The Property Management Agreement ("Agreement") is effective when the property management contact 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.

Summary:

Term of The Agreement:

The appointment of Nexus Real Estate Group ("Nexus") as your property manager will commence on the date Nexus signs and returns this Agreement to you and will continue for an initial term of one year following the start date of the tenant’s lease (the “Term”). If the tenant’s lease begins mid-month, the Term may be extended to the end of that month.

At the end of each Term, the Agreement will automatically renew for an additional year or for a duration specified by Nexus based on the current lease of your property, if applicable. Nexus will provide you with written notice of this automatic extension at least 60 days before the Term's expiration, including any proposed changes to the Agreement.

Potential changes may include but are not limited to, updates to rental terms, market-adjusted rental rates, or other key provisions. If you wish to continue under the updated terms, no action is required on your part. However, if you prefer to terminate the Agreement or convert it to a non-guaranteed management arrangement, you must notify Nexus by responding to the renewal notice within thirty (30) days. Detailed instructions for responding will be included in the renewal notice.

Property Preparation and Rental:

Nexus will conduct a thorough initial rental inspection of your property. This inspection is not a traditional home inspection used in real estate sales to assess structural or mechanical aspects of the property. Instead, it is a detailed evaluation focused on ensuring that the property meets the standards necessary for leasing at a competitive market rate and is properly prepared to receive a new tenant.

Purpose of Inspection:

• Assess the overall condition of the property, including both interior and exterior areas.

• Identify maintenance and repair needs to achieve market readiness.

• Evaluate safety and compliance with local housing codes and regulations.

Pre-Inspection Preparation:
To facilitate an efficient and accurate inspection, please ensure the following before our visit:

• The property must be thoroughly cleaned, with all personal belongings and furniture removed.

• The property must be vacant, free of occupants, and pets, allowing for an unobstructed assessment of all rooms and amenities.

• Utility services (electricity, water, gas, etc.) must be active to enable proper testing of fixtures, appliances, and systems.

Post-Inspection Process:
After completing the inspection, Nexus will provide you with a detailed and itemized report specifying:

• Cleaning requirements to meet professional standards.

• Necessary repairs and maintenance, including but not limited to, plumbing, electrical, HVAC, painting, and landscaping needs.

• Recommended replacements of appliances, fixtures, or other features to enhance marketability.

You will be responsible for approving and covering the costs of the required work. However, Nexus will handle all logistics, including scheduling and overseeing contractors and service providers. Our network of trusted vendors ensures high-quality work at competitive rates.

In specific instances, you may request permission to complete or manage some of the required work independently or through your preferred vendors. However, Nexus reserves the right to determine whether such work meets our standards for the property to be considered "Rent-Ready."

Rent-Ready Status:
When all required work is completed, Nexus will conduct a final quality assurance check to verify that the property meets our Rent-Ready standards. This process ensures the property is clean, safe, well-maintained, and presents well to prospective tenants.

Market Adjustment Clause:
If the Rent-Ready process extends beyond sixty (60) calendar days, Nexus reserves the right to re-evaluate and adjust the Guaranteed Rent price to reflect current market conditions. This adjustment may result in an increase or decrease in the Guaranteed Rent, ensuring the property's rental price remains competitive and aligned with market demand.

Listing, Advertising, and Marketing:

Once the property achieves Rent-Ready status, Nexus will initiate a strategic and targeted marketing campaign to attract qualified tenants quickly and efficiently. Our comprehensive approach includes:

Professional Photography and Media:

• High-quality photographs and, if applicable, virtual tour videos to showcase the property’s best features.

• Staging recommendations to enhance visual appeal in listings.

Strategic Listing Approach:

• Listing the property on major rental platforms such as Zillow, Realtor.com, Apartments.com, and other high-traffic websites.

• Featuring the property on the Nexus website and through our internal marketing channels, including email campaigns and social media.

• Utilizing targeted advertising strategies, including paid ads, to reach specific demographics most likely to be interested in your property.

Pre-Listing Opportunities:
In certain cases, Nexus may pre-list the property before achieving full Rent-Ready status. This limited pre-listing approach on select channels helps to:

• Generate early interest and build a list of potential tenants.

• Conduct preliminary marketing activities to reduce vacancy periods.

Tenant Showings and Selection:
Nexus handles every aspect of tenant interactions, including:

• Scheduling and conducting property showings, offering flexible times to accommodate potential tenants.

• Providing guided tours that highlight the property's features and answer tenant questions.

• Managing open houses when beneficial to accelerate interest.

Tenant Screening Process:
Our tenant screening process is rigorous and compliant with all applicable laws, including the Fair Housing Act. The screening process includes:

• Background checks, including credit history, criminal record, and rental history.

• Verification of employment and income to ensure tenants meet rental criteria.

• Evaluating references from previous landlords to gauge reliability and behavior.

Compliance and Exclusivity:
By entering into this Agreement, you agree not to independently post, list, advertise, or market the property through any means during the term of the Agreement. This exclusivity allows Nexus to maintain a cohesive marketing strategy and avoid potential conflicts or tenant confusion.

Management Fee:

Nexus Real Estate Group ("Nexus") charges a Management Fee based on either a percentage of the collected rent or a fixed dollar amount, whichever is specified in The Agreement. This fee compensates Nexus for providing comprehensive property management services, including tenant relations, rent collection, maintenance coordination, and administrative support.

The Management Fee will be automatically deducted from each monthly payment made to you. The exact percentage or fixed amount will be clearly outlined in The Agreement, ensuring clarity and transparency.

Included Management Services:

• Proactive property maintenance and repair management.

• Professional tenant communication and issue resolution.

• Detailed financial reporting and monthly statements.

• Full compliance with local, state, and federal property management regulations.

Leasing Fee:

When Nexus sources and places a new tenant in your property, a Leasing Fee will apply. This fee covers the costs associated with the leasing process, including:

• Professional marketing, photography, and property listings.

• Coordinating property showings and managing inquiries.

• Conducting thorough tenant screening, including credit and background checks.

• Preparing and executing lease agreements in accordance with legal requirements.

The specific Leasing Fee amount, whether a percentage of the first month’s rent or a fixed dollar rate, will be clearly outlined in The Agreement.

Payment and Fee Deduction:
The first payment to you will be reduced by the Leasing Fee each time a new tenant is placed unless a separate agreement is in place. This fee only applies when a new lease is initiated and does not apply if a tenant is already occupying the property at the time this Agreement is signed for a renewal.

Additional Costs:

While management and leasing fees cover most services, certain additional costs may arise, including:

• Maintenance and Repairs: Expenses related to necessary repairs or improvements, with all costs pre-approved by you.

• Marketing Enhancements: Optional premium marketing services or advertising, if requested.

• Legal Fees: In cases of eviction or legal disputes, if applicable.

All such costs will be disclosed and agreed upon in advance, ensuring complete transparency.

Owner Expenses:

As a property owner, there are certain expenses associated with owning and managing a rental property that you are responsible for covering. Below are the categories of expenses and how they are managed by Nexus Real Estate Group ("Nexus"):

Rent-Ready Expenses:

Before listing your property for rent, it must be in a condition that is competitive in the rental market and ready to attract quality tenants. Nexus requires the property to meet certain standards to ensure it is "Rent-Ready."

Typical Rent-Ready Expenses Include:

• Repairs: Addressing any issues that may deter potential tenants or affect the property's safety and functionality.

• Cleaning: Ensuring the property is professionally cleaned, including carpets, windows, and all living spaces.

• Cosmetic Updates: Repainting walls, updating fixtures, or other enhancements that improve market appeal.

Nexus will perform or manage all required work to achieve Rent-Ready status. You will be responsible for all associated costs, which will either be deducted from future rental payments or invoiced directly to you. For more details on property preparation, please refer to the Initial Rental Inspection section of this Agreement.

Routine Repair and Maintenance:

Over the course of managing your property, there will be routine expenses related to repairs and maintenance. These expenses ensure the property remains in good condition and complies with health and safety standards.

Routine Maintenance and Repair Policy:

• Repair Threshold: By agreeing to these terms, you authorize Nexus to incur expenses up to a specified Repair Threshold amount agreed upon per individual repair or maintenance issue without your prior approval. This allows us to address common issues promptly and maintain tenant satisfaction.

• Payment and Reimbursement: These expenses will be deducted from upcoming payments or directly from your bank account to you unless you choose to reimburse Nexus directly or cover the expense directly through an approved vendor.

• Vendor Selection: Nexus exclusively selects and manages all vendors, ensuring high-quality service and competitive pricing.

Examples of Routine Maintenance:

• Plumbing and electrical repairs.

• HVAC servicing and filter replacements.

• General property upkeep, such as landscaping or pest control.

Extraordinary Expenses and Emergency Repairs:

Situations may arise where repair costs exceed the Repair Threshold or emergency repairs are required to maintain safety and property integrity.

Approval Process for Non-Emergency Expenses:

• If any anticipated or estimated expense exceeds the Repair Threshold, Nexus will contact you for authorization before proceeding.

• You will have 24 hours to approve or decline non-emergency repairs. If we do not receive a response within this timeframe, your approval will be considered granted by default unless agreed upon otherwise.

Emergency Repairs:
In cases of emergency, Nexus may initiate repairs without prior approval to stabilize and protect the property, ensure tenant safety, or act in the best interests of you or Nexus. Emergency repairs include but are not limited to:

• Addressing hazardous conditions such as water leaks, fire hazards, or structural issues.

• Responding to situations that may lead to property damage if not handled immediately.

• Restoring essential services like heating, plumbing, or electricity in compliance with local habitability laws.

Expense Reporting and Transparency:

Nexus is committed to full transparency regarding property expenses:

• You will receive detailed statements outlining all incurred expenses, including receipts and vendor invoices.

• Routine maintenance and emergency repairs will be itemized separately for clarity.

• You can access expense reports and updates through our property management portal or upon request.

Payment to the Owner:

Nexus Real Estate Group ("Nexus") will initiate payments to you via direct deposit or wire transfer in accordance with the schedule outlined in the tenant’s lease agreement. Typically, payments will be initiated within five (5) business days after rent is collected, ensuring timely and predictable disbursements. Actual receipt of funds may vary depending on your financial institution's processing times.

Payment Method and Timing:

• Payments are processed exclusively through electronic transfer methods; physical checks will not be issued.

• You must provide and maintain accurate and current bank account information to avoid payment delays.

Net Payment Amount:
The payment amount will be net of all fees and expenses incurred on the property unless you have paid these expenses directly. Deductions may include:

• Management Fees: As defined in this Agreement.

• Leasing Fees: Applicable when a new tenant is placed.

• Repair and Maintenance Costs: Including routine and emergency repairs, subject to the Repair Threshold.

• Other Agreed Expenses: Such as marketing costs or legal fees, if applicable.

Nexus will provide a monthly statement detailing the income and expenses related to your property, ensuring full transparency in all transactions.

Bank Information and Payment Authorization:

To facilitate seamless payment processing, you must provide current and accurate bank account details to Nexus for initiating payments and, when necessary, debits related to property management expenses.

Owner Responsibilities:

• Update Bank Information: You must promptly notify Nexus if your banking information changes.

• Maintain Sufficient Funds: Ensure that your bank account has enough funds to cover potential expenses up to the Repair Threshold, as outlined in this Agreement.

Authorization for Payments and Debits:
By signing this Agreement, you authorize Nexus or its designated payment processor to:

• Initiate payments to your account for rental income, net of fees and expenses.

• Debit your account for expenses incurred under this Agreement, including repair costs and service fees.

Payment Collection and Error Correction:

• For repair costs, you authorize Nexus to charge your payment method on file for the amount shown on each invoice, in accordance with the terms of this Agreement.

• You also authorize Nexus to adjust payments as necessary to correct any errors, including overpayments or underpayments.

Revocation of Authorization:

This authorization will remain in effect until you provide written notice to Nexus, requesting revocation. To revoke authorization:

• Notify Nexus at least five (5) business days before the next scheduled payment date.

• Revocation of authorization will not affect outstanding payment obligations under this Agreement.

Additional Considerations:

• Account Verification: Nexus may verify your bank account details through a micro-deposit process or other validation methods to ensure payment accuracy and security.

• Payment Delays: Nexus is not liable for delays caused by bank holidays, processing errors, or issues with your financial institution.

• Insufficient Funds: If your account lacks sufficient funds to cover expenses, you may incur additional fees imposed by your bank, for which Nexus is not responsible.

Tenant Lease:

Each tenant lease managed by Nexus Real Estate Group ("Nexus") will be for a minimum term of one year, plus any additional days needed to ensure the lease concludes at the end of a calendar month. This practice helps maintain consistent leasing cycles and reduces vacancy risks unless another term is agreed upon.

Lease Term and Extension:

• Nexus will not extend a lease beyond this initial timeframe without your explicit written consent.

• Once a tenant signs their lease, the Term of this Agreement is automatically extended to cover the entire lease period, ensuring uninterrupted property management services.

• All relevant dates, including the sixty-day notice for automatic renewal, will be adjusted to align with the new lease termination date.

Tenant Turnover and Income Stability:

• If a tenant vacates the property before the end of the initial one-year lease, Nexus will continue management efforts to minimize downtime and ensure the property remains rent-ready.

• If a tenant vacates after the initial one-year period, Nexus will prioritize securing a new tenant and may propose a new rental rate based on current market conditions.

Early Termination:

In the event that either you (the Owner) or Nexus must terminate this Agreement before the end of the Term, both parties agree to an Early Termination Fee to cover costs and potential disruptions.

Early Termination Fee:

• The fee will be two months of rent, as specified in The Agreement, once Rent-Ready repairs have been approved.

• This fee applies equally to both parties, ensuring fairness in the event of early termination.

Notice and Compliance:

• Early termination is subject to any legal notice period required for a tenant occupying the property.

• Nexus will handle all tenant communication and ensure compliance with local and state laws regarding lease terminations.

Conditions for Early Termination:

• Owner-Initiated Termination: The Owner may terminate this Agreement for reasons including, but not limited to, sale of the property, personal use, or management dissatisfaction.

• Nexus-Initiated Termination: Nexus may terminate the Agreement if the Owner fails to maintain the property, violates the terms of the Agreement, or if management of the property becomes untenable due to safety or compliance issues.

Transition and Property Handover:

• Upon early termination, Nexus will provide a comprehensive transition plan, including all relevant documents, keys, and tenant information.

• Nexus will ensure a smooth transition and assist with any final accounting and financial reconciliations.

Tenant Selection and Tenant Transfers:

Nexus Real Estate Group ("Nexus") is solely responsible for managing all communication and interactions with prospective and current tenants. To ensure compliance with Fair Housing laws and maintain a consistent and professional tenant experience, you agree not to directly communicate with any prospective or current tenant.

Tenant Selection Process:

Nexus manages every aspect of the tenant selection process, including:

• Advertising and Marketing: Professionally promoting the property across multiple channels to attract qualified tenants.

• Communication Management: Handling inquiries, scheduling showings, and providing property information to potential tenants.

• Lease Negotiation and Execution: Signing, negotiating, renewing, amending, or canceling leases for the property.

Screening Procedures:
To ensure that all tenant selections are conducted fairly and legally, Nexus:

• Uses a rigorous screening process, including background checks, credit evaluations, and rental history assessments.

• Follows established procedures that comply with the Fair Housing Act and all relevant local and state regulations.

• Exercises sole discretion in tenant selection, providing you with peace of mind and reducing the risk of discrimination claims or compliance issues.

Managing Existing Tenants and Lease Transfers:

In certain circumstances, Nexus may agree to manage a property with an existing tenant. This may involve transferring the lease from:

• Another Property Management Company, or

• Directly from You (the Owner) to Nexus.

Key Considerations for Lease Transfers:

• Existing Lease Terms: Since the rent and terms have already been established under the existing lease, this arrangement may not be eligible for standard management incentives.

• Information Collection: Nexus will collect all relevant information about the tenant and property, including:

  • Lease documents and addendums.

  • Tenant contact information.

  • Maintenance history and property condition reports.

• Property Inspection: Nexus will conduct a comprehensive inspection of the property to assess its condition and ensure compliance with safety and habitability standards.

• Documentation Transition: Nexus will facilitate the transition of the tenant to our standard lease documentation, ensuring consistent management practices and compliance.

Owner Cooperation:

For a successful transfer of management, you agree to:

• Provide accurate and complete information about the existing tenant and property.

• Allow Nexus to handle all communication with the tenant during the transition period.

• Support Nexus's efforts to inspect the property and transition lease agreements into our management system.

Ensuring a Smooth Transition:

Nexus aims to make the transfer process as seamless as possible for both owners and tenants. Our approach includes:

• Clear communication with tenants about the management change.

• Proactive coordination with existing property managers or owners.

• Ensuring compliance with all legal requirements during the transition process.

Security Deposit:

Nexus Real Estate Group ("Nexus") will determine the appropriate amount for the tenant's security deposit and will hold and manage the security deposit in compliance with applicable laws. The security deposit amount will generally be equal to or greater than one month’s rent, unless specific local or state regulations impose limitations.

Security Deposit Amount and Management:

• Standard Deposit Amount: The security deposit will typically be one month’s rent, but may be adjusted based on tenant qualifications or market conditions.

• Compliance: Nexus will handle the security deposit in accordance with all local, state, and federal laws, including any requirements for segregated accounts, interest payments, or tenant notifications.

• Adjustments: If the rent increases, the security deposit may also be adjusted accordingly, consistent with lease terms and legal requirements.

Authorized Deductions from the Security Deposit:

By signing this Agreement, you authorize Nexus to deduct funds from the security deposit when necessary. Deductions may be applied to:

1. Unpaid Rent: When a tenant fails to pay rent and the payment is not cured following a default notice.

2. Property Damage: When the tenant or their guests damage the property beyond normal wear and tear.

3. Cleaning and Painting: When the property requires cleaning or repainting to restore it to a Rent-Ready condition at the end of the lease.

4. Restoration of Property: For restoring, replacing, or returning personal property or fixtures as required by the lease agreement.

5. Future Defaults: To cover future tenant defaults under their obligations in the lease.

Priority of Application:

When using the security deposit to cover fees, damages, or repairs, Nexus will apply the funds in the following order of priority:

1. Nexus Fees and Expenses: Any management fees, leasing fees, or service charges owed to Nexus.

2. Vendors and Contractors: Payments due to approved service providers for repairs or cleaning services.

3. Owner Compensation: Any remaining amounts owed directly to you as the property owner.

Legal and Compliance Considerations:

• Interest on Deposits: If local laws require interest payments to the tenant on the security deposit, you are responsible for complying with those requirements. Nexus will provide the necessary accounting and documentation to facilitate this.

