PROPERTY MANAGEMENT AGREEMENT
(Illinois – Comprehensive Form)
TABLE OF CONTENTS
- Document Header
- Definitions
- Appointment & Scope of Authority
- Manager Duties
- Owner Duties
- Compensation & Expenses
- Term; Renewal; Termination
- Representations, Warranties & Covenants
- Insurance; Risk Allocation
- Default & Remedies
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Title
Property Management Agreement (the “Agreement”)
1.2 Parties
This Agreement is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
• [OWNER LEGAL NAME], a [state/jurisdiction] [entity type] (“Owner”); and
• [MANAGER LEGAL NAME], a [state/jurisdiction] [entity type] (“Manager”).
1.3 Recitals
A. Owner is the fee simple owner of certain real property commonly known as [PROPERTY ADDRESS / LEGAL DESCRIPTION] (the “Property”).
B. Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, operate, control, rent, and lease the Property on the terms set forth herein.
C. The parties enter this Agreement in consideration of the mutual promises, covenants, and conditions contained herein and other good and valuable consideration, the sufficiency of which is acknowledged.
1.4 Governing Law & Jurisdiction
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois, without regard to conflict-of-law principles.
[// GUIDANCE: Recitals provide context and consideration; they are not operative but may guide interpretation.]
2. DEFINITIONS
For ease of reference, capitalized terms have the meanings set forth below and shall apply equally to singular and plural forms.
“Affiliate” means any entity controlling, controlled by, or under common control with a party.
“Applicable Law” means all federal, state (including Illinois), county, and municipal statutes, regulations, ordinances, codes, case law, and common law affecting the Property or the performance of this Agreement.
“Gross Receipts” means all rents and other income actually received from the Property, excluding security deposits unless and until applied.
“Leasing Fee” has the meaning given in Section 6.2.
“Management Fee” has the meaning given in Section 6.1.
“Trust Account” means a segregated, interest-bearing escrow account established and maintained under Section 4.2 in conformity with Illinois trust account requirements for licensed real estate brokers.
[// GUIDANCE: Keep definitions alphabetical; add or delete as needed.]
3. APPOINTMENT & SCOPE OF AUTHORITY
3.1 Exclusive Appointment. Owner hereby appoints Manager as its exclusive agent and attorney-in-fact to manage and operate the Property, and Manager accepts such appointment, subject to the limitations of this Agreement and Applicable Law.
3.2 Agency & Licensing. Manager shall serve as fiduciary agent of Owner and hereby certifies that it (i) holds all licenses required under the Illinois Real Estate License Act, as amended, and any related regulations issued by the Illinois Department of Financial and Professional Regulation (“IDFPR”); and (ii) shall maintain such licensure in good standing throughout the Term.
3.3 General Authority. Subject to any monetary limits in Section 4.3 and emergency authority in Section 4.4, Manager is authorized to:
a. advertise and lease units;
b. execute leases, renewals, amendments, and terminations;
c. collect rents and other charges;
d. institute and prosecute eviction or collection actions;
e. contract for utilities, services, repairs, and capital improvements; and
f. take any other action reasonably necessary or desirable for the prudent management of the Property.
3.4 Limitations on Authority. Manager shall not:
a. sell, convey, or encumber the Property;
b. materially alter structural components without Owner’s prior written consent;
c. confess judgment against Owner; or
d. execute any agreement extending beyond the Term except residential leases not exceeding [MAX LEASE TERM – e.g., 12 months].
4. MANAGER DUTIES
4.1 Standard of Performance. Manager shall perform its obligations diligently, in good faith, and in accordance with (i) commercially reasonable standards of professional property management, and (ii) Applicable Law.
4.2 Trust Account Rules. Manager shall deposit all Gross Receipts and security deposits into a Trust Account titled “[OWNER NAME] – Trust Account”, established at [BANK NAME], and shall maintain separate accounting in compliance with Illinois trust account rules.
4.3 Expenditure Limits. Manager may expend up to [$____] for any single non-emergency item without prior Owner approval.
4.4 Emergency Authority. In an emergency threatening life, safety, or material property damage, Manager may act beyond monetary limits, provided Manager promptly notifies Owner.
4.5 Records & Reporting.
a. Maintain complete books and records in accordance with GAAP and IDFPR requirements;
b. Provide Owner with monthly statements within [__] days after month-end;
c. Furnish annual operating budget and year-end financials.
4.6 Leasing & Marketing. Manager shall use commercially reasonable efforts to lease vacancies, including compliance with federal Fair Housing laws and Illinois Human Rights Act.
