Signing a contract or agreement with a property management company is not just a formality. It is the sole determiner of the services you will or will not receive from it. It further informs you of the total cost you incur and, most importantly, your rights in the relationship.
A property management contract not only eliminates confusion but also creates a mutual understanding between property owners and property management companies. Moreover, it determines how a relationship between both the parties will work in foreseeable circumstances if a dispute arises.
Not reviewing the terms of a property management contract just because of a positive impression of a property management company is unwise. It could lead to misunderstandings about things like services and fees. Other legal issues can also arise due to your lack of attention.
Choosing to overlook the contract details or not reading them thoroughly is no different from hiring a property manager without interviewing him. A contract ensures that everything between the clients and the right property management company is crystal clear.
Here is an overview of key areas a property management contract should cover.
Essential of a Property Management Contract
Note that a good property agreement lists all its services and charges clearly. It anticipates the misunderstandings and spells out the best solutions in these situations.
Table of Contents
A Summary of Services
A summary or outline of services is the most important part of a property management contract. It clearly defines the scope of work and the services a property manager is responsible for. It also describes the responsibilities and rights that a property owner retains.
Some important elements related to services may include;
- Basic property management services
- Tenants screening and their approval procedure
- Rent collection responsibility
- Repair and maintenance responsibility and their approval
- Funding for repairs and maintenance
- What will the monthly report include, and how often property manager will send it
Keep in mind that the broader the horizon of work, the higher the service charges will be.
As a reputed property management company in Los Angeles, experts at RTI Properties Inc collaborated to offer you the best solutions describing a comprehensive property management contract. Call today at (310) 532-5994 for more information.
Generally, a property management company asks clients to step aside completely and allows it to manage the properties. Hence, you must know what services it includes in the management fee and how much more it will charge to fix and repair issues in the property.
Moreover, a comprehensive property management contract estimates labor and man-hour expenditures. Plus, it includes the cost of on-ramping new customers, designing a new contract for them, training staff, maintaining new offices, and much more.
That is to say, a property management company has many costs to cover, which are often invisible to the clients. That is why it is essential to understand cancellation provision as it helps property management companies to recoup initial investments they made into each property.
The limitations of the property manager’s liability also make an important part of the contract. Another name for this property management contract’s section is the Hold Harmless Clause. The liability clause typically protects the property manager (excluding cases in which a contractor hired by a company damages the property).
Property owners may include a “care clause” in the contract for their protection against liabilities. The clause ensures that the property management company will not hire contractors who have a negative history.
Generally, a property management contract includes the dates for beginning, ending, and renewing the agreement. It also specifies the laws and scenarios for each party to cancel the contract. The contracts typically allow clients or the company to cancel an agreement if they provide the notice timely (in advance).
If a property owner cancels the contract, the property management company is accounted for holding reserves, deposits, and other funds on behalf of the property.
The right to amending the services, terms, and fees in the contract is also a vital aspect of a good property management contract. With mutual consent, property owners and Management Company can make amendments to the contract. It is an excellent way to increase and improve the longevity and flexibility of a contract.
Equal Opportunity Housing Law
A property management agreement should indicate that the management company and property owner abide by federal and state “Equal Opportunity Housing law.” Adhering to the law can prevent a discrimination lawsuit.
It is worth mentioning that the tenants may bring up this lawsuit claiming the property owner has denied housing or asked them to leave the property because of gender, race, sexual orientation, disability, or other classes.
Why You Need a Property Management Contract
Initially, investing and managing properties on your own seems easy to handle the task. Once you become diversified in purchasing and investing in the properties, managing specific responsibilities and needs of each property begins to consume all your time. This is when signing a contract with a reliable property management company can make a significant difference.
The contract ensures that a property management firm takes on the responsibilities for a fee. A mutual agreement specifies that a property manager is responsible for managing rents, repairs, and other day-to-day operations of a property.
The agreement provides property owners with the necessary terms and regular reminders for both parties.
All in all, property management contracts or agreements protect the landlord’s interests. Both property management companies and property owners make a mutually beneficial relationship through this contract.
However, property owners must ensure that they understand their responsibility and the property manager’s responsibilities. If a property manager doesn’t satisfy owners, they will get the protection.
Thus, both property owners should go over the contract carefully before signing it and ensure the inclusion of relevant details. Working with reliable property management companies such as RTI properties gives you peace of mind that you’re dealing with well-qualified staff, and you will get all the services mentioned in the contract. Call us at (310) 532-5994 or Contact RTI Property Managers for more insight on property management contracts and have your keen interest in property management services in the best area of Southern California.