PROPERTY MANAGEMENT AGREEMENT
(Commonwealth of Massachusetts)
[// GUIDANCE: This template is drafted to comply with Massachusetts real-estate, agency-licensing, and trust-account rules. Customize all bracketed text, confirm current regulatory citations, and attach appropriate exhibits before execution.]
DOCUMENT HEADER
This Property Management Agreement (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
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[OWNER LEGAL NAME], a [STATE OF FORMATION] [ENTITY TYPE] having its principal place of business at [ADDRESS] (“Owner”); and
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[MANAGER LEGAL NAME], a [STATE OF FORMATION] [ENTITY TYPE], holding an active Massachusetts real-estate broker’s license (License No. [LICENSE #]) issued pursuant to M.G.L. c. 112, §§ 87PP–87DDD and 254 CMR 2.00 et seq. (“Manager”).
RECITALS
A. Owner is the fee simple owner (or lawful ground lessee) of the real property commonly known as [PROPERTY NAME / ADDRESS], more particularly described in Exhibit A (the “Property”).
B. Owner desires to engage Manager, and Manager desires to accept such engagement, to provide comprehensive property-management services for the Property under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:
TABLE OF CONTENTS
I. Definitions
II. Appointment & Scope of Authority
III. Term; Renewal; Termination
IV. Compensation; Expenses; Accounting
V. Trust & Escrow Accounts
VI. Manager Duties & Performance Standards
VII. Owner Responsibilities
VIII. Representations & Warranties
IX. Covenants & Restrictions
X. Insurance
XI. Risk Allocation
XII. Default & Remedies
XIII. Dispute Resolution
XIV. General Provisions
XV. Execution Block
Exhibits: A – Property Description | B – Management Fees & Budget | C – Required Reports | D – Insurance Requirements
I. DEFINITIONS
For purposes of this Agreement, capitalized terms have the meanings set forth below. Terms defined in one section shall have the same meaning throughout unless expressly provided otherwise.
“Applicable Law” means all federal, state, county, municipal, and local statutes, regulations, ordinances, orders, and common-law requirements applicable to the Property or the performance of this Agreement, including without limitation:
(a) Massachusetts General Laws ch. 112, §§ 87PP–87DDD;
(b) 254 CMR 3.00 (Escrow/Trust Accounts & Records);
(c) M.G.L. ch. 111, §§ 189A–199B (lead-paint); and
(d) the federal Lead-Based Paint Disclosure Rule (24 C.F.R. Part 35; 40 C.F.R. Part 745).
“Authorized Representative” means, with respect to a party, the individual(s) designated in writing to bind that party.
“Budget” means the annual operating budget for the Property prepared by Manager and approved by Owner in accordance with Section IV.
“Gross Receipts” means all rents and other income actually received from operation of the Property, excluding security deposits and tenant escrow funds.
“Management Fees” means the compensation payable to Manager under Section IV.
“Trust Account” has the meaning given in Section V.
[// GUIDANCE: Add additional definitions (e.g., “Leasing Services,” “Capital Expenditure,” etc.) as needed for the specific project.]
II. APPOINTMENT & SCOPE OF AUTHORITY
2.1 Appointment. Owner hereby appoints Manager as the exclusive agent to manage, operate, and maintain the Property, and Manager hereby accepts such appointment, subject to the limitations expressly set forth herein.
2.2 Scope of Authority. Manager is authorized to perform, or cause to be performed, the following services (collectively, the “Services”):
(a) Market, lease, and renew tenancies;
(b) Collect rents and other charges;
(c) Enforce lease terms, including issuance of notices and commencement of summary-process actions;
(d) Procure, supervise, and pay for goods and services reasonably necessary for the operation of the Property;
(e) Maintain books and records in accordance with Section IV;
(f) Establish and administer Trust Accounts under Section V;
(g) Obtain and maintain insurance in accordance with Section X;
(h) Make emergency expenditures not exceeding [EMERGENCY SPEND LIMIT] without prior consent, and greater amounts with Owner’s prior written approval; and
(i) Such other actions as are reasonably necessary to discharge Manager’s duties hereunder, provided that Manager shall not, without Owner’s prior written consent:
(i) Sell, transfer, or encumber the Property;
(ii) Enter into any lease exceeding [MAX LEASE TERM] months/years;
(iii) Make any single capital expenditure exceeding [CAPEX LIMIT]; or
(iv) Settle any claim or litigation exceeding [SETTLEMENT LIMIT].
