporting: On or before the [Day] day of each calendar month, Manager shall deliver to Owner a comprehensive financial statement for the preceding month, including an income statement, balance sheet, rent roll, accounts receivable aging report, and a reconciliation of the Disbursement Account.

3.4 Maintenance, Repairs, and Capital Improvements

1. Routine Maintenance: Manager shall maintain the Property in a clean, safe, and operable condition, making all necessary routine repairs, painting, plumbing, electrical, and structural maintenance consistent with the approved Operating Budget.
2. Emergency Repairs: Manager is authorized to incur immediate expenses for emergency repairs necessary to preserve or protect the Property from imminent damage, or to protect the health, safety, and welfare of tenants or the public, regardless of whether such expense exceeds budget thresholds. Manager shall notify Owner of any emergency expenditure exceeding [Dollar Amount] within twenty-four (24) hours.
3. Vendor Contracts: Manager may enter into service contracts for utilities, trash removal, landscaping, security, and maintenance, provided such contracts do not exceed a term of [Number] months without Owner's prior written consent.

3.5 Operating Budget

Not later than [Number] days prior to the commencement of each calendar year, Manager shall prepare and submit to Owner a proposed Operating Budget for the upcoming year. Owner shall review and approve or reasonably object to the proposed Operating Budget within thirty (30) days of receipt. If Owner objects, Manager shall operate the Property under the previous year's budget, adjusted for inflation and fixed utility increases, until a new budget is approved.

3.6 Compensation and Management Fees

1. Management Fee: In consideration for the services rendered hereunder, Owner shall pay to Manager a Management Fee equal to:
   • [Percentage, e.g., 5%] of the monthly Gross Receipts collected from the Property; OR
   • A flat monthly fee of [Dollar Amount].
2. Timing of Payment: The Management Fee shall be calculated monthly and shall be deducted directly by Manager from the Disbursement Account on or before the [Day] day of each month for the preceding month's operations.
3. Leasing Commissions: Manager [shall / shall not] be entitled to an additional leasing commission equal to [Percentage or Flat Rate] for each new lease executed and [Percentage or Flat Rate] for each lease renewal.

3.7 Representations and Warranties

1. Owner Representations: Owner represents and warrants that it holds legal title or valid leasehold rights to the Property, has full power and authority to enter into this Agreement, and that the Property complies with all Applicable Laws.
2. Manager Representations: Manager represents and warrants that it is duly organized, validly existing, and in good standing under the laws of its state of organization, holds all necessary real estate broker licenses and operational permits required by Applicable Law, and possesses the requisite skill and expertise to perform the services required hereunder.

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4. Default, Termination, and Remedies

4.1 Term and Expiration

This Agreement shall commence on the Effective Date and shall continue for an initial term of [Number] year(s) (the "Initial Term"). Upon the expiration of the Initial Term, this Agreement shall automatically renew on a month-to-month basis unless either Party provides written notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term or any subsequent renewal term.

4.2 Termination for Cause

Either Party may terminate this Agreement immediately upon written notice if the other Party commits a material Default of any provision of this Agreement and fails to cure such Default within thirty (30) business days after receipt of written notice detailing the specific breach. If the Default cannot reasonably be cured within thirty (30) business days due to causes beyond the breaching Party's control, the cure period shall be extended for an additional reasonable period (not to exceed sixty (60) days total), provided the breaching Party commences cure efforts promptly and pursues them with continuous diligence.

4.3 Termination Without Cause

Owner may terminate this Agreement without cause at any time by providing [Number, e.g., 60] days prior written notice to Manager. Manager may terminate this Agreement without cause by providing [Number, e.g., 60] days prior written notice to Owner.

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, except as necessary to effectuate an orderly transition.
2. Within thirty (30) days following termination, Manager shall deliver to Owner all books, records, tenant files, keys, access codes, unexpired service contracts, and property documents in Manager’s possession or control.
3. Manager shall render a final accounting of all funds and transfer any balance in the Disbursement Account, less valid reserves for pending liabilities or undisputed fees earned, to an account designated by Owner.
4. Owner shall pay to Manager all unpaid Management Fees, undisputed expense reimbursements, and authorized contractual obligations accrued up to the date of termination.

4.5 Remedies Cumulative

All remedies specified herein are cumulative and in addition to any other remedies available to the non-defaulting Party at law or in equity. The waiver by either Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

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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 of this Agreement shall remain in full force and effect.

5.2 Entire Agreement

This Agreement, including any exhibits and attachments referenced herein, constitutes the entire agreement between Owner and Manager regarding the subject matter hereof and supersedes all prior oral or written agreements, negotiations, commitments, and understandings between the Parties. 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 liable for any failure, delay, or default in performance under this Agreement (other than the obligation to pay money) if such failure or delay arises directly or indirectly from a Force Majeure Event, provided that the affected Party uses diligent efforts to resume performance as soon as practicable.

5.4 Governing Law and Venue

This Agreement 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 jurisdiction of the state and federal courts located in [County] County, [State], for the resolution of any dispute arising out of or relating to this Agreement.

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, shall be submitted to mandatory mediation administered by [Name of Mediation Provider, e.g., the American Arbitration Association] before resorting to litigation. If mediation is unsuccessful within thirty (30) days of appointment of a mediator, the dispute shall be resolved by binding arbitration conducted in [City, State] in accordance with the commercial arbitration rules of the designated provider. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

5.6 Notices

All notices, demands, consents, and other communications required or permitted under this Agreement must be in writing and shall be deemed effectively given: (a) upon personal delivery; (b) upon confirmed transmission by electronic mail (with receipt acknowledged); (c) one (1) business day after deposit with a nationally recognized overnight courier service; or (d) three (3) business days after mailing by certified or registered mail, postage prepaid, return receipt requested, addressed to the respective Parties at the addresses set forth in the Preamble (or to such other address as a Party may designate by notice given in accordance with this Section).

5.7 Assignment

Manager shall not assign this Agreement, or any of its rights or obligations hereunder, without the prior written consent of Owner, which consent may be withheld in Owner’s sole discretion. Any attempted assignment in violation of this Section shall be null and void ab initio. Owner may assign this Agreement to any purchaser or transferee of the Property upon written notice to Manager.

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6. Formal Execution Block

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

OWNER:

[Owner/Entity Legal Name]

By: _____________________________________
Name: [Signatory Name]
Title: [Signatory Title]
Date: [Date]

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MANAGER:

[Management Company Legal Name]

By: _____________________________________
Name: [Signatory Name]
Title: [Signatory Title]
Date: [Date]