All the property management
contracts differ, so it is necessary to read it carefully to understand exactly
the terms you are approving.
Property management agreement is not
just a formality but determines -
·
What
services you will receive?
·
What
costs will be incurred?
·
What
are your rights?
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The role of this contract with La Jolla Property Management Company
is to eliminate
confusion and build a good rapport. This can help both to work smoothly in
unforeseeable circumstances, where disputes can possibly arise.
Reading the fine print may be a
boring task, but this can lead to misunderstandings related to services and
fees. Positive impression about the company’s professionalism and ethics can
distract you and make you drop your guards, while reviewing actual contract
terms and conditions.
Factors
to consider in reviewing property management agreement
Services
and fees
Get familiar with -
·
All
the services included in the total managing fee
·
What
are the services that can be attained for an extra fee?
·
What
services will never be carried out under any circumstances?
Look at the fees structure of 2 to 3
managers. If one charges 5% management fee and the others charge 7%, then don’t
avoid the latter one. Read the quotes in detail to find out what is included.
The former manager may not be considering the extras fees for services, which
you will absolutely need.
Property
owner responsibilities
This part of the contract defines
the obligations
and restrictions of property owners.
·
Example
of obligations - For maintaining proper insurance, the agreement needs to
mention in detail about the kind of insurance and coverage amount they need you
to obtain.
·
Example
of restrictions - Most of the contract will prevent property owner from
selecting tenants themselves.
Equal
housing opportunity
A section needs to say that they
sustain equal housing opportunity and abide by federal and state housing laws.
Liability
This portion limits property
manager’s legal responsibility. Generally, it protects property manager
excluding negligence on their part.
However, the property manager will
be responsible for the hired third parties carelessness.
Duration
of agreement
Avoid signing a long contract until
you obtain good results and confidence from the management company. However,
majority of managers do not sign an agreement for less than one year. Therefore
carefully evaluate the termination clause and ensure that you can cease their
service agreement, if you are unsatisfied.
Termination
clause
The cancellation or termination
clause must be very clear. It should state clearly when and why the property
manager can terminate the agreement and when the property owner can end the
contract.
Usually, a contract termination
notice is given with a time limit between 30 to 90 days. However, you will have
to pay terminating charges for ending the contract early. This charge can vary
significantly. In case, the property manager desires to cancel the contract
from their end, then ensure that you get one month notice.
You will want to sign an agreement -
·
Which
does not need to get terminated
·
Which
allows you to cancel the agreement without penalty in case the property manger
fails to find tenant in a specified time period
The duties that need to be
undertaken upon termination must be slated clearly with time.
Hire an advocate to review the
agreement, if you want to ensure that you are not missing anything.