III. TERM; RENEWAL; TERMINATION
3.1 Initial Term. The initial term shall begin on the Effective Date and continue until [END DATE], unless earlier terminated as provided herein (the “Term”).
3.2 Renewal. The Term shall automatically renew for successive [RENEWAL PERIOD] periods unless either party delivers written non-renewal notice at least [DAYS] days prior to expiration.
3.3 Termination for Cause. Either party may terminate this Agreement upon [CURE PERIOD] days’ written notice of material breach if the breaching party fails to cure within such period.
3.4 Termination Without Cause. Owner may terminate without cause upon [NO-CAUSE NOTICE DAYS] days’ prior written notice, subject to payment of all accrued Fees through the effective termination date.
3.5 Effect of Termination. Upon termination:
(a) Manager shall deliver to Owner all Property funds, records, leases, and keys;
(b) Manager’s authority shall immediately cease, except as reasonably necessary to facilitate handover; and
(c) Sections V, XI, XII, XIII, and XIV shall survive.
IV. COMPENSATION; EXPENSES; ACCOUNTING
4.1 Management Fees. Owner shall pay Manager the fees described in Exhibit B, which may include:
(a) A monthly management fee equal to [PERCENT]% of Gross Receipts;
(b) A leasing fee of [LEASING FEE FORMULA]; and
(c) A project-management fee for capital projects exceeding [CAPEX THRESHOLD].
4.2 Expenses. Reasonable operating expenses incurred in accordance with the approved Budget shall be reimbursed to Manager from Property funds. Manager shall not mark-up third-party invoices.
4.3 Accounting & Reports.
(a) Manager shall keep complete books and records in accordance with generally accepted accounting principles (“GAAP”) and 254 CMR 3.00;
(b) Manager shall deliver the reports listed on Exhibit C within the time frames specified therein; and
(c) Owner may, at its expense, audit such records upon [AUDIT NOTICE DAYS] days’ notice.
4.4 Budget. Manager shall submit a proposed Budget for Owner’s approval no later than [DAYS] days prior to each fiscal year. Absent Owner approval within [DAYS] days after submission, the prior year’s Budget, adjusted for known changes, shall apply on an interim basis.
V. TRUST & ESCROW ACCOUNTS
5.1 Establishment. In compliance with 254 CMR 3.10, Manager shall establish and maintain, at a Massachusetts-chartered bank, one or more separate, FDIC-insured trust accounts (each, a “Trust Account”) titled “Trust Account for [OWNER NAME] – [PROPERTY NAME]”.
5.2 Deposits & Withdrawals.
(a) All rents, security deposits, and other tenant funds shall be deposited into the Trust Account within [BANKING DAYS] business days of receipt;
(b) No commingling of funds is permitted;
(c) Disbursements shall be made only for proper Property expenses or Owner distributions and shall be documented by invoice or statement.
5.3 Records. Manager shall maintain complete trust-account ledgers, journals, and reconciliations for not less than seven (7) years and shall provide copies to Owner on request.
[// GUIDANCE: Security-deposit handling in MA is subject to M.G.L. c. 186, § 15B — consider adding detailed compliance language if Manager will hold deposits.]
VI. MANAGER DUTIES & PERFORMANCE STANDARDS
6.1 Standard of Care. Manager shall perform the Services diligently, in good faith, and in accordance with (i) Applicable Law; (ii) the standard of care of prudent Massachusetts property-management professionals; and (iii) any reasonable written instructions from Owner.
6.2 Licensing. Manager represents that it holds, and shall maintain in good standing throughout the Term, all licenses required to perform the Services, including its Massachusetts real-estate broker’s license.
6.3 Personnel & Vendors. Manager shall employ personnel and retain vendors who are properly licensed and insured. All vendor contracts exceeding [CONTRACT LIMIT] shall be subject to Owner’s prior written approval.
6.4 Compliance & Disclosures. Manager shall:
(a) Provide the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure to each prospective tenant as required by 254 CMR 3.00;
(b) Provide the federal and state lead-paint disclosures for dwellings built before 1978;
(c) File and post notices required under M.G.L. c. 58; and
(d) Maintain written documentation evidencing compliance with the foregoing.
6.5 Emergencies. Manager may, without prior approval, take actions reasonably necessary to protect life or property in the event of an emergency and shall notify Owner as soon as practicable.
