Property Management Agreement
The Property Management Agreement ("Agreement") is effective when the property management agreement is signed ("Effective Date"), between Nexus Real Estate Group LLC ("Property Manager"), and Landlord ("Owner").
A. The Owner holds either the record or beneficial ownership of the Property (as subsequently defined), and the Property Manager possesses substantial experience in managing, operating, leasing, servicing, repairing, and overseeing real estate comparable to the Property.
B. Both parties wish to formalize their relationship through the Agreement, outlining the specific terms and conditions under which the Property Manager will undertake the management of the Property.
C. Any modifications, amendments, or changes to the terms and conditions outlined in this agreement shall be made in writing and must be signed by both parties. No oral agreements or understandings shall be considered valid or enforceable unless they are documented in writing and duly executed by the authorized representatives of both parties. All such modifications shall be incorporated as an addendum to the property management agreement.
Definitions:
Within the context of the Agreement, the following terms are defined as follows and will have the meanings specifically assigned to them below:
The term "Affiliate" refers to any associated entity or individual with a specific connection to a person as outlined below: (a) For a corporation, this includes any officer or director, any individual or entity that owns directly or indirectly more than 10% of any class of equity securities (as defined in the Securities Exchange Act of 1934), and in cases where such an owner is a partnership, any of its partners, or if the owner is another corporation, any entity that controls, is controlled by, or is under common control with that corporation, or any officer or director of such an entity. (b) For a partnership, it includes any partner of the partnership. (c) It also extends to any person or entity that directly or indirectly has control over, is controlled by, or is under common control with the person in question. Control, for the purposes of this definition, refers to the ability, either directly or indirectly, to influence or direct the management and policies of a person, through ownership of voting securities, contractual agreements, or other means. Additionally, the term "Affiliate" when related to an individual, includes that individual's parents and grandparents, the parents and grandparents of any other individual who is an Affiliate due to connections described in parts (a), (b), or (c), any direct descendants (whether by birth or adoption) of such parents or grandparents, and the spouses of such descendants. This comprehensive definition encapsulates various layers of affiliation through familial, corporate, or partnership links, enhancing the clarity and scope of relationships described as affiliates in legal and business contexts.
The term "Fiscal Year" refers to the twelve-month period starting on January 1 and concluding on December 31 of the same year.
The phrase "Gross Monthly Collections" encompasses the total gross monthly revenue collected from the property. This includes all forms of income such as tenant rental payments, pet rents, and other varied charges and miscellaneous revenue items attributable to the Owner. It should be noted that any tenant payments made towards any taxes levied on the rental income managed by the Property Manager are not included in the Gross Monthly Collections. However, any advance rental payments are counted within the Gross Monthly Collections upon receipt. Security and other types of deposits are generally excluded unless they are no longer held as security and are applied as income.
Furthermore, Gross Monthly Collections do not include payments made by tenants to either the Owner or Property Manager that are associated with rental deposits, or relate to the termination, cancellation, expiration, renewal, extension, or modification of a tenant’s lease. Additionally, money received from property insurance claims for damages, costs related to remodeling and tenant improvements, compensation from condemnation, or funds acquired through the sale or refinancing of any part of the Property secured by a lien, are all excluded from the Gross Monthly Collections. Conversely, proceeds from business interruption insurance are included in the Gross Monthly Collections. This definition is crafted to provide a clear and comprehensive understanding of what constitutes Gross Monthly Collections in the management and financial operations of the property.
The terms "Approved Capital Budget" and "Approved Operating Budget" are defined in detail in the sections that follow.
The term "Property" shall refer to the specific real estate asset under management, which includes the land and any buildings, structures, and improvements situated at the designated address of the managed property. This encompasses all physical aspects of the property such as residential units, common areas, landscaping, parking facilities, and any additional amenities provided. Additionally, the Property includes any fixtures, installations, and infrastructure that are a part of the premises, such as plumbing, electrical systems, and HVAC units. It is the comprehensive entity that the Property Manager is responsible for overseeing, maintaining, and managing according to the terms outlined in the agreement. This definition ensures that all components and aspects of the real estate asset at the specified address are encompassed under the term "Property."
The term "Records Office" refers to the offices of the Property Manager that are situated at the Property itself as well as the office located in 205 River St, Haverhill, Massachusetts. These offices are designated for the maintenance, storage, and management of all records related to the Property, including tenant files, financial documents, maintenance logs, and other pertinent information necessary for the effective management and operation of the Property.