• Deposit Returns: Nexus will manage the return of the security deposit, including providing itemized deductions and remaining balances to the tenant within the legally mandated timeframe.

Tenant Communication and Disputes:

• Nexus will handle all communications with the tenant regarding security deposit deductions and refunds.

• In the event of a dispute, Nexus will provide detailed records and documentation to support the deductions made, ensuring a clear and legally defensible process.

Trust Account:

Nexus Real Estate Group ("Nexus") will maintain your funds in a trust account in accordance with our obligations as a licensed broker and applicable state and federal laws. This account will be separate from Nexus's personal and operational accounts, ensuring the integrity and security of your funds.

Trust Account Management:

• Segregated Account: All rental income, security deposits, and property-related funds will be held in a dedicated trust account.

• Operating Expenses: Nexus may pay property-related expenses directly from the trust account as part of operating expenses, including maintenance, repairs, utilities, and vendor payments.

• Funding Level: You agree to maintain your Trust Account at a reasonable funding level as requested by Nexus to ensure sufficient funds for anticipated expenses.

Limitations of Liability:

• Financial Institution Risk: Nexus is not liable in the event of bankruptcy or failure of the financial institution where the Trust Account is held.

• Nexus will take reasonable care to select a reputable financial institution, but market risks and institutional failures are beyond Nexus's control.

Owner Storage and Access:

Nexus generally does not allow storage of personal property at the managed property. If storage is permitted under special agreement, the following terms apply:

Storage of Personal Property:

• Storage Prohibition: You may not store personal belongings at the property without prior written consent from Nexus.

• Risk of Loss: Nexus is not responsible for any loss, theft, or damage to your personal property under any circumstances.

Exclusion of Property Areas:

• You cannot exclude specific portions of the property (e.g., owner’s closet, parking spaces, storage sheds) from tenant use without Nexus's agreement.

• Any exclusions may impact rental income and property management effectiveness.

Property Access:

• During a tenant lease term, you may not enter the property without providing advance notice to Nexus.

• Notice Requirement: You must provide at least 72 hours' notice (or as required by law) before accessing the property. Nexus will then notify the tenant as per lease and legal requirements.

• Exceptions: No notice is required in cases of emergency, tenant abandonment, or surrender of the property.

Ownership of the Property:

To ensure compliance and clarity in property management, Nexus requires evidence of ownership for the managed property.

Proof of Ownership:

• Upon request, you agree to provide documentation demonstrating your ownership interest, including whether the property is:

  • Owned directly by you.

  • Held by another owner, trust, or corporate entity.

  • Subject to legal or financial conditions, such as liens or mortgages.

Representations and Warranties:

By entering this Agreement, you represent that you have no knowledge of:

1. Property Defaults: Any default affecting the property.

2. Financial Liabilities: Delinquent payments under any loan or lien related to the property.

3. Legal Proceedings: Bankruptcy, insolvency, or other financial proceedings affecting the property.

4. Disputes and Claims: Any litigation, arbitration, administrative action, government investigation, or other legal actions that affect or may affect the property or your ability to transfer the property.

Duty to Inform:

• You must immediately notify Nexus in writing if you become aware of any issues that affect ownership, legal status, or management of the property during the Term of this Agreement.

• This proactive communication helps Nexus protect your interests and maintain compliance with all applicable laws.

Property Compliance with Codes and Regulations:

By entering into this Agreement, you represent and warrant that the Property is in full compliance with all applicable local, state, and federal building codes and regulations. You affirm that you possess the legal right to rent the Property, including obtaining all necessary permits and governmental approvals required by applicable law.

The Property must meet health and safety standards established by the relevant city, county, state, or municipal codes. If the Property is found to be fully or partially uninhabitable due to structural issues, code violations, or any other circumstance, Nexus Real Estate Group ("Nexus") reserves the right to reduce rental income, adjust management terms, convert this Agreement to a standard management agreement without Guaranteed Rent (if applicable), or terminate this Agreement immediately without incurring a termination fee. At Nexus's discretion, we may provide you with a reasonable period to correct any deficiencies before taking such actions.

Legal Compliance and Habitability:

You represent that, to the best of your knowledge, the following disclosures are accurate and complete:

If the property was built before 1978, you understand that federal law requires disclosures related to lead-based paint for pre-1978 properties. You agree to inform Nexus immediately if you believe that lead-based paint is present on the Property. Nexus will provide the necessary disclosures to tenants and maintain compliance with the Residential Lead-Based Paint Hazard Reduction Act.

You certify that mold has not been discovered at the Property within the last six (6) months. You agree to immediately notify Nexus if you become aware of mold at the Property, either currently or historically. If mold is identified, Nexus may require remediation before marketing or leasing the Property.

You represent that you are not aware of any asbestos on the Property. If you become aware of asbestos, either currently or historically, you agree to notify Nexus immediately. Asbestos management and remediation may be required to ensure tenant safety and regulatory compliance.

You confirm that there has been no known bed bug infestation on the Property within the last six (6) months. Nexus cannot show, rent, or lease a property with a known bed bug infestation. You agree to address any infestation in compliance with pest control regulations before listing the Property.

You represent that you have not received any order from a health official prohibiting occupancy of the Property due to methamphetamine contamination. If such an order exists, Nexus may require certification of remediation before leasing the Property.

If the Property contains two or more units served by a single water meter, you confirm that you have installed a submeter to measure and charge each unit separately for water usage. This disclosure ensures compliance with utility billing regulations and prevents tenant disputes over utility costs.

If the Property is in California, you confirm that you are unaware of any chemical or substance requiring disclosure under Proposition 65. You have not posted a Proposition 65 notice on the Property. If required, you will cooperate with Nexus to provide necessary disclosures to tenants.

You affirm that any pool or spa on the Property has an approved anti-entrapment drain cover, device, or system, as well as appropriate safety features such as fences, covers, or enclosures as required by local laws. Compliance with pool safety regulations helps prevent accidents and liability issues.

You certify that any water heater installed on the Property has been braced, anchored, or strapped to resist falling or other movement during an earthquake, in compliance with seismic safety regulations.

If the Property was built before January 1994, you confirm that you have installed water-conserving plumbing fixtures, including but not limited to toilets, showerheads, and interior faucets, in accordance with current building and environmental codes.

Non-Compliance and Remedies:

If the Property fails to meet any of the above standards, Nexus may pause marketing and leasing efforts until the property complies. You may be required to remediate any health or safety hazards immediately. Nexus reserves the right to adjust the terms of this Agreement or terminate the Agreement without penalty.

You agree to address any compliance issues in a timely manner and maintain transparency with Nexus throughout the management process.

Fair Housing:

Nexus Real Estate Group ("Nexus") is committed to compliance with all applicable federal, state, and local fair housing laws and regulations. The Property will be shown and made available to all persons regardless of race, color, creed, religion, national origin, sex, familial status, handicap, or age. Nexus will ensure that advertising, screening, and leasing practices reflect this commitment to fair and equal housing opportunities for all applicants.

Rent and Eviction Control:

Nexus will comply with the requirements of all local rental and eviction control ordinances applicable to the Property. This includes adherence to rent control regulations, tenant rights under eviction moratoriums, and local laws governing lease renewals, rent increases, and eviction procedures. Nexus will manage all tenant interactions and legal compliance related to rental and eviction control on your behalf, providing you with peace of mind and reduced liability.

Appliances and Required Amenities:

To maintain the marketability and Guaranteed Rent eligibility of your Property, certain essential amenities and market-rate appliances must be provided in good working order. These include a stove, refrigerator, oven, microwave, kitchen sink, dishwasher, washing machine, and dryer.

If these required items are not included, Nexus may:

• Reduce the Guaranteed Rent offered for the Property.

• Offer a different management agreement that aligns with the Property’s amenities and condition.

During the inspection and Rent-Ready process, Nexus will evaluate the Property's amenities and provide a complete list of requirements needed to maximize rental value and ensure compliance with all legal and safety standards.

In addition, you authorize Nexus to install carbon monoxide detectors and smoke alarms at your expense in any location where required by law. This measure ensures tenant safety, legal compliance, and reduced liability.

Keysafe, Lockbox, and Property Access:

You authorize Nexus to use a keysafe, lockbox, or other key services to access the Property as needed for preparing the Property for rental, maintenance, or emergency situations.

If a homeowners' association (HOA) restricts the use of keysafe/lockbox systems, you agree to assist Nexus in coordinating with the HOA to ensure access. This may include facilitating key exchanges and granting property access for maintenance vendors, inspectors, and prospective tenants.

If the Property is currently occupied, you agree to assist Nexus in obtaining tenant permission for entry when needed. Nexus will comply with legal notice requirements and best practices for tenant communication.

Nexus is not liable for any personal injury, theft, loss, damage, or other harm that may occur through the use of a keysafe/lockbox, provided that reasonable care and standard security practices are followed.

To ensure efficient property management, you agree to provide Nexus with all applicable keys, access codes, locks, security cards, and fobs necessary to manage the Property effectively.

Homeowners Association (HOA) Requirements:

For Properties under common control by a Homeowners Association, you must provide Nexus with all relevant HOA documentation and contact information as soon as possible and before the Property can be deemed Rent-Ready.

Required HOA Information includes:

• Homeowners Association name, contact person, phone number, and email address.

• Covenants, Conditions, and Restrictions (CC&Rs) governing Property use and tenant compliance.

• Fee schedule for HOA fees that may be passed through to tenants, including parking, amenities, and special assessments.

• Any other rules or regulations that may affect tenants' rights, property use, or management practices.

By providing this information, you enable Nexus to:

• Ensure compliance with HOA rules.

• Communicate effectively with the HOA.

• Avoid potential fines or violations that could impact the property's profitability and management efficiency.

Legal Action:

From time to time, legal action may be necessary to protect your rights or Nexus Real Estate Group’s ("Nexus") rights under this Agreement. When a tenant fails to perform under their lease, you authorize Nexus to act on your behalf in taking necessary legal actions, including but not limited to:

• Delivering legal notices to tenants.

• Engaging legal counsel and hiring attorneys.

• Initiating eviction proceedings in compliance with local and state laws.

• Attending court hearings and legal proceedings.

• Negotiating settlements and releasing claims as appropriate.

Nexus will cover the first $1,000 in legal expenses as part of our management program. These expenses include attorney fees, court costs, and related expenses necessary to enforce lease agreements, pursue tenant default remedies, or defend against claims by tenants or third parties.

For any legal costs exceeding $1,000, you agree to be responsible for paying the additional costs. Nexus will provide you with notification of costs as soon as a cost estimate or invoice is available, ensuring full transparency in legal expenditures.

In circumstances where legal action is required, and the costs exceed the covered amount, you agree to reimburse Nexus for any unrecoverable expenses, including:

• Judgments or awards issued by courts or arbitrators.

• Settlement costs or financial awards arising from legal disputes.

• Legal fees associated with defending or pursuing claims involving tenants or third parties.

Nexus will make good faith efforts to recover legal costs from tenants when applicable. However, if recovery is not possible, you remain financially responsible for legal fees and related expenses beyond the initial $1,000 coverage.

Independent Contractors, Service Providers, and Vendors:

Nexus will engage, supervise, and pay all independent contractors, service providers, and vendors as required to operate and manage the Property effectively. Nexus will handle vendor relationships, including:

• Selecting qualified professionals to perform maintenance, repairs, and services.

• Terminating contracts with vendors when necessary.

• Ensuring compliance with local and state regulations.

Where possible, Nexus will engage with contractors, providers, or vendors that are licensed, bonded, certified, and/or insured in the locale and state where work is performed, as required by local laws.

However, you acknowledge that Nexus is not liable for the acts or omissions of any employee, independent contractor, or vendor hired to perform work on the Property. Nexus does not warrant the quality of services provided by third-party contractors.

If quality concerns arise regarding work performed, Nexus will collaborate with contractors and vendors in good faith to resolve issues and ensure satisfaction with the completed work.

Should you choose to engage with a different contractor or vendor, not recommended or approved by Nexus, you may be responsible for:

• Contacting, hiring, and supervising the contractor or vendor directly.

• Managing payments and coordinating services independently of Nexus.

If the Property has an existing home or product warranty, you may be asked to initiate the warranty process by informing the warranty holder. While Nexus may manage the repair and service process, if the warranty service is not completed timely, Nexus may need to perform the work outside the warranty at your expense to ensure tenant satisfaction and property safety.

Pets:

Nexus Real Estate Group ("Nexus") may lease the Property to tenants with pets at our sole discretion. When pets are permitted, tenants will be required to sign a Pet Addendum to the lease agreement, which outlines specific terms and conditions, including pet policies, responsibilities, and potential pet-related fees.

In compliance with federal and state laws, particularly the Fair Housing Act and Americans with Disabilities Act, Nexus is required to allow service animals and assistance animals to reside on the Property, even if the Property has a “no pet” policy.

Nexus is not obligated to verify a tenant's disability or need for a service or assistance animal, beyond what is legally permissible. Additionally, while Nexus typically increases the security deposit for tenants with pets, this is not allowed when the animal is a service or assistance animal, in accordance with fair housing regulations.

Set-Off and Liens:

Nexus reserves the right to set off any payment owed to you against any amounts you owe to Nexus. This includes the right to attach a lien against your Property and the rents under the lease to cover advances and expenditures made by Nexus on your behalf.

These expenditures may include, but are not limited to, costs of improving, repairing, or maintaining your Property, legal fees, and any other expenses incurred in the management and upkeep of the Property. Nexus will provide detailed statements of such expenditures and apply any available funds to offset outstanding amounts as necessary.

Property and Liability Insurance:

a. Owner’s Insurance

You agree to maintain appropriate insurance coverage for the Property and to name Nexus as an additional insured party on all liability insurance policies. You bear the risk of any tenant damage or other damages not adequately covered by insurance.

You should:

• Maintain public and premises liability insurance at your cost, with a recommended coverage of $1,000,000, unless the Property’s value or secondary insurance (e.g., HOA insurance) suggests otherwise.

• Maintain property damage and worker’s compensation insurance adequate to protect both your interests and Nexus's interests, ensuring coverage for accidental damage, natural disasters, and contractor injuries on-site.

• Waive any right of subrogation against Nexus in connection with the performance of our services under this Agreement. This waiver prevents your insurance company from pursuing Nexus for compensation after paying a claim on your behalf.

b. Nexus’s Insurance

Nexus will maintain general liability insurance in an amount not less than $1,000,000 and carry all other reasonable forms of insurance as reasonably determined in accordance with property management standards for similar properties in your local area.

Nexus’s insurance covers general liability, including property management operations, tenant interactions, and standard business practices, providing additional protection for both Nexus and property owners.

Casualty and Claims Management:

If there is a fire or other material damage ("Casualty") to the Property, Nexus will promptly notify you and work in good faith to file insurance claims with your insurance carriers.

Nexus will:

• Coordinate with you to collect documentation, photographs, and evidence needed to support insurance claims.

• Assist in facilitating repairs, ensuring contractor compliance with insurance requirements.

• Avoid settling any insurance claims without your express written permission, maintaining your control over claim negotiations.

Nexus does not handle claims that involve personal injury. Such matters will be referred back to you as the Owner to manage directly with insurance providers, legal counsel, or other relevant parties.

Indemnification:

a. Owner's Indemnification of Nexus:

You agree to indemnify, defend, and hold harmless Nexus Real Estate Group ("Nexus"), and all affiliated persons, to the full extent permitted by law, from all costs, expenses, suits, liabilities, damages, attorney fees, and claims of any kind, including but not limited to those arising from personal injury, death, or damage to real or personal property, including your own property.

This indemnification applies to:

1. Repairs performed by you or by others hired directly by you, regardless of the outcome or quality of the work performed.

2. Acts related to the management, leasing, rental, security deposits, or operation of the Property by Nexus or any person acting on behalf of Nexus, including the performance or exercise of duties, powers, or authorities granted under this Agreement.

3. Losses arising from incorrect or incomplete information supplied by you or material facts that you know but fail to disclose, including dangerous or hidden conditions on the Property.

For clarity, Nexus is not responsible for any damage or loss caused by a tenant or any action or inaction taken by a tenant, even if the tenant was selected and managed by Nexus.

You agree to defend Nexus against any losses related to the Property or this Agreement, unless the losses were caused by Nexus's gross negligence or willful misconduct.

b. Nexus's Indemnification of Owner:

Nexus agrees to defend you against any loss if, and to the extent, the loss was caused by Nexus’s gross negligence or willful misconduct, or the gross negligence or willful misconduct of Nexus's agents or employees in connection with the Property or this Agreement.

Nexus will not provide compensation if the losses suffered were caused in whole or in part by your own negligence or willful misconduct.

c. Insurance and Subrogation Rights:

These indemnification agreements are not intended to affect any insurance benefits either party might be entitled to under any property insurance policy or under the terms of any waiver of subrogation. You and Nexus retain the right to pursue insurance claims independently of this Agreement’s indemnification provisions.

Renewal:

Not less than sixty (60) days prior to the end date of your contract term, Nexus will notify you of the automatic renewal of this Agreement for one additional year.

The Starting Rent, Guaranteed Rent, and Guarantee Start Date may change based on current market conditions. You may choose to accept the new terms by taking no action, allowing the Agreement to renew automatically.

Alternatively, you may:

1. Change the management relationship to a non-guaranteed agreement.

2. Terminate the Agreement entirely.

To proceed with termination or changes, you must inform Nexus in writing within fourteen (14) days of receiving the renewal notice.

Upon termination of the Agreement, you become solely responsible for the performance under any existing tenant lease. Nexus will transfer any security deposit held to you for management and compliance with tenant and legal requirements.

Terms of Service and Privacy Policy:

In connection with property management services, Nexus may provide access to its website or mobile applications (the "Nexus Platform").

By using the Nexus Platform, you agree to comply with:

• The Nexus Terms of Service, available at https://nexus.realestate/terms-policy-center/general-terms-of-service.

• The Nexus Privacy Policy, available at https://nexusreal.estate/privacy-center/privacy-policy.

These policies may be amended periodically, and you agree to adhere to updated terms when utilizing the Nexus Platform. Nexus will provide notice of changes to these policies where required by law.

Taxes:

You are responsible for all taxes on rental income earned from the Property.

Nexus will maintain accurate records of rent receipts and expenditures for the Property, including a detailed annual statement of receipts and disbursements for tax purposes.

At the end of each fiscal year, Nexus will generate IRS Form 1099 indicating the amount paid to you, ensuring compliance with federal tax reporting requirements.

