The contract that you sign with a property management company is vital. Don’t think for a second that the piece (or pieces) of paper is only for mere formality. Just like with all types of contracts, you need to ensure that your contract is of the best quality. Aside from reading the contract thoroughly, it’s essential to know what makes a good contract for property management.Confused? Read on to find out more on what makes a great property management contract:

Services

The first thing that the contract must contain is the property management services that you will pay for. Every service must be written in detail on the contract, as well as other services that can be done for an extra fee. For extra services purchased, make sure that they’re reflected on the contract.

Fees

How much the property management company will charge for their services must be included in the contract. The most common type of fee is the management fee and you should pay close attention to how it is broken down. Fees for extra services must also be thoroughly broken down into the details as well.

Property Owner’s Responsibilities

Typically on the second part of a property management contract, the Property Owner’s Responsibilities has all the details of your responsibilities as a landlord. It contains a breakdown of your obligations. For example, one of the examples of a landlord’s responsibility is to set up and maintain a reserve fund.

Contract Amendments

In the case of changes on the terms, services, fees, and conditions, there must be an agreement listed down on the contract. A good property management contract allows both parties to make amendments to it should the need arise.

Contract Duration

Contracts must have specific beginning and end dates along with renewal procedures. It should also specify how either party may end the contract. Generally, cancellations are allowed when a notice is submitted within a certain number of days in advance. In the event that there’s a contract cancellation, any deposits, reserves, etc., that the company is holding on behalf of the rental property owner must be accounted for.

Indemnification

Property management contracts must specify that property owners must hold harmless the property manager for any liability that may arise as a result of the reasonable exercise of their responsibilities as outlined in the services sections.

Conclusion

Having a full understanding of a property management contract is essential. Therefore, you must know all the necessary details a property management contract must contain, such as the services, fees, contract amendments, and more.

Reading the fine print may seem like a chore, but not doing so may lead to stressful misunderstandings. Before you hire the services of a property management company, it’s crucial that you layout everything first on paper to ensure that both parties are on the same page.

You can also seek the advice of a lawyer when you’re about to sign a property management contract. This is a great way to ensure that all the essential details are listed on the contract. After all, property management services are an investment, so you better have your money’s worth!

It would also be a great idea to get a copy of the contract from a property management company before you decide to hire them.

Fahel & Co is a leading property management firm in Ottawa. Contact us today!

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