PROPERTY MANAGEMENT AGREEMENT
(Pennsylvania – Comprehensive Template)
[// GUIDANCE: This template is designed for use by Pennsylvania-licensed real estate brokers managing residential and/or commercial property located in the Commonwealth of Pennsylvania. Customize all bracketed items and confirm compliance with current statutes, regulations, and local ordinances before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Appointment; Scope of Authority
- Term; Termination
- Compensation; Reimbursements
- Trust/Escrow Account Administration
- Leasing & Tenant Relations
- Maintenance, Repairs & Capital Improvements
- Insurance & Risk Management
- Financial Reporting; Books & Records
- Representations & Warranties
- Covenants of the Parties
- Default; Notice & Remedies
- Indemnification; Limitation of Liability
- Force Majeure
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
THIS PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”), by and between:
• [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS] (“Owner”); and
• [MANAGER LEGAL NAME], a Pennsylvania-licensed real estate broker, License No. [__], with its principal place of business at [ADDRESS] (“Manager”).
Owner and Manager are sometimes referred to individually as a “Party” and collectively as the “Parties.”
Recitals
A. Owner is fee simple owner of the real property and improvements commonly known as [PROPERTY NAME/ADDRESS] (the “Property”).
B. Manager is duly licensed and qualified under the Pennsylvania Real Estate Licensing and Registration Act (“RELRA”) and the regulations of the Pennsylvania State Real Estate Commission to perform property management services.
C. Owner desires to engage Manager, and Manager desires to accept such engagement, on the terms and conditions herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the Parties agree as follows:
2. DEFINITIONS
The following terms shall have the meanings set forth below. Capitalized terms used but not defined in a particular Section shall have the meanings ascribed to them in this Section 2.
“Affiliate” – Any entity controlling, controlled by, or under common control with a Party.
“Applicable Law” – The RELRA, regulations of the Pennsylvania State Real Estate Commission, Pennsylvania Landlord and Tenant Act, and all other federal, state, and local statutes, ordinances, regulations, and codes applicable to the Property or the services contemplated herein, each as amended.
“Gross Collections” – All rents, fees, and other sums actually received by Manager on behalf of Owner from tenants or others in connection with the Property, excluding security deposits until applied.
“Management Fee” – The consideration payable to Manager pursuant to Section 5.1.
“Operating Account” – The trust or escrow account established pursuant to Section 6.
“Property Documents” – All leases, service contracts, warranties, permits, and other instruments affecting the Property.
“Services” – The property management services more fully described in Section 3.2.
[Add additional definitions as required.]
3. APPOINTMENT; SCOPE OF AUTHORITY
3.1 Appointment. Owner hereby engages Manager as the exclusive agent to manage, operate, lease, and maintain the Property, and Manager accepts such engagement, subject to the limitations set forth herein.
3.2 Services. Manager shall, in accordance with Applicable Law and prudent industry standards:
a. Advertise and lease units; negotiate and execute leases of up to [MAX TERM] years and renewals thereof;
b. Bill and collect rents and other charges; serve notices; commence and oversee eviction or collection actions with Owner’s prior written consent;
c. Procure, supervise, and pay for utilities, maintenance, repairs, and capital improvements not exceeding [CAP AMOUNT] per occurrence without prior Owner approval, except in emergencies;
d. Hire, supervise, and discharge on-site personnel (if any);
e. Obtain and maintain insurance as required herein;
f. Keep the books and records set forth in Section 10;
g. Prepare and deliver monthly financial statements and an annual operating budget;
h. Perform such other services as are reasonably necessary for the efficient management of the Property and not inconsistent with this Agreement.
3.3 Limitations on Authority. Manager shall not, without Owner’s prior written consent:
i. Sell, transfer, or encumber the Property;
ii. Enter into any service contract with a term exceeding [_____] months or that is not terminable on 30 days’ notice without penalty;
iii. Make any single expenditure exceeding [THRESHOLD] or undertaking capital improvements exceeding [ANNUAL CAP];
iv. Waive, modify, or release any material right of Owner under any lease, except in the ordinary course of business.
3.4 Standard of Performance. Manager shall perform the Services (a) in a fiduciary capacity, (b) with commercially reasonable skill and diligence, and (c) in compliance with Applicable Law and ethical standards promulgated by the Pennsylvania State Real Estate Commission.
[// GUIDANCE: Consider adding KPIs or performance benchmarks if desired.]
