PROPERTY MANAGEMENT AGREEMENT
(Michigan – Comprehensive Template)
TABLE OF CONTENTS
- Document Header
- Definitions
- Appointment; Term
- Manager Duties
- Compensation & Expense Handling
- Owner Responsibilities
- Representations & Warranties
- Covenants
- Default; Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
This Property Management Agreement (“Agreement”) is entered into as of [EFFECTIVE DATE] (“Effective Date”) by and between:
- [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE], with a principal address at [OWNER ADDRESS] (“Owner”); and
- [MANAGER LEGAL NAME], a [STATE] [ENTITY TYPE], holding Michigan real-estate broker license no. [LICENSE #], with a principal address at [MANAGER ADDRESS] (“Manager”).
Owner and Manager are sometimes referred to individually as a “Party” and collectively as the “Parties.”
Recitals
A. Owner is the fee-simple owner of the real property commonly known as [PROPERTY NAME / ADDRESS] and legally described on Exhibit A (“Property”).
B. Owner desires to engage Manager, and Manager desires to accept such engagement, to provide property management services for the Property under the terms and conditions set forth herein.
C. The Parties intend this Agreement to comply with the Michigan Occupational Code, Article 25 (Real Estate Broker & Salesperson Licensing), and all related administrative rules, trust account requirements, and disclosure obligations.
For good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement:
“Affiliate” – Any entity that controls, is controlled by, or is under common control with a Party.
“Applicable Law” – All federal, state (Michigan), and local statutes, ordinances, regulations, codes, orders, and common-law duties relating to the Property or the Services, including but not limited to the Michigan Occupational Code, the Truth in Renting Act, the Security Deposit Act, lead-based paint disclosure regulations, fair-housing laws, and any successor provisions.
“Gross Receipts” – All funds collected by Manager on Owner’s behalf, including Rent, pet fees, late fees, and security deposits, but excluding security-deposit interest.
“Management Fee” – The fee described in Section 5.1.
“Rent” – All recurring sums payable by tenants under Property leases.
“Services” – The property management and ancillary services described in Section 4.
[// GUIDANCE: Add additional defined terms as needed; maintain alphabetical order.]
3. APPOINTMENT; TERM
3.1 Appointment. Owner hereby appoints Manager as the exclusive agent to perform the Services, and Manager accepts such appointment, all on the terms herein.
3.2 Term. The term commences on the Effective Date and continues for [INITIAL TERM LENGTH] (the “Initial Term”) unless earlier terminated under Section 9. After the Initial Term, the Agreement automatically renews for successive [RENEWAL TERM] periods unless either Party gives written non-renewal notice at least [NON-RENEWAL NOTICE DAYS] days before the end of the then-current term.
3.3 Independent Contractor. Manager is an independent contractor and not an employee, joint venturer, or partner of Owner.
4. MANAGER DUTIES
Subject to Owner’s reasonable direction and Applicable Law, Manager shall:
4.1 Leasing & Marketing
a. Advertise vacancies; list on Multiple Listing Service (MLS) and internet platforms.
b. Screen prospective tenants (credit, background, income verification) in compliance with fair-housing rules.
c. Negotiate, execute, renew, and terminate residential leases on forms approved by Owner.
4.2 Rent Collection; Enforcement
a. Invoice and collect Rent and other tenant charges.
b. Serve statutory notices and coordinate legal proceedings (evictions) through licensed Michigan attorneys only.
c. Impose and collect late fees as provided in leases.
4.3 Trust Account Administration
a. Deposit all tenant funds (including security deposits) into a Michigan-based real-estate broker trust account titled “Trust Account of [MANAGER NAME]” within two (2) banking days of receipt, separate from Manager’s operating funds, and maintain detailed ledger records.
b. Remit net proceeds to Owner on or before the [DAY] day of each month, accompanied by an itemized statement.
[// GUIDANCE: Michigan administrative rules require trust-account reconciliations; ensure monthly three-way reconciliation reports are available.]
4.4 Maintenance & Repairs
a. Arrange for routine maintenance not exceeding [SINGLE-EXPENSE LIMIT] per occurrence without Owner pre-approval, except in emergencies.
b. Engage only properly licensed and insured contractors.
c. Conduct annual property inspections and provide written reports to Owner.
