Pro-rata side letter to Investment agreement Template for United States

A Property Management Agreement sets out the legal relationship between property owners and the professionals they hire to manage their real estate. This contract spells out how a property manager will handle day-to-day operations like collecting rent, maintaining the property, and dealing with tenants.

The agreement covers key responsibilities, fees, and the length of service. It protects both parties by clearly defining what services the manager will provide, how they'll be paid, and what authority they have to make decisions. Most U.S. states require these agreements to be in writing and may have specific rules about what must be included to make them legally binding.

Use a Property Management Agreement any time you're hiring someone to manage your rental property or planning to manage properties for others. This becomes essential when dealing with multiple units, commercial properties, or when you live far from your investment properties.

The right time to put this agreement in place is before any management services begin - ideally during initial negotiations. Having it ready protects both parties from misunderstandings about responsibilities, fees, and decision-making authority. Many property investors create these agreements when expanding their portfolio beyond what they can personally manage or when entering new markets.

• Property Management Contract Agreement: The most comprehensive version, covering all aspects of long-term property management including maintenance, tenant screening, and financial reporting.
• Short Term Rental Property Management Agreement: Specialized for vacation rentals and Airbnb-style properties, with provisions for frequent turnover and dynamic pricing.
• Lease Management Contract: Focuses specifically on lease administration and tenant relationships, with less emphasis on physical property maintenance.

• Property Owners: Individuals or companies who own residential, commercial, or vacation properties and need professional management services.
• Property Management Companies: Professional firms that handle day-to-day operations, maintenance, and tenant relations on behalf of owners.
• Real Estate Attorneys: Draft and review agreements to ensure legal compliance and protect both parties' interests.
• Real Estate Investment Trusts (REITs): Large-scale property investors who often use management agreements for their portfolio properties.
• Property Managers: Individual professionals who execute the agreement's terms and serve as the main point of contact for tenants.

• Property Details: Gather complete property information, including address, type, size, and any special features or requirements.
• Service Scope: List specific management duties, from rent collection to maintenance limits and emergency procedures.
• Fee Structure: Define management fees, including base rate, leasing fees, maintenance markups, and any additional service charges.
• Authority Limits: Specify spending limits, decision-making powers, and when owner approval is needed.
• Documentation: Collect necessary licenses, insurance certificates, and banking details for both parties.
• Local Rules: Review state-specific property management regulations to ensure compliance.

• Identification Section: Full legal names and contact details of property owner and management company.
• Property Description: Detailed description of the managed property, including address and any included amenities.
• Scope of Services: Specific duties and responsibilities of the property manager.
• Compensation Terms: Clear breakdown of management fees, payment schedules, and additional charges.
• Duration and Termination: Agreement length, renewal terms, and conditions for ending the contract.
• Insurance Requirements: Required coverage types and minimum limits for both parties.
• Liability Provisions: Risk allocation and indemnification terms between parties.
• Signature Block: Dated signatures of authorized representatives from both parties.

While both documents deal with management services, a Property Management Agreement differs significantly from a Facilities Management Agreement in several key ways:

• Scope of Services: Property management focuses on tenant relations, rent collection, and property-specific maintenance, while facilities management covers broader operational aspects like workspace planning, security systems, and building-wide infrastructure.
• Revenue Handling: Property managers typically collect and process rental income, while facility managers don't usually handle direct revenue streams.
• Target Properties: Property management agreements primarily cover residential and commercial rental properties, while facilities management typically serves corporate campuses, institutions, or large commercial complexes.
• Stakeholder Relations: Property managers deal directly with tenants and lease agreements, while facility managers focus on vendor relationships and service contracts.