4. TERM; TERMINATION
4.1 Initial Term. The term of this Agreement shall commence on the Effective Date and continue for [INITIAL TERM] year(s) (the “Initial Term”) unless earlier terminated in accordance with this Section 4.
4.2 Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive one-year periods (each, a “Renewal Term”) unless either Party delivers written notice of non-renewal at least 60 days prior to the end of the then-current term.
4.3 Termination for Convenience. Either Party may terminate this Agreement without cause upon 60 days’ prior written notice.
4.4 Termination for Cause. Either Party may terminate immediately upon written notice if the other Party:
a. Materially breaches this Agreement and fails to cure within 15 days after receipt of written notice (or such shorter period as may be required to comply with Applicable Law or prevent imminent harm); or
b. Becomes insolvent, files a petition in bankruptcy, or makes an assignment for the benefit of creditors.
4.5 Obligations Upon Termination. Upon termination, Manager shall: (i) deliver to Owner all Property Documents and funds; (ii) assign to Owner all assignable service contracts at Owner’s option; and (iii) cooperate in a smooth transition.
4.6 Survival. Sections 8, 10–17, and any right or obligation of the Parties that by its nature should survive, shall survive termination.
5. COMPENSATION; REIMBURSEMENTS
5.1 Management Fee. Owner shall pay Manager a Management Fee equal to [ % of Gross Collections]/[flat amount $__] per month, payable monthly in arrears and retained by Manager from Gross Collections.
[// GUIDANCE: Insert alternative leasing commission structure if applicable.]
5.2 Leasing and Renewal Commissions. Manager shall be entitled to a leasing commission of [ % of first-year base rent] for new leases and [ % of annual base rent] for renewals, payable upon tenant occupancy.
5.3 Expense Reimbursements. Owner shall reimburse Manager for (i) documented, out-of-pocket expenses incurred in performing the Services, and (ii) costs of on-site personnel, each without markup.
5.4 Delinquency. If Gross Collections are insufficient to pay the Management Fee or reimbursable expenses, Owner shall fund the deficiency within 5 business days of notice.
5.5 Audit Rights. Owner may, upon 10 business days’ written notice and no more than twice per calendar year, audit Manager’s books relating to the Property at Owner’s expense.
6. TRUST/ESCROW ACCOUNT ADMINISTRATION
6.1 Establishment of Operating Account. In compliance with RELRA and the regulations of the Pennsylvania State Real Estate Commission regarding trust money, Manager shall establish and maintain a separate, interest-bearing, federally-insured trust account titled “[OWNER NAME] Operating Trust Account” (the “Operating Account”) at a bank located within the Commonwealth of Pennsylvania.
6.2 Deposits and Disbursements.
a. All rents, fees, and other funds collected on behalf of Owner shall be deposited into the Operating Account within one (1) business day of receipt or as otherwise required by Applicable Law.
b. Manager shall disburse funds from the Operating Account only for (i) payment of Property operating expenses, (ii) transfers to Owner, and (iii) Management Fees and commissions due hereunder, each accompanied by appropriate documentation.
6.3 Security Deposits. Manager shall hold tenant security deposits in a separate escrow account meeting statutory requirements and shall administer such deposits strictly according to the Pennsylvania Landlord and Tenant Act and related regulations.
6.4 Interest. Unless otherwise required by Applicable Law or instructed by Owner in writing, any interest earned on the Operating Account shall accrue to Owner.
6.5 Recordkeeping; Reconciliation. Manager shall maintain detailed ledgers of all trust funds and reconcile the Operating Account monthly. Copies of reconciliations shall accompany the monthly statement provided to Owner.
7. LEASING & TENANT RELATIONS
7.1 Leasing Standards. Manager shall lease the Property in accordance with Owner-approved rental criteria, Fair Housing laws, and Applicable Law.
7.2 Forms. All leases and related documents shall be on forms approved by Owner and compliant with Pennsylvania statutes and ordinances.
7.3 Enforcement. Manager shall diligently enforce lease terms, including the collection of rents and other charges, and shall take such actions as are lawful and commercially reasonable to remedy tenant defaults.
7.4 Tenant Communications. Manager shall promptly forward to Owner any written complaints, legal notices, or governmental communications relating to the Property.
8. MAINTENANCE, REPAIRS & CAPITAL IMPROVEMENTS
8.1 Ordinary Maintenance. Manager shall maintain the Property in good order and repair, consistent with comparable properties and all code requirements.
