The management agreement: six clauses that decide the relationship

A property management agreement is mostly standard. The parts that generate arguments are few and identifiable. Scope and fee. What the management fee covers and what is billed separately — leasing fee, renewal fee, project management on larger repairs, inspections, eviction handling. A percentage that looks lower than a competitor's often is, until the add-ons are compared. The repair approval threshold. The dollar figure below which the manager acts without asking. Too low and the manager is slow and the owner is annoyed; too high and an air handler gets replaced without a conversation. This number belongs in the contract, not in anybody's head. Term and termination. How long, what notice ends it, whether there is a fee for terminating early, and — the one that matters most — what happens to the tenants, deposits, keys and records on the way out. An agreement that makes leaving expensive or messy is a problem the owner only discovers when they want to leave. Handling of funds. Which account holds the rents and deposits, when owner distributions are made, what reserve the manager keeps, and how often reconciliations are provided. Vendor arrangements and disclosure. Whether the manager owns or has an interest in any vendor used, and whether markups on repairs are charged. Both are workable; neither should be a surprise. Insurance and indemnity. Who carries what, and whether the manager is named on the owner's policy. An owner who asks about these six before signing is also telling the manager what kind of client they will be. That conversation is worth having on day one. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com