PROPERTY MANAGEMENT AGREEMENT
(California – Court-Ready Template)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
3.1 Appointment & Scope of Authority
3.2 Term & Renewal
3.3 Compensation
3.4 Trust Funds & Accounting
3.5 Leasing & Tenant Relations
3.6 Maintenance & Repairs - Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
7.1 Indemnification
7.2 Limitation of Liability
7.3 Insurance - Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
This Property Management Agreement (“Agreement”) is entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
• [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] (“Owner”); and
• [MANAGER LEGAL NAME], a [STATE] [ENTITY TYPE], holding California Department of Real Estate (“DRE”) Broker License No. [LICENSE #] (“Manager”).
Owner and Manager are each a “Party” and collectively the “Parties.”
Recitals
A. Owner is the fee simple owner of the real property commonly known as [PROPERTY ADDRESS / LEGAL DESCRIPTION] (the “Property”).
B. Manager is duly licensed and qualified under applicable California Real Estate Law to provide property management services.
C. Owner desires to engage Manager, and Manager agrees to accept such engagement, subject to the terms and conditions herein.
For good and valuable consideration, the receipt and adequacy of which are acknowledged, the Parties agree as follows:
2. DEFINITIONS
For ease of reference, capitalized terms used in this Agreement have the meanings set forth below:
“Affiliate” – any entity controlling, controlled by, or under common control with a Party.
“Applicable Law” – all federal, state, county, and municipal statutes, regulations, ordinances, and codes applicable to the Property or the performance of this Agreement, including California Real Estate Law and Fair Housing laws.
“Approved Budget” – the annual operating budget for the Property approved by Owner pursuant to Section 3.1(f).
“Gross Rent Proceeds” – all amounts collected from tenants, licensees, or occupants of the Property, excluding security deposits until lawfully forfeited.
“Management Fee” – the compensation payable to Manager under Section 3.3(a).
“Trust Funds” – tenant rents, security deposits, pet deposits, and other monies belonging to or for the benefit of Owner or tenants which are required by Applicable Law to be held in a trust account.
[// GUIDANCE: Add or delete defined terms to match project specifics; maintain alphabetical order.]
3. OPERATIVE PROVISIONS
3.1 Appointment & Scope of Authority
a. Exclusive Agency. Owner hereby appoints Manager as the sole and exclusive agent to manage, operate, and lease the Property, and Manager hereby accepts such appointment.
b. General Powers. Subject to the limitations herein, Manager shall have all authority reasonably necessary or desirable for the proper management and operation of the Property, including the powers enumerated in this Section 3.1.
c. Leasing Authority. Manager may negotiate, execute, extend, and terminate residential leases on Owner’s behalf, provided that (i) no lease term shall exceed [MAX LEASE TERM] months, and (ii) all leases shall be in a form approved by Owner.
d. Expenditures. Manager may expend up to [EXPENSE LIMIT] per individual item or service without prior Owner approval and may make emergency expenditures as required for the preservation of life or property.
e. Personnel. Manager may hire, supervise, and discharge on-site personnel as independent contractors or employees of Manager.
f. Budgeting. Not less than [#] days prior to each fiscal year, Manager shall submit a proposed operating budget to Owner for approval.
3.2 Term & Renewal
a. Initial Term. The term of this Agreement shall commence on the Effective Date and continue for [INITIAL TERM] years (the “Initial Term”).
b. Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive one-year periods unless either Party gives at least [90] days’ prior written notice of non-renewal.
3.3 Compensation
a. Management Fee. Owner shall pay Manager [__]% of monthly Gross Rent Proceeds, payable on or before the [10th] day of each calendar month.
b. Leasing Fee. For each new lease or renewal, Owner shall pay a leasing fee equal to [__]% of the first full month’s rent.
c. Reimbursement of Costs. Owner shall reimburse Manager for all reasonable, out-of-pocket costs incurred in the performance of this Agreement that are (i) within the Approved Budget or (ii) otherwise approved by Owner in writing.
d. Late Charge. Any undisputed amount not paid within [15] days after due shall bear interest at the lesser of (i) ten percent (10%) per annum or (ii) the maximum rate permitted by Applicable Law.
