Property Management Agreement
You’ve talked with a few management companies and you found one you like, now what? It’s time to review and sign the Property Management Agreement. This agreement outlines the legal terms, responsibilities and obligations of you as the owner and the property management company.
Below I highlight the most important parts of a Property Management Agreement to review before you enter into a relationship with the property management company. Please read to the end, as I also share the most important things that the agreement CAN'T tell you.
1. How Easy Is It To Cancel and Are There Fees?
We believe property owners should have flexibility when it comes to their management agreement. That’s why our agreement is month-to-month, so you aren’t locked into a long-term commitment.
If you decide to end management, we simply ask for 30 days’ notice to ensure there is enough time for a smooth transition. If you need to end the agreement sooner, we may be able to accommodate an expedited termination with Emerson’s prior approval and an Expedited Termination Fee.
2. Are There Any Hidden Fees?
Are you having trouble finding the fees the company charges you? There are management companies that charge owners over 30 different fees! Yes, 30! Ensure you’re clear on what’s included in the monthly management fee and what’s an extra cost.
3. How Much Money Do I Have To Place In Reserve?
Most property management companies have a reserve per property to pay expenses that are incurred before or after you receive the rental income each month.
Reserve amounts vary, but you should expect this amount to be anywhere from a few hundred dollars, up to one full month's rent.
4. How Fast Do I Get My Money?
How quickly does the property management company process the tenants' rent, deduct any expenses, then pay you?
You want your money ASAP! And no two companies are the same. Some companies make owner distributions in a couple weeks, some take over a month!
5. What Is The Maintenance Trigger?
One of the benefits of hiring a property management company is having a team handle day-to-day maintenance issues, from routine repairs to unexpected emergencies.
Over time, every property will experience maintenance needs—whether it’s a plumbing issue, an HVAC problem, or another repair.
To protect your property and maintain compliance with applicable health and safety requirements, we follow established maintenance protocols and work to address repairs efficiently and at reasonable costs.
Our goal is to minimize unnecessary owner involvement while keeping you informed when your approval or participation is required. Maintenance responsibilities and owner involvement may vary depending on the property management package selected.
6. What Are The Guarantees?
Two of the common fears we hear from owners are:
If either of those things happen, how will the property management company respond and will they share in the expense?
While it can’t be guaranteed that a tenant will always pay on time – will your property management company re-rent the property for free? Or better yet will they pay the legal fees on your behalf?
While guarantees like these are not common – ask “What DO you guarantee for me!”
7. Who Handles Evictions?
Although evictions should be rare, if a legal problem must be addressed, will the property management company do it for you? This is where you want to ensure you’re working with a professional property management company and NOT a realtor who does property management on the side.
You want to be sure that the company will handle ALL legal problems on your behalf including preparation and service of the legal documents required to initial the eviction process in Texas.
Beware of any management agreement language that requires YOU to involve YOUR legal counsel in cases of tenant eviction.
What the Property Management Agreement Can’t Tell You:
Because Property Management Agreements are written by attorneys to outline the legal relationship between you (the property owner) and the property management company, they can’t tell you the most important aspect when selecting a property management partner - care.
Does the property management company care about you, your property and providing a quality service?
Do they care about their reputation with residents and the Texas Real Estate Commission?
Partnering with a professional property management company that you know is looking out for your best interest and will always do the right thing, is invaluable.
I hope this information will help you make an informed decision for your property management needs. Please don’t hesitate to reach out for any of your real estate needs.