Although managers that have been in the industry for a long time have years of experience creating property management contracts, it might seem a little intimidating if you're new to real estate management.
Fortunately, we have the information you need to ensure that your property management agreement complies with state law and contains all the important information to govern the management of residential properties in Florida.
Property Management Agreement
Before we talk about how to draw up a Florida property management agreement, it is essential to have a good understanding of what this document or legal contract is.
A property management agreement formalizes an arrangement where a property owner or investor employs a third party (a property management company or professional) to manage the day-to-day activities of their real estate.
The contract details the manager's duties to the owner and the duration of their real estate authority. Moreover, most management agreements are applicable for at least one year.
To ensure that their rental properties will be appropriately managed throughout the duration of the contract, property owners often check the credentials of a potential manager using the Department of Business and Professional Regulation online site.
Property managers attract clients because they manage rentals on a daily basis. They have faith in your ability to deliver the best outcomes with no fuss.
However, giving your firm the reins to a landlord's most valuable possession carries considerable risk. Clients frequently request many offers from various real estate firms before selecting the property management company with which they feel most at ease.
Therefore, a property management contract is essential to win against the competition and gain the sole right to look after your client's rental property. Without a written agreement in place, property managers run the risk of landlords withdrawing their interest at any time during your administration.
What To Include
A property management agreement sets the tone of the relationship between property management companies and their clients.
Therefore, it is important to pay special attention to the contents of these legal contracts. We'll provide all the information you need to include in the section below.
1. The Responsibilities of the Property Owner and the Manager's Obligations
In this section of the property management contract, you will list the obligations and responsibilities of both parties. This is designed to clearly define the property manager's duties. Typical responsibilities include collecting rent and security deposits and maintaining the rental property.
2. Management Fees
The company's fee schedule should be outlined in the agreement. In addition, this section should include any additional costs they plan to collect. It is designed to obtain consent from the owner prior to entering into the agreement.
Some businesses entice property owners to join with them by offering a reduced upfront fee, only for them to reveal later that there are several hidden costs. Not only will this earn your business a poor reputation, but it can also ruin any chances of retaining the client after the contract term has ended.
The services included in the pricing should be explicitly specified in the contract. This way, an owner can easily see what it will cost for additional services. Knowing a company's entire fee structure can allow property owners to budget and avoid any unforeseen costs.
Moreover, being as transparent as possible in this section could help you build a reputation for reliable services.
3. The Duration of the Contract
Most contracts expire automatically after one to two years. The actual time frame is determined by the property manager and the owner. Landlords frequently extend their contracts when working with reliable property management firms.
Although some property management companies let owners select their own terms, others won't accept anything less than a full year.
In general, clauses describing liabilities are necessary for all agreements. It is important to take note of where you might be held accountable.
Hold-harmless provisions are included in property management agreements to safeguard the property manager from liability unless they are irresponsible.
5. Contract Termination
Both parties can terminate the entire agreement for various reasons. To ensure that the property owner and manager do not have a hard time when it is time to terminate the contract, it is important to ensure that certain terms pertaining to contract termination are included in the agreement.
Some details to include in this section are the notice period, any applicable fees for early termination, and responsibilities that must be taken care of until the agreement is terminated.
Every real estate management company needs to understand the laws that govern rental management in Florida.
A broker's license is necessary when renting or leasing a property owner's real estate in exchange for management fees. However, Florida statute § 475.011 lists a number of circumstances in which a manager might be excused from the requirement for a license.
The property manager can carry out their management responsibilities without a broker's license if they are a permanent employee of the building owner or a licensed real estate broker.
Build Your Own
Creating your own property management agreement can be challenging, especially if you don't have the right tools. While you will find many sites offering a property management agreement template to help you build your own contract, these templates often leave much to be desired.
Fortunately, you can use DoorLoop to generate flawless property management contracts quickly and easily. Add eSignatures and personalize the agreement to meet the demands of your arrangement.
Furthermore, you can count on DoorLoop to manage every aspect of your job. It can help with everything from property listings to accounting!
Knowing how to draw up a management agreement is essential if you are a property manager. With the information we have provided in this article and an intuitive tool like DoorLoop, you can build professional contracts to set forth the terms and conditions of your arrangement.
You can try DoorLoop out for free with a demo mode. Contact us today for more information!
Under what conditions can a property management agreement be terminated?
The contract can be terminated at any time by either the owner or the management company. However, an early termination fee may apply.
Moreover, a property management arrangement may be canceled when the lease expires, and the landlord decides to stop renting the property.
It can also be terminated when a party violates the terms of the contract or once the agreed-upon rental period for the property has passed without the unit being rented.
Do I need a broker's license to be a property manager in Florida?
Yes, you will need a license unless you are an employee of the property owner or operate under a licensed real estate broker.
What are some typical property manager obligations?
A manager's obligations will vary from one agreement to the other, depending on the needs and preferences of the property owner. Here are some of the responsibilities of the property manager that are generally added in this section of the contract:
- Marketing the rental unit and running background checks on candidates
- Collecting rent and security deposits from tenants
- Maintaining the rental unit
- Managing tenant requirements
- Communicating with the property owner
- Handling evictions
How Much Do Property Managers Charge in Illinois?
It depends on the manager. Typically, managers charge between 8% and 12% of monthly rent plus expenses.