Landlords! Look out for the property management agreement
By Sadiya Anjum
So you think you have finally found a property manager who will deliver. But before you put your signature on the property management agreement, read it carefully and watch out for the fine print. Some times property management firms will not deliver entirely what you expect but this may be because your expectations are not part of the property management agreement. So here are a few details that you should watch out for in the agreement.
Attentiveness to your property
Most agreements will have phrases to the effect of doing the best they can in taking care of your property in a given situation. “Best” is a dicey term because it is intangible. So find out what best means: for instance, state a dilemma and see what they are offering to do in that situation. You should not have to settle for half-baked efforts.
Information and reports
Most companies will provide you with reports to keep you informed about what is happening. This is a must. Try and find out in detail which reports you will be receiving, if you can request for a report on a specific issue and how often will you be getting these reports.
Accounting is in accordance to the laws of that particular state. So the company will have to abide by those laws and a clause in the agreement will indicate to this. This really is non-negotiable so hopefully you will obtain the right amount of money. But make sure you are aware of those laws and what they dictate. However, here you can still ask them when you will receive this amount, if they will hold back a certain amount of money and what they intend to do with the security deposit they collect from the tenants.
Repairs on your property
Management companies will take responsibility for repairs on your property. But these repairs will be done by contractors or other companies they hire. The agreement generally contains a clause holding the company free of responsibility for any “acts, defaults or negligence” on part of the contractors. While this is valid, it will be unacceptable if the company hires someone who has a history of bad or negligent work. Make sure you get this clarified and included in the agreement.
Eviction of tenants
Strangely some companies do not include evictions as a part of their services. If you will have to do the dirty work of evicting tenants and handling the legal procedures during this period, it will be pretty useless to hire that company/manager. Ensure that you have the expertise and support of skilled people to take care of the eviction procedure.
Property Management Agreement termination
Every agreement will have a clause providing the details of time frame and conditions for termination of the agreement. Take note of how you can terminate the agreement and what penalties or costs you may have to suffer if you decide to end it before the time period stated in the agreement.
These are the absolute essentials that you must look out for in a property management agreement. This will not ensure a perfect property manager but without these you will be getting a raw deal for yourself. If the company provides you with good service and you are satisfied with their terms, conditions and work, then you have the green signal to sign on the dotted line.
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