As a property manager, the contract you present to your clients is crucial. While your company may boast about certain certifications, standards, and reviews on its website or in person, the property management contract is the piece of information that will tell your clients the most about you. They’ll likely be comparing your contract against other property management agreements to see which one is the best fit for them.
What are clients looking for in a property management contract?
Terms of the Relationship
Your clients will be looking for a clear understanding outlined in the contract about how your relationship with them will function. This includes all aspects of the relationship such as:
- How long will the relationship be? One to two years is common.
- Who is responsible for what? You’ll be responsible for services provided, but will you require your client to pay for insurance, parts needed for maintenance, or additional services?
- What rights does the client have? Rights to privacy, withhold payment, etc.
- How will disputes be handled? The more detailed your contract is, the better. Disputes generally arise from uncertainty or things being unclear.
The clearer you are about how the relationship will function, whether it be everyday interactions or emergency situations, the better picture a client can get about how the relationship will go. Clients also want to see how your relationship with the tenants will function. Include terms of the relationship and be as specific as you can in the property management contract.
This part of the contract is obvious, but it shouldn’t be basic. Again, be as detailed as you can. Your clients will be looking to see what exactly you’ll do and won’t do in your property management contract. List what services you provide and under what conditions they will be provided.
Some property managers also include a section under which they detail what services they feel are outside of their responsibilities. They will explicitly state the additional fees for these services if they need to be performed or if they are required to perform them. This part of the contract can also detail a bit of how your relationship with the tenants will function—including abiding by state laws regarding notice to enter the property and conducting inspections and disclosures of hazards on the property. Your clients will want to see that your services are inclusive, fair, and law-abiding.
All costs for your services should be included in your contract. Your client is looking for specifics about what you’ll charge, why, and in what instances the rate may change. If you’re vague or unclear about certain fees in the property management contract, you can expect your client to ask questions about how much the fees will be, or they may go with another company who is more detailed and spare themselves the trouble of asking you.
Your property management contract should state what your monthly rate is, in what instances that rate would change, and any fees for additional services required. There may be fees for added tasks the client requires of you outside of your normal responsibilities, fees for any changes in the contract or the duration of time, or fees for terminating the contract.
Termination of Relationship
Your potential client wants to know your conditions for terminating the contract and if they can terminate the relationship if they wish. Include this information in your contract to give your client peace of mind when hiring you. Some property managers include terms under which the client may terminate the relationship, but more commonly, their contracts let the client know that they can terminate the relationship without reason as long as they give 30 days’ notice.
Some property managers require fees along with this. For instance, the client may be required to pay the monthly fee for the rest of the duration of the contract if they choose to terminate early. Whatever you decide to put on the agreement is up to you—just be clear about the termination conditions in your property management contract.
Your clients want to see the services, fees, relationship terms, and any termination requirements in your property management contract. When reviewing contracts, they want to see that yours is the best one with what you’re offering, the costs, and how the relationship will be conducted. What you decide to include in your property management contract should be detailed and clear for your clients.