Property Management Agreement

PROPERTY MANAGEMENT AGREEMENT

State of Arkansas

IMPORTANT PRACTITIONER NOTES

• Licensing Required: Anyone who manages property for compensation in Arkansas must hold a real estate broker's license issued by the Arkansas Real Estate Commission (Ark. Code § 17-42-301), unless an exemption applies under § 17-42-104.
• Commission Regulations: The Arkansas Real Estate Commission regulates property management activities under its administrative rules.
• Penalties: Engaging in unlicensed real estate activity may result in a civil penalty of up to $5,000 per violation.

TABLE OF CONTENTS

1. Parties and Recitals
2. Definitions
3. Appointment and Scope of Services
4. Owner's Responsibilities
5. Compensation
6. Operating Account and Financial Management
7. Insurance
8. Indemnification
9. Term and Termination
10. Licensing Compliance
11. Dispute Resolution
12. General Provisions
13. Execution Block

1. PARTIES AND RECITALS

PROPERTY MANAGEMENT AGREEMENT ("Agreement") made and entered into as of [__/__/____] ("Effective Date") by and between:

OWNER: [________________________________], a [________________________________] (entity type), with its principal place of business at [________________________________]

MANAGER: [________________________________], a [________________________________] (entity type), with its principal place of business at [________________________________]
Arkansas Real Estate License No.: [________________________________]
Broker of Record: [________________________________]

Recitals

A. Owner is the owner of the real property commonly known as [________________________________] (the "Property"), described as:

• Type: ☐ Single-family ☐ Multi-family ([____] units) ☐ Commercial ☐ Mixed-use
• Address: [________________________________]
• Legal Description: [________________________________]

B. Owner desires to engage Manager to manage the Property, and Manager desires to accept such engagement, on the terms set forth herein.

C. Manager holds a valid Arkansas real estate broker's license and is authorized to provide property management services.

2. DEFINITIONS

1. "Gross Receipts" — All rents, fees, late charges, pet fees, application fees, and other income collected from the Property.
2. "Management Fee" — The compensation payable to Manager as set forth in Section 5.
3. "Operating Account" — The bank account established by Manager for Property operations.
4. "Security Deposit Account" — A separate account for tenant security deposits per Ark. Code § 18-16-304.
5. "Lease" — Any lease, rental agreement, or license for space at the Property.
6. "Tenant" — Any person or entity occupying space at the Property under a Lease.

3. APPOINTMENT AND SCOPE OF SERVICES

3.01 Appointment

Owner hereby appoints Manager as the exclusive managing agent for the Property, and Manager accepts such appointment.

3.02 Scope of Services

Manager shall, as Owner's agent:

Rent Collection and Financial:
(a) Collect rents and other charges from Tenants;
(b) Deposit all collections into the Operating Account within [____] business days;
(c) Pay operating expenses from the Operating Account as authorized;
(d) Maintain separate books and records for the Property;
(e) Provide Owner monthly financial statements by the [____] day of each month;
(f) Prepare annual income/expense summaries for tax purposes;

Leasing and Tenant Relations:
(g) Market and advertise vacancies;
(h) Show the Property and screen prospective tenants (credit, background, references);
(i) Negotiate and execute Leases, subject to Owner approval for terms exceeding [____] months or rent below $[________];
(j) Handle Tenant relations, complaints, and requests;
(k) Enforce Lease terms and collect late fees;
(l) Manage security deposits in compliance with Ark. Code § 18-16-304;

Maintenance and Repairs:
(m) Maintain the Property in good condition and repair;
(n) Procure and supervise contractors for repairs and maintenance;
(o) Authorize emergency repairs up to $[________] without prior Owner approval;
(p) Obtain Owner approval for non-emergency expenditures exceeding $[________];

Compliance:
(q) Comply with all applicable federal, state, and local laws, including the Arkansas Uniform Residential Landlord and Tenant Act;
(r) Comply with Fair Housing laws (federal, state, and local);
(s) Manage eviction proceedings through licensed attorneys;
(t) Maintain required records and make them available for Owner inspection.

3.03 Limitations

Manager shall NOT, without Owner's prior written consent:
(a) Execute leases exceeding [____] months;
(b) Make capital improvements exceeding $[________];
(c) Borrow money or encumber the Property;
(d) Settle claims exceeding $[________].

4. OWNER'S RESPONSIBILITIES

Owner shall:
(a) Maintain adequate funds in the Operating Account (minimum balance: $[________]);
(b) Provide Manager with authority to act on Owner's behalf;
(c) Maintain required insurance coverages (see Section 7);
(d) Approve annual budgets within [____] days of submission;
(e) Approve capital expenditures exceeding $[________];
(f) Comply with all applicable laws regarding the Property;
(g) Notify Manager promptly of any material facts affecting the Property.

5. COMPENSATION

5.01 Management Fee

Owner shall pay Manager a monthly Management Fee equal to [____]% of Gross Receipts, payable on the [____] day of each month. Manager may deduct the fee from the Operating Account.

5.02 Leasing Commissions

☐ New Leases: [____]% of first year's gross rent
☐ Renewals: [____]% of renewal term's gross rent
☐ Flat fee: $[________] per new lease; $[________] per renewal

5.03 Additional Services

5.04 Expense Reimbursement

Manager shall be reimbursed for reasonable, pre-approved out-of-pocket expenses related to Property management.