4.5 Regulatory Compliance & Disclosures
a. Provide all disclosures required under federal or Michigan law (e.g., lead-based paint, security-deposit receipts, Domestic Violence Survivors Act).
b. File and serve “Notice of Contract for Services” if required by local ordinances.
c. Maintain all required licenses in good standing.
4.6 Recordkeeping
Maintain complete books and records for at least six (6) years and make them available to Owner or regulators upon reasonable request.
4.7 Insurance Coordination
Obtain certificates of insurance from vendors; assist Owner in maintaining Property insurance meeting Section 10.3 minimums.
4.8 Additional Services
Manager may perform services outside the scope herein (e.g., capital improvements) only under a separate written addendum signed by Owner.
5. COMPENSATION & EXPENSE HANDLING
5.1 Management Fee. Owner shall pay Manager a monthly fee equal to [PERCENTAGE]% of Gross Receipts (the “Management Fee”), payable from collected funds.
5.2 Leasing Fee. For each new lease signed, Owner shall pay [LEASING FEE]. Renewals longer than [RENEWAL MONTHS] months incur [RENEWAL FEE].
5.3 Maintenance Mark-Up. Manager may add [MARK-UP PERCENTAGE]% to the direct cost of third-party maintenance.
5.4 Expense Reimbursement. Owner shall reimburse Manager for out-of-pocket costs (court filing fees, advertising, etc.) without mark-up.
5.5 Security Deposits. All security deposits remain the property of the tenants and shall be handled strictly in compliance with Michigan’s Security Deposit Act.
5.6 Limitation on Charges to Tenants. Manager shall not impose fees on tenants that are unlawful or inconsistent with Owner-approved lease forms.
6. OWNER RESPONSIBILITIES
6.1 Funding. Maintain minimum working-capital reserve of $[RESERVE AMOUNT] in the trust account.
6.2 Insurance. Procure and keep in force property and liability insurance per Section 10.3.
6.3 Legal Compliance. Provide Manager with any existing code violations and promptly disclose material defects.
6.4 Cooperation. Execute lease documents and legal filings when requested and reasonably approve expenditures.
7. REPRESENTATIONS & WARRANTIES
7.1 Mutual. Each Party represents that (a) it is duly organized, validly existing, and in good standing; (b) it has full power and authority to enter into this Agreement; and (c) its execution does not violate any other agreement or law.
7.2 Owner. Owner further represents that (a) it holds marketable title to the Property, free of undisclosed liens; (b) the Property complies with zoning and habitability requirements; and (c) funds provided to Manager are unencumbered.
7.3 Manager. Manager represents that (a) it holds an active Michigan real-estate broker license and any local registrations; (b) no disciplinary action is pending against it; and (c) it carries the insurance described in Section 10.3(b).
7.4 Survival. Representations and warranties survive for two (2) years after termination.
8. COVENANTS
8.1 Affirmative Covenants of Manager
a. Maintain license and trust account in full statutory compliance.
b. Provide monthly owner statements and year-end IRS Form 1099.
c. Use commercially reasonable efforts to maximize occupancy and Rent rates.
8.2 Negative Covenants of Manager
a. No commingling of funds.
b. No discrimination in tenant selection.
c. No contractual commitments (e.g., service contracts exceeding [LONG-TERM CONTRACT LIMIT]) without Owner consent.
8.3 Compliance Monitoring. Manager shall implement internal controls sufficient to detect fraud and misapplication of funds.
9. DEFAULT; REMEDIES
9.1 Events of Default
a. Monetary default if a Party fails to pay any amount due within ten (10) days after written notice.
b. Non-monetary default if a Party materially breaches any covenant and fails to cure within thirty (30) days after notice (or sooner if health/safety is at risk).
c. Insolvency, bankruptcy, or loss of Manager’s license.
9.2 Remedies
a. Termination. Upon an uncured default, the non-defaulting Party may terminate immediately.
b. Specific Performance or Injunctive Relief. Available in addition to any other remedy.
c. Set-Off. Owner may set off undisputed sums owed to Manager against Gross Receipts.
d. Attorneys’ Fees. The prevailing Party in any dispute arising under this Agreement is entitled to reasonable attorneys’ fees and costs.