8.2 Emergency Repairs. In the event of an emergency threatening life, safety, or material Property damage, Manager may act without prior approval and shall notify Owner as soon as practicable.
8.3 Capital Improvements. Capital expenditures exceeding [CAPITAL PROJECT THRESHOLD] require Owner’s prior written consent and, if requested, competitive bids.
8.4 Vendor Selection. Manager shall use bona fide, licensed, and insured contractors. Any Affiliate of Manager may be engaged only with full written disclosure to, and approval by, Owner.
9. INSURANCE & RISK MANAGEMENT
9.1 Owner Insurance. Owner shall maintain at least: (i) all-risk property insurance covering 100 % replacement cost, (ii) commercial general liability insurance with limits not less than $[_____] per occurrence, and (iii) loss-of-rents coverage for not less than 12 months. Owner shall cause Manager to be named as an additional insured and provide certificates evidencing such coverage.
9.2 Manager Insurance. Manager shall maintain: (i) errors & omissions (professional liability) insurance with limits of at least $[_] per claim, and (ii) commercial general liability insurance with limits of at least $[___] per occurrence, each naming Owner as an additional insured.
9.3 Waiver of Subrogation. To the extent permitted by Applicable Law, each Party releases the other and its insurers from subrogation rights with respect to insured losses.
10. FINANCIAL REPORTING; BOOKS & RECORDS
10.1 Monthly Reports. Within 15 days after each calendar month, Manager shall provide Owner with: (i) income and expense statement, (ii) rent roll, (iii) Operating Account reconciliation, (iv) variance report comparing actual results to budget, and (v) narrative management report.
10.2 Annual Report & Budget. Manager shall submit to Owner, at least 60 days before each fiscal year, a proposed annual operating budget and capital improvement plan.
10.3 Record Retention. Manager shall maintain complete and accurate books and records for at least seven (7) years after the applicable fiscal year-end or longer if required by Applicable Law.
10.4 Ownership of Records. All books and records relating to the Property are the property of Owner; Manager may retain copies for archival and defensive purposes.
11. REPRESENTATIONS & WARRANTIES
11.1 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 execute and perform this Agreement;
c. Execution and performance of this Agreement do not violate any agreement or law to which it is subject.
11.2 Manager Representations. Manager further represents and warrants that:
a. Manager holds a current, unrestricted Pennsylvania real estate broker’s license;
b. Manager has, and throughout the Term will maintain, all licenses, permits, and insurance required to perform the Services;
c. Manager is not subject to any disciplinary action by the Pennsylvania State Real Estate Commission.
11.3 Survival. All representations and warranties shall survive the execution, delivery, and termination of this Agreement.
12. COVENANTS OF THE PARTIES
12.1 Compliance. Each Party shall comply with Applicable Law in the performance of its obligations.
12.2 Owner Funding Obligations. Owner shall timely fund any deficiency in the Operating Account necessary to pay Property expenses.
12.3 Non-Discrimination. Manager shall comply with the Fair Housing Act and Pennsylvania Human Relations Act and shall not discriminate on any prohibited basis.
12.4 Confidentiality. The Parties shall keep confidential all non-public information obtained in connection with this Agreement, except as required by law or court order.
12.5 Conflicts of Interest. Manager shall disclose any potential conflict of interest, including any financial interest in vendors, and shall obtain Owner’s prior written consent before proceeding.
13. DEFAULT; NOTICE & REMEDIES
13.1 Events of Default. The following constitute an “Event of Default”:
a. Material breach of this Agreement not cured within 15 days after written notice;
b. Willful misconduct, gross negligence, fraud, or misappropriation of funds by Manager;
c. Revocation, suspension, or expiration of Manager’s real estate broker’s license.
13.2 Owner Remedies. Upon an Event of Default by Manager, Owner may:
i. Suspend Manager’s authority;
ii. Terminate this Agreement immediately;
iii. Seek injunctive relief, specific performance, or damages;
iv. Offset any amounts owed to Manager.
13.3 Manager Remedies. Upon an Event of Default by Owner, Manager may:
i. Terminate this Agreement;
ii. Recover unpaid fees and expenses;
iii. Exercise any other remedy available at law or in equity.
13.4 Cumulative Remedies. All remedies herein are cumulative and not exclusive.
13.5 Attorneys’ Fees. The prevailing Party in any action arising out of this Agreement shall be entitled to reasonable attorneys’ fees and costs.