6. OPERATING ACCOUNT AND FINANCIAL MANAGEMENT

(a) Manager shall establish and maintain an Operating Account at a federally insured financial institution;
(b) All Gross Receipts shall be deposited into the Operating Account;
(c) Security deposits shall be held in a separate Security Deposit Account per Ark. Code § 18-16-304;
(d) Manager shall not commingle Property funds with Manager's personal or business funds;
(e) Owner may audit the Operating Account upon reasonable notice.

7. INSURANCE

Manager shall maintain:

(a) Commercial General Liability Insurance: minimum $[________] per occurrence / $[________] aggregate;
(b) Professional Liability/E&O Insurance: minimum $[________];
(c) Workers' Compensation Insurance as required by Arkansas law;
(d) Fidelity/Crime Bond: minimum $[________].

Owner shall maintain:

(a) Property/Casualty Insurance covering the Property;
(b) Liability Insurance naming Manager as additional insured;
(c) Loss of Rents/Business Interruption Insurance (recommended).

8. INDEMNIFICATION

8.01 Manager's Indemnity

Manager shall indemnify, defend, and hold harmless Owner from claims arising from Manager's negligence, willful misconduct, or breach of this Agreement.

8.02 Owner's Indemnity

Owner shall indemnify, defend, and hold harmless Manager from claims arising from: (a) the condition of the Property; (b) Owner's acts or omissions; (c) any matter not caused by Manager's negligence.

8.03 Limitation of Liability

Neither party shall be liable for consequential, special, or punitive damages. Manager's aggregate liability shall not exceed the Management Fees paid in the preceding twelve (12) months.

9. TERM AND TERMINATION

9.01 Term

This Agreement commences on the Effective Date and continues for [____] year(s), automatically renewing for successive one-year terms unless terminated.

9.02 Termination

(a) Either party may terminate upon [____] days' written notice;
(b) Owner may terminate immediately for: (i) Manager's material breach; (ii) loss of real estate license; (iii) fraud or misconduct;
(c) Manager may terminate immediately if Owner fails to fund the Operating Account after [____] days' written notice.

9.03 Transition Obligations

Upon termination, Manager shall within [____] days:
(a) Deliver all records, keys, and documents to Owner or successor;
(b) Transfer all funds (Operating Account and Security Deposit Account);
(c) Provide a final accounting;
(d) Assign (or terminate at Owner's election) all service contracts;
(e) Cooperate with successor manager.

10. LICENSING COMPLIANCE

10.01 Arkansas Real Estate Commission

Manager represents and warrants that:
(a) Manager holds a valid Arkansas real estate broker's license (License No. [________________________________]);
(b) Manager will maintain the license in good standing throughout the term;
(c) Manager will comply with all Arkansas Real Estate Commission regulations;
(d) Manager will promptly notify Owner of any disciplinary action, suspension, or revocation.

10.02 Continuing Education

Manager shall complete all continuing education requirements mandated by the Commission.

11. DISPUTE RESOLUTION

11.01 Governing Law

Arkansas law, without regard to conflict-of-laws principles.

11.02 Forum

State courts of [________________________________] County, Arkansas.

11.03 Arbitration (Optional)

☐ Disputes shall be resolved by binding arbitration under [JAMS / AAA] rules in [________________________________], Arkansas.
☐ Arbitration is waived; all disputes shall be resolved in the courts identified above.

11.04 Attorney Fees

The prevailing party in any action shall be entitled to reasonable attorney fees and costs.

11.05 Mediation

Before initiating litigation or arbitration, the parties shall attempt good-faith mediation for a period of [____] days.

12. GENERAL PROVISIONS

1. Notices. All notices in writing to addresses stated above. Effective upon receipt (personal delivery) or 3 days after mailing (certified mail).
2. Assignment. Manager shall not assign this Agreement without Owner's prior written consent.
3. Entire Agreement. This Agreement constitutes the entire agreement between the parties.
4. Amendments. Must be in writing signed by both parties.
5. Severability. Invalid provisions severed.
6. Counterparts; Electronic Signatures. Permitted.
7. Confidentiality. Manager shall maintain confidentiality of Owner's financial and business information.
8. Independent Contractor. Manager is an independent contractor, not an employee of Owner.

13. EXECUTION BLOCK

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

OWNER:
[________________________________]
By: ____________________________________
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

MANAGER:
[________________________________]
By: ____________________________________
Name: [________________________________]
Title: [________________________________]
Arkansas RE License No.: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

1. Ark. Code § 17-42-101 et seq. — Arkansas Real Estate License Law
2. Ark. Code § 17-42-301 — Licensing Requirements
3. Ark. Code § 18-17-401 et seq. — Uniform Residential Landlord and Tenant Act
4. Ark. Code § 18-16-304 — Security Deposits
5. Arkansas Real Estate Commission — https://arec.arkansas.gov
6. Arkansas Bar Association — www.arkbar.com

This Agreement is intended to comply with Arkansas real estate law and Commission regulations. A valid Arkansas real estate broker's license is required to manage property for compensation. This template does not constitute legal advice. Consult a licensed Arkansas attorney.