A property management contract is a great idea for landlords who’re looking for a means to ensure the smooth functioning of their rental property with a minimal investment of time. Through a rental property management contract, you can entrust the property manager with critical responsibilities such as maintaining your property, finding, screening and eventually managing your tenants, and safely securing the monthly rent. But, selecting a quality property manager is imperative if you want those responsibilities to be handled with efficiency and professionalism. To select a quality property manager, you need to go through their property management contracts. Presented below is what you should be looking for in a thorough property management contract.
Their Services and Fees
The entire point of the contract is that you will avail of certain services in exchange for a set fee. The first thing you need to be clear about is the entire scope and specifics of the services the property manager is to perform. It is important that you carefully compare the services of various property managers. Now, while it’s natural to prefer a property manager who charges the least for their services, that shouldn’t be your approach. It is quite possible that a property manager who charges more may offer you a greater range of services. Furthermore, some property managers charge a lower initial fee, but they might have additional charges for additional duties that may have been excluded from the contract. Even if you are charged extra for additional services, you must be given the specifics of how the charge came about. It may be a good idea to ask the property manager for a complete breakdown in any case.
Your Responsibilities and Restrictions
As a landlord, you are obligated to perform a certain set of responsibilities, and it’s important to understand them and compare how they are different from contract-to-contract. Alongside responsibilities, the landlord is also placed with certain restrictions on their powers.
As a standard practice, most property management contracts include how the landlord is required to maintain a reserve fund. This reserve fund shall be used by the property manager themselves for daily operations such as property maintenance and emergencies. Landlords are also generally required to maintain a proper insurance for their rental property. It should also outline if the property manager is also covered.
This section of the property management contract also acts as a rough guide of restrictions imposed on the landlord. For instance, a property management contract relieves the property owner from the duty of finding a tenant. A property manager generally has their own guidelines and considerations for tenant selection. To ensure that the property managers impose their guidelines, the landlords are prevented from making a unilateral decision when it comes to finding a tenant. Furthermore, a property management contract also generally states that the landlord must notify the tenant if they intend to visit their rental property.
Equal Opportunity Housing
According to our Human Rights Code, it is against the law to discriminate against a tenant on the basis of their race, sex, caste, religion, and family status. Furthermore, you also have to ensure that your property manager is regular with the way they follow the safe housing laws that are applicable on a provincial level and federal level across Canada. All landlords are required to ensure that their tenants enjoy safe, clean, and healthy living conditions in their rental property.
The Reasonable Care Clause
Your property manager enjoys limited liability, which is supposed to protect the property manager for being responsible from any damaged caused to your property where they aren’t directly responsible. What this implies is that that the property manager will not be held accountable if the tenant or contractor they hire causes any damage to your property, this is the premise of the ‘hold harmless clause’. To safeguard your interests, you should look to add the ‘reasonable care clause’, which makes it necessary for property managers to take reasonable care and research while they hire a contractor.
Look closely at the contract to see how long it lasts. It is in the best interests of the property owner to not a sign a contract that lasts for more than one year before being more certain and comfortable about the credentials of the property manager. It is very hard to find a property manager who is willing to sign a contract for less than the 1-year period. In any case, a period of one year is relatively fair in terms of the time a property manager needs to prove their quality.
The Termination Clause
A property management contract doesn’t have to stand just because that’s what the contract says. A property management contract should also have a termination clause that allows the property manager and the landlord to terminate the contract. However, the property management contract mustn’t be terminated without a legitimate reason. The possible reasons that allow either party to terminate the property management contract must be clearly outlined in the contract. In the termination clause, you should also look for other important details such as ‘notice period of termination’, ‘fee payable upon early termination’ (in the event of a no-fault termination), and the reason for an early termination. It must be noted that the termination clause of each property management contract may differ.
To begin the process, you may want to consider going through our elaborate property management contract that outlines the range of services you’ll be entitled to. At Rental Advisors, your rental property will have access to online listings that will provide your rental property with all the exposure it needs. Contact us to learn more about our property management contract.