The term "Rental Guidelines" refers to the set of rules and standards provided upon request, which outline the policies and procedures for renting units at the Property. These guidelines include criteria for tenant selection, lease terms, rent payment procedures, and other relevant rental policies. The Rental Guidelines are subject to revisions and updates over time, ensuring that they remain current and applicable to the Property's management practices and regulatory requirements.
Appointment And Property Manager Services:
Owner hereby engages Property Manager as the exclusive manager and real estate agent for both the Owner and the Property, according to the terms and conditions set forth in the Agreement. Property Manager accepts this engagement for a term commencing on the Effective Date of the Agreement and concluding at 12:00 midnight on the one-year anniversary of the start date. However, the Agreement may be terminated at any time by either the Owner or the Property Manager, provided that the terminating party gives no less than thirty (30) days' advance written notice.The Property Manager shall oversee, supervise, and manage the Property. This includes directing operations, maintaining, and repairing the Property, and developing, instituting, and adhering to programs and policies aimed at ensuring the efficient operation of the Property. These actions shall be in compliance with this Agreement, the Rental Guidelines, and all written instructions provided by the Owner, aiming to operate the Property as profitably as reasonably possible.
Without limiting the scope of the aforementioned responsibilities and always subject to the procedures and directives outlined in the Agreement and the Rental Guidelines (as they may be revised or amended from time to time), the Property Manager shall undertake the following tasks described in the agreement.
Employees:
Property Manager shall be responsible for selecting, employing, paying, supervising, and discharging all employees and personnel necessary for the operation, maintenance, and protection of the Property, subject to the limitations outlined in Section 4.01 of this agreement. All individuals employed by Property Manager shall be considered employees of Property Manager or independent contractors retained by Property Manager, and not employees of the Owner.
The costs associated with gross salaries and wages, payroll taxes, medical and dental insurance, worker’s compensation insurance, incentive leasing bonuses, and other employee benefits shall be included in the Approved Operating Budget. Property Manager agrees to fully comply with all applicable laws and regulations related to workers’ compensation, social security, unemployment insurance, hours of labor, wages, working conditions, and other employer/employee-related matters.
Records and Budgets:
The Property Manager shall be responsible for maintaining or ensuring the maintenance of appropriate and detailed books of control and account at the designated Records Office, in accordance with the provisions set forth in this Agreement. The Property Manager shall utilize Microsoft Excel worksheets, specifically employing Nexus templates, to prepare and submit to the Owner any required monthly, quarterly, annual, or other operating and capital budgets.
Without limitation, the Property Manager is required to prepare and submit to the Owner a proposed operating budget and a proposed capital budget for the Property. These budgets are essential for the management and operation of the Property for the upcoming Fiscal Year. Such proposals must be submitted no later than November 1 of each year during the term of this Agreement.
The submission of the proposed operating and capital budgets shall be made using a standardized form provided by the Property Manager and must receive the Owner's approval. Upon receipt of these proposals, the Owner will review and consider the budgets, making every reasonable effort to provide approval by December 1 of each year during the term of this Agreement.
The proposed budgets will only become effective and officially recognized as the Approved Capital Budget and the Approved Operating Budget upon the Owner's approval. Following the Owner's approval, the Property Manager shall promptly ensure that the Approved Capital Budget and the Approved Operating Budget are uploaded into the preferred accounting system designated for the Property.
In addition, the Property Manager shall provide ongoing updates and adjustments to these budgets as required by the Owner, ensuring that any changes are also recorded and submitted for the Owner's approval. The Property Manager shall maintain transparent and accurate financial records to facilitate effective budget management and ensure compliance with all financial reporting requirements as stipulated by the Owner.
By adhering to these procedures, the Property Manager will ensure comprehensive financial oversight and accountability, thereby facilitating the efficient management and operation of the Property throughout the term of this Agreement.
In the event that an annual operating budget for a Property has not been approved by the Owner prior to the commencement of any Fiscal Year during the term of this agreement, the operating budget for each subsequent month (referred to as the “Current Month”) until the annual operating budget is approved shall default to the amount specified in the most recently Approved Operating Budget for the Property corresponding to the same calendar month of the previous year (referred to as the “Base Month”). This provisional operating budget shall be subject to adjustments based on the following factors:
(a) Any increase or decrease in the Consumer Price Index for All Urban Consumers (CPI-U) for the metropolitan area in which the Property is located, as published by the United States Department of Labor, Bureau of Labor Statistics, using the base year 1982-84=100. The adjustment will reflect the percentage change in the CPI-U between the Base Month and the Current Month.
(b) Any variation in the occupancy levels of the Property between the Base Month and the Current Month. This adjustment will account for changes in rental income and occupancy-related expenses that result from fluctuations in the occupancy rate.