VII. OWNER RESPONSIBILITIES
7.1 Information & Access. Owner shall provide all records, warranties, keys, and authorizations reasonably requested by Manager and shall grant Manager access to the Property.
7.2 Funding. Owner shall maintain a minimum operating reserve of [RESERVE AMOUNT] in the Trust Account. If funds are insufficient, Owner shall remit the shortfall within [DAYS] days of written demand.
7.3 Insurance. Owner shall procure and maintain the insurance specified in Section X and Exhibit D.
7.4 Legal Proceedings. Owner shall cooperate in any legal proceedings relating to the Property and shall execute documents reasonably required for Manager to perform its duties.
VIII. REPRESENTATIONS & WARRANTIES
8.1 Mutual. Each party represents and warrants that:
(a) It is duly formed, validly existing, and in good standing under the laws of its jurisdiction 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.
8.2 Additional Manager Representations. Manager further represents that:
(a) Its license referenced above is current, not suspended or revoked;
(b) It carries professional liability/errors & omissions insurance of not less than [E&O LIMIT] per claim; and
(c) It is familiar with, and will comply with, all Applicable Law.
8.3 Survival. The representations and warranties set forth in this Section shall survive the termination or expiration of this Agreement for a period of twelve (12) months.
IX. COVENANTS & RESTRICTIONS
9.1 Affirmative Covenants of Manager. Manager shall:
(a) Promptly remit to Owner surplus operating cash in excess of the required reserve;
(b) Deliver IRS Forms 1099 and other tax documentation as required;
(c) Prepare and issue tenant notices strictly in the name of Owner to preserve Owner’s right to pursue summary eviction; and
(d) Maintain all licenses, registrations, and certificates required for the Property (e.g., Certificates of Occupancy, smoke/carbon-monoxide detector compliance, and any municipal rental registrations).
9.2 Negative Covenants of Manager. Manager shall not:
(a) Pledge credit of Owner or place liens on the Property, except as expressly authorized;
(b) Transfer or assign this Agreement without Owner’s prior written consent; or
(c) Accept or retain any rebate, kickback, or undisclosed compensation from vendors, tenants, or applicants.
9.3 Owner Covenants. Owner shall not interfere with Manager’s day-to-day operational decisions made in accordance with this Agreement.
X. INSURANCE
10.1 Owner Insurance. Owner shall maintain, at its sole cost:
(a) Property insurance on an “all-risk” basis in an amount not less than full replacement cost;
(b) Commercial general liability insurance with limits of not less than [CGL LIMIT] per occurrence; and
(c) Such other coverages (e.g., flood, earthquake) as reasonably required by Manager or any lender.
10.2 Manager Insurance. Manager shall maintain:
(a) Commercial general liability insurance of not less than [MANAGER CGL LIMIT] per occurrence;
(b) Workers’ compensation insurance as required by law; and
(c) Professional liability (errors & omissions) insurance of not less than [E&O LIMIT] per claim.
10.3 Waiver of Subrogation. Each party hereby waives, and shall cause its insurers to waive, all rights of subrogation against the other party to the extent permitted by law.
XI. RISK ALLOCATION
11.1 Indemnification by Manager. Manager shall indemnify, defend, and hold harmless Owner and its affiliates, directors, officers, employees, and agents from and against any and all claims, losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to (a) Manager’s gross negligence, willful misconduct, or breach of this Agreement; (b) Manager’s violation of Applicable Law; or (c) any claim by Manager’s employees, contractors, or vendors.
11.2 Limitation of Liability. Except for (i) Manager’s indemnification obligations in Section 11.1, (ii) claims arising from Manager’s gross negligence, willful misconduct, or fraud, and (iii) claims that cannot be limited under Applicable Law, Manager’s total cumulative liability to Owner arising out of this Agreement shall not exceed the aggregate Management Fees actually paid to Manager during the twelve (12) months immediately preceding the event giving rise to the claim.
11.3 No Consequential Damages. Neither party shall be liable to the other for special, incidental, consequential, or punitive damages, except to the extent such damages are awarded to a third-party claimant in connection with a claim subject to indemnification hereunder.
11.4 Injunctive Relief. Notwithstanding anything to the contrary, either party may seek temporary, preliminary, or permanent injunctive relief to protect its rights or property pending resolution of any dispute.
XII. DEFAULT & REMEDIES
12.1 Events of Default. The following constitute Events of Default:
(a) Failure to remit funds or perform material obligations within applicable cure periods;
(b) Insolvency, bankruptcy filing, or appointment of a receiver for a party;
(c) Revocation, suspension, or lapse of Manager’s required license(s); or
(d) Material misrepresentation or fraud.
