The “fine print” in a contract may seem like a chore to us, but with a lack of effort, this could lead to misunderstanding. Contracts are made to eliminate confusion and provide a mutual understanding of how the relationship will function. All property management contracts should address the following.
Outline of Work
It is essential for a property management contract to outline how the project management company is going to work. In this case, the client will have an understanding of what the company is responsible for. Some of the elements of the contract outline should include:
- Services offered
- Responsibilities of rent collection, maintenance, & repair
- How tenant screening is performed
- What is included in reports and how they will be sent
An excellent property management contract should allow both parties to make amendments to it. Contract flexibility enhances longevity and acknowledges everyone who is involved to have a mutual understanding.
Many costs go into property management, but in some cases, they might be invisible to the client. If both the client and property manager can have a clear idea of the estimates and fees are structured, then there will be a clear understanding. Some costs to be aware of are laboring fees and the costs of “on-ramping.” These can include:
- The cost of drafting a new contract
- Training and hiring staff
- Paying the Salesperson
- Furnishing costs
Liability is what protects the responsible party and is extremely important to take into consideration when reading through the contract. To protect yourself, look to see if the contract has a “reasonable care” clause. This clause determines who will be held liable if there is a case of negligence from either party.
In regards to a contracts policy, it is essential to recognize the longevity of the contract and how the cancellation process works. You should adequately review the duration and expectations of the contract. Additionally, the contact should have a clear termination or cancellation clause. The termination clause should include:
- Notice to Terminate
- Fee for Termination
- Reason to Terminate
- Obligations Upon Termination