3.4 Trust Funds & Accounting
a. Trust Account. Manager shall deposit all Trust Funds in a separate, interest-bearing trust account maintained in a California-chartered bank or savings institution, titled “Trust Account – [OWNER NAME], [PROPERTY NAME].”
b. Signatories. All withdrawals shall require the signatures of [AT LEAST TWO] authorized representatives of Manager.
c. Recordkeeping. Manager shall maintain complete and accurate trust account records in conformity with California Department of Real Estate rules and shall make such records available for Owner inspection upon [3] business days’ prior notice.
d. Reporting. Within [15] days after month-end, Manager shall deliver to Owner (i) an income and expense statement, (ii) a general ledger, (iii) a rent roll, and (iv) bank reconciliation for the trust account.
e. Annual Statement. Within [60] days after the end of each fiscal year, Manager shall furnish an annual statement of operations and a summary of Trust Fund activity.
[// GUIDANCE: Consider aligning report formats with Owner’s accounting software to streamline integration.]
3.5 Leasing & Tenant Relations
a. Marketing. Manager shall advertise available units using commercially reasonable channels and compliant advertising material.
b. Tenant Screening. Manager shall apply uniform, written tenant-selection criteria consistent with fair housing and credit reporting laws.
c. Security Deposits. Manager shall collect, hold, and account for security deposits in the trust account in accordance with California Civil Code § 1950.5 and other Applicable Law.
d. Legal Proceedings. Manager may institute unlawful detainer actions on Owner’s behalf using counsel approved by Owner; all litigation costs are pass-through expenses to Owner.
3.6 Maintenance & Repairs
a. Routine Maintenance. Manager shall maintain the Property in a clean, safe, and tenantable condition, performing all routine maintenance consistent with the Approved Budget.
b. Capital Improvements. Capital expenditures in excess of [CAPEX THRESHOLD] require prior Owner approval except in emergencies.
c. Vendor Contracts. Manager shall use licensed and insured contractors and shall obtain at least [2] competitive bids for projects exceeding [BID THRESHOLD].
4. REPRESENTATIONS & WARRANTIES
4.1 Mutual Representations. Each Party represents and warrants that:
a. it is duly organized, validly existing, and in good standing under the laws of its jurisdiction;
b. it has full power and authority to enter into and perform this Agreement; and
c. the execution of this Agreement does not violate any agreement binding upon it.
4.2 Manager’s Additional Representations. Manager further represents and warrants that:
a. Licensing. Manager holds and shall maintain a current, unencumbered California real estate broker’s license.
b. Insurance. Manager maintains the insurance coverages specified in Section 7.3.
c. Compliance. All services shall be performed in material compliance with Applicable Law and the standard of care generally exercised by first-class property managers in the State of California.
All representations and warranties survive the termination of this Agreement for a period of one (1) year.
5. COVENANTS & RESTRICTIONS
a. Compliance with Laws. Manager shall at all times comply with Applicable Law, including California Trust Account Rules, wage and hour laws, and fair housing regulations.
b. Notices. Manager shall promptly transmit to Owner any notice of violation, citation, or legal process relating to the Property.
c. Ethical Standards. Manager shall not commingle Trust Funds with its own funds or those of any other principal.
d. Owner Cooperation. Owner shall timely provide all documents, consents, and funds reasonably required for Manager’s performance.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute an “Event of Default”:
a. Monetary default not cured within [10] days after written notice;
b. Material non-monetary breach not cured within [30] days (or, if not curable within 30 days, diligently commenced and completed within a reasonable period);
c. Insolvency, assignment for benefit of creditors, or commencement of bankruptcy proceedings;
d. Revocation, suspension, or expiration of Manager’s DRE license.
6.2 Remedies. Upon an Event of Default, the non-defaulting Party may:
a. terminate this Agreement immediately by written notice;
b. pursue injunctive relief, specific performance, or damages; and
c. recover reasonable attorneys’ fees and costs incurred in enforcing this Agreement.
[// GUIDANCE: Consider adding a liquidated damages clause if the Property has significant vacancy risk.]
