PROPERTY MANAGEMENT AGREEMENT

(Alabama – Court-Ready Template)

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

This Property Management Agreement (“Agreement”) is made and entered into as of [EFFECTIVE DATE] (“Effective Date”) by and between:

A. Owner: [LEGAL NAME OF OWNER], a [state and entity type] having a principal place of business at [ADDRESS] (“Owner”); and

B. Manager: [LEGAL NAME OF MANAGER], an Alabama–licensed real estate [broker / brokerage company] holding License No. [LICENSE NUMBER] issued by the Alabama Real Estate Commission (“AREC”) (“Manager”).

Recitals
A. Owner is the fee simple owner of the real property commonly known as [PROPERTY NAME / ADDRESS], more particularly described in Exhibit A (the “Property”).
B. Owner desires to retain Manager, and Manager desires to accept such engagement, to provide property management services for the Property in accordance with the terms and conditions set forth herein.
C. In consideration of the mutual covenants and promises contained herein, the parties agree as follows:

II. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms not defined in this Section shall have the meanings ascribed to them elsewhere in the Agreement.

“Affiliate” – Any entity that directly or indirectly controls, is controlled by, or is under common control with a party.
“Applicable Law” – All federal, state, and local statutes, regulations, rules, ordinances, and case law governing the subject matter of this Agreement, including without limitation the Alabama Real Estate Brokers License Act, Ala. Code § 34-27-1 et seq., the Real Estate Brokerage Rules of AREC, and the Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. § 4852d; 24 C.F.R. Part 35.
“Gross Rents Collected” – All amounts actually received by Manager on behalf of Owner from tenants at the Property, excluding (i) security deposits (until forfeited) and (ii) tenant reimbursements of costs not constituting rent.
“Management Fees” – The compensation payable to Manager under Section 3.4.
“Operating Account” – The bank account described in Section 3.3(b).
“Property Documents” – All leases, service contracts, warranties, plans, permits, and other records relating to the Property.
“Trust Account” – The separate, interest-bearing trust account required by Section 3.3(a) in compliance with Ala. Code § 34-27-36(a)(8)b.

[// GUIDANCE: Add additional defined terms as needed for specialized properties (e.g., “Common Areas,” “HOA,” “CAM Charges”).]

III. OPERATIVE PROVISIONS

3.1 Appointment & Scope of Services

(a) Owner hereby appoints Manager as its exclusive agent to manage, operate, control, rent, and lease the Property.
(b) Services shall include, without limitation:
1. Advertising and leasing (including broker cooperation);
2. Tenant screening in compliance with Fair Housing laws;
3. Execution, renewal, and termination of leases on forms approved by Owner;
4. Collection of rents and other amounts due;
5. Maintenance and repair coordination within the Budget (defined below);
6. Engagement and supervision of contractors and vendors;
7. Regular property inspections (minimum quarterly);
8. Eviction and enforcement actions as reasonably necessary;
9. Accounting and financial reporting; and
10. Such other services as the parties may mutually agree in writing.

3.2 Term

(a) Initial Term: [NUMBER] year(s) commencing on the Effective Date.
(b) Renewal: Automatically renew for successive one-year periods unless either party provides [30/60] days’ prior written notice of non-renewal.

3.3 Banking & Trust Accounts

(a) Trust Account. Manager shall deposit all tenant security deposits and other trust funds into a federally insured trust account titled “Trust Account – [Owner/Property Name]” in accordance with Ala. Code § 34-27-36(a)(8)b and AREC Rule 790-X-3-03. Funds shall not be commingled with Manager’s assets.
(b) Operating Account. Manager shall maintain a separate operating account for routine Property income and expenses. Owner shall maintain a minimum balance of $[AMOUNT] (“Minimum Operating Balance”).
(c) Disbursements. Manager may disburse funds only for expenditures authorized by (i) the Approved Budget, (ii) emergencies required for health- or safety-related repairs up to $[EMERGENCY THRESHOLD] per incident, or (iii) Owner’s written instruction.