If you are an out-of-state resident owner, Nexus may have withholding obligations under state tax laws. In such cases, Nexus will issue an addendum to this Agreement outlining specific requirements and processes.

During the onboarding process, you will be asked to provide tax documentation, including IRS Form W-9 (or its equivalent). Failure to provide the necessary tax documents may affect payment processing and compliance with tax regulations.

Force Majeure:

If either party is unable to perform its obligations under this Agreement due to events beyond reasonable control, including but not limited to natural disasters, pandemics, labor disputes, strikes, governmental actions (such as quarantines, travel restrictions, or material business disruptions), acts of terrorism, wars, judicial orders, or other unforeseen circumstances, the performance of the impacted obligations will be excused for the duration of the force majeure event.

If the force majeure event persists for more than thirty (30) days, either party may terminate this Agreement without incurring a termination fee. Written notice of termination must be provided to the other party, and reasonable steps should be taken to mitigate losses and secure the property during the termination process.

Delegation of Authority:

You represent that you have the authority to enter into this Agreement and to delegate decision-making authority regarding the Property.

You may delegate authority to make decisions related to the Property by providing written permission to Nexus Real Estate Group ("Nexus"). This delegation may include but is not limited to:

• Approving repairs and maintenance.

• Managing financial transactions.

• Making leasing decisions.

Nexus is entitled to rely upon any apparent or actual authority given to the delegated entity or individual without further confirmation from you until you explicitly revoke this authority in writing. You agree to notify Nexus immediately if the delegated authority changes or if the delegation is revoked, ensuring clear communication and continuity in property management.

Notices:

All notices required under this Agreement must be in writing, which may include electronic communications such as email. Notices will be considered given and effective on the date of delivery to the intended recipient.

• Notices to You: Nexus will send notices to the contact information provided by you, including your physical address, email address, or designated representative.

• Notices to Nexus: You should send all notices to Nexus using the official contact information provided in this Agreement or as updated by Nexus from time to time.

In the event of electronic notices, the timestamp of the sent email will be considered the effective date of the notice, provided there is confirmation of receipt.

Dispute Resolution:

In the event of a dispute or claim arising out of this Agreement, both parties agree to engage in mediation before pursuing arbitration or court action.

• Mediation Process: The mediation will be conducted by a mutually agreed-upon mediator.

• Cost Sharing: Mediation fees will be equally divided between both parties, ensuring fairness in dispute resolution costs.

• Good Faith Participation: Both parties agree to participate in good faith, exploring reasonable solutions before escalating to legal action.

If mediation fails to resolve the dispute, either party may then pursue legal remedies, including arbitration or litigation, in accordance with the applicable law.

Entire Agreement:

This Agreement, along with its attachments and addendums, constitutes the entire understanding between you and Nexus.

• Supersession of Prior Agreements: It supersedes all prior agreements, understandings, negotiations, and representations, whether written or oral, related to the subject matter of this Agreement.

• Amendments: Any modifications or amendments to this Agreement must be in writing and mutually agreed upon by both parties.

This Agreement ensures clear expectations and comprehensive terms, protecting both parties' rights and responsibilities.

Applicable Law:

This Agreement will be governed by and interpreted under the laws of the state in which the Property is located.

• Jurisdiction: Any legal action or proceeding arising from this Agreement will be brought in the appropriate court within the jurisdiction of the Property’s location.

• Compliance with Local Laws: Both parties agree to comply with all applicable laws, regulations, and ordinances, including local property management laws, tenant rights, and landlord obligations.

This provision ensures consistency, legal compliance, and clarity in the interpretation and enforcement of this Agreement.

1. 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 assets 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.

2. 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.

3. 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 the Sections of this agreement. All individuals employed by the 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. Collections:

The Property Manager shall be responsible for the diligent and timely collection of all rent payments, fees, and any other monetary obligations owed by tenants of the Property. This includes, but is not limited to, monthly rent, late fees, utility reimbursements, security deposits (as applicable), and any other charges stipulated in the lease agreements. The Property Manager shall ensure that all collected funds are accurately recorded, deposited, and accounted for in accordance with the financial procedures outlined in this Agreement.

Collection Methods and Payment Processing:

For all new and renewing tenants, the Property Manager shall require that monthly rent payments be made through Electronic Funds Transfer (EFT) or Automatic Clearing House (ACH) debits from the tenant’s designated bank account, as specified in the approved lease agreement. The Property Manager shall facilitate tenant enrollment in these automated payment systems and ensure that tenants are provided with clear instructions on how to set up their accounts.

For existing tenants who do not yet participate in EFT or ACH payments, the Property Manager shall make commercially reasonable efforts to transition them to these electronic payment methods, thereby ensuring consistency and minimizing the risks associated with manual collections. In cases where tenants are unable or unwilling to utilize EFT or ACH, the Property Manager shall establish and implement alternative collection procedures in accordance with industry best practices, provided that such procedures align with the Owner’s policies and all applicable laws.

The Property Manager shall track and monitor rent payments on an ongoing basis, identifying delinquencies or late payments as soon as they occur. In the event of a failed or returned payment, the Property Manager shall promptly notify the tenant and take appropriate steps to rectify the issue, including reattempting the payment, assessing applicable late fees, or working with the tenant to facilitate compliance with their lease obligations.

Delinquency and Default Management:

If a tenant fails to remit payment in full by the due date and any applicable grace period has elapsed, the Property Manager shall promptly initiate a structured collection process. This process shall include:

1. Issuance of Written Notices: The Property Manager shall send formal written notices to the tenant, in accordance with the lease terms and applicable landlord-tenant laws, informing them of their delinquency and the consequences of continued non-payment. Such notices shall specify the total outstanding amount, any late fees incurred, and the deadline for remitting payment to avoid further action.

2. Tenant Outreach and Resolution Efforts: The Property Manager shall make reasonable attempts to contact the tenant through multiple communication channels, including phone, email, and in-person visits, if necessary, to encourage payment and discuss potential resolution options.

3. Escalation to Collection Procedures: If the tenant fails to make payment within the specified timeframe, the Property Manager shall initiate appropriate collection actions. These may include:

   • Employing a licensed third-party collection agency to recover unpaid rent and associated fees in accordance with all applicable collection laws.

   • Engaging in structured payment negotiations where legally permissible and in the Owner’s best interest.

4. Eviction and Legal Proceedings: If all reasonable collection efforts fail, and the tenant remains in default, the Property Manager shall proceed with eviction in compliance with applicable state and local laws. The following steps shall be undertaken:

   • Issuing the required legal notice to vacate the premises.

   • Coordinating with lawfully authorized legal counsel, as necessary, to initiate eviction proceedings.

   • Filing formal eviction lawsuits, obtaining court judgments, and coordinating with law enforcement officers to enforce eviction orders, as required by law.

Legal and Owner Approval Requirements:

The Property Manager shall not, except as expressly permitted by law, engage in the following actions without obtaining prior written approval from the Owner:

• Terminating a lease agreement due to non-payment.

• Changing or restricting tenant access to the premises (i.e., locking out a tenant).

• Filing a lawsuit for unpaid rent, use occupancy, or lease violations.

• Initiating legal proceedings for the recovery of possession of the Property.

For routine residential tenant evictions and rent collection matters—including lawsuits for the recovery of delinquent rents, damages, or possession of the premises—the Property Manager may proceed without requiring prior written approval, provided that such actions fall within the scope of the Property Manager’s authority under this Agreement.

However, for non-routine litigation (e.g., commercial tenant disputes, complex legal matters, or cases involving significant financial risk), the Property Manager shall first seek Owner approval. In such cases, the Property Manager shall:

• Provide the Owner with a written summary of the issue, including the tenant’s delinquency status, prior collection efforts, and proposed legal actions.

• Recommend legal counsel for representation in the case and obtain the Owner’s approval before retaining counsel.

• Submit an estimated cost analysis for legal services, including attorney fees, court costs, and any potential expenses associated with litigation or tenant removal.

All legal proceedings shall be conducted in the name of the Owner, with the Property Manager acting as the Owner’s authorized agent with a beneficial interest in the Property.

Reporting and Documentation:

The Property Manager shall maintain comprehensive records of all collection activities, including:

• Copies of tenant invoices, payment histories, and correspondence related to delinquent accounts.

• Documentation of notices issued, tenant responses, and attempted collection efforts.

• Any agreements, settlement arrangements, or legal proceedings related to unpaid rent or eviction matters.

The Property Manager shall provide the Owner with monthly reports detailing rent collections, outstanding balances, delinquent accounts, and any collection or legal actions taken during the reporting period. The Owner may request additional information or financial records as needed to assess the effectiveness of collection efforts.

Compliance with Laws and Industry Standards:

The Property Manager shall ensure that all collection activities, eviction proceedings, and legal actions comply with federal, state, and local landlord-tenant laws, including but not limited to:

• The Fair Debt Collection Practices Act (FDCPA)

• Applicable state landlord-tenant statutes

• Local eviction and housing court procedures

9. Maintenance and Repairs:

The Property Manager shall be responsible for maintaining, or ensuring the maintenance of, the Property, including all common areas, structural elements, mechanical systems, and other essential components, to a standard that ensures safety, functionality, and aesthetic appeal. This obligation extends to both external and internal areas of the Property, including but not limited to:

• Building Structures and Exteriors – including walls, roofs, foundations, doors, windows, and facades.

• Common Areas – including lobbies, hallways, stairwells, elevators, and shared spaces.

• Sidewalks and Signage – ensuring pathways are clear and signage remains visible and in compliance with local ordinances.

• Mechanical, Electrical, and Plumbing (MEP) Systems – including HVAC (heating, ventilation, and air conditioning), water supply and drainage, lighting, fire suppression systems, and security alarms.

• Parking Areas and Driveways – including asphalt and concrete surfaces, line striping, lighting, and signage.

• Landscaping and Grounds – including lawns, trees, shrubs, irrigation systems, and seasonal upkeep such as snow removal and leaf clearing.

The Property Manager shall maintain all aspects of the Property in good, clean, and fully operational condition and ensure that all required repairs, maintenance, and refurbishments are conducted in a timely and cost-effective manner. The Property Manager shall take all reasonable measures to prevent deferred maintenance and ensure that the Property remains in compliance with all building codes, health regulations, and safety requirements.

(1) Authorization and Budgetary Compliance:

• All maintenance, repair, and alteration expenses must comply with the Approved Operating Budget unless otherwise authorized by the Owner.

• Non-emergency repairs, maintenance, or alterations that are not specifically included in the Approved Operating Budget shall not be undertaken without the prior written consent of the Owner.

• In cases where any individual repair, maintenance project, or alteration exceeds $25,000, the Property Manager shall, at the Owner’s discretion, retain an architect, designer, inspector, or general contractor to oversee the planning and supervision of such work. Any such professional shall be designated by the Property Manager and approved in writing by the Owner before the commencement of the work.

• The Property Manager shall exercise due diligence in obtaining competitive bids for repair and maintenance services exceeding a cost threshold of $10,000 unless the Owner directs otherwise.

(2) Preventative Maintenance Program:

The Property Manager shall implement and oversee a preventative maintenance program designed to prolong the lifespan of building systems and components, reduce long-term costs, and minimize the risk of unexpected failures. This program shall include, but is not limited to:

• Scheduled Inspections of HVAC systems, electrical panels, plumbing lines, and structural integrity at least once per year or as required by applicable regulations.

• Routine Servicing of elevators, escalators, fire safety systems, and security alarms per manufacturer recommendations and legal requirements.

• Seasonal Maintenance programs, including winterization of pipes, air conditioning inspections before summer months, and pest control services.

• Replacement Planning for capital expenditures, such as roofing, boilers, and major mechanical systems, with a timeline for future upgrades.

• Documentation and Record-Keeping of all maintenance activities, contractor work orders, warranties, and service agreements.

The Property Manager shall ensure that all service providers, contractors, and maintenance personnel adhere to industry best practices and safety protocols, utilizing only licensed, bonded, and insured vendors where required.

(3) Emergency Repairs and Response Protocol:

In the event of an emergency maintenance issue that poses an immediate threat to tenant safety, property integrity, or the continuous operation of essential services, the Property Manager shall take all necessary and reasonable actions to mitigate damage and resolve the issue promptly. Such emergency situations include, but are not limited to:

• Fire, flooding, or major water leaks that could cause structural damage.

• Gas leaks or carbon monoxide issues require immediate attention.

• Electrical failures that could compromise building security or essential operations.

• HVAC system failures in extreme weather conditions that may endanger occupant health.

• Structural failures such as roof collapses, broken windows, or compromised foundations.

• Hazardous material spills or contamination that requires immediate containment and remediation.

In such emergency circumstances:

• The Property Manager shall attempt to contact the Owner for approval prior to taking action, if feasible given the urgency of the situation.

• If prior approval is not possible, the Property Manager is authorized to act as reasonably necessary to resolve the emergency, mitigate further damage, and restore the affected areas.

• The Property Manager shall document all emergency actions taken and notify the Owner within 48 hours, providing a written summary of the incident, costs incurred, and any recommended follow-up work.

• The Owner shall reimburse the Property Manager for any reasonable and necessary emergency repair expenses, even if such expenses were not included in the Approved Operating Budget.

(4) Vendor Management, Compliance, and Lien Prevention:

To ensure that all maintenance and repair work is conducted in a legally compliant manner and that the Property remains free from mechanics’ liens, laborers’ liens, or material suppliers’ claims, the Property Manager shall:

• Obtain written agreements from all contractors, suppliers, and vendors that include provisions for timely payments, lien waivers, and compliance with applicable laws.

• Ensure that all work performed is properly inspected and documented before approving final payments.

• Require vendors to provide releases, waivers, discharges, and assurances ensuring that no liens are placed on the Property.

• Retain copies of all service contracts, invoices, receipts, and proof of payment in a secure and accessible record-keeping system.

All documentation related to vendor agreements, lien waivers, and payment confirmations shall be maintained in a form acceptable to the Owner and made available upon request.

(5) Construction, Tenant Improvements, and Capital Projects:

In addition to routine maintenance and repairs, the Property Manager shall coordinate and oversee all construction, tenant improvements, and capital expenditures related to the Property. These projects may include:

• Tenant Improvements (TIs) – modifications or build-outs required to customize spaces for new or existing tenants.

• Common Area Upgrades – renovations to shared spaces such as lobbies, restrooms, fitness centers, or amenity areas.

• Major Renovations or Structural Work – projects involving roofing, facades, foundation repairs, or mechanical system overhauls.

For any such projects:

• The Property Manager shall solicit multiple bids and present options to the Owner for approval.

• The Property Manager shall supervise the work to ensure compliance with project specifications, budgets, and timelines.

• No construction or capital improvement exceeding $25,000 shall commence without prior written approval from the Owner.

• The Property Manager shall ensure that all necessary permits, inspections, and approvals are obtained from the appropriate regulatory authorities.

(6) Reporting and Owner Communication:

The Property Manager shall provide detailed maintenance reports to the Owner on a monthly basis, including:

• Completed maintenance activities with associated costs.

• Outstanding repair issues requiring further attention.

• Upcoming preventative maintenance schedules.

• Capital project updates and budget tracking.

• Emergency incidents and resolutions.

Upon request, the Property Manager shall provide additional documentation, vendor contracts, warranties, or inspection reports to the Owner for review.

10. Contracts and Agreements:

The Property Manager shall not enter into any contract, agreement, or lease obligation on behalf of the Owner without obtaining the Owner’s prior written approval, except as expressly permitted under the provisions of this Agreement. This restriction applies to all vendor contracts, service agreements, equipment leases, maintenance contracts, and any other binding obligations that may impose financial or legal responsibilities on the Owner.

(1) Exceptions to Prior Approval Requirement:

Notwithstanding the general requirement for Owner approval, the Property Manager may enter into contracts without prior written approval from the Owner, provided that the contract meets all of the following conditions:

• The contract is for utility or service agreements entered into in the usual course of business (e.g., water, electricity, gas, waste disposal, internet, telecommunications, janitorial services, landscaping, security services, or similar essential operations).

• The term of the contract does not exceed one (1) year from the date of execution.

• The contract is specifically included in the Approved Operating Budget for the applicable fiscal year.

For any contract not meeting all of the above criteria, the Owner’s prior written approval is required before execution.

(2) Cancellation and Termination Provisions:

To ensure contractual flexibility and protect the Owner’s interests, all contracts entered into by the Property Manager must include a provision allowing the Owner to terminate the contract without cause, subject to the following conditions:

• The contract must contain a cancellation clause of no more than thirty (30) days’ notice for termination by the Owner without penalty or additional fees, unless a longer termination period is expressly approved in writing by the Owner.

• Upon termination of any contract, the Property Manager shall take all reasonable steps to facilitate a smooth transition to a replacement vendor or service provider, minimizing disruptions to the Property’s operations.

• The Property Manager shall immediately notify the Owner of any termination notice received from a contractor or service provider and provide recommendations for alternative arrangements as necessary.

(3) Contract Execution and Compliance Requirements:

All utility, supply, service, vending, equipment lease, and related contracts shall be executed by the Property Manager exclusively on behalf of the Owner and shall clearly indicate that the Owner is the contracting party, with the Property Manager acting as an agent.

To protect the Owner’s interests, the Property Manager shall:

• Conduct due diligence before engaging any vendor, contractor, or service provider to ensure reliability, cost-effectiveness, and compliance with industry standards.

• Negotiate favorable terms in all contracts to secure cost savings, service guarantees, and performance metrics that align with the Owner’s business objectives.

• Maintain detailed records of all executed contracts, including copies of agreements, amendments, correspondence, payment schedules, and termination notices.

• Provide the Owner with electronic and/or physical copies of executed contracts upon request.

(4) Insurance and Liability Protections:

The Property Manager shall ensure that all contractors, subcontractors, service providers, and vendors performing work on the Property maintain adequate insurance coverage, as determined by the Owner.

Prior to commencing work, the Property Manager shall verify that each contractor provides and maintains satisfactory insurance coverage, which shall include, but is not limited to:

• General Liability Insurance – covering bodily injury, property damage, and personal injury arising from the contractor’s operations.

• Workers’ Compensation Insurance – in compliance with applicable state and federal laws, covering all employees and subcontractors.

• Non-Occupational Disability Insurance – when required by law, providing coverage for employees unable to work due to non-job-related injuries.

• Professional Liability Insurance – if applicable, covering errors and omissions in professional services provided.

• Automobile Liability Insurance – covering any vehicles used in connection with services performed on the Property.