(c) Any changes in the costs associated with taxes, insurance, and utilities for the Property. This adjustment will take into account any increases or decreases in these specific expenses between the Base Month and the Current Month.
By adhering to this approach, the provisional operating budget will ensure that the financial management of the Property remains consistent and reflects current economic conditions, occupancy levels, and operational costs until the annual operating budget is formally approved by the Owner.
Budget Approval and Amendments:
The Owner reserves the right to revoke its approval of either the Operating Budget or the Capital Budget at any time. This revocation will be effective upon providing the Property Manager with twenty (20) days' prior written notice. Once this notice period has elapsed, the previously approved Budget shall no longer be in effect.
The Owner also retains the authority to amend its approval of either the Operating Budget or the Capital Budget. The Owner may instruct that the Budget be amended to align with the new approval. This amendment will be effective upon providing the Property Manager with twenty (20) days' prior written notice. Following this notice period, only the Budget as amended shall be considered the approved Budget.
For the initial Fiscal Year, if the term does not encompass a full twelve months, the Property Manager shall submit an operating and capital budget for the remaining period of the calendar year. This submission should be made as soon as possible and no later than thirty (30) days from the date of this agreement.
Throughout each calendar year, the Property Manager retains the right to submit revised Operating and Capital Budgets to the Owner for approval. Such submissions can be made periodically as deemed necessary by the Property Manager.
The Property Manager commits to exercising diligence and employing all reasonable efforts to ensure that the actual costs incurred in maintaining and operating the Property do not exceed the amounts stipulated in the Approved Operating Budget or the Approved Capital Budget, as applicable. The Property Manager will actively manage expenses to stay within the approved budgetary limits.
Leasing Responsibilities:
The Property Manager shall be responsible for overseeing all leasing activities associated with the Property. In this capacity, the Property Manager shall use commercially reasonable efforts to secure responsible tenants for any and all unleased units. This includes diligently marketing the available units, conducting thorough tenant screenings, and engaging in negotiations to attract suitable tenants. Additionally, the Property Manager shall endeavor to renew existing leases in a timely manner, ensuring that rental rates conform to the established Rental Guidelines.
In performing these duties, the Property Manager is authorized to negotiate and execute lease agreements using the most current version of our preferred lease documents. This ensures consistency and adherence to the standards set forth by the Owner.
However, any deviations from the lease forms or the Rental Guidelines require the prior written consent of the Owner. Such deviations might include, but are not limited to, adjustments to rental rates, alterations to lease terms, or any other modifications that depart from the established guidelines. The Property Manager must obtain explicit written approval from the Owner before implementing any changes that diverge from the standard practices or prescribed guidelines.
Furthermore, the Property Manager shall maintain accurate records of all leasing activities and provide regular updates to the Owner. These updates shall include detailed reports on lease expirations, renewals, and vacancies, as well as any issues encountered during the leasing process. This ensures that the Owner is kept fully informed and can provide timely approvals for any necessary deviations from the established protocols.
Rent:
The Property Manager shall employ reasonable efforts to ensure that all rents and other payments stipulated in the leases are promptly paid by the tenants of the Property when due. These payments should be made directly to the Property Manager. In cases where lease agreements contemplate adjustments in rent or other payments, the Property Manager shall make the necessary adjustments, and promptly notify both the Owner and the tenants of such changes. The Property Manager shall also be responsible for signing and serving notices on behalf of the Owner, including but not limited to letters demanding overdue and currently due rents and other monies, as deemed necessary or appropriate, except where limitations are imposed in other sections of this agreement or other written amendments.
Furthermore, the Property Manager shall diligently collect and identify any income owed to the Owner from miscellaneous services provided to tenants or the public. This includes, but is not limited to, revenue from parking, tenant storage, and cable television charges. All rents and other monies collected by the Property Manager shall be promptly deposited into the Property Bank Account.
The Property Manager's responsibilities also encompass the adjustment of rentals and other required payments as specified in the leases. These adjustments, along with corresponding notifications to the Owner and tenants, must be managed efficiently to ensure compliance with the terms of the leases. In fulfilling these duties, the Property Manager shall act in the best interest of the Owner, ensuring that all communications, including demand letters for overdue and current payments, are issued in a timely and effective manner.
All collected rents and other monies shall be immediately deposited into the Property Bank Account, ensuring that the funds are accurately accounted for and managed in accordance with the Owner’s financial protocols. The Property Manager shall maintain transparent and thorough records of all transactions and adjustments, providing the Owner with regular reports detailing the financial status of the Property.
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