Handling the responsibilities of a landlord for a residential property, such as condominiums, may be a tedious task for some. Thus, hiring a condominium management company can be an excellent option to ensure that one still generates profit from their property despite having a limited time or having countless rental units. Regardless, you can’t just let anyone handle your properties. You need to obtain a c ondominium management agreement that both you and the service provider should sign for important reasons. We will discuss more of it in this article. We also included a set of management agreements templates and examples that you can use for your business.
A condominium is a type of real estate similar to apartments which you can structurally divide to create multiple units to rent. If you are an owner of such property, you can opt to sell each living space individually. Recently though, detached condominiums are becoming popular. This type of condominium are the ones that look like single-family homes. The difference is they may share corridors, exteriors, yards, streets, and recreational facilities—which community association manages or even own.
A condominium management agreement is a type of agreement that both the owner of the condominium and its hired property management firm agree. This contract will set proper expectations by including not just the responsibilities of each party, but also the legal liabilities and insurance coverage for the owner.
Just like investment agreements , rental management agreements, commercial property management agreements, and business management agreements , a condominium management agreement should include items that will cover the necessary provisions that are beneficial to both parties, such as the following:
This section is one of the most essential elements of a condominium management agreement. It includes the services that the management firm must perform. In this clause, the service list should be specific, which means that the agreement should indicate the scope and limitations of service the management company must render to the property owner.
The fees included in the contract will depend on the services that the management company will render. Thus, it is crucial to check the completeness of the services covered. You can also include a clause that would address the extra services that you want the firm to render, which are not in the standard contract. The content of the said clause should also specify the additional fees for each extra service.
This section contains the responsibilities that both you and the management company has to adhere to. It may also include the insurance policy that will protect you in case unfavorable circumstances happen. Although it is your property, you still have to agree to the limitations that both parties will agree. That is why it is essential to set up a meeting that will allow both parties to address possible misunderstandings and disagreements of the agreement.
When agreeing to a contract, make sure that it is time-bound. The clauses that both parties have approved may not be as feasible as it is next year due to changes in external factors. Thus, it is essential to specify the length of the agreement’s effectivity. Most companies agree for a year contract. Although many partnership agreements last more than a year, they regularly check the contents of the arrangements. Both parties should also discuss the termination arrangement to make sure that either party won’t get stuck in a contract that is not beneficial anymore. You may also include other sections, such as liability & compliance, funding, etc. to have more specific terms and conditions of the condominium management agreement that you and the management firm agree.
Take a look at the following examples of condominium agreements and use them as a reference in creating one for your property.