Each contract shall require that the contractor’s insurance policies:

• Name the Owner and Property Manager as Additional Insureds, ensuring that both parties are covered against liability claims arising from the contractor’s work.

• Include a waiver of subrogation in favor of the Owner and Property Manager, preventing the contractor’s insurer from seeking reimbursement from the Owner for claims paid under the policy.

• Provide primary and non-contributory coverage, ensuring that the contractor’s insurance responds first before any policies maintained by the Owner or Property Manager.

The Property Manager shall:

• Obtain certificates of insurance (COIs) from all contractors before work commences and ensure that policies remain in force throughout the contract term.

• Furnish copies of all certificates of insurance to the Owner upon request.

• Maintain an up-to-date insurance compliance tracking system to monitor expiration dates and renewal requirements.

• Immediately notify the Owner of any lapses, cancellations, or deficiencies in contractor insurance coverage and take necessary steps to rectify the situation before work continues.

(5) Vendor Performance and Contract Oversight:

To ensure that vendors and contractors fulfill their contractual obligations effectively, the Property Manager shall:

• Establish performance benchmarks for service providers, including quality standards, response times, and service level expectations.

• Conduct periodic evaluations of vendor performance and document any service deficiencies, disputes, or unresolved issues.

• Hold vendors accountable for contract compliance, ensuring that all agreed-upon services are delivered as specified.

• Recommend contract renewals, renegotiations, or terminations based on performance reviews and Owner feedback.

(6) Owner Communication and Reporting:

The Property Manager shall provide regular reports to the Owner regarding contract management, including:

• New contracts executed under the authority of this Agreement.

• Upcoming contract expirations or renewals requiring Owner approval.

• Pending or ongoing contract disputes and recommended resolutions.

• Cost-saving opportunities identified through contract negotiations or vendor consolidations.

At the Owner’s request, the Property Manager shall furnish copies of all contracts, amendments, insurance certificates, and supporting documentation for review and audit purposes.

11. Purchases and Procurement:

The Property Manager shall be responsible for supervising, purchasing, or arranging for the purchase of all reasonable inventories, provisions, supplies, and operating equipment necessary for the efficient operation, maintenance, and management of the Property. All purchases shall adhere to the following guidelines to ensure cost-effectiveness, transparency, and alignment with the Owner’s financial and operational objectives.

(1) Authorization and Budget Compliance:

• All purchases must be explicitly provided for in the Approved Operating Budget or receive prior written approval from the Owner before procurement.

• The Property Manager shall not exceed the budgeted allocations for any category of expenditures without the express written consent of the Owner.

• For any individual purchase exceeding $10,000, the Property Manager shall obtain at least three (3) competitive quotes unless a specific vendor has been pre-approved by the Owner.

(2) Cost Efficiency and Volume Discounts:

The Property Manager shall ensure that all purchases are made at competitive market rates and that the Owner receives the best possible pricing, discounts, and purchasing advantages. To achieve this, the Property Manager shall:

• Leverage volume purchasing benefits and discounts available to the Property Manager or similar properties of comparable size and class.

• Utilize bulk purchasing strategies where practical to secure preferential pricing, rebates, or vendor incentives.

• Identify cost-saving opportunities by negotiating long-term vendor contracts with favorable terms for recurring purchases.

• Monitor market trends and pricing fluctuations to ensure that procurement decisions align with current industry standards.

(3) Vendor Selection and Purchasing Controls:

To maintain accountability and quality control, the Property Manager shall:

• Conduct due diligence in selecting suppliers and vendors, ensuring that they meet the necessary quality, reliability, and compliance standards.

• Establish approved vendor lists for frequently purchased items, prioritizing suppliers who offer the best combination of cost, quality, and service reliability.

• Require vendors to document warranties, return policies, and service guarantees before purchases are finalized.

• Ensure that all major purchases and supplier agreements include provisions allowing for cancellation, returns, or refunds in the event of non-compliance with agreed-upon specifications.

(4) Inventory Management and Procurement Practices:

The Property Manager shall implement a structured inventory management system to prevent unnecessary expenditures and ensure that all purchases are properly tracked and accounted for. This system shall include:

• Regular inventory assessments to determine actual needs and prevent overstocking or shortages.

• Reordering thresholds for critical supplies, ensuring timely replenishment without excessive accumulation of goods.

• Supplier performance tracking, reviewing past vendor reliability, cost-effectiveness, and fulfillment accuracy.

• Waste reduction initiatives, minimizing losses through efficient use of supplies and eliminating redundant purchases.

(5) Documentation and Owner Reporting:

To maintain full transparency and financial accountability, the Property Manager shall:

• Maintain detailed records of all purchases, including purchase orders, invoices, receipts, and payment confirmations.

• Provide monthly procurement reports to the Owner, summarizing:

  • Total expenditures by category.

  • Major purchases exceeding $10,000.

  • Vendor performance evaluations.

  • Cost-saving measures implemented.

• Furnish copies of all procurement-related documentation to the Owner upon request for audit or review purposes.

12. Operating Expenses and Capital Expenditures:

The Property Manager shall be responsible for approving and managing the payment of all normal operating expenses related to the Property, provided that such expenses are specifically included in the Approved Operating Budget and are not otherwise paid for by tenants under the terms of their lease agreements. The Owner (or its designated agent, Legacy, acting on behalf of the Owner) shall ensure that all such expenses are paid in a commercially reasonable manner appropriate for the Property’s financial management and operational needs.

(1) Payment and Approval of Operating Expenses:

• The Property Manager shall review and approve invoices for routine operating expenses within the scope of the Approved Operating Budget, ensuring that such expenses are accurately recorded and timely paid.

• The Property Manager shall monitor and control expenditures to ensure that operating costs remain within budget and align with industry standards.

• If an operating expense is not included in the Approved Operating Budget, the Property Manager must obtain the Owner’s prior written approval before incurring or authorizing such an expense, unless such expenditure qualifies as an emergency repair, as defined in agreement.

(2) Major Equipment Purchases and Capital Expenditures:

The Property Manager shall identify and recommend to the Owner the purchase of major new or replacement equipment when such acquisition is deemed necessary or desirable for the continued operation, maintenance, or enhancement of the Property.

• The Owner may choose to procure and install such items independently or may authorize the Property Manager to manage the purchase and installation process, subject to the Owner’s supervision, specifications, and conditions as prescribed in writing.

• Before purchasing any major equipment, the Property Manager shall evaluate cost-effectiveness, long-term value, and operational impact, and shall provide the Owner with a detailed justification for the recommended purchase.

For all capital expenditures, including capital repairs, replacements, or improvements:

• The Property Manager must obtain the Owner’s specific written authorization for:

  • Any capital expenditure not included in the Approved Capital Budget.

  • Any capital expenditure of $25,000 or more, even if included in the Approved Capital Budget, unless such expenditure is itemized with specificity within a single line item of the budget.

(3) Bidding and Procurement Process for Capital Improvements:

To ensure cost transparency and competitive pricing, the Property Manager shall adhere to the following procurement guidelines for capital improvement projects:

• Competitive Bidding Requirement:

  • For any capital improvement project exceeding $25,000, the Property Manager shall obtain at least three (3) written estimates from qualified and reputable bidders, unless otherwise directed by the Owner.

  • The bidding process shall be conducted in a fair and transparent manner, ensuring that all proposals are evaluated based on cost, quality, contractor experience, and compliance with project specifications.

• Selection and Oversight of Contractors:

  • The Property Manager shall recommend a preferred contractor to the Owner, along with a comparison of bid proposals, detailing the strengths, weaknesses, and cost breakdowns of each option.

  • The final selection of a contractor shall be subject to Owner’s written approval.

  • The Property Manager shall ensure that all selected contractors comply with insurance, licensing, and bonding requirements, as detailed in the Sections of this agreement – Contracts.

• Project Supervision and Compliance:

  • For any capital improvement project exceeding $25,000, the Owner may elect to require that the project be planned and supervised by an architect, designer, inspector, or general contractor designated by the Property Manager and approved in writing by the Owner.

  • The Property Manager shall oversee the execution, progress, and completion of all approved capital projects, ensuring that work is performed on schedule, within budget, and in compliance with contractual requirements.

  • Any significant deviations from the approved scope, timeline, or budget shall be immediately reported to the Owner for review and resolution.

(4) Expense Tracking and Reporting:

To maintain financial accountability and provide the Owner with full visibility into operating and capital expenditures, the Property Manager shall:

• Maintain detailed records of all approved expenses, including invoices, receipts, contracts, and payment confirmations.

• Provide the Owner with monthly financial reports, summarizing:

  • Operating expenses incurred, categorized by type and compared against budget allocations.

  • Capital expenditures, including project progress, contractor payments, and variance analysis against approved budgets.

  • Outstanding or anticipated major expenses, including expected repairs, replacements, or improvements.

• Flag any potential budget overruns and present recommendations for cost control or reallocation as necessary.

(5) Compliance with Legal and Financial Regulations:

The Property Manager shall ensure that all payments, contracts, and capital expenditures comply with:

• Applicable state and federal financial reporting standards.

• Any loan covenants, property financing agreements, or investor requirements applicable to the Property.

• Tax regulations, ensuring that appropriate documentation is retained for tax deductions, depreciation, and expense categorization.

13. Conservation Techniques and Sustainability Initiatives:

The Property Manager shall implement and oversee energy management, utility conservation, and environmental sustainability initiatives to promote efficient resource usage, cost reduction, and compliance with applicable environmental regulations. These efforts shall include strategies for optimizing energy consumption, water efficiency, waste management, and sustainable building operations while maintaining the comfort, safety, and functionality of the Property.

(1) Energy Management and Efficiency:

The Property Manager shall be responsible for developing and maintaining a structured energy management program aimed at reducing operational energy costs and improving the overall efficiency of building systems. The Property Manager shall:

• Monitor and analyze energy consumption patterns to identify opportunities for reducing electricity, gas, and fuel usage.

• Implement automated energy management systems (EMS) or smart building technologies, where feasible, to optimize lighting, heating, cooling, and ventilation schedules based on occupancy levels.

• Ensure that HVAC systems, electrical panels, and lighting fixtures are regularly serviced and calibrated for maximum efficiency.

• Recommend and facilitate the transition to LED lighting, motion-sensor lighting, or daylight harvesting systems to minimize unnecessary energy use.

• Encourage tenants to participate in energy-saving practices, such as reducing after-hours energy consumption and using energy-efficient appliances.

• Work with utility providers to explore rebate programs, incentives, or renewable energy credits for implementing energy-efficient upgrades.

(2) Utility Conservation and Water Efficiency:

The Property Manager shall take all reasonable steps to ensure that water and other utility resources are used efficiently, reducing waste and minimizing the environmental impact of the Property’s operations. These steps shall include:

• Conducting regular audits of water usage to identify leaks, excessive consumption, or inefficiencies.

• Installing low-flow plumbing fixtures, such as faucets, toilets, and showerheads, to reduce water consumption where applicable.

• Implementing smart irrigation systems with weather-based controls to optimize landscaping water use.

• Monitoring gas and heating fuel consumption to identify inefficiencies in boiler or furnace operations.

• Working with utility providers to explore alternative rate structures or conservation incentives that may benefit the Property.

(3) Waste Management and Recycling Initiatives:

The Property Manager shall implement waste reduction strategies and recycling programs designed to minimize landfill waste and promote environmentally responsible disposal practices. These initiatives shall include:

• Partnering with waste management providers to establish and maintain recycling programs for tenants and staff.

• Providing clearly labeled recycling bins and educating tenants on proper disposal practices.

• Exploring the feasibility of composting programs for organic waste, where applicable.

• Ensuring proper disposal of hazardous materials, such as batteries, fluorescent bulbs, and e-waste, in compliance with environmental regulations.

• Reviewing waste removal contracts to ensure cost-effectiveness and sustainability compliance.

(4) Sustainable Building Operations and Green Certifications:

Where feasible, the Property Manager shall recommend and implement strategies to improve the overall environmental sustainability of the Property, including:

• Evaluating green building certifications, such as LEED (Leadership in Energy and Environmental Design) or ENERGY STAR compliance, to enhance the Property’s environmental standing.

• Incorporating eco-friendly cleaning products and maintenance supplies to reduce the use of harmful chemicals.

• Exploring opportunities for renewable energy integration, such as solar panel installations or purchasing green energy credits.

• Promoting eco-conscious tenant behaviors, such as reducing paper waste, minimizing energy use, and adopting sustainable transportation options.

(5) Reporting and Compliance:

To ensure accountability and continued progress in conservation efforts, the Property Manager shall:

• Provide the Owner with quarterly reports detailing energy and utility consumption trends, cost savings achieved, and any recommendations for further efficiency improvements.

• Stay informed on local, state, and federal regulations related to energy efficiency and environmental conservation to ensure compliance.

• Regularly evaluate the cost-benefit ratio of sustainability upgrades and present recommendations for future investments in conservation initiatives.
  
  

14. Security and Risk Management:

The Property Manager shall implement and maintain a comprehensive security strategy to ensure the safety and protection of the Property, its tenants, visitors, and assets. The Property Manager shall take reasonable and proactive measures to establish and oversee adequate security provisions in accordance with the specific needs of the Property and any directives issued by the Owner.

(1) Security Assessments and Risk Mitigation:

To maintain a secure and well-protected environment, the Property Manager shall:

• Conduct regular security assessments to identify vulnerabilities and recommend necessary improvements.

• Implement and maintain appropriate security measures, such as surveillance cameras, controlled access points, alarm systems, and on-site security personnel, as deemed necessary for the Property’s size, tenant profile, and location.

• Ensure that all entry points, gates, parking areas, and common spaces are well-lit, monitored, and secure to deter unauthorized access and criminal activity.

• Establish and enforce security protocols for access control, including visitor management, key card systems, and tenant verification procedures.

• Recommend and coordinate the installation of security enhancements, such as reinforced locks, motion detectors, or security fencing, where necessary.

(2) Incident Response and Emergency Protocols:

In the event of security incidents, threats, or emergencies, the Property Manager shall:

• Promptly notify the Owner of any significant security breaches, criminal activity, or conditions that may affect tenant safety or Property security.

• Develop and maintain an emergency response plan, outlining procedures for handling incidents such as theft, vandalism, unauthorized entry, violent incidents, or other threats to Property security.

• Ensure that tenants are informed about emergency contact numbers, security procedures, and evacuation plans in case of fire, natural disasters, or security threats.

• Work in coordination with law enforcement, fire departments, and emergency responders as needed to resolve security issues.

• Document and report all security-related incidents, including a description of the event, actions taken, and any recommendations for preventive measures.

(3) Security Personnel and Surveillance:

If on-site security personnel are deemed necessary, the Property Manager shall:

• Engage and supervise qualified and licensed security service providers, ensuring that security personnel are trained and equipped to handle Property security needs.

• Establish patrolling schedules for security officers to cover key areas of the Property, particularly during high-risk hours.

• Ensure that all security staff are properly screened, trained, and certified in accordance with applicable legal and industry standards.

• Implement video surveillance systems, where appropriate, and ensure proper monitoring, recording, and maintenance of security footage.

(4) Tenant and Visitor Security Awareness:

To foster a secure community environment, the Property Manager shall:

• Provide tenants with security guidelines and best practices, including recommendations for personal safety, emergency contacts, and building access protocols.

• Encourage tenants to report suspicious activity or security concerns promptly to the Property Manager or designated security personnel.

• Organize periodic security meetings or awareness programs for tenants to educate them on crime prevention strategies and emergency preparedness.

(5) Security Expense Management and Compliance:

• The Property Manager shall evaluate and recommend cost-effective security solutions that align with the Approved Operating Budget and Owner directives.

• Any security enhancements, equipment purchases, or major service contracts exceeding $25,000 shall require prior written approval from the Owner unless already specified within the Approved Operating Budget.

• The Property Manager shall ensure that all security systems and procedures comply with local, state, and federal laws, including privacy regulations related to surveillance and tenant data protection.

15. Taxes and Tax Compliance:

The Property Manager shall be responsible for obtaining, verifying, and ensuring the accurate and timely processing of all tax-related obligations associated with the Property, including but not limited to:

• Real estate and personal property taxes

• Sales taxes on rental payments

• Improvement assessments

• Other charges that may become liens against any portion of the Property (collectively referred to as “Taxes”)

(1) Tax Bill Processing and Remittance:

• The Property Manager shall obtain and verify all applicable tax bills to ensure accuracy, compliance with assessment schedules, and proper categorization of tax liabilities.

• Within fifteen (15) calendar days of receipt of any tax bill, the Property Manager shall remit the bill to the Owner and Legacy for processing and payment.

• The Property Manager shall review tax bills for potential discrepancies, overcharges, or errors and, where applicable, may recommend tax appeals or reassessment requests to the Owner if an adjustment is warranted.

• The Property Manager shall maintain a record of all tax-related communications, appeals, and payments to ensure full compliance and documentation for tax reporting purposes.

(2) Tax Obligations on Rental Income:

• The Owner is solely responsible for all taxes on rental income earned from the Property, including income tax, sales tax (where applicable), and other related tax obligations as required by local, state, and federal laws.

• The Property Manager shall assist the Owner in maintaining accurate financial records of rental income and associated expenses to facilitate tax reporting and compliance.

(3) Owner Portal and Tax Documentation:

To streamline tax record-keeping and compliance, the Property Manager shall provide the Owner with access to an Owner Portal, where the following records shall be maintained:

• Rent receipts and income records for all rental payments collected.

• Expense documentation, including invoices, receipts, and payment confirmations for operating expenses, maintenance costs, and capital improvements.

• A detailed annual statement summarizing all receipts and disbursements related to the Property for tax purposes.

At the end of each fiscal year, the Property Manager shall generate and provide:

• IRS Form 1099-MISC or 1099-NEC, reporting the total rental income paid to the Owner.

• An annual tax summary report, detailing gross rental income, deductible expenses, and net taxable income for tax filing purposes.

(4) Tax Withholding for Out-of-State Owners:

If the Owner is an out-of-state resident, the Property Manager may be subject to state-mandated withholding obligations for rental income earned from the Property.

• If withholding obligations apply, the Property Manager shall issue an addendum to this Agreement outlining the withholding procedures and compliance requirements.

• The Property Manager shall ensure that all necessary withholding tax payments and filings are made in accordance with state tax laws.

(5) Owner’s Tax Documentation Requirements:

During the onboarding process, the Property Manager shall require the Owner to submit tax-related documentation, including:

• IRS Form W-9 (or its equivalent) to verify taxpayer identification and facilitate IRS reporting requirements.

• Any additional state-specific tax compliance forms as required by local tax authorities.