10. RISK ALLOCATION
10.1 Indemnification by Manager. Manager shall indemnify, defend, and hold harmless Owner, its Affiliates, and their respective officers, directors, members, managers, employees, and agents (collectively, “Owner Indemnitees”) from and against any and all claims, losses, liabilities, damages, fines, penalties, costs, and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) arising out of:
a. Manager’s breach of this Agreement or Applicable Law;
b. Gross negligence, willful misconduct, or fraud of Manager or its agents;
c. Employment-related claims of Manager’s personnel.
10.2 Limitation of Liability. Except for (i) Manager’s indemnification obligations, (ii) gross negligence or willful misconduct, or (iii) misappropriation of funds, Manager’s aggregate liability under this Agreement shall not exceed the Management Fees actually paid to Manager during the twelve (12) months immediately preceding the event giving rise to liability.
10.3 Insurance
a. Owner Insurance. Owner shall maintain (i) all-risk property insurance on a replacement-cost basis; and (ii) commercial general liability coverage of at least $[CGL LIMIT] per occurrence, naming Manager as additional insured.
b. Manager Insurance. Manager shall maintain (i) errors & omissions/professional liability coverage of at least $[E&O LIMIT] per claim; (ii) workers’ compensation; and (iii) fidelity bond covering employee dishonesty at not less than $[FIDELITY LIMIT].
10.4 Force Majeure. Neither Party is liable for failure to perform due to events beyond its reasonable control, including natural disasters, war, terrorism, pandemics, or governmental orders, provided the affected Party gives prompt notice and resumes performance when feasible.
11. DISPUTE RESOLUTION
11.1 Governing Law. This Agreement and any dispute hereunder are governed by the laws of the State of Michigan, without regard to conflict-of-law rules.
11.2 Forum Selection. Exclusive venue shall lie in the state courts located in [COUNTY], Michigan.
11.3 Optional Arbitration. If the Parties initial below, any dispute shall be finally resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, held in [CITY], Michigan:
Owner Initials: _ Manager Initials: _
11.4 Jury-Trial Waiver (Optional). IF INITIALLED, EACH PARTY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.
Owner Initials: _ Manager Initials: _
11.5 Injunctive Relief. Nothing herein limits either Party’s right to seek temporary, preliminary, or permanent injunctive relief in any court of competent jurisdiction.
12. GENERAL PROVISIONS
12.1 Amendment; Waiver. No amendment or waiver is effective unless in a writing signed by the Party against whom enforcement is sought. A waiver is valid only for the specific instance.
12.2 Assignment. Neither Party may assign this Agreement without the other’s prior written consent, except that Owner may assign to a successor in interest to the Property upon notice to Manager.
12.3 Successors & Assigns. This Agreement binds and benefits the Parties and their permitted successors and assigns.
12.4 Severability. If any provision is held invalid, the remaining provisions remain effective, and the invalid provision shall be reformed to the minimum extent necessary.
12.5 Entire Agreement. This Agreement, including its exhibits and schedules, constitutes the entire understanding and supersedes all prior agreements regarding the subject matter.
12.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and delivered electronically (PDF, DocuSign, etc.), which shall be deemed original signatures.
12.7 Notices. All notices must be in writing and delivered (i) by certified U.S. Mail, return receipt requested; (ii) by nationally recognized overnight courier; or (iii) by email with confirmations, to the addresses set forth above, or such other address a Party designates by notice. Notice is deemed given upon receipt or refusal.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Property Management Agreement effective as of the Effective Date.
| OWNER | MANAGER |
|---|---|
| [OWNER LEGAL NAME] | [MANAGER LEGAL NAME] |
| By: _______ | By: _______ |
| Name: _____ | Name: _____ |
| Title: ____ | Title: ____ |
| Date: _____ | Date: _____ |
[OPTIONAL NOTARY ACKNOWLEDGMENT – attach if required by lender or local ordinance]
Exhibit A
Legal Description of Property
(Attach full metes-and-bounds or plat description.)
[// GUIDANCE:
1. Confirm local ordinances (e.g., Detroit Rental Registration) for additional disclosures.
2. Review Section 5 rates to comply with any brokerage commission caps in client’s lender documents.
3. Before execution, verify Manager’s trust-account details and attach specimen monthly statement.
4. For properties with >4 rental units, consider incorporating Michigan Housing Law inspection protocols.
5. If subcontracting on-site employees, include employment law addendum.]