7. RISK ALLOCATION
7.1 Indemnification
Manager shall indemnify, defend, and hold harmless Owner, its Affiliates, and their respective officers, directors, managers, members, shareholders, employees, and agents (collectively, “Owner Indemnitees”) from and against any and all losses, liabilities, claims, damages, and expenses (including reasonable attorneys’ fees) arising out of or relating to (i) Manager’s negligence, willful misconduct, or breach of this Agreement, or (ii) any violation of Applicable Law by Manager or its agents.
7.2 Limitation of Liability
Notwithstanding any provision to the contrary, Manager’s aggregate liability to Owner under this Agreement shall not exceed the total Management Fees actually received by Manager during the twelve (12) months immediately preceding the event giving rise to the claim. This limitation does not apply to claims arising from Manager’s fraud or willful misconduct.
7.3 Insurance
a. Manager Coverage. Manager shall maintain at its expense:
i. Commercial General Liability insurance with limits of not less than $[1,000,000] per occurrence and $[2,000,000] aggregate;
ii. Errors & Omissions/Professional Liability insurance with limits of not less than $[1,000,000] per claim;
iii. Workers’ Compensation insurance as required by law.
b. Owner Coverage. Owner shall maintain property insurance for full replacement cost and liability insurance naming Manager as an additional insured.
7.4 Force Majeure
Neither Party shall be liable for failure to perform caused by events beyond its reasonable control, including acts of God, natural disasters, acts of terrorism, epidemics, or governmental orders (“Force Majeure Event”), provided the affected Party gives prompt notice and resumes performance as soon as practicable.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement is governed by the laws of the State of California without regard to its conflict-of-laws rules.
8.2 Forum Selection
Subject to Section 8.3, the Parties irrevocably submit to the exclusive jurisdiction of the state courts located in [COUNTY], California for any suit, action, or proceeding arising out of or relating to this Agreement.
8.3 Optional Arbitration
☐ Initials: _ / _
If BOTH Parties initial above, any dispute shall be resolved by binding arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction.
8.4 Jury Trial Waiver
☐ Initials: _ / _
IF INITIALLED, EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT.
8.5 Injunctive Relief
Nothing herein shall limit either Party’s right to seek provisional or injunctive relief in any court of competent jurisdiction to prevent irreparable harm pending resolution on the merits.
9. GENERAL PROVISIONS
a. Amendments. No amendment or waiver is effective unless in writing and signed by both Parties.
b. Assignment. Manager may not assign or delegate its rights or duties without Owner’s prior written consent; any attempted assignment in violation hereof is void.
c. Successors & Assigns. This Agreement binds and benefits the Parties and their respective successors and permitted assigns.
d. Severability. If any provision is held unenforceable, the remainder of the Agreement shall remain in full force, and the unlawful provision shall be deemed modified to the minimum extent necessary to make it lawful.
e. Integration. This Agreement (including exhibits) constitutes the entire understanding between the Parties and supersedes all prior agreements regarding its subject matter.
f. Counterparts; E-Signatures. This Agreement may be executed in counterparts (including PDF or electronic signatures), each of which is deemed an original and all of which together constitute one instrument.
g. Notice. All notices must be in writing and delivered (i) personally, (ii) by nationally recognized overnight courier, or (iii) by certified mail, return receipt requested, to the addresses set forth below (or such other address as a Party designates by notice). Notice is deemed given (A) upon personal delivery, (B) one business day after deposit with an overnight courier, or (C) three business days after mailing.
10. EXECUTION BLOCK
OWNER:
[OWNER LEGAL NAME]
By: ______
Name: [PRINT NAME]
Title: [TITLE]
Date: __________
MANAGER:
[MANAGER LEGAL NAME]
By: ______
Name: [PRINT NAME]
Title: [TITLE]
Date: __________
[NOTARIZATION BLOCK – USE IF REQUIRED UNDER CA LAW FOR RECORDING PURPOSES]
[// GUIDANCE:
1. Attach Exhibit A (Form Residential Lease), Exhibit B (Approved Budget), and Exhibit C (Management Fee Schedule) as needed.
2. Verify local ordinances (e.g., Los Angeles Rent Stabilization) for property-specific compliance.
3. Reconcile insurance requirements with Owner’s lender instructions.
4. Confirm federal lead-based paint disclosures for pre-1978 housing.]