The Property Manager shall not provide legal or tax advice but may recommend that the Owner consult with a qualified tax professional or CPA for tax planning, deductions, and compliance strategies.

16. Compliance with Legal, Financial, and Insurance Obligations:

The Property Manager shall be responsible for ensuring that the Property is managed, maintained, and operated in full compliance with all applicable laws, regulations, contractual obligations, and insurance requirements that govern the Property. This includes, but is not limited to, local, state, and federal laws, as well as any applicable ground leases, space leases, mortgages, easements, and security instruments affecting the Property.

(1) Legal Compliance and Regulatory Adherence

The Property Manager shall operate the Property in accordance with all applicable laws, ordinances, and government regulations, including but not limited to:

• Landlord-tenant laws, including fair housing regulations, rent control statutes (if applicable), and eviction procedures.

• Environmental regulations, including hazardous material management, waste disposal, and energy efficiency mandates.

• Building and zoning codes, ensuring that all structural, mechanical, and operational aspects of the Property remain legally compliant.

• Health and safety regulations, including fire codes, ADA (Americans with Disabilities Act) compliance, and workplace safety standards.

• Employment and labor laws, if applicable, regarding any on-site staff employed in connection with the Property’s operation.

The Property Manager shall monitor and stay informed about any changes in applicable laws and regulations that may affect the Property’s operations and shall promptly notify the Owner of any material changes that require action or policy adjustments.

(2) Compliance with Financial Obligations:

• The Property Manager shall ensure compliance with any ground lease, space lease, mortgage, deed of trust, or other security instruments affecting the Property, provided that the Property Manager has knowledge of such obligations.

• The Property Manager shall not be responsible for making any payments related to such obligations unless:

  • The payment is specifically included in the Approved Operating Budget, or

  • The Owner provides written instructions authorizing the Property Manager to make such payment.

• The Property Manager shall promptly notify the Owner of any default notices, financial penalties, or compliance violations related to the Property’s financial obligations and recommend appropriate corrective actions.

(3) Insurance Compliance and Risk Mitigation:

The Property Manager shall ensure compliance with all provisions of any insurance policy or policies insuring the Owner in relation to the Property. The Property Manager shall:

• Ensure that no actions are taken that would decrease insurance coverage or increase insurance premiums.

• Implement risk management protocols to reduce liability exposure and maintain the Property in an insurable condition.

• Promptly report any incidents, claims, or property damage that may require an insurance claim to be filed.

• Ensure that all tenants, contractors, and vendors maintain appropriate insurance coverage, where applicable, and that certificates of insurance (COIs) are collected and reviewed to confirm compliance.

If required by the Owner, the Property Manager shall assist in the review and procurement of insurance policies, ensuring that appropriate coverage is maintained for:

• Property and casualty insurance.

• General liability insurance.

• Workers' compensation insurance (if applicable).

• Umbrella or excess liability policies.

(4) Compliance with Title, Easements, and Operational Agreements:

The Property Manager shall be responsible for ensuring that the Owner meets all obligations arising from:

• License agreements, including those related to signage, parking, telecommunications, or other third-party service agreements.

• Easement agreements, ensuring compliance with shared access, utility rights, or other recorded easements.

• Covenants, conditions, and restrictions (CC&Rs) governing the Property’s use and management.

• Use permits and zoning requirements, ensuring that business operations remain compliant with applicable land use regulations.

• Development and operating agreements applicable to the Property, particularly those related to mixed-use developments, planned communities, or commercial districts.

For any such agreements or recorded documents known to the Property Manager, the Property Manager shall:

• Supervise compliance with all applicable provisions.

• Notify the Owner of any required actions, potential breaches, or renewal obligations.

• Assist the Owner in resolving compliance disputes with third parties.

(5) Reporting and Owner Notification:

The Property Manager shall provide timely written notification to the Owner in the event of:

• Any compliance violations or enforcement actions initiated by government agencies, regulatory bodies, or third parties.

• Any legal disputes, litigation threats, or regulatory inquiries involving the Property.

• Any changes in laws, codes, or policies that may materially affect the Property’s operations.

The Property Manager shall maintain detailed records of all compliance-related matters, including permits, inspection reports, regulatory notices, and correspondence with legal or governmental authorities.

17. Notice and Cooperation in Legal Proceedings:

The Owner and Property Manager shall promptly notify each other of the commencement of any legal action, suit, claim, arbitration, or administrative proceeding that may affect the Property, its operations, or either party’s rights and obligations under this Agreement. The Property Manager shall also provide full cooperation in connection with the prosecution or defense of any such legal proceedings.

(1) Notice of Legal Actions:

• The Property Manager shall notify the Owner immediately upon receiving notice of:

  • Any lawsuit, claim, or legal demand filed against the Owner or Property Manager in connection with the Property.

  • Any governmental investigation, citation, or enforcement action involving the Property, including zoning disputes, building code violations, environmental compliance issues, or tenant complaints.

  • Any legal dispute with a tenant, vendor, contractor, or third party that may require formal legal action or arbitration.

  • Any threatened or pending litigation that could materially impact the Property’s operations, value, or financial standing.

• The Owner shall promptly notify the Property Manager of any legal proceedings, claims, or disputes initiated against the Property Manager that are related to the Property or its management.

• Any notices of legal action shall be provided in writing, along with copies of relevant legal documents, including summons, complaints, demand letters, and regulatory notices.

(2) Cooperation in Legal Proceedings:

The Property Manager shall fully cooperate with the Owner, legal counsel, and relevant authorities in connection with the prosecution or defense of any lawsuit, arbitration, or administrative action affecting the Property. Such cooperation shall include, but is not limited to:

• Providing all relevant records, reports, and documentation necessary for case preparation, legal filings, or regulatory compliance.

• Ensuring that all Property Manager employees, contractors, or agents provide statements, testimony, or other assistance as needed.

• Coordinating with the Owner’s legal counsel to facilitate depositions, discovery responses, and litigation strategy.

• Assisting in the enforcement of tenant lease provisions, vendor contracts, or indemnification claims that may be relevant to legal disputes.

• Maintaining strict confidentiality regarding any legal proceedings, ensuring that information is disclosed only to authorized parties.

(3) Legal Representation and Expenses:

• The Owner shall have sole discretion in selecting legal counsel to represent its interests in any legal proceeding.

• For routine legal matters, such as tenant evictions or rent collection lawsuits, the Property Manager may engage Owner-approved legal counsel in accordance with the terms outlined in this Agreement.

• For non-routine litigation or matters involving significant financial or reputational risks, the Property Manager shall obtain the Owner’s prior written approval before engaging legal representation or incurring any legal expenses on behalf of the Property.

• Any legal costs, settlement payments, or damages incurred in connection with a legal proceeding shall be the Owner’s responsibility, unless the dispute arises from the Property Manager’s negligence, misconduct, or breach of this Agreement, in which case the Property Manager shall bear such costs in accordance with the indemnification provisions of this Agreement.

(4) Record-Keeping and Reporting:

To ensure effective legal oversight and compliance, the Property Manager shall:

• Maintain detailed records of all legal actions affecting the Property, including case numbers, court filings, attorney correspondence, and settlement agreements.

• Provide the Owner with periodic updates on the status of ongoing legal proceedings, including any material developments or required actions.

• Ensure that all legal records are securely stored and made available to the Owner upon request for audit, compliance review, or reporting purposes.

18. Other Complaints and Notices:

The Property Manager shall be responsible for promptly addressing complaints, notices, and legal or regulatory matters affecting the Property. The Property Manager shall ensure that the Owner is kept informed of any significant issues, potential risks, or compliance requirements, while also maintaining detailed records for future reference.

(1) Handling of Complaints and Tenant Concerns:

• The Property Manager shall promptly receive, review, and respond to all complaints and service requests from:

  • Tenants, concerning lease issues, maintenance concerns, or service deficiencies.

  • Concessionaires and licensees, including any businesses operating on or within the Property.

  • Visitors and third parties, regarding property conditions, accessibility, or public safety concerns.

• If a complaint is deemed minor and routine, the Property Manager shall resolve the matter in a timely and professional manner, documenting actions taken.

• If a complaint is major, ongoing, or requires Owner involvement, the Property Manager shall immediately notify the Owner and provide a written summary of the issue, steps taken, and any recommended course of action.

(2) Notifications to Owner:

The Property Manager shall promptly notify the Owner of any of the following:

(i) Violations of Governmental Requirements:

• If the Property Manager receives or becomes aware of any notice of violation issued by a government agency, regulatory authority, or municipal office, it shall:

  • Provide written notice to the Owner, including a copy of the violation notice.

  • Assess the nature and severity of the violation and prepare a recommended compliance plan, including any necessary corrective actions or regulatory filings.

  • Coordinate with contractors, legal counsel, or relevant authorities, as needed, to ensure compliance.

(ii) Defects or Unsafe Conditions:

• If the Property Manager discovers any unsafe condition, material defect, or potential hazard within the Property, it shall:

  • Take immediate action to mitigate safety risks.

  • Notify the Owner within 24 hours of discovery.

  • Conduct a risk assessment and provide recommendations for necessary repairs or safety enhancements.

(iii) Violations of Covenants, Restrictions, or Loan Documents:

• The Property Manager shall immediately notify the Owner upon receiving:

  • Any notice of noncompliance with recorded covenants, conditions, or restrictions affecting the Property.

  • Any notice of default or violation under loan agreements, mortgages, or financial obligations tied to the Property.

• The Property Manager shall provide copies of all related correspondence and recommend corrective measures to address compliance issues.

(iv) Fire, Accidents, and Property Damage:

• In the event of fire, accident, casualty loss, or any significant damage to the Property, the Property Manager shall:

  • Immediately notify the Owner by telephone and follow up with written documentation summarizing the incident.

  • Complete all necessary and customary loss reports, including any insurance filings required for claims processing.

  • Coordinate with emergency services, insurance adjusters, and repair contractors as necessary to mitigate further damage.

  • Maintain a complete record of all related documents, reports, and insurance claim materials in the Property’s official records.

(v) Condemnation Proceedings, Rezoning, or Governmental Orders:

• If the Property Manager becomes aware of any proposed or ongoing condemnation proceedings, rezoning initiatives, or other governmental orders that may impact the Property, it shall:

  • Notify the Owner immediately and provide all relevant details.

  • Monitor the status of the proceedings and report updates to the Owner.

  • Assist in coordinating legal and regulatory responses, including filings or appeals, if necessary.

(vi) Legal and Lease Violations:

• The Property Manager shall notify the Owner if:

  • The Property is subject to any lawsuit, regulatory enforcement action, or litigation that affects its leasing, maintenance, or use.

  • A tenant, concessionaire, or licensee is in default under their lease or agreement (excluding standard residential lease violations, unless they require escalation).

  • Any party is found to be in violation of an insurance policy requirement, which could impact coverage or result in increased premiums.

(3) Documentation and Record-Keeping:

To ensure proper tracking of all notices, violations, and complaints, the Property Manager shall:

• Maintain detailed records of all complaints, regulatory notices, and legal matters, including:

  • Copies of all written complaints and responses.

  • Regulatory citations, government notices, and court filings.

  • Correspondence related to insurance claims, fire incidents, or property damage.

• Provide the Owner with periodic updates on any unresolved complaints or pending legal or regulatory matters.

• Upon request, furnish the Owner with copies of all relevant documentation for review, legal consultation, or future reference.

(4) Emergency Reporting for Hazardous Waste and Environmental Violations:

• In the event of a fire, significant property damage, or a violation related to hazardous materials or environmental laws, the Property Manager shall:

  • Immediately notify the Owner by telephone and follow up with a written incident report.

  • Coordinate with environmental consultants, regulatory agencies, and legal advisors to ensure proper response and remediation.

  • Ensure that all hazardous waste violations are addressed in accordance with the Sections of this Agreement and applicable environmental laws.

19. Business Plan and Property Review Program:

The Property Manager shall develop and submit an Annual Business Plan for the Property to the Owner and Legacy for review and approval, ensuring a structured approach to property management, financial performance, and market positioning. The Property Manager shall also participate in the Owner’s property review programs, providing necessary data, strategic insights, and operational adjustments as required by the Owner.

(1) Submission and Approval of the Annual Business Plan:

• By November 1 of each year, the Property Manager shall submit a draft business plan for the forthcoming Fiscal Year.

• The business plan shall include all reasonably requested information by the Owner, including but not limited to:

  • Market and Competitive Analysis:

    • A comprehensive list of competing properties in the local market.

    • A tenant list for each competing property, along with an analysis of their lease terms (if available).

    • Relevant market trends, vacancy rates, rental rates, and occupancy data for comparable properties.

  • Demographic and Economic Data:

    • Population growth trends within the Property’s market area.

    • Major employers and employment/unemployment statistics affecting the Property’s leasing potential.

    • If the Property is a retail asset, additional insights such as retail sales data and housing starts in the area.

  • Operational and Financial Projections:

    • Projected rental income, operating expenses, and net operating income (NOI).

    • Capital expenditure forecasts and major anticipated repairs or improvements.

    • Strategic recommendations for lease renewals, tenant retention, and vacancy reduction.

    • Cost-saving initiatives and operational efficiency improvements.

  • Marketing and Leasing Strategy:

    • Proposed leasing strategies to attract and retain tenants.

    • Advertising and promotional plans, if applicable.

    • Recommendations for repositioning or enhancing the Property’s marketability.

• First Fiscal Year Consideration:

  • For the first Fiscal Year of this Agreement, the Property Manager shall submit a draft business plan covering the remainder of the calendar year as soon as possible but no later than 30 days after the Agreement’s execution date.

• Owner’s Review and Approval:

  • The Owner will review and consider the draft business plan and shall make reasonable efforts to approve it by December 1 of each year.

  • The proposed business plan shall become the official Annual Business Plan only upon Owner’s formal written approval.

  • If the Owner requests revisions, the Property Manager shall work in good faith to revise and resubmit the plan promptly to obtain final approval.

(2) Property Review Program and Asset Evaluations:

In addition to preparing the Annual Business Plan, the Property Manager shall fully participate in the Owner’s Property Review Program as requested. These reviews may include, but are not limited to:

• Asset Performance Review:

  • Evaluation of the Property’s financial health, leasing status, and capital investment needs.

  • Assessment of how the Property aligns with the Owner’s investment strategy and long-term objectives.

• Investment and Strategy Reports:

  • Preparation of investment and financial strategy profiles as required by the Owner.

  • Recommendations for repositioning, refinancing, or selling the Property if market conditions justify such actions.

• Appraisal and Valuation Assistance:

  • Providing necessary data, lease agreements, expense reports, and operational history to assist in third-party appraisals.

  • Working with appraisers, brokers, and analysts to provide market-based justifications for valuation adjustments.

(3) Management Evaluation Reports and Corrective Actions:

• The Owner may conduct periodic management evaluations to assess the Property Manager’s performance in operational, financial, and tenant management functions.

• Upon receipt of an Owner’s management evaluation report, the Property Manager shall:

  • Review the report and its findings within ten (10) days of receipt.

  • Prepare a written response outlining corrective actions or adjustments to be made in its management standards, financial practices, or leasing strategies.

  • Implement any reasonable modifications or operational improvements as directed by the Owner.

• If the Property Manager fails to respond within the required timeframe or does not make adequate improvements, the Owner reserves the right to take appropriate actions to ensure the Property’s optimal performance.

(4) Reporting and Documentation Requirements:

• The Property Manager shall maintain detailed records of:

  • All business plans and revisions submitted to the Owner.

  • Market research, financial projections, and strategy documents.

  • Communications regarding management evaluations and corrective actions.

  • Supporting materials related to property reviews, appraisals, and investment strategy updates.

• These records shall be available to the Owner upon request for audit, compliance, or decision-making purposes.

20. Fees:

(a) Management Fee:

The Owner shall compensate the Property Manager for all property management services provided under this Agreement with a monthly Management Fee agreed upon on the property management contract or 10% of the rental income.

(1) Definition of Gross Monthly Collections:

For purposes of calculating the Management Fee, "Gross Monthly Collections" shall be defined as the total amount of revenue collected by the Property Manager during each calendar month from the following sources:

• Tenant rental payments, including base rent and any percentage rent (if applicable).

• Common area maintenance (CAM) reimbursements or other expense recoveries from tenants.

• Late fees, penalties, and interest collected from tenants.

• Parking fees, storage fees, and other ancillary income generated from the Property.

• Any other recurring income generated from the Property’s normal operations.

(2) Exclusions from Gross Monthly Collections:

The following revenue sources shall not be included in the calculation of Gross Monthly Collections:

• Security deposits or any funds held in trust that are refundable to tenants.

• Insurance proceeds received from property damage claims.

• Tax refunds or governmental incentives, including property tax abatements.

• Proceeds from capital events, including the sale, refinancing, or disposition of the Property.

• Contributions or reimbursements from the Owner that are not derived from tenant payments or operational income.

(3) Payment Terms:

• The Management Fee shall be paid monthly, with payment due on or before the 20th of the subsequent month following the period in which Gross Monthly Collections were received.

• The Property Manager shall submit an invoice to the Owner detailing:

  • The total Gross Monthly Collections for the relevant period.

  • The calculated Management Fee based on the agreed-upon percentage.

  • A breakdown of included and excluded revenue sources to ensure full transparency.

• The Owner shall remit payment via electronic funds transfer (EFT), ACH, or other agreed-upon payment methods.

(4) Adjustments and Disputes:

• In the event of a billing discrepancy or dispute regarding the Management Fee calculation, the Owner shall notify the Property Manager within 15 days of receiving the invoice.

• The Property Manager shall review and, if necessary, provide supporting documentation to reconcile any differences.

• Any overpayments or underpayments shall be adjusted in the following month’s invoice.

(5) Compliance and Record-Keeping:

• The Property Manager shall maintain accurate financial records supporting the calculation of the Management Fee, including rent ledgers, collection reports, and accounting statements.

• These records shall be made available to the Owner for review or audit upon request.

21. Construction Supervision Fee:

In the event that the Owner requests the Property Manager to coordinate and supervise major repairs, renovations, or capital improvements that qualify as Capital Expenditures under Generally Accepted Accounting Principles (GAAP), the Property Manager shall be entitled to receive a Construction Supervision Fee based on a percentage of the hard costs of such Capital Expenditures.

(1) Definition of Capital Expenditures:

For purposes of this Agreement, "Capital Expenditures" shall include, but are not limited to:

• Major building renovations, including façade restoration, roofing replacements, or exterior repairs.

• Mechanical, Electrical, and Plumbing (MEP) system upgrades, such as HVAC replacements, new electrical infrastructure, or major plumbing repairs.