14. INDEMNIFICATION; LIMITATION OF LIABILITY
14.1 Manager Indemnification of Owner. Manager shall indemnify, defend, and hold harmless Owner, its Affiliates, and their respective officers, directors, members, managers, employees, and agents from and against any and all claims, damages, liabilities, losses, costs, and expenses (including reasonable attorneys’ fees) (collectively, “Claims”) arising out of or relating to (i) Manager’s breach of this Agreement, (ii) violation of Applicable Law, or (iii) gross negligence, willful misconduct, or fraud of Manager or its agents.
14.2 Owner Indemnification of Manager. Owner shall indemnify, defend, and hold harmless Manager and its Affiliates from Claims arising out of or relating to (i) the condition of the Property, except to the extent caused by Manager’s gross negligence or willful misconduct, or (ii) Owner’s breach of this Agreement.
14.3 Limitation of Liability. EXCEPT FOR (a) A PARTY’S INDEMNITY OBLIGATIONS, (b) FRAUD, OR (c) WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, THE TOTAL LIABILITY OF MANAGER TO OWNER FOR ALL CLAIMS ARISING UNDER THIS AGREEMENT SHALL NOT EXCEED THE MANAGEMENT FEES ACTUALLY PAID TO MANAGER DURING THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO LIABILITY.
14.4 No Consequential Damages. Neither Party shall be liable to the other for special, indirect, or consequential damages, including lost profits, except to the extent resulting from a Party’s fraud, willful misconduct, or gross negligence.
15. FORCE MAJEURE
Neither Party shall be liable for failure to perform its non-monetary obligations when such failure is due to causes beyond its reasonable control, including acts of God, war, terrorism, pandemics, governmental orders, or natural disasters, provided the affected Party notifies the other promptly and uses commercially reasonable efforts to resume performance.
16. DISPUTE RESOLUTION
16.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflict-of-laws principles.
16.2 Forum Selection. The state courts located in [COUNTY], Pennsylvania, shall have exclusive jurisdiction over any action arising out of or relating to this Agreement, subject to Section 16.3.
16.3 [OPTIONAL] Arbitration.
a. Election. If BOTH Parties initial here __, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules.
b. Venue. The arbitration shall be held in [CITY], Pennsylvania before a single arbitrator with at least 10 years’ real estate law experience.
c. Injunctive Relief. Either Party may seek temporary injunctive relief from a court of competent jurisdiction pending the final award.
d. Costs. The arbitrator may award costs and attorneys’ fees in accordance with Section 13.5.
16.4 [OPTIONAL] Jury Trial Waiver. IF PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT.
16.5 Equitable Relief. Each Party acknowledges that monetary damages may be an inadequate remedy for breach and agrees that the non-breaching Party shall be entitled to seek injunctive or other equitable relief without the necessity of posting bond.
17. GENERAL PROVISIONS
17.1 Amendments. No amendment or waiver of any provision shall be effective unless in writing and signed by both Parties.
17.2 Assignment. Neither Party may assign, delegate, or otherwise transfer this Agreement without the prior written consent of the other Party, except that Owner may assign to a successor in interest to the Property upon written notice.
17.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
17.4 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to effectuate the intent of the Parties.
17.5 Entire Agreement. This Agreement constitutes the entire understanding of the Parties with respect to its subject matter and supersedes all prior agreements or understandings, whether oral or written.
17.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together constitute one instrument. Electronic signatures and PDF copies shall be deemed originals for all purposes.
17.7 Notices. All notices shall be in writing and deemed given (i) upon delivery by hand, (ii) one (1) business day after dispatch by nationally recognized overnight courier, or (iii) three (3) business days after deposit in U.S. certified mail, return receipt requested, postage prepaid, addressed to the Parties at the addresses set forth above (or such other address as either Party may designate by notice).
17.8 No Third-Party Beneficiaries. Except as expressly stated herein, nothing in this Agreement is intended to confer any rights upon any person other than the Parties and their permitted successors and assigns.
17.9 Headings. Section headings are for convenience only and shall not affect interpretation.
18. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
OWNER:
[OWNER LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
MANAGER:
[MANAGER LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
[Optional Notary Acknowledgment – Pennsylvania]
[// GUIDANCE: Verify whether local ordinances or lender requirements mandate notarization or witness signatures for property management agreements concerning the Property.]
END OF AGREEMENT