Property management agreement template

Property management agreements are a crucial tool for estate agents and landlords. But how do they work, what should they cover, how do and how should you manage your property management agreement template? Find out in this guide to property management agreements in 2023.

Alternatively you can dive straight in and download the simple property management agreement PDF above.

What is a property management agreement?

A property management agreement is a legal document that outlines the business relationship between a property owner and a property management company or a property manager. This contract contains the terms and conditions under which the manager agrees to manage a property on behalf of the property owner.

A property management agreement should set out the expectations of both parties, clearly stipulating the terms of their relationship, the scope of the manager's authority, and their contractual obligations. By doing this, a property management agreement acts as a crucial reference point, providing transparency and accountability throughout the commercial relationship.

When do you need a property management agreement?

A property management agreement is put in place when a landlord wants to entrust a company or individual to look after their property. This is a popular arrangement for a few reasons.

Firstly, property managers have specialist experience when it comes to looking after properties and arranging tenants for them. This means that they are often better placed to make strategic and financial decisions relating to the property than the landlord.

But property management agreements are particularly common when a landlord has multiple properties in different areas. It's difficult to give all of these the attention they deserve, so a landlord will usually assign a property manager to do this work on their behalf.

Why is it important to have a property management agreement in place?

Property management agreements are important because they set out clear rules for both the property owner and the manager. Properties are an expensive asset, so they carry a lot of risk.

If drafted properly, property management agreements protect everyone involved in the transaction by making sure expectations and rules are crystal clear, which can help avoid any disputes down the line.

This helps to minimize the risk typically associated with outsourcing the management of assets as the contract can set clear boundaries and minimizes the scope for error.

What should a property management agreement template include?

You now understand the importance of having a property management agreement in place. The next step is knowing what this agreement should say and include.

Typically, a property management template will outline the following things:

• Property information: As basic as it sounds, your agreement should begin with a clear identification of the property or properties involved. This includes the property address, description, and any identifying features or unique aspects. The more specific, the better!

• Scope of services: This section sets out obligations for the parties. It could include marketing the property, finding and vetting tenants, collecting rents, handling maintenance and repairs, managing tenant complaints, and even dealing with legal issues like evictions.

• Compensation and fee structure: Money matters need to be transparent. The agreement should clearly outline how much the property manager will be paid, when payments will be made, and how they will be processed. This section should also address extra fees for services not included in the regular management fee.

• Liability and dispute resolution: No one likes to think about things going wrong, but it's crucial to plan for all possibilities. This part of the agreement should define who is responsible in case of property damage, injury, or legal disputes related to the property. It should also lay out how disputes between the owner and manager will be resolved, whether through mediation, arbitration, or court proceedings.

• Term and termination details: The agreement needs to specify how long it will last, what notice is required to end it, and under what circumstances it can be terminated early. It may also include any penalties or costs associated with early termination.

• Property owner’s responsibilities: Just as the property manager's duties are outlined, so should the owner's. This could involve financial obligations, such as mortgage and insurance payments, responsibilities for specific repairs or maintenance, and any required actions in case of legal issues.

• Additional clauses: Depending on the property, you might need to add additional clauses. These could relate to renovations, restrictions on certain types of tenants, or guidelines for dealing with environmental issues like lead-based paint.

How do you process a property management agreement?

To get started, you need a property management agreement. To create one of these, you need a property management agreement template (assuming you're not intending to write this complex legal contract from scratch, which is not recommended, even for a simple Airbnb property management agreement).

After some digging, the property manager finds a template, fills in all the details, likely in fields with square brackets, crosses their fingers, and send it off to the legal team for a check-up (if there is a legal team). Legal swoops in, fixes a few things here and there, and sends it back over email.

The property manager then sends the property management agreement to the landlord for review and signing. They might have a few comments or changes, so they mark those up in a separate Word document and send it back. If there's any back-and-forth about the terms, they'll likely save a new version each time and pass it around.

Once they've eventually agreed the details of the contract, the parties need to sign it. There are a few options at this stage. Either they can sign in wet ink and scan the document, or they can use an electronic signature tool like HelloSign or DocuSign.

Once it's signed, they'll send it out to all the key stakeholders - business team, legal team, you name it - and hopefully, remember to save it in the shared drive.

Now imagine what the process of creating property management agreements looks like for estate agents and property managers responsible for lots of properties, each with their own unique characteristics and terms.

Why is this approach painful?

There are a few problems with the approach we just described:

• Tedious work: “finding the same document on our shared drive time and again is a waste of time when I could be signing more deals.”

• Control issues over document versions: “As a property manager, I'm often at a loss as to which template is the most current - do these have the right clauses?”

• Wrong templates: “Should I use the standard property management agreement template or a more specific version?”

• Unprofessional look: “Our property management agreements are so varied and lack standardization - this not only poses risk, it also appears amateurish”

• Lengthy negotiations: “Negotiations on these agreements are getting buried in my emails. It means we take a long time to finalize property management agreements and get tenants in the properties.”

• Missing metadata: “After signing, I lose visibility of our agreements - I am unsure which of our properties are governed by specific agreements.”

How to automate your property management agreement template

Fortunately, there's a faster and more effective way to create property management agreements. You can automate them. More and more forward-thinking businesses are starting to automate routine contracts like these to boost efficiency.

Hosting your property management agreement template in a contract management platform can save you time, eliminate headaches, and allow your legal and business teams to focus on higher-impact work.

With Juro's automated templates, generating a property management agreement can be done in moments. Here’s how it works.

1. Create a property management agreement template in Juro

Juro's automated contract templates can be pre-defined, approved and locked downby the business team responsible for contracting. This allows the business to set safeguards in the contract, with built-in rules and logic that makes contracts easier and safer for other teams to self-serve with and customize.

For example, you can set a rule at template-level so that the dollar value of the agreement will automatically change which clauses appear in the contract. They can do the same to vary the template depending on the billing approach you choose, and the value of the contract. This is achieved through Juro's conditional logic feature.

2. Generate property management agreements in seconds

Commercial teams can then generate property management agreements in seconds from these templates. They simply fill in a basic Q&A form with key details like the property owner's name, payment terms, and services included and watch these data points get pulled into the relevant smartfield. This is quick, easy, and doesn't need any legal expertise.

3. Send to the landlord for review and negotiation

‍After the agreement is ready, it's sent to the property owner to review. Instead of downloading it, changing things in Word, and emailing it back, they can suggest edits and leave comments directly in the browser. This way, the back-and-forth is quicker, more efficient, and all changes are tracked in one place.

4. Sign property management agreements electronically

‍When both parties are happy with the agreement, they can sign it electronically using Juro's native eSignature tool. This eliminates the need for wet ink signatures and scanning. Instead, property managers and owners can add a legally binding signature to the agreement from any device.

5. Store property management agreements securely

‍Once the agreement is signed, it's automatically saved in a secure, data-rich contract repository. This means you can find your agreements quickly when you need them, without rummaging through emails or shared drives.

Since contracts created in Juro are built as structured data, you can also create custom contract dashboards to display the key data points in your real estate contracts. You can also search through your contracts with Juro's OCR-enabled search functionality.

Automate your property management template with Juro

At Juro, we understand how important it is to get property management agreements right. However, making and managing these agreements can take up too much time and resource.

By automating this process, you save time, lower risks, and let your teams focus on higher-value tasks, like procuring new properties for you to manage.

If you're ready to join the 6000+ companies already using Juro to power their contracts, hit the button below to find out more about how Juro can streamline real estate contract management for your business.