• Structural enhancements, including foundation work, seismic retrofitting, or load-bearing modifications.

• Tenant improvement projects requiring substantial modifications or build-outs.

• Large-scale landscaping, paving, or site development work.

• Other significant improvements that increase the useful life, value, or functionality of the Property.

(2) Construction Supervision Fee Structure:

The Construction Supervision Fee shall be calculated as a percentage of the total hard costs associated with each Capital Expenditure project, as follows:

Job Cost (Hard Costs of Capital Expenditure)Construction Supervision Fee (%)

• Under $100,000: 8.0%

• $100,000 - $249,999: 6.5%

• $250,000 - $499,999: 6.0%

• $500,000 - $4,999,999: 5.0%

• Over $5,000,000: Negotiable

(3) Scope of Construction Supervision Services:

In consideration for the Construction Supervision Fee, the Property Manager shall provide the following services:

• Project Coordination and Oversight:

  • Assisting in the development of project scope, budget estimates, and timelines.

  • Coordinating with architects, engineers, and consultants to ensure proper planning and compliance.

• Contractor and Vendor Management:

  • Soliciting bids and obtaining at least three (3) competitive quotes for projects exceeding $25,000, unless otherwise directed by the Owner.

  • Reviewing contractor qualifications, negotiating contracts, and recommending vendors to the Owner for approval.

  • Ensuring that all contractors meet insurance, licensing, and bonding requirements.

• Regulatory Compliance and Permitting:

  • Assisting with building permits, zoning approvals, and inspections required for construction activities.

  • Ensuring compliance with local, state, and federal regulations related to labor laws, environmental standards, and safety requirements.

• Construction Oversight and Quality Control:

  • Monitoring project progress, work quality, and contractor performance.

  • Conducting regular site visits to verify adherence to specifications, budgets, and timelines.

  • Identifying and resolving construction delays, cost overruns, or disputes with vendors.

• Financial Oversight and Payment Processing:

  • Reviewing contractor invoices, change orders, and cost adjustments for accuracy.

  • Providing monthly financial reports to the Owner detailing project expenditures and budget variances.

  • Managing final inspections, punch-list items, and project close-out documentation.

(4) Payment Terms for Construction Supervision Fee:

• The Construction Supervision Fee shall be payable in installments aligned with project milestones, as follows:

  • 20% upon project commencement, based on approved contracts and project initiation.

  • 30% upon 50% project completion, verified through progress reports and site inspections.

  • 40% upon substantial completion, after passing final inspections and obtaining necessary approvals.

  • 10% upon project close-out, following final reconciliation of costs and completion of punch-list work.

• The Property Manager shall submit invoices detailing the fee calculation and project status before each payment milestone.

• If the Owner terminates a project before completion, the Property Manager shall be entitled to payment for services rendered up to the termination date, based on work completed and documented project oversight.

(5) Adjustments and Special Negotiations:

• For projects exceeding $5,000,000, the Construction Supervision Fee shall be subject to negotiation between the Property Manager and Owner, based on project complexity, risk factors, and oversight requirements.

• The Owner reserves the right to adjust or waive the Construction Supervision Fee for certain projects at its discretion, provided that such modifications are agreed upon in writing.

• Any changes to fee percentages, scope, or payment terms shall require a written addendum to this Agreement.

(6) Record-Keeping and Audit Rights:

• The Property Manager shall maintain detailed records of all construction management activities, including:

  • Contractor agreements, bid comparisons, and scope-of-work documents.

  • Change orders, payment approvals, and financial reconciliation reports.

  • Inspection reports, compliance documents, and project close-out certifications.

• The Owner shall have the right to audit all construction-related records upon request to ensure full transparency and compliance with project budgets and management fees.

22. Retail Leasing Commission:

If the Property includes retail space, the Owner may agree to compensate the Property Manager for leasing services performed in connection with securing retail tenants for the Property. The Retail Leasing Commission (the "Retail Commission") shall be subject to the following terms and conditions:

(1) Retail Leasing Commission Structure:

• The Retail Commission rate and structure shall be negotiated and agreed upon in writing for each retail lease transaction.

• The Retail Commission shall be calculated as a percentage of total base rent to be paid by the retail tenant over the term of the executed lease.

• The Retail Commission shall be payable only upon full execution and delivery of a lease agreement between the Owner and the retail tenant procured by the Property Manager.

(2) Conditions for Earning the Retail Commission:

The Retail Commission shall be earned and payable only if all of the following conditions are met:

• The Property Manager is directly responsible for procuring, negotiating, and finalizing a new retail lease, renewal, or extension with a tenant.

• The lease is fully executed by all parties and has commenced under legally binding terms.

• The tenant has taken possession of the premises and has satisfied any initial rent payment obligations as defined in the lease agreement.

• No default, termination, or lease cancellation occurs before the lease commencement date.

(3) Exclusions and Owner's Right to Reject Prospective Leases:

• The Owner retains sole and absolute discretion to reject any prospective retail lease, lease renewal, or lease extension agreement for any reason.

• If the Owner rejects a proposed retail lease, no Retail Commission or other compensation shall be earned or payable to the Property Manager or any other broker for activities related to the rejected lease.

• The Property Manager shall not be entitled to a Retail Commission for leases negotiated or executed directly by the Owner without the Property Manager’s involvement.

(4) Payment Terms for Retail Commission:

• Unless otherwise agreed upon in writing, the Retail Commission shall be payable in two installments:

  • 50% upon lease execution and receipt of the tenant’s initial rent payment.

  • 50% upon tenant occupancy and commencement of rent payments as outlined in the lease.

• If a tenant defaults before taking possession or fails to meet lease commencement conditions, the Retail Commission shall not be payable, and any previously paid amounts shall be refundable to the Owner or offset against future commissions.

• The Property Manager shall provide an invoice and supporting documentation detailing the commission calculation and lease terms before payment processing.

(5) Additional Terms and Commission Adjustments:

• The Retail Commission structure may be adjusted or renegotiated based on lease term length, rental rates, tenant creditworthiness, or special incentives required to secure the lease.

• If a third-party broker or leasing agent is involved in the transaction, the commission shall be shared based on an allocation agreed upon in writing between the Property Manager, Owner, and third-party broker.

• Any Retail Commission disputes shall be resolved in good faith negotiation, with final authority resting with the Owner.

(6) Reporting and Lease Documentation:

To ensure transparency and proper tracking of leasing commissions, the Property Manager shall:

• Maintain detailed records of all retail leasing activities, including lease proposals, tenant negotiations, and executed agreements.

• Provide the Owner with regular leasing activity reports, summarizing prospective tenants, lease status updates, and anticipated commissions.

• Upon request, furnish the Owner with copies of executed leases, commission agreements, and supporting lease documentation for review.

23. Property Manager’s Costs and Expense Responsibilities:

Except for services provided by Affiliates of the Property Manager, which shall be reimbursed by the Owner pursuant to this agreement, the Property Manager shall be responsible for covering all costs associated with or relating to its own office overhead and management personnel not physically located at or directly employed by the Property. These costs shall be borne solely by the Property Manager and included within the Management Fee, with no additional reimbursement required from the Owner.

(1) Covered Costs and Expenses:

The Property Manager shall pay for and absorb the following costs from its Management Fee:

• Corporate and Administrative Overhead:

  • Costs related to the Property Manager’s central office operations, administrative functions, and general corporate expenses.

  • Office rent, equipment, utilities, telecommunications, and business supplies.

• Management Personnel Compensation:

  • Salaries, wages, bonuses, and all other compensation for employees of the Property Manager who are not physically stationed at or directly employed by the Property.

  • Payroll-related expenses, including:

    • Unemployment insurance contributions.

    • Social Security (FICA) and Medicare taxes.

    • State and federal payroll tax contributions.

  • Any employee benefits, such as health insurance, retirement plan contributions, and paid leave, for off-site management personnel.

• Technology, Software, and Business Services:

  • Any property management software, accounting platforms, or IT services used by the Property Manager that are not specifically designated for the Property’s exclusive use.

  • Marketing, promotional, or public relations activities undertaken for general business development and not specifically authorized by the Owner for the Property.

• Other Costs and Expenses Stated in This Agreement:

  • Any costs explicitly stated elsewhere in this Agreement as the responsibility of the Property Manager.

  • Any expenses related to professional licensing, training, certifications, or continuing education required for Property Manager personnel.

(2) Excluded Costs – Reimbursable by Owner:

The Property Manager shall not be responsible for, and may seek reimbursement from the Owner, for the following expenses:

• On-site property personnel costs, including salaries and benefits for employees stationed at and directly involved in the daily operations of the Property.

• Direct operational costs incurred in managing and maintaining the Property, provided such costs are included in the Approved Operating Budget or otherwise approved by the Owner in writing.

• Third-party vendor and contractor expenses incurred for repairs, maintenance, and tenant services, provided such expenses are properly authorized and documented.

• Costs for services provided by Affiliates of the Property Manager, as outlined in this agreement,.

(3) No Additional Overhead Charges:

• The Management Fee shall serve as full compensation for the Property Manager’s services and shall not be supplemented by additional overhead or administrative fees, except as expressly authorized by the Owner.

• The Property Manager shall not charge the Owner separately for general corporate expenses, indirect labor, or non-property-specific costs.

(4) Record-Keeping and Financial Accountability:

• The Property Manager shall maintain accurate records of all covered expenses and shall make such records available to the Owner upon request for audit or financial review.

• Any disputed charges or reimbursement requests shall be resolved through good faith discussions between the Property Manager and the Owner.

24. Use of Affiliates and Reimbursable Costs:

If expressly included in the Approved Capital Budget or authorized in advance by the Owner in writing, the Property Manager may procure services, materials, and contract work through its organization, subsidiaries, or Affiliates for the benefit of the Property. Any such procurement shall be subject to competitive pricing, quality assurance, and full financial transparency, with all costs reimbursed by the Owner in accordance with the following conditions:

(1) Eligible Reimbursable Services and Materials:

The Property Manager may engage its Affiliates to provide the following types of services and materials, among others:

• Advertising and Marketing Services:

  • Digital and print marketing campaigns.

  • Tenant prospecting, outreach, and promotional materials.

• Consulting and Training Services:

  • Professional property management, leasing, and market analysis consulting.

  • Employee or contractor training programs.

• Technology and IT Services:

  • Procurement and maintenance of computer hardware and software for property management functions.

  • Digital platforms for tenant communication, accounting, or reporting.

• Property Operational Supplies and Materials:

  • Custom forms, signage, and printed materials for use at the Property.

  • Building materials, maintenance supplies, and inventory used in routine operations and repairs.

• Third-Party Contract Services:

  • Security, landscaping, janitorial, pest control, and other essential contracted services.

  • Vendor relationships for maintenance, HVAC, and plumbing services.

(2) Competitive Pricing and Quality Standards:

To ensure cost-effectiveness and fair market value, the Property Manager shall:

• Only procure goods and services through its Affiliates if the quality and pricing are competitive with comparable third-party providers.

• Conduct market analysis and vendor comparisons to confirm pricing remains in line with industry standards.

• Provide the Owner with cost breakdowns and justifications upon request for verification.

• Disclose any potential conflict of interest or financial benefit that may arise from engaging an Affiliate.

(3) Discounts, Rebates, and Cost Savings:

• All discounts, rebates, and cost savings obtained by the Property Manager, its Affiliates, or third-party vendors in connection with these services shall be fully credited to the Owner.

• The Property Manager shall not retain any portion of vendor discounts, supplier rebates, or bulk purchasing advantages unless expressly agreed upon in writing by the Owner.

(4) Owner Approval and Documentation Requirements:

• The Property Manager must obtain prior written approval from the Owner for any expense not pre-approved in the Approved Capital Budget.

• All invoices, receipts, and contract agreements related to services or materials obtained from Affiliates shall be properly documented and made available to the Owner upon request.

• The Owner reserves the right to audit or review any transactions involving the Property Manager’s Affiliates to ensure compliance with fair market pricing and service quality.

25. Expenses to be Borne by Property:

Unless expressly provided for in the Approved Operating Budget, the Property Manager shall bear all costs associated with providing general supervisory, lease negotiation, rent collection, lease enforcement, lease termination, management, recordkeeping, and related administrative services in connection with the operation of the Property.

The Owner shall not be responsible for reimbursing the Property Manager for any such expenses, except as specifically provided in this Agreement.

(1) Non-Reimbursable Expenses:

The following expenses and costs incurred by or on behalf of the Property Manager shall be solely the Property Manager’s responsibility and shall not be charged to the Owner:

(a) General Property Supervision and Administration:

• Corporate and regional office overhead costs, including office rent, utilities, supplies, and administrative support unrelated to on-site operations.

• Salaries, benefits, payroll taxes, and insurance for corporate, regional, or off-site management personnel.

• Property Manager’s general business expenses, including professional dues, continuing education, training, and certifications.

(b) Lease Negotiation and Administration/;

• The cost of negotiating leases, including preparing lease agreements, amendments, and renewals, excluding lease commissions (if applicable under this Agreement).

• Costs related to tenant screening, credit checks, and application processing, unless otherwise approved in the Approved Operating Budget.

• Routine rent collection services, except for expenses associated with:

  • On-site personnel specifically designated for rent collection.

  • Attorneys’ fees for legal rent collection actions.

  • Third-party collection agencies, when required for delinquent accounts.

(c) Lease Enforcement and Termination Costs:

• Costs incurred in the routine enforcement of lease terms, including serving notices to tenants, except:

  • Legal fees incurred for eviction proceedings or litigation.

  • On-site personnel costs associated with lease enforcement actions.

• Any expenses related to voluntary lease terminations or tenant buyouts, unless explicitly pre-approved by the Owner.

(d) Management and Recordkeeping Expenses:

• Costs associated with accounting, financial reporting, and bookkeeping services related to the Property, including:

  • Routine recordkeeping, invoice processing, and rent roll management.

  • Preparation of monthly financial reports and management statements.

  • Costs related to the maintenance of electronic property management systems unless specifically included in the Approved Operating Budget.

• The cost of storing financial, legal, or operational records beyond the required period under applicable laws.

(e) Marketing and Advertising Costs:

• Any general branding, marketing, or promotional costs incurred for the benefit of the Property Manager’s business.

• Advertising expenses not included in the Approved Operating Budget or pre-approved by the Owner in writing.

(f) Insurance and Legal Compliance Costs:

• Insurance coverage maintained by the Property Manager for its own business operations, including:

  • General liability, professional liability, and errors & omissions (E&O) insurance.

  • Workers’ compensation or health insurance for Property Manager’s corporate employees.

• Legal fees and regulatory compliance costs incurred by the Property Manager for matters unrelated to the Property.

(2) Exceptions and Owner-Approved Expenses:

The Owner may, at its sole discretion, approve in writing the reimbursement of specific expenses that would otherwise be the responsibility of the Property Manager. Any such approval shall be documented in:

• The Approved Operating Budget, or

• A separate written agreement or addendum executed between the Owner and Property Manager.

(3) Record-Keeping and Audit Rights:

• The Property Manager shall maintain accurate financial records detailing all expenses incurred under this Agreement.

• The Owner shall have the right to audit the Property Manager’s financial records to verify compliance with the expense allocation provisions of this section.

26. Corporate Office and Executive Personnel Costs:

The Property Manager shall be solely responsible for all costs associated with the gross salaries, wages, payroll taxes, insurance, workers’ compensation, and other employment-related expenses for its corporate office and executive personnel, unless otherwise expressly included in the Approved Operating Budget or separately authorized in writing by the Owner. These costs shall not be charged to the Owner or reimbursed under this Agreement.

(1) Non-Reimbursable Corporate and Executive Personnel Costs:

The following expenses shall be borne entirely by the Property Manager and shall not be charged to the Owner:

• Salaries, wages, and bonuses for all corporate office personnel, including:

  • Executive officers, regional managers, and senior leadership.

  • Corporate accounting, finance, HR, and administrative staff.

  • Any corporate-level operational support personnel who are not physically stationed at the Property.

• Payroll-related costs, including:

  • Employer-paid payroll taxes (FICA, Medicare, state, and federal taxes).

  • Unemployment insurance contributions.

  • Workers' compensation insurance covering corporate employees.

  • Health insurance, retirement plan contributions, and other employee benefits.

• General office expenses associated with the Property Manager’s corporate headquarters, including:

  • Office rent, utilities, and telecommunications.

  • Office equipment, computers, and business supplies.

  • Corporate software and IT infrastructure not directly used for the Property’s operations.

(2) Exceptions – On-Site Personnel Authorized in Approved Operating Budget:

The Owner may approve reimbursement for salaries and related costs only for full-time or part-time personnel who:

• Are physically stationed at the Property and perform daily operational duties.

• Have their position and salary specifically authorized in the Approved Operating Budget.

• Provide direct, day-to-day management, maintenance, or tenant-related services to the Property.

(3) Compliance and Record-Keeping:

• The Property Manager shall not allocate corporate-level expenses to the Property without explicit Owner approval.

• The Owner reserves the right to audit payroll records, tax filings, and employment cost allocations to ensure compliance with this Agreement.

27. Costs Arising from Breach, Negligence, or Misconduct:

The Property Manager shall bear full financial responsibility for any and all costs, damages, liabilities, or expenses incurred as a direct or indirect result of:

1. A breach of this Agreement by the Property Manager.

2. The negligence, gross negligence, fraud, or willful misconduct of:

   • The Property Manager,

   • Any of the Property Manager’s Affiliates,

   • Any of the Property Manager’s employees, independent contractors, agents, or representatives acting on its behalf.

(1) Non-Reimbursable Costs Due to Breach or Non-Performance:

The following costs and expenses shall not be charged to the Owner and shall be the sole responsibility of the Property Manager:

• Fines, penalties, or legal fees resulting from the Property Manager’s failure to comply with:

  • Applicable laws, regulations, building codes, or lease terms.

  • Governmental orders, citations, or enforcement actions against the Property.

• Contractual liabilities, settlements, or judgments resulting from disputes caused by:

  • The Property Manager’s failure to perform obligations under vendor, tenant, or service agreements.

  • Unauthorized contract modifications or improper procurement practices.

• Additional costs incurred due to failure to properly maintain the Property, including:

  • Unresolved maintenance issues leading to damage, tenant complaints, or legal action.

  • Costs associated with remedial work required due to the Property Manager’s failure to perform routine maintenance.

• Legal fees, damages, or settlements arising from:

  • Claims of tenant harassment, discrimination, wrongful eviction, or lease mismanagement due to the Property Manager’s actions.