3.4 Compensation

(a) Management Fee. Owner shall pay Manager a fee equal to [PERCENTAGE]% of Gross Rents Collected, payable monthly in arrears (“Management Fees”).
(b) Leasing Fee. For each new lease or renewal, Owner shall pay [AMOUNT OR %] of the first month’s rent.
(c) Maintenance Coordination Fee. [Optional]
(d) Expense Reimbursement. Owner shall reimburse Manager for out-of-pocket expenses incurred on Owner’s behalf, provided Manager submits supporting documentation.

3.5 Budget & Reporting

(a) Annual Budget. No later than [DATE] of each calendar year, Manager shall submit to Owner a proposed operating budget (the “Budget”). The Budget is subject to Owner’s written approval.
(b) Monthly Reports. Manager shall deliver to Owner, within [15] days after each month-end, (i) income and expense statement, (ii) rent roll, (iii) aged receivables, and (iv) bank reconciliations of the Trust Account and Operating Account.
(c) Audit Rights. Owner or its representatives may audit Manager’s books and records relating to the Property upon [10] business days’ notice during normal business hours.

3.6 Leasing Authority

Manager is authorized to execute lease agreements on behalf of Owner, provided all leases (i) are on forms previously approved by Owner, (ii) do not exceed [MAX TERM] years, and (iii) contain market-rate rental terms.

3.7 Termination

Either party may terminate this Agreement:
(a) For any reason upon [30/60] days’ prior written notice to the other party; or
(b) Immediately upon an Event of Default by the other party (Section 6.1).

Upon termination, Manager shall promptly deliver to Owner all Property Documents, funds, and keys, and shall cooperate in a smooth transition.

IV. REPRESENTATIONS & WARRANTIES

4.1 Mutual

Each party represents and warrants that:
(a) It is duly organized, validly existing, and in good standing under the laws of its state of formation;
(b) It has full power and authority to enter into and perform this Agreement; and
(c) This Agreement constitutes a legal, valid, and binding obligation enforceable against it in accordance with its terms.

4.2 Manager

Manager further represents and warrants that:
(a) Licensure. Manager and its key personnel hold all licenses required under Applicable Law, including an active broker’s license issued by AREC;
(b) No Proceedings. No disciplinary action that would impair Manager’s ability to perform hereunder is pending before AREC;
(c) Insurance. Manager maintains (i) professional liability (E&O) coverage of not less than $[LIMIT] per claim and (ii) general liability insurance of not less than $[LIMIT] combined single limit.

4.3 Survival

The representations and warranties in this Article IV shall survive the termination or expiration of this Agreement for a period of [12] months.

V. COVENANTS & RESTRICTIONS

5.1 Compliance

Manager shall at all times:
(a) Comply with Applicable Law, including Fair Housing, ADA, lead-based paint disclosure, and Alabama trust-account rules;
(b) Ensure that all contractors are properly licensed and insured;
(c) Maintain the Property in good order and condition, ordinary wear and tear excepted.

5.2 Notice Obligations

Manager shall promptly notify Owner in writing of:
(a) Any material tenant default or threat thereof;
(b) Any governmental notice, violation, or legal process affecting the Property;
(c) Any casualty, condemnation, or environmental condition.

5.3 Prohibited Acts

Manager shall not, without Owner’s prior written consent:
(a) Sell, encumber, or otherwise transfer any interest in the Property;
(b) Enter into any contract obligating Owner for a term exceeding [12] months or involving aggregate payments in excess of $[LIMIT];
(c) Comingle trust funds or pledge Property assets.

VI. DEFAULT & REMEDIES

6.1 Events of Default

(a) Failure to Perform. A material breach of any covenant or obligation that remains uncured for [10] business days (monetary) or [30] calendar days (non-monetary) after written notice.
(b) Insolvency. The filing of a petition in bankruptcy or similar insolvency event.
(c) License Revocation. Suspension, revocation, or expiration of Manager’s broker license.

6.2 Remedies

Upon an Event of Default, the non-defaulting party may:
1. Terminate this Agreement immediately upon written notice;
2. Offset amounts owed against sums otherwise due;
3. Seek all remedies available at law or equity, including specific performance and injunctive relief (Section 8.4); and
4. Recover reasonable attorneys’ fees and costs incurred in enforcing this Agreement.

