Important parts of a property management agreement and what the agreement cannot tell you.
When you enter a legal relationship with a property management company, you sign a Property Management Agreement that outlines legal terms and obligations. Beyond the legal language, it is important to understand flexibility, fees, reserves, payout timelines, maintenance rules, guarantees, and eviction responsibilities.
Cancellation
A property management company should not handcuff you or charge termination fees if you leave. Ideally you want a month-to-month agreement, allowing you to leave any time without penalty. Our management agreement is month-to-month with no termination fees or penalties.
Transparent Fees
You can expect a company to charge fees for the services they provide, but are those fees transparent and fair? If fees are hidden throughout the agreement, that could indicate the company is not being transparent about what they will charge you.
Attorney-Prepared Documents
We use Pennsylvania Association of Realtors (PAR) documents prepared by state attorneys. Some companies use their own, and while that is fine, we have found the PAR agreement protects both the consumer and the management company.
Reserve Requirements
Your Pennsylvania property management company should open a banking trust account for you, which you fund with a reserve. This money pays expenses on the property incurred before or after you receive the rental income each month. Reserve amounts vary, but expect anywhere from a few hundred dollars up to one full month of rent.
Owner Payout Speed
When a tenant pays rent, how quickly does the property management company process those funds and pay you? As a general benchmark when comparing agreements, look for one that gets your money to you no later than the 15th of the month. First Lock disburses funds by secure ACH transfer directly into your bank account each month.
Maintenance Trigger
Strong maintenance protocols define emergencies, owner approvals, tenant responsibility, and repair-versus-replace decisions.
Benefits
Two of the most common fears we hear from owners are what happens if a tenant does not pay rent and has to be evicted, and what happens if a pet damages the property. Ask how the company will respond and whether they will re-rent the property for free.
Evictions
Although evictions should be rare, be sure the company will handle all legal problems on your behalf, including the preparation and service of the legal documents required to begin the eviction process in Pennsylvania. Beware of language requiring you to involve your own legal counsel. First Lock oversees the entire legal process from start to finish and prepares and serves the required notices at no cost to you.
What the Agreement Cannot Tell You
Because property management agreements are written by attorneys to outline the legal relationship between the property owner and the property management company, they cannot tell you what you need to know most. They cannot describe the most important parts of your new relationship: expertise, integrity, honesty, professionalism, communication response time, compassion, and wisdom.
You are not entering into a transaction so much as entering into a relationship. You should have confidence and trust in the person and the company who will be keeping the keys to the front door of your valuable real estate asset. We hope this information helps you make an informed decision for your property management needs, and we would be glad to be a resource if we can help in any way.
Why Owners Trust First Lock
- Tenant Placement Guarantee
- Rent Deposit Guarantee
- Management Fee Guarantee
- One Contact & Response Time Guarantee