  • Liability claims, personal injury lawsuits, or property damage caused by the Property Manager’s negligence.

(2) Non-Reimbursable Costs Due to Negligence or Willful Misconduct:

• Fraudulent, unethical, or illegal actions by the Property Manager or its representatives, including:

  • Misappropriation of funds or failure to properly account for collected rents.

  • Intentional misrepresentation of financial data, tenant leases, or vendor contracts.

  • Self-dealing or conflicts of interest that result in financial harm to the Owner.

• Insurance claims denied due to the Property Manager’s failure to maintain coverage or comply with policy terms, including:

  • Failure to enforce required vendor and contractor insurance requirements.

  • Failure to submit timely loss claims related to covered damages.

(3) Indemnification and Owner’s Right to Offset:

• The Owner shall have the right to offset any losses, damages, or costs incurred due to the Property Manager’s breach, negligence, or misconduct against any fees owed to the Property Manager under this Agreement.

• The Property Manager shall indemnify, defend, and hold the Owner harmless against any third-party claims, liabilities, or expenses arising from the Property Manager’s:

  • Failure to perform its obligations under this Agreement.

  • Acts of negligence, willful misconduct, or legal violations in the operation of the Property.

(4) Compliance and Financial Accountability

• The Property Manager shall maintain accurate records of any incidents, disputes, or claims related to its actions.

• The Owner shall have the right to conduct audits or request financial documentation to assess the impact of any breach or negligent act.

28. Corporate Office Supplies, Equipment, and Data Processing Costs:

Unless expressly included in the Approved Operating Budget, the Property Manager shall bear all costs associated with supplies, equipment, and data processing services used at its corporate office. These costs shall not be charged to the Owner or reimbursed under this Agreement.

(1) Non-Reimbursable Office Supplies and Administrative Materials:

The following expenses incurred at the Property Manager’s corporate office shall be the sole responsibility of the Property Manager:

• Office forms, stationery, and administrative materials, including:

  • Standard corporate documents, letterhead, and envelopes.

  • General office forms and supplies not specifically allocated to the Property.

• Accounting materials and financial recordkeeping supplies, including:

  • Ledgers, journals, receipt books, and check registers.

  • Internal corporate bookkeeping and financial tracking documents.

• General business paper products, such as:

  • File folders, binders, labels, printer paper, and writing materials.

(2) Non-Reimbursable Data Processing and IT Costs:

• Costs associated with data processing equipment and IT systems maintained at the Property Manager’s corporate office, including:

  • Computers, servers, printers, scanners, and copiers used at the Property Manager’s headquarters.

  • Internal software licenses, including enterprise accounting, customer relationship management (CRM), or property management platforms not exclusively dedicated to the Property.

• Fees paid to third-party data processing or IT service providers for:

  • Cloud computing, data storage, and server maintenance.

  • Corporate IT security, networking infrastructure, or enterprise-wide digital tools.

  • Enterprise-wide customer service platforms or tenant communication tools not exclusively allocated to the Property.

(3) Exceptions – Reimbursable Technology and Supplies:

The Owner may approve reimbursement for specific technology, software, or supplies if:

• The item is explicitly included in the Approved Operating Budget.

• The software, hardware, or IT service is exclusively used for the Property’s operations.

• The Owner provides prior written approval for a technology expense that directly benefits the Property.

(4) Compliance and Financial Accountability:

• The Property Manager shall not allocate corporate IT, office supply, or data processing costs to the Property unless explicitly authorized by the Owner.

• The Owner reserves the right to audit any expenses related to data processing, office equipment, or administrative materials to ensure compliance.

29. Employee Bonuses, Incentive Compensation, and Profit Sharing:

The Property Manager shall be solely responsible for all costs associated with bonuses, incentive compensation, profit-sharing contributions, or pay advances provided to its employees in connection with the operation and management of the Property. Such costs shall not be reimbursed by the Owner, unless expressly included in the Approved Operating Budget or otherwise approved in writing by the Owner in advance.

(1) Non-Reimbursable Employee Compensation Costs:

The following compensation-related expenses shall be borne solely by the Property Manager and shall not be charged to the Owner:

• Bonuses or merit-based incentives provided to Property Manager’s employees, including:

  • Annual or quarterly performance bonuses.

  • Spot bonuses or discretionary awards.

  • Retention or signing bonuses.

• Incentive-based compensation programs, including:

  • Commission-based earnings not tied to lease agreements approved by the Owner.

  • Stock options or profit-sharing contributions.

• Advances or loans provided to Property Manager employees, including:

  • Temporary wage advances or salary draws.

  • Personal loans or financial assistance programs.

• Deferred compensation or long-term incentive plans established by the Property Manager.

(2) Exceptions – Reimbursable Compensation:

The Owner may approve reimbursement for specific employee compensation expenses if:

• The individual’s salary or compensation structure is explicitly included in the Approved Operating Budget.

• The Owner provides prior written approval for a bonus or incentive tied to Property-specific performance objectives.

• The payment is directly related to on-site personnel whose compensation is authorized as part of the Property’s operations.

(3) Compliance and Financial Accountability:

• The Property Manager shall maintain accurate payroll and compensation records, ensuring that non-reimbursable bonus and incentive payments are not allocated to the Property.

• The Owner reserves the right to audit all payroll expenses to verify compliance with this Agreement.

30. Automobile Purchases and Rentals:

• The Property Manager shall bear all costs associated with the purchase, lease, rental, or maintenance of automobiles used by its employees, corporate office, or regional management teams.

• These costs shall not be reimbursed by the Owner unless:

  • The expense is explicitly included in the Approved Operating Budget or Approved Capital Budget.

  • The Owner provides prior written approval for a specific automobile-related expense.

  • The vehicle is provided by the Owner for on-site use in Property operations.

• The Property Manager shall not charge the Owner for personal vehicle mileage, fuel, or repairs, except as specifically authorized in advance by the Owner.

31. Crime Insurance for Property Manager’s Own Account:

• The Property Manager shall be solely responsible for the costs of purchasing and maintaining any comprehensive crime insurance, fidelity bonds, or liability coverage for its own protection.

• The Owner shall not be required to reimburse the Property Manager for insurance policies that:

  • Cover internal business risks, fraud, theft, or employee dishonesty unrelated to the Property.

  • Provide errors & omissions (E&O) or professional liability insurance for the Property Manager’s corporate operations.

• The Owner shall maintain its own property and liability insurance, and the Property Manager shall comply with all insurance requirements affecting the Property as set forth in this Agreement.

32. Meals, Travel, and Hotel Accommodations:

• The Property Manager shall bear all costs related to travel, meals, lodging, and transportation for its home office or regional office personnel traveling to and from the Property.

• These costs shall not be reimbursed by the Owner, unless:

  • The Owner expressly authorizes the travel in writing prior to incurring expenses.

  • The travel is necessary for an Owner-approved meeting, training, or project requiring on-site supervision.

  • The expenses are included in the Approved Operating Budget.

• Any unauthorized travel, entertainment, or discretionary expenses incurred by the Property Manager’s personnel shall not be charged to the Owner.

33. Licenses, Permits, Consents, and Authorizations:

• The Property Manager shall be solely responsible for the costs of obtaining and maintaining licenses, permits, consents, and authorizations required for its own business operations.

• The Owner shall not reimburse the Property Manager for:

  • Business licenses, corporate registrations, or certifications required for the Property Manager’s legal existence and operations.

  • Professional real estate or property management licenses required for the Property Manager’s personnel.

  • Any permit or authorization fees unrelated to the direct operation of the Property.

• The Owner shall only reimburse the Property Manager for fees directly related to the Property itself, such as:

  • Property-specific registrations, permits, and operating licenses required for legal compliance.

  • Municipal occupancy permits, fire safety inspections, and environmental permits affecting the Property’s use.

(1) Compliance and Financial Accountability:

• The Property Manager shall not allocate non-reimbursable costs to the Property’s financial statements.

• The Owner reserves the right to audit all expenses related to automobiles, insurance, travel, and licensing to ensure compliance with this Agreement.

34. Noncustomary Services:

Notwithstanding any other provision in this Agreement, the Property Manager shall not furnish or render noncustomary services to tenants of the Property beyond those services typically provided at comparable properties, unless such services comply with the following conditions:

(1) Conditions for Providing Noncustomary Services:

The Property Manager may provide noncustomary services only if all of the following conditions are met:

• (a) Separate Charge to Tenants:

  • The Property Manager must make a separate, adequate charge to tenants for any noncustomary service provided.

  • The charge must be market-based and competitive with third-party providers offering similar services.

• (b) Retention of Revenue by Property Manager:

  • Any revenue generated from such noncustomary services must be received and retained by the Property Manager.

  • The Owner shall not be entitled to a share of such revenues, and the income must not be commingled with Owner’s rental revenue.

• (c) Property Manager Bears All Costs:

  • The full cost of providing such services, including labor, equipment, materials, and administrative expenses, shall be solely borne by the Property Manager.

  • The Owner shall not be responsible for reimbursing any portion of these costs, unless otherwise agreed in writing.

• (d) Prior Written Consent from Owner:

  • The Property Manager must obtain written consent from the Owner before offering any noncustomary services to tenants.

  • The Owner reserves the absolute right to approve or reject such requests.

• (e) Tax and Legal Compliance Certification:

  • The Property Manager must certify in writing to the Owner that:

    • (i) It qualifies as an independent contractor with respect to the Owner (and Owner’s direct and indirect beneficial owners) under Section 856(d)(3) of the Internal Revenue Code.

    • (ii) The Owner (and its direct and indirect beneficial owners) does not derive or receive any income from the Property Manager in connection with such services.

(2) Definition of Customary Services:

For purposes of this this agreement, the following services shall be considered customary services and may be provided by the Property Manager as part of its management responsibilities:

• Basic utilities, including water, heating, lighting, and air conditioning.

• Common area maintenance, including the operation of public entrances and exits.

• Janitorial and cleaning services provided as part of standard building maintenance.

• General maintenance and repair services, including landscaping and groundskeeping.

• Trash collection and disposal services.

• On-site security or watchmen services, where applicable.

• Operation and maintenance of parking facilities.

The Property Manager shall not offer additional or premium services (such as laundry services, concierge services, or interior unit renovations for tenants) unless explicitly approved by the Owner under the conditions set forth above.

(3) Compliance and Reporting Requirements:

• The Property Manager shall maintain accurate records of all noncustomary services provided, including:

  • A detailed breakdown of revenues collected from tenants for such services.

  • A separate accounting of all expenses incurred in providing noncustomary services.

  • Copies of written approvals from the Owner for such services.

• The Owner reserves the right to audit such records to ensure compliance with this Agreement and applicable tax laws.

35. Nonperformance:

If the Property Manager fails to perform any act or obligation required under this Agreement, the Owner shall have the right to remedy such failure, subject to the following conditions:

(1) Notice and Opportunity to Cure:

• Standard Notice Period:

  • If the Property Manager fails to fulfill a contractual duty under this Agreement, the Owner shall provide the Property Manager with written notice specifying the nature of the nonperformance.

  • The Property Manager shall have ten (10) calendar days from the date of the written notice to cure the issue.

• Emergency Exception:

  • In cases of emergency, where immediate action is required to prevent material harm to the Property, protect tenant safety, or comply with legal obligations, the Owner may act without prior notice to the Property Manager.

  • In such cases, the Owner shall provide written notice of the action taken as soon as practicable.

(2) Owner’s Right to Cure and Offset:

If the Property Manager fails to cure the nonperformance within the notice period, or if immediate action is required in an emergency, the Owner shall have the right, but not the obligation, to take corrective action directly. This may include, but is not limited to:

• Hiring third-party vendors, contractors, or service providers to perform the required work.

• Addressing maintenance, security, safety, or legal compliance issues that the Property Manager has failed to remedy.

• Fulfilling financial, regulatory, or operational obligations that the Property Manager has neglected.

The Owner shall have the right to recover all reasonable costs and expenses incurred in taking such action, including but not limited to:

• Vendor or contractor fees.

• Legal fees incurred in enforcing compliance.

• Any regulatory fines or penalties paid due to the Property Manager’s failure to act.

(3) Financial Offsets Against Property Manager’s Fees:

• The Owner shall have the right to offset all costs and expenses incurred in remedying the nonperformance against any payments due or to become due to the Property Manager, including:

  • The Management Fee for the applicable period.

  • Any unpaid incentive or leasing commissions.

  • Any expense reimbursements otherwise payable to the Property Manager.

• If the Owner’s costs exceed the amounts due to the Property Manager, the Property Manager shall remain liable for the balance and must reimburse the Owner within thirty (30) days of receiving an itemized statement of costs incurred.

(4) Additional Remedies and Rights:

• The Owner’s right to cure nonperformance and offset costs shall be in addition to, and not in limitation of, any other rights or remedies available under this Agreement or applicable law.

• The Owner’s exercise of its right to cure shall not waive or release the Property Manager from its obligations under this Agreement.

• Repeated instances of nonperformance may be considered a material breach of this Agreement, subject to termination rights and legal recourse as provided elsewhere in this Agreement.

(5) Compliance and Accountability:

• The Property Manager shall maintain accurate records of all performance obligations and provide timely updates to the Owner on the status of any outstanding issues.

• The Owner reserves the right to audit the Property Manager’s performance, review reports, and require additional compliance measures if patterns of nonperformance are identified.

Personnel And Bonding:

36. Stability Of Management Team:

The Owner and Property Manager recognize the importance of maintaining a stable and competent management team in the operation of the Property. Both parties agree to promote continuity, efficiency, and reliability in staffing decisions, ensuring the proper administration and oversight of the Property.

(a) Selection and Supervision of Employees and Contractors:

• The Property Manager shall exercise reasonable care in selecting, hiring, and retaining qualified, competent, and trustworthy employees and independent contractors to perform duties related to the Property.

• All personnel working at the Property shall be employees or contractors of the Property Manager, and not of the Owner, unless expressly agreed otherwise in writing.

• The Property Manager shall have full discretion in:

  • Hiring and assigning employees, provided they meet qualifications and industry standards.

  • Establishing terms of employment, including salaries, benefits, and compensation structures.

  • Supervising, training, evaluating, and managing employees assigned to the Property.

  • Determining promotions, reassignments, or terminations of employees.

• The Property Manager shall ensure that all employees and contractors:

  • Comply with applicable laws, regulations, and industry standards.

  • Receive appropriate training to perform their duties effectively.

  • Act professionally and uphold high ethical standards in dealing with tenants, vendors, and other stakeholders.

(b) Employment and Costs of Property Manager’s On-Site Manager:

• The Property Manager shall employ (at its own sole cost and expense, unless otherwise provided in the Approved Operating Budget) a dedicated manager to oversee the daily operations of the Property.

• The on-site Property Manager shall work from the designated Records Office and shall:

  • Supervise on-site staff and independent contractors.

  • Handle tenant relations, leasing matters, and maintenance coordination.

  • Ensure compliance with Owner directives, lease agreements, and regulatory requirements.

• If the on-site Property Manager is responsible for multiple properties, then:

  • The costs and expenses associated with this employee shall be prorated in proportion to the time spent managing the Property relative to other properties.

  • The Approved Operating Budget shall explicitly specify the prorated share of the on-site manager’s compensation and expenses.

• The Property Manager shall ensure that all employment arrangements comply with local, state, and federal labor laws, including wage and hour regulations.

(c) Bonding and Crime Insurance:

• The Property Manager shall maintain bonding and/or crime insurance policies covering all employees handling funds related to the Property.

• These policies shall protect against employee dishonesty, fraud, theft, and other financial misconduct.

• The Property Manager shall provide the Owner with satisfactory documentation relating to the bond(s) or alternative crime insurance policy immediately upon issuance.

• The minimum coverage amounts and terms of such bonding and crime insurance shall be:

  • In compliance with industry standards and applicable regulations.

  • Adequate to fully protect the Owner’s financial interests.

  • Subject to periodic review and updates, as required by the Owner.

(d) Compliance and Reporting Obligations:

• The Property Manager shall:

  • Maintain accurate records of all employees and contractors assigned to the Property.

  • Provide the Owner with periodic staffing reports, including any hiring, terminations, or personnel changes affecting Property operations.

  • Immediately notify the Owner in writing of any material personnel issues, such as:

    • Allegations of fraud, misconduct, or regulatory violations involving Property staff.

    • Significant staffing shortages affecting operations.

    • Legal disputes or claims filed against Property personnel.

• The Owner reserves the right to review and audit personnel-related expenses to ensure compliance with this Agreement.

37. Affiliates:

The Property Manager shall not engage, contract, or procure outside services for the Property from any Affiliate of the Property Manager without obtaining the prior written consent of the Owner.

(1) Definition of "Affiliate":

For purposes of this Section, an Affiliate of the Property Manager shall include, but is not limited to:

• Any parent company, subsidiary, or related entity of the Property Manager.

• Any company, partnership, or organization in which the Property Manager or its principals, officers, or employees hold a controlling interest.

• Any family member, close associate, or business partner of the Property Manager’s executives or decision-makers.

(2) Conditions for Contracting with Affiliates:

If the Property Manager seeks to engage an Affiliate for services, the following conditions must be met before entering into any contract:

• Written Approval from Owner:

  • The Property Manager must submit a written request to the Owner detailing the proposed services, costs, and justifications for using an Affiliate.

  • The Owner has sole discretion to approve or reject such requests.

• Competitive Pricing and Market Rates:

  • The services provided by the Affiliate must be priced competitively and comparable to rates charged by unaffiliated third-party providers.

  • The Property Manager must obtain at least three (3) competitive bids from unaffiliated service providers for any contract exceeding $25,000 (unless waived in writing by the Owner).

• Disclosure of Financial Interest:

  • The Property Manager must fully disclose any financial interest it or its officers hold in the Affiliate.

  • The Owner may require additional documentation or financial statements from the Affiliate to verify independence and fair pricing.

• Pass-Through of Discounts and Rebates:

  • Any rebates, discounts, volume pricing, or cost savings negotiated by the Property Manager or its Affiliate must be fully passed on to the Owner.

  • The Property Manager shall not retain any undisclosed financial benefits from contracts with Affiliates.

(3) Owner's Right to Terminate or Replace Affiliated Contracts:

• The Owner reserves the right to terminate any contract between the Property Manager and its Affiliate at any time, without penalty, upon written notice.

• If the Owner determines that:

  • The Affiliate is not providing services at a fair market rate.

  • The quality of service does not meet industry standards.

  • There is a conflict of interest that was not properly disclosed.

  • The Property Manager failed to obtain prior written consent—
    Then the Owner may require the immediate termination of the contract and replacement with an independent third-party provider.