6.3 Cumulative Remedies

All rights and remedies are cumulative and not exclusive of one another.

VII. RISK ALLOCATION

7.1 Indemnification

Manager shall indemnify, defend, and hold harmless Owner, its Affiliates, and their respective officers, directors, members, managers, employees, and agents (“Owner Indemnitees”) from and against any and all claims, damages, losses, liabilities, and expenses (including reasonable attorneys’ fees) arising out of or related to (i) Manager’s gross negligence, willful misconduct, or breach of this Agreement, or (ii) violation of Applicable Law by Manager or its personnel.

[// GUIDANCE: Revise indemnity scope to reflect negotiated risk tolerance.]

7.2 Limitation of Liability

Notwithstanding anything to the contrary herein, Manager’s aggregate liability under this Agreement shall not exceed the total Management Fees actually paid to Manager during the 12-month period immediately preceding the event giving rise to liability. This limitation shall not apply to (i) Manager’s fraud, gross negligence, or willful misconduct, (ii) amounts payable under Section 7.1 (Indemnification), or (iii) misappropriation of funds.

7.3 Insurance Requirements

Owner shall maintain (i) property insurance covering the full replacement cost of the Property, naming Manager as an additional insured and (ii) liability insurance of not less than $[LIMIT] per occurrence.

7.4 Force Majeure

Neither party shall be liable for delays or failures to perform due to events beyond its reasonable control, including acts of God, war, terrorism, epidemic, governmental order, or natural disaster, provided the affected party gives prompt written notice and resumes performance as soon as practicable.

VIII. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the State of Alabama, without regard to its conflict-of-laws principles.

8.2 Forum Selection

Subject to Section 8.3 (Arbitration), the parties consent to exclusive jurisdiction and venue in the state courts located in [COUNTY], Alabama.

8.3 Arbitration (Optional)

☐ ELECTED  ☐ NOT ELECTED
If elected, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, held in [CITY], Alabama, before a single arbitrator. Judgment on the award may be entered in any court of competent jurisdiction.

8.4 Injunctive Relief

Nothing in this Article shall limit either party’s right to seek temporary, preliminary, or permanent injunctive relief in a court of competent jurisdiction to prevent irreparable harm.

8.5 Jury Trial Waiver (Optional)

☐ ELECTED  ☐ NOT ELECTED
IF ELECTED, TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION ARISING OUT OF THIS AGREEMENT.

IX. GENERAL PROVISIONS

9.1 Amendment; Waiver. No amendment or waiver shall be effective unless in writing signed by both parties. A waiver in one instance shall not constitute a continuing waiver.

9.2 Assignment. Neither party may assign or delegate its rights or obligations without the prior written consent of the other, except Owner may assign to a successor-in-interest to the Property.

9.3 Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force, and the parties shall negotiate a valid substitute provision reflecting the original intent.

9.4 Entire Agreement. This Agreement (including exhibits) constitutes the sole and entire agreement between the parties regarding the subject matter and supersedes all prior understandings.

9.5 Successors & Assigns. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Signatures transmitted electronically (e.g., PDF, DocuSign) shall be deemed original and binding.

9.7 Notices. All notices shall be in writing and deemed given (i) upon delivery by hand, (ii) one business day after deposit with a recognized overnight courier, or (iii) three business days after mailing by certified U.S. Mail, return receipt requested, to the addresses set forth below (or as updated by notice).

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Property Management Agreement as of the Effective Date.

[// GUIDANCE: Notarization is not generally required for enforceability but may be advisable if the Agreement will be recorded. Add acknowledgment blocks if needed.]

Exhibit A – Legal Description of the Property

(Attach or insert full metes-and-bounds or lot/block description.)

Exhibit B – Approved Annual Budget

(Attach initial Budget upon Owner approval.)

Exhibit C – Schedule of Management Fees & Charges

(Detail percentages, flat fees, and pass-through costs.)

[// GUIDANCE:
1. Review and tailor the trust-account provisions to align with your internal banking setup and AREC audit standards.
2. Confirm insurance limits with risk management professionals.
3. Ensure compliance with any local ordinances (e.g., rental registration or inspection regimes).
4. Insert city/county names and notice addresses before circulation for signature.]