4.7 Compliance & Disclosures. Manager shall prepare, deliver, and obtain all tenant disclosures required by Applicable Law, including but not limited to lead-based paint, radon, mold, municipal rental ordinances, and any other statutory notices.
4.8 Staff & Contractors. Manager may hire, supervise, and discharge on-site personnel and third-party contractors; all such parties shall be treated as independent contractors unless specifically approved otherwise in writing by Owner.
4.9 Insurance Claims. Manager shall promptly notify Owner of, and assist in processing, all casualty or liability claims involving the Property.
5. OWNER DUTIES
5.1 Funding Requirements. Owner shall advance or reimburse all sums reasonably necessary for operation of the Property, including but not limited to taxes, insurance, repairs, and capital expenditures.
5.2 Information. Owner shall timely provide Manager with all records, keys, manuals, plans, warranties, and other information reasonably required.
5.3 Insurance. Owner shall maintain the insurance coverages described in Section 9.3 and name Manager (and its Affiliates) as additional insureds where commercially available at no extra cost.
5.4 Legal Cooperation. Owner shall cooperate in all legal proceedings relating to the Property, including signing pleadings and providing testimony when necessary.
6. COMPENSATION & EXPENSES
6.1 Management Fee. Owner shall pay Manager a monthly management fee equal to [__ %] of Gross Receipts (the “Management Fee”), payable on or before the [__th] day of the following month.
[// GUIDANCE: Replace percentage with flat amount if preferred.]
6.2 Leasing Fee. For each new lease or renewal procured by Manager, Owner shall pay a Leasing Fee of [__ %] of the first month’s rent or [$____] flat per lease.
6.3 Expense Reimbursement. Owner shall reimburse Manager for all out-of-pocket expenses reasonably incurred in performance of this Agreement, including court costs, filing fees, and approved marketing costs.
6.4 Late Payment. Unpaid amounts shall accrue interest at [__ %] per annum (or the maximum rate permitted by Applicable Law, if lower).
7. TERM; RENEWAL; TERMINATION
7.1 Initial Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and continue for [__] months, unless earlier terminated as provided herein.
7.2 Renewal. The Term shall automatically renew for successive [one-year] periods unless either party delivers written notice of non-renewal at least [30] days prior to the end of the then-current Term.
7.3 Termination for Convenience. Either party may terminate this Agreement without cause upon [30/60] days’ prior written notice to the other.
7.4 Termination for Cause. Either party may terminate immediately upon written notice if the other party:
a. materially breaches any provision and fails to cure within [10] days’ notice;
b. files for bankruptcy or becomes insolvent; or
c. loses any required license (for Manager) or ownership interest (for Owner).
7.5 Effect of Termination. Upon termination:
a. Manager shall deliver all books, records, funds, keys, and tenant information to Owner or its designee within [15] days;
b. Earned but unpaid fees shall be immediately due;
c. Sections 8, 9, 10, 11, and 12 survive termination.
8. REPRESENTATIONS, WARRANTIES & COVENANTS
8.1 Mutual. Each party represents that it has full power and authority to enter into and perform this Agreement.
8.2 Manager Representations. Manager further represents and warrants that:
a. It holds and shall maintain all licenses required under Applicable Law;
b. It is not subject to any disciplinary action by IDFPR;
c. It will comply with all trust accounting, record-keeping, disclosure, and fair-housing obligations.
8.3 Owner Representations. Owner represents and warrants that:
a. Owner holds marketable title to the Property, free of undisclosed liens;
b. No hazardous materials are knowingly present except as disclosed in writing;
c. Owner has obtained all requisite governmental approvals for occupancy and use.
8.4 Survival. All representations and warranties shall survive the termination of this Agreement for a period of [12] months.
9. INSURANCE; RISK ALLOCATION
9.1 Insurance—Owner. Owner shall maintain at its sole expense:
a. Property insurance (special form) covering 100% replacement cost;
b. Commercial general liability insurance with limits not less than [$1,000,000] per occurrence;
c. Loss of rents/business income coverage for at least [6] months.
9.2 Insurance—Manager. Manager shall maintain:
a. Errors & Omissions (professional liability) insurance with limits not less than [$1,000,000] per claim; and
b. Workers’ compensation insurance as required by law.
9.3 Proof of Coverage. Each party shall furnish certificates of insurance within [10] days after the Effective Date and upon renewal.
9.4 Indemnification. Manager shall indemnify, defend, and hold harmless Owner and its Affiliates against all claims, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of (i) Manager’s gross negligence, willful misconduct, or breach of this Agreement; or (ii) violations of Applicable Law by Manager or its employees/agents.
