Wednesday, September 16, 2015

My Property Management Agreement

Readers and clients have asked me how I charge for my property management services. Typically, I will charge a monthly fee of 10% gross rental income plus a half-month fee for tenant fulfillment (advertising, showing, screening and leasing up a property). I will do short-term and furnished rentals, for an additional fee.

Here are some excerpts from my property management agreement, for anyone interested in renting out their Seattle house:

Article I – Powers and Duties of the Manager
1.      Owner hereby appoints Manager as Owner’s agent to handle, manage, and control the Property, and expressly authorizes and empowers Manager as follows:
a.      To advertise the Property for lease and to execute leases covering the Property, or any part thereof, for such rent and upon such terms and conditions as Manager may deem reasonable and proper, PROVIDED HOWEVER that Manager shall not enter into a lease for a period longer than _24_ months, unless written consent is given by Owner.
b.      To collect rents and revenues from the Property.
c.       To maintain and keep the Property in a reasonable state of repair and to expend such part of the rents and revenues from the Property which it collects, as may be necessary in so doing; PROVIDED HOWEVER, Manager shall not spend more than  _$1000_  in repairs during any 12 month period unless and until first receiving the consent of the Owner to do so.
d.      In the event that repairs or improvements are needed or necessary, which repairs or improvements exceed $500    per occurrence, then in that event, with the consent of Owner, Manager will act as general contractor on behalf of Owner to cause said repairs or improvements to be made. The Owner will pay to the Manager the cost of said repairs or improvements, plus 15% of said cost as a fee for Manager acting as a general contractor for said repairs or improvements.
e.      To employ such attorneys, agents, contractors and workmen as Manager may deem reasonable and proper in connection with the handling, managing and control of the Property.
f.        Generally, to handle, manage and control the Property and to execute such agreements, contracts or other documents or do such other acts as Manager from time to time may deem reasonable and proper to carry out the duties stated in this agreement.

2.      Manager shall keep proper books of accounting of this agency, which said books shall be open to inspection by Owner during regular business hours of the Manager. The books and records shall reflect at all times the rents and revenues received and the disbursements made as to the Property. Manager shall furnish to Owner a monthly statement showing the rents and revenues received, the disbursements made and the other transactions had with respect to the Property.

3.      Manager is NOT authorized by this Agreement to either make any capital improvements on the Property except as herein provided, or to sell any of the real estate constituting a part of the Property, or to create any mortgages, liens, or encumbrances against the Property, unless and until first instructed by Owner to do so.
4.      Owner agrees that Manager shall be under no duty to undertake any action, other than as herein specified, with respect to the handling, managing, and controlling of the Property, unless and until specifically agreed to by Manager.

5.      Owner agrees that Manager shall have a lien against the Property to secure payment of Manager’s compensation and any advances Manager may make from other funds.
6.      Owner’s objectives in the management of the Property are:
a.      Maintain 100% occupancy and maintain rents at market rates
b.      Maintain the appearance, upkeep and marketability of the Property
Manager shall manage the Property accordingly.

Article II – Rights Reserved by the Parties:
1.      This agreement may be altered, amended, or modified at any time by a written mutual agreement signed by Owner and Manager.   
2.      This agreement may be terminated by either Owner or Manager giving to the other at least thirty days written notice of intention to terminate this Agreement on a certain date specified in such notice; provided however the termination of the Agreement shall not affect the right of Manager to receive leasing commissions or fees which have accrued on the date specified in such notice that have not been paid.

Article III – Manager’s Compensation and Right of Reimbursement
  1. For service hereunder, Manager shall be entitled to receive and retain 10% of gross rents and revenue collected from the Property as compensation for the performance of such services. Owner agrees to pay Manager upon demand any fee for services rendered by Manager and/or out-of-pocket expenses incurred by Manager in the handling and managing of the Property, where Manager does not have available funds from the rents and revenues from the Property from which to be reimbursed. Any fees for services rendered by Manager and/or out-of-pocket expenses incurred by Manager NOT PAID by Owner on demand shall, after thirty days, bear interest at the rate of one-and-one-half percent (1.5%) per month or eighteen percent (18%) per annum until paid.
  2. Owner promises and agrees to indemnify Manager and hold Manager harmless from and against any and all losses and liabilities incurred by Manager as a result of any action in good faith taken or not taken by Manager pursuant to the terms and conditions of the Agreement.

Article IV – Miscellaneous
  1. Owner and Manager agree that late fees and interest on funds held in escrow for Owner if any, shall be considered earned by and paid to the Manager each month to help offset Manager’s time, check and banking charges.
  2. Owner and Manager agree that
Manager will maintain the tenant’s deposit balance in escrow, the amount to be adjusted as the total deposit balances change.

If you are interested in renting out your Seattle house, seasonally or year-round, please contact me at

Happy Investing!

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