Management Contract Questions!
Hello,
A few days ago I was given this Terms of agreement from a property Management company. I am a little Weary of some of the statements in this contract.
What do you guys think?
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Monies collected AND RETAINED by Management Company.
1) 10% of the Gross Rents. This includes any rent collected and retained by the OWNER.
2) Any Late charges
3) Minimum fee of $40 per unit
4) All repair-maintanance work done in house at $45 plus materials.
5) 10% of work contracted by independent contractors, and 10% of the supplies used.
6) a $200 fee to cancel Management contract (Per Property)
7) Any Misc. fees not mentioned in this agreement.
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I would say that 4 and 5 bother me the MOST. I also am not Crazy about number 6 but I suppose I could live with it.
How should I work this? do I simply CROSS out the ones I dont like and send it back? how does this work?
Thanks in advance for the advice!!
I would definitely compare against other management companies. If this one is your final choice, I would discuss with them the terms that you do not agree with. If they are still willing to enter a contract with you make sure these items are crossed out ( maybe have a lawyer review to protect yourself too?).
If you don't like the terms of the proposed contract then by all means negotiate with them. Don't settle for something you are not comfortable with. The great thing about contract law is that two parties can negotiate and contract for basically whatever they want.
If they do agree to change the contract you can either cross out the offending clauses and have BOTH parties initial the change and have them sign something that states they have the power within the company to negotiate and enter into contracts, or you could write an addendum to the contract spelling out the changes.
Either way though I would make sure the person you negotiate with has that authority within the company.
Good luck
PS> if you have more than a couple of units 10% seems a little high. The management companies I have spoken with all agree to drop the percentage if the investor has over 2 units. Just something to think about.