9.5 Limitation of Liability. Manager’s aggregate liability under this Agreement shall not exceed the total Management Fees actually earned by Manager during the [12] months immediately preceding the event giving rise to liability; provided, however, such limitation shall not apply to (i) fraud or willful misconduct; or (ii) amounts payable under Section 9.4.
9.6 Force Majeure. Neither party shall be liable for failure to perform due to causes beyond its reasonable control, including acts of God, governmental actions, terrorism, labor disputes, and epidemic/pandemic events, provided the affected party promptly notifies the other and resumes performance when commercially practicable.
10. DEFAULT & REMEDIES
10.1 Events of Default. The following constitute “Events of Default”:
a. Failure to make any payment when due;
b. Material breach of any covenant, representation, or warranty;
c. Violation of trust account obligations (as to Manager);
d. Failure to maintain required insurance.
10.2 Notice & Cure. The non-defaulting party shall give written notice specifying the default; the defaulting party shall have [10] days to cure monetary defaults and [30] days for non-monetary defaults, unless such period is extended in writing.
10.3 Remedies. Upon an Event of Default, the non-defaulting party may, in addition to termination under Section 7.4, pursue any remedies available at law or in equity, including injunctive relief, specific performance, and recovery of all costs of collection, including reasonable attorneys’ fees.
10.4 Attorneys’ Fees. The prevailing party in any dispute arising under this Agreement shall be entitled to recover its reasonable attorneys’ fees and costs.
11. DISPUTE RESOLUTION
11.1 Governing Law. Illinois law governs all disputes.
11.2 Forum Selection. State courts located in [COUNTY], Illinois shall have exclusive jurisdiction and venue over any litigation arising from or related to this Agreement, subject to Section 11.3.
11.3 Optional Arbitration. [SELECT ONE:]
☐ The parties elect not to use arbitration.
☐ The parties agree that any dispute shall be resolved by binding arbitration administered by [AAA/JAMS] in [CITY], Illinois in accordance with its commercial rules, and judgment may be entered on the award.
11.4 Jury Trial Waiver (Optional). [INITIALS _ / _] EACH PARTY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
11.5 Injunctive Relief. Notwithstanding any arbitration election, either party may seek temporary, preliminary, and/or permanent injunctive relief in a court of competent jurisdiction to prevent irreparable harm, without the necessity of posting bond.
[// GUIDANCE: Check local court rules for enforceability of jury waivers in Illinois.]
12. GENERAL PROVISIONS
12.1 Amendment; Waiver. No amendment or waiver is effective unless in writing and signed by both parties. Failure to enforce any provision is not a waiver of future enforcement.
12.2 Assignment. Neither party may assign this Agreement without the prior written consent of the other, except that Owner may freely assign to a purchaser of the Property.
12.3 Successors & Assigns. This Agreement binds and benefits the parties and their respective successors and permitted assigns.
12.4 Severability. If any provision is invalid or unenforceable, the remaining provisions remain in effect and shall be construed to fulfill the parties’ intent.
12.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties regarding the subject matter and supersedes all prior discussions or agreements, whether written or oral.
12.6 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered by facsimile, PDF, or electronic signature platform (e.g., DocuSign) are binding.
12.7 Notices. All notices shall be in writing and deemed given when delivered personally, by certified mail (return receipt requested), or by nationally recognized overnight courier to the addresses set forth below (or as later designated in writing).
12.8 Interpretation. Headings are for convenience only and shall not affect interpretation. The word “including” means “including, without limitation.” No presumption against the drafter shall apply.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Property Management Agreement as of the Effective Date.
| OWNER | MANAGER |
|---|---|
| [OWNER LEGAL NAME] | [MANAGER LEGAL NAME] |
| By: _________ | By: _________ |
| Name: [PRINTED NAME] | Name: [PRINTED NAME] |
| Title: [TITLE] | Title: [TITLE] |
| Date: _______ | Date: _______ |
[Notary Acknowledgment if required]
[// GUIDANCE:
1. Confirm compliance with local municipal ordinances (e.g., Chicago RLTO) where the Property is located.
2. Verify that all trust accounts are opened in the exact name format required by IDFPR.
3. Customize monetary limits, fees, and termination periods to client’s risk tolerance.
4. Confirm optional arbitration and jury-waiver selections with client before final execution.
5. Attach Exhibit A (Property Description) and Exhibit B (Form Residential Lease) as needed.]