12.2 Notice & Cure. The non-defaulting party shall give written notice specifying the Event of Default. The defaulting party shall have [CURE PERIOD] days (five (5) days for monetary defaults) to cure.
12.3 Remedies. If an Event of Default is not timely cured, the non-defaulting party may:
(a) Terminate this Agreement immediately;
(b) Offset amounts due against sums otherwise payable;
(c) Seek specific performance or injunctive relief; and/or
(d) Pursue any other remedy available at law or in equity, including recovery of reasonable attorneys’ fees and costs.
XIII. DISPUTE RESOLUTION
13.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, without regard to its conflict-of-laws principles.
13.2 Forum Selection. The parties irrevocably submit to the exclusive jurisdiction of the state courts located in [COUNTY], Massachusetts for any suit, action, or proceeding arising out of or relating to this Agreement.
13.3 Arbitration (Optional). If the parties elect by initialing below, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules.
Owner Initials: __ Manager Initials: ____
13.4 Jury Trial Waiver (Optional). IF NOT PROHIBITED BY LAW, THE PARTIES WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF THIS AGREEMENT.
13.5 Attorneys’ Fees. The prevailing party in any dispute shall be entitled to recover its reasonable attorneys’ fees and costs.
XIV. GENERAL PROVISIONS
14.1 Amendments; Waivers. No amendment or waiver of any provision shall be effective unless in writing signed by both parties. A waiver in one instance shall not constitute a waiver in any other instance.
14.2 Assignment. Manager may not assign or delegate its rights or obligations without Owner’s prior written consent, which may be withheld in Owner’s sole discretion. Owner may assign this Agreement to a successor-in-interest to the Property with notice to Manager.
14.3 Entire Agreement. This Agreement, together with its Exhibits, constitutes the entire agreement between the parties and supersedes all prior negotiations and understandings.
14.4 Severability. If any provision is held invalid or unenforceable, the remainder shall be construed to give effect to the parties’ intent, and such provision shall be limited to the minimum extent necessary.
14.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original. Electronic signatures and PDF copies shall be deemed originals for all purposes.
14.6 Force Majeure. Neither party shall be liable for failure to perform caused by events beyond its reasonable control, including acts of God, war, terrorism, epidemic, or governmental action, provided the affected party promptly notifies the other and resumes performance as soon as practicable.
14.7 Notices. All notices shall be in writing and delivered (a) by hand with signed receipt, (b) by certified U.S. mail, return-receipt requested, (c) by nationally recognized overnight courier, or (d) by email with confirmation of receipt, addressed to the parties at the addresses set forth below (or such other address designated by notice). Notices are effective upon receipt (or first refusal).
Owner Notice Address: [ADDRESS | EMAIL]
Manager Notice Address: [ADDRESS | EMAIL]
XV. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties hereto have executed this Property Management Agreement as of the Effective Date.
OWNER:
[OWNER LEGAL NAME]
By: _______
Name: [SIGNATORY NAME]
Title: [TITLE]
MANAGER:
[MANAGER LEGAL NAME]
By: _______
Name: [SIGNATORY NAME]
Title: [TITLE]
[Seal/Notary Acknowledgment if required]
EXHIBIT A
Property Description
[LEGAL DESCRIPTION OR DEED REFERENCE]
EXHIBIT B
Management Fees & Budget
1. Monthly Management Fee: [PERCENT]% of Gross Receipts
2. Leasing Fee: [FORMULA]
3. Project-Management Fee: [FORMULA]
4. Estimated Annual Budget: [ATTACH BUDGET SPREADSHEET]
EXHIBIT C
Required Reports
1. Monthly operating statement – due by the 15th of the following month
2. Bank reconciliation – monthly
3. Annual CAM reconciliation – within 90 days after fiscal year end
4. Year-end financial package suitable for tax return preparation
EXHIBIT D
Insurance Requirements
1. Property Insurance: Replacement Cost = [$]
2. CGL: [LIMITS]
3. Umbrella/Excess: [LIMITS]
4. Additional Insureds: Manager (and its affiliates) on Owner policies; Owner on Manager policies.
[// GUIDANCE: Review local municipal ordinances (e.g., Boston Rental Registry) and insert additional compliance clauses where required. Confirm whether security-deposit interest must be credited annually to tenants and adjust Section V accordingly.]