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| What to Look for in Property Management Agreements | | Print | |
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Every so often we receive phone calls from distressed property owners having trouble with their existing Orlando property management company. Complaints usually boil down to companies not meeting the expectations the property owner was led to believe they would fulfil. When drafting our own property management contract we reviewed a number of existing contracts to come up with a list of clauses and terms that should be in any management agreement you sign with an agency: We have heard all kinds of complaints, such as “references were never checked”, “he let the guests get away with trashing the place” and “they never got us any bookings despite promising upwards of 40 weeks a year”. After an Orlando villa owner has started having these issues he or she reads the management contract only to discover that despite all the promises, the management company is not responsible for anything. Too many contracts are created so all the management company has to do is mow the lawns and take your money, and that’s only because they’ll get in trouble with the Homeowners Associations if they don’t do the landscaping! Due DiligenceWithout a doubt the most important clause in any management contract. Due diligence is a legal term which states the management company promises to do it’s best to ensure a satisfactory service, or in legal-ese, that the company will execute "that amount of diligence which a reasonable and prudent man would exercise under the circumstances."Professional managers have an extra duty of diligence over agreements with friends to look after property as by signing a contract they are implying they have the necessary experience to manage your property. Notification and Status UpdatesA clause where the management company will promise to keep you up to date with occurrences in the management of your property, as necessary.AccountingWhat happens to your money? When will they send out your check for rental income as soon as they receive it, on a set day of the month, or quarterly?What happens to guest’s security deposit money? Do they maintain a separate escrow account for client funds? Early Termination PenaltiesAll contracts should include a provision for termination or renewal after a certain date. But how can you get out of it? Is there a penalty fee for early termination of your property management contract?Repairs and Maintenance Every management agreement will provide for the company to handle repairs. Usually they will subcontract to local specialists. What you’ll usually see in a management agreement is a “hold harmless” clause which will waive the management company’s liability for the “acts, defaults and negligence” of people they hire. What you should look for is a backup statement that they will use “reasonable care” in their hiring process. Although the company should not be held responsible for workers they have no control over, but the management company can and should be held responsible if they hire someone who has a history of providing a poor or dangerous service and the company knew or should have been aware of the problems. Marketing and Advertising your Orlando/Kissimmee Vacation Rental Property |
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