Free Commercial Property Management Agreement Template: A Comprehensive Guide

Essential Elements for a Comprehensive Agreement

A well-crafted commercial property management agreement is a crucial legal document that outlines the terms and conditions governing the relationship between a property owner and a property management company. To ensure a professional and legally sound agreement, the following essential elements should be included:

1. Identifying Information

Parties Involved: Clearly state the names and contact information of the property owner and the property management company.

Property Description: Provide a detailed description of the property, including its address, legal description, and any specific features or characteristics.

2. Scope of Services

Management Responsibilities: Specify the exact services the property management company will provide, such as rent collection, tenant screening, maintenance, and financial Reporting.

Exclusions: Clearly delineate any services that are not included in the agreement, to avoid misunderstandings.

3. Term and Termination

Agreement Duration: Establish the initial term of the agreement and outline any renewal options or automatic renewal provisions.

Termination Grounds: Specify the circumstances under which either party can terminate the agreement, such as breach of contract or material default.

4. Rent Collection and Disbursement

Rent Collection Procedures: Outline the procedures for collecting rent from tenants, including due dates, late fees, and payment methods.

Rent Disbursement: Describe how rent payments will be disbursed to the property owner, including any deductions for management fees, expenses, or reserves.

5. Financial Management

Accounting and Reporting: Specify the frequency and format of financial reports that the property management company will provide to the property owner.

Petty Cash: Establish guidelines for the management and use of petty cash funds for minor expenses.

Insurance: Address the property owner’s responsibility for maintaining insurance coverage and the property management company’s role in coordinating insurance claims.

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6. Tenant Relations

Tenant Screening: Outline the tenant screening process, including credit checks, background checks, and rental history verification.

Tenant Complaints and Disputes: Describe the procedures for handling tenant complaints and resolving disputes.

Tenant Evictions: Address the process for evicting tenants who violate the lease agreement or fail to pay rent.

7. Property Maintenance

Maintenance Responsibilities: Specify who is responsible for maintaining the property, including common areas, exterior grounds, and individual units.

Emergency Procedures: Outline the procedures for handling emergency situations, such as water leaks, power outages, or security breaches.

Capital Improvements: Address the approval process for capital improvements and how costs will be allocated.

8. Management Fees and Expenses

Management Fee Structure: Clearly state the basis for calculating the property management fee, such as a percentage of gross rental income or a flat fee.

Reimbursable Expenses: Identify any expenses that the property owner will be responsible for reimbursing to the property management company.

9. Indemnification and Liability

Indemnification: Specify the circumstances under which each party will indemnify the other for losses or damages arising from the agreement.

Limitation of Liability: Establish any limitations on the liability of either party, such as exclusions for certain types of damages or losses.

10. Governing Law and Dispute Resolution

Governing Law: Specify the jurisdiction that will govern the interpretation and enforcement of the agreement.

Dispute Resolution: Outline the procedures for resolving disputes, such as mediation or arbitration, before resorting to litigation.

Additional Considerations

Signatures: Ensure that both the property owner and the property management company sign the agreement to make it legally binding.

Amendments: Establish a process for amending the agreement if necessary, requiring written consent from both parties.

Notices: Specify how notices or communications should be sent between the parties.

By carefully addressing these essential elements and tailoring the agreement to the specific needs of the property and the parties involved, you can create a professional and comprehensive commercial property management agreement that protects the interests of both the property owner and the property management company.