(4) Compliance and Audit Rights:

• The Owner shall have the right to audit and review all agreements and financial transactions involving Affiliates of the Property Manager.

• The Property Manager shall provide copies of all Affiliate contracts, invoices, and supporting documentation upon request.

• Any failure to comply with the requirements of this section shall constitute a material breach of this Agreement and may be grounds for termination.

Compliance With Laws

38. Compliance:

The Property Manager shall ensure full compliance with all applicable laws, rules, regulations, requirements, orders, notices, determinations, and ordinances (collectively, “Requirements”) issued by federal, state, and municipal authorities, as well as any insurance requirements applicable to the Property and Owner’s liabilities.

(a) Scope of Compliance Obligations:

The Property Manager shall:

• Comply with all applicable federal, state, and local laws and regulations, including but not limited to:

  • The Occupational Safety and Health Act (OSHA) and all related workplace safety standards.

  • Fair Housing Act and Americans with Disabilities Act (ADA) compliance requirements.

  • Environmental laws, including hazardous waste disposal and air quality regulations.

  • Building codes, zoning laws, and fire safety regulations.

  • Tax and employment laws, including proper handling of payroll, worker classification, and benefits compliance.

  • Data protection and privacy laws, including any regulations applicable to tenant records and financial data.

• Ensure that all contractors, vendors, and service providers engaged for the Property are in full compliance with applicable laws, hold valid licenses, and meet insurance and bonding requirements.

• Maintain required documentation and permits for the Property, ensuring that inspections, certifications, and renewals are completed on time.

• Comply with the requirements of all insurance carriers providing coverage for the Property and the Owner’s liabilities.

(b) Notification and Approval for Compliance-Related Expenditures:

If compliance with a legal requirement, regulation, or governmental order requires an expenditure that:

1. Is not included in the Approved Operating Budget or Approved Capital Budget, or

2. Exceeds $10,000,

then the Property Manager must:

• Promptly notify the Owner in writing upon discovering the compliance obligation.

• Provide the Owner with a detailed cost estimate, explanation of the legal requirement, and potential consequences of non-compliance.

• Obtain the Owner’s prior written approval before making any expenditure related to compliance, unless it qualifies as an emergency.

(c) Emergency Compliance Measures:

• If a compliance-related issue poses an immediate danger to persons, property, or the continued operation of the Property, the Property Manager may take necessary actions without prior approval.

• In such cases, the Property Manager shall:

  • Make reasonable efforts to notify the Owner immediately, explaining the emergency and expected costs.

  • Take only the necessary steps to mitigate the risk or legal exposure until further instructions are received from the Owner.

  • Provide a detailed written report within 48 hours explaining the emergency, actions taken, and associated costs.

(d) Compliance Reporting and Record-Keeping:

• The Property Manager shall maintain accurate records of all compliance-related activities, including:

  • Inspection reports, permits, and certifications.

  • Government notices and legal correspondence.

  • Vendor and contractor agreements ensuring compliance with all legal requirements.

• Upon request, the Property Manager shall provide the Owner with compliance status reports summarizing:

  • Any pending legal or regulatory issues.

  • Recent compliance-related expenditures.

  • Upcoming required inspections or renewals.

(e) Liability for Non-Compliance:

• The Property Manager shall be responsible for any fines, penalties, or legal fees resulting from its failure to comply with applicable laws, unless such non-compliance was caused by the Owner’s actions or directives.

• If the Property Manager fails to inform the Owner of a compliance requirement that results in legal or financial liability, the Owner shall have the right to offset any resulting costs against any fees payable to the Property Manager.

• The Owner reserves the right to audit the Property Manager’s compliance efforts and may require corrective actions to ensure continued adherence to applicable laws.

39. Notice of Non-Compliance

The Property Manager shall promptly notify the Owner upon becoming aware of any non-compliance or alleged violation of any applicable law, rule, regulation, governmental requirement, or ordinance (collectively, "Requirements").

(a) Timing and Method of Notification:

• Immediate Notification: If the non-compliance issue poses an imminent threat to tenant safety, the Property’s structural integrity, or legal standing, the Property Manager shall:

  • Notify the Owner immediately via telephone or email upon discovery.

  • Provide a written follow-up report within 24 hours, outlining the issue, potential consequences, and recommended actions.

• Standard Notification: For all other non-compliance issues, the Property Manager shall:

  • Provide written notice to the Owner within 48 hours of becoming aware of the issue.

  • Include all relevant documentation, such as government notices, violation letters, inspection reports, or legal communications.

(b) Content of Notice:

Each notice of non-compliance shall include:

1. A detailed description of the violation (including the date it was discovered and the specific law, regulation, or requirement allegedly violated).

2. The authority or agency issuing the notice, including contact details if applicable.

3. Potential penalties, fines, or legal consequences for non-compliance.

4. Required corrective actions and deadlines imposed by regulatory authorities.

5. The Property Manager’s proposed plan of action to resolve the issue, including estimated costs if applicable.

6. Any immediate steps already taken by the Property Manager to mitigate potential risks.

(c) Owner’s Right to Review and Approve Compliance Measures:

• The Owner shall have the right to review all compliance matters and determine the appropriate course of action.

• If resolution of the issue requires expenditures exceeding $10,000 or not included in the Approved Operating Budget, the Property Manager shall obtain the Owner’s prior written approval before taking corrective action, except in emergencies.

• The Property Manager shall cooperate fully with the Owner’s legal, financial, and compliance advisors in addressing any regulatory violations.

(d) Record-Keeping and Follow-Up Reports:

• The Property Manager shall maintain detailed records of all compliance-related notices, government communications, and resolution efforts.

• The Property Manager shall provide the Owner with periodic updates on the status of any unresolved compliance issues until final resolution.

• Upon resolution, the Property Manager shall provide the Owner with a final compliance report, including:

  • Documentation of corrective actions taken.

  • Confirmation that the issue has been closed by the relevant authorities.

  • Any lessons learned or recommendations to prevent future violations.

40. Hazardous Wastes:

(a) Prohibition and Management of Hazardous Wastes:

• The Property Manager shall not place, cause, or permit the placement of any hazardous or toxic wastes or substances (collectively, “Hazardous Wastes”) on the Property except in the ordinary course of performing its obligations under this Agreement and in full compliance with applicable federal, state, and local laws.

• “Hazardous Wastes” shall be defined in accordance with all applicable federal, state, and municipal statutes and regulations, including but not limited to:

  • The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

  • The Resource Conservation and Recovery Act (RCRA).

  • The Toxic Substances Control Act (TSCA).

  • Any applicable state or local environmental protection laws.

(1) Immediate Notification and Removal Requirements:

• If the Property Manager discovers the existence of any Hazardous Wastes on the Property, other than those:

  • Used, generated, or stored in the ordinary course of business; and

  • In full compliance with all applicable environmental laws,
    then the Property Manager shall immediately notify the Owner in writing and provide a full report of the discovery.

• If such Hazardous Wastes were placed on the Property by the Property Manager, its agents, employees, or contractors, the Property Manager shall:

  • Immediately undertake, at its sole cost and expense, the proper removal, remediation, and disposal of the Hazardous Wastes in full compliance with all applicable environmental laws.

  • Coordinate all remediation activities with the Owner and comply with any instructions or directives provided by the Owner.

(2) Exemptions for Pre-Existing or Third-Party Hazardous Wastes:

• The Property Manager shall not be responsible for any Hazardous Wastes:

  • Present on the Property prior to the Effective Date of this Agreement, unless such materials were deposited by the Property Manager, its agents, or employees.

  • Brought onto the Property by third parties, including but not limited to tenants, vendors, visitors, or trespassers, unless the Property Manager knowingly permitted such placement or failed to take reasonable steps to prevent unauthorized disposal.

(3) Governmental Violations and Compliance Assistance:

• If the Property Manager receives any notice from a governmental authority regarding an actual or threatened violation of environmental laws related to Hazardous Wastes, the Property Manager shall:

  • Immediately notify the Owner in writing, providing a copy of the notice.

  • Cooperate fully with the Owner in responding to the notice.

  • Assist the Owner, at the Owner’s expense, in correcting, contesting, or responding to any alleged violations, including coordinating legal or remediation efforts.

(b) Notices and Disclosures Related to Hazardous Wastes:

• The Property Manager shall be responsible for providing all legally required notices or disclosures concerning Hazardous Wastes associated with the Property, including notices to:

  • Employees, agents, and contractors working on the Property.

  • Tenants and the public, as required by applicable environmental regulations.

  • Governmental agencies, when legally mandated.

(1) Owner’s Right to Review Notices and Disclosures:

• Before distributing or submitting any notice, disclosure, or regulatory filing regarding Hazardous Wastes, the Property Manager shall:

  • Submit the notice or disclosure to the Owner for review.

  • Allow the Owner the right (but not the obligation) to prescribe the form and content of such notices, provided that the Owner’s modifications comply with all applicable laws.

(2) Owner’s Hazardous Waste Disclosures:

• The Owner shall provide the Property Manager with any legally required notices or disclosures concerning known Hazardous Wastes on the Property.

• The Property Manager shall ensure that any such Owner-provided notices are delivered in accordance with all applicable legal requirements.

(c) Indemnification by Property Manager:

(1) Property Manager’s Liability for Breach or Non-Compliance:

• Without limiting any other indemnification obligations provided under this Agreement or by law, the Property Manager shall indemnify, defend (at its sole cost and expense, using legal counsel approved by the Owner), and hold harmless the Owner, its agents, employees, and contractors from and against any and all:

  • Claims, demands, losses, damages, disbursements, fines, penalties, and liabilities.

  • Governmental enforcement actions, lawsuits, or remediation costs.

  • Costs and expenses (including, without limitation, reasonable attorneys’ fees, expert fees, and consultant expenses).

  • Any required removal or remediation of Hazardous Wastes on, under, from, or about the Property.

• Such indemnification shall apply only if the hazardous materials violation, contamination, or damage results from the Property Manager’s:

  • Breach of this agreement,

  • Negligence, misconduct, or failure to act in compliance with environmental laws.

  • Intentional or reckless disregard for environmental regulations or industry standards.

(2) Survival of Indemnification Obligations:

• The Property Manager’s indemnification obligations under this Section shall survive:

  • The termination or expiration of this Agreement.

  • Any transfer of management responsibilities to another entity.

  • Any legal proceedings related to hazardous waste contamination initiated after the termination of this Agreement provided the contamination arose during the Property Manager’s tenure.

(d) Compliance Audits and Reporting:

• The Owner reserves the right to conduct periodic environmental compliance audits to assess the Property Manager’s adherence to hazardous waste management laws.

• The Property Manager shall provide regular compliance reports, including:

  • A summary of any hazardous waste materials used, stored, or disposed of on-site.

  • Records of any environmental inspections or enforcement actions.

  • A detailed log of any remediation efforts or government-mandated corrective actions.

41. Asbestos And Similar Compliance Matters:

If the Property is subject to the Occupational Safety and Health Administration (OSHA) regulations regarding asbestos or any federal, state, or local laws governing asbestos, carcinogenic substances, or other toxic chemicals, the Property Manager shall ensure full compliance with such regulations at the Owner’s expense, subject to the following conditions:

(a) Compliance with Asbestos and Toxic Chemical Regulations:

The Property Manager shall comply with all applicable laws, regulations, and industry standards governing the identification, handling, removal, and disposal of asbestos and other hazardous materials, including but not limited to:

1. Federal Regulations:

   • Occupational Safety and Health Administration (OSHA) – 29 CFR 1910.1001 (General Industry Asbestos Standard).

   • Environmental Protection Agency (EPA) – National Emission Standards for Hazardous Air Pollutants (NESHAP).

   • Toxic Substances Control Act (TSCA).

2. State and Local Regulations:

   • Any state-specific asbestos abatement, reporting, and notification requirements.

   • Any local health department or building code requirements governing the management of toxic chemicals.

3. Other Applicable Regulations:

   • Carcinogenic or toxic chemical safety standards set forth by any governmental or regulatory body.

   • Workplace safety protocols concerning asbestos exposure, employee protection, and public safety.

(b) Property Manager’s Responsibilities:

• Asbestos Identification and Risk Assessment:

  • If asbestos-containing materials (ACMs) are suspected or confirmed on the Property, the Property Manager shall promptly notify the Owner and recommend appropriate compliance measures.

  • The Owner shall determine whether to conduct an asbestos survey, inspection, or risk assessment, which shall be carried out by a licensed environmental consultant at the Owner’s expense.

• Asbestos and Toxic Chemical Compliance Procedures:

  • The Property Manager shall ensure that any asbestos-related activities, such as removal, encapsulation, or disposal, are conducted only by licensed and certified abatement contractors.

  • The Property Manager shall coordinate with regulatory authorities, contractors, and the Owner to ensure compliance with required permitting, notification, and disposal procedures.

  • The Property Manager shall provide all required tenant and employee notifications related to asbestos hazards or toxic chemical risks, in compliance with applicable disclosure laws.

• Emergency Response Measures:

  • If asbestos or hazardous materials are disturbed, damaged, or pose an immediate health risk, the Property Manager shall:

    • Immediately notify the Owner in writing.

    • Secure the affected area and restrict access until further instructions are received.

    • Engage licensed environmental professionals to assess and remediate the situation at the Owner’s expense.

    • Provide a written incident report to the Owner detailing the response measures taken.

(c) Owner’s Approval and Oversight:

• The Property Manager shall not initiate any asbestos removal, encapsulation, or major remediation project without the Owner’s prior written approval, except in cases of emergency where immediate action is required to protect human health and safety.

• The Owner reserves the right to select environmental consultants, remediation contractors, and legal advisors to oversee asbestos and toxic chemical compliance matters.

• The Property Manager shall submit all compliance-related expenditures for Owner review, and such costs shall be covered by the Owner if they are not included in the Approved Operating Budget or Capital Budget.

(d) Compliance Record-Keeping and Reporting:

• The Property Manager shall maintain all required documentation related to asbestos and toxic chemical compliance, including:

  • Inspection reports, test results, and laboratory analyses.

  • Notifications to tenants, employees, and regulatory agencies.

  • Work permits, remediation records, and disposal manifests.

  • Copies of all regulatory filings and correspondence with government agencies.

• Upon request, the Property Manager shall provide the Owner with a comprehensive compliance report summarizing all asbestos-related activities, regulatory inspections, and ongoing risk management efforts.

(e) Indemnification and Liability:

• The Owner shall bear the financial responsibility for compliance costs, provided that the Property Manager is not responsible for any asbestos or toxic chemical violations due to:

  • Negligence, willful misconduct, or failure to act in accordance with legal requirements.

  • Unauthorized disturbance of asbestos-containing materials by Property Manager’s employees, agents, or contractors.

  • Failure to promptly notify the Owner of known or suspected asbestos risks.

• The Owner reserves the right to seek indemnification from the Property Manager for any fines, penalties, or damages incurred due to the Property Manager’s failure to comply with asbestos-related laws.

Financial Matters:

42. Books And Records:

The Property Manager shall maintain comprehensive and accurate financial records related to the operation of the Property, ensuring full transparency, accessibility, and compliance with industry best practices.

(a) Record-Keeping Requirements:

• The Property Manager shall keep and maintain for the Owner at the Records Office complete and accurate books and records reflecting:

  • All receipts and expenditures related to the Property’s operations.

  • Tenant rental payments, security deposits, and other income sources.

  • Operating expenses, including invoices, vendor payments, payroll costs, and maintenance expenses.

  • Bank statements, reconciliations, and financial transaction logs.

  • Tax records, regulatory filings, and insurance-related financial documents.

  • Contracts, lease agreements, and any amendments affecting financial obligations.

• The books and records shall be maintained in a form and format approved by the Owner and Legacy and shall conform to:

  • Generally Accepted Accounting Principles (GAAP).

  • Industry-standard property management accounting practices.

  • Any additional requirements specified by the Owner or Legacy.

(b) Accounting System and Software Requirements:

• The Property Manager shall maintain all financial records and reports using the accounting software.

• The Property Manager shall ensure that all transactions are entered accurately and promptly into the accounting system, maintaining real-time financial oversight.

• The Property Manager shall comply with all security protocols and data management requirements established by Legacy to protect sensitive financial information.

(c) Location, Access, and Security of Records:

• All original books and records shall be securely stored at the Records Office, ensuring protection against theft, loss, or unauthorized access.

• The Owner, Legacy, and their authorized representatives shall have the right to inspect, audit, and review the books and records at any time during normal business hours.

• The Property Manager shall fully cooperate in facilitating access to all requested financial records, including assisting with audits or providing additional documentation as needed.

(d) Monthly Financial Reporting and Cut-Off Date:

• The cut-off date for monthly books shall be the 23rd day of each month unless modified by Legacy.

• The Property Manager shall complete all monthly financial reports and reconciliations within this timeframe, ensuring:

  • All income and expenses are properly recorded.

  • Bank accounts are reconciled to match reported cash flow.

  • Any discrepancies, outstanding transactions, or financial irregularities are addressed before submission.

(e) Handover of Records Upon Termination:

• Upon the effective date of termination of this Agreement, the Property Manager shall:

  • Immediately transfer all books and records to the Owner.

  • Ensure the orderly continuance of the Property’s operations by providing complete and accurate financial data.

  • Assist with the transition of financial management to any successor entity designated by the Owner.

• The Owner shall have the right to withhold final compensation payments to the Property Manager until all books, records, and financial documents have been successfully transferred and reconciled.

43. Reports:

The Property Manager shall provide comprehensive and timely reports to the Owner and Legacy, ensuring full transparency regarding the financial performance, physical condition, and leasing activities of the Property.

(a) Monthly Reporting Requirements:

On or before the last day of each month, the Property Manager shall provide the Owner and Legacy with reports and data as required by the Owner, including, but not limited to:

(i) Revenue Collection and Cash Flow Report:

• A detailed breakdown of all monies collected, itemized by tenant or other income sources, including:

  • Base rent collected from all tenants, including retail, residential, or commercial tenants.

  • Prepaid rents beyond the current month, specifying applicable lease periods.

  • Security deposits received, refunded, or transferred.

  • Ancillary income, including:

    • Laundry or vending machine revenue.

    • Garage, parking, or storage fees collected.

    • Percentage rent and other retail lease payments, if applicable.

  • Vacancy and delinquency report, detailing:

    • Units or spaces currently vacant.

    • Tenants with outstanding rent balances, including aging of accounts receivable.

(ii) Expense Report:

• A detailed breakdown of all expenses paid during the month, including:

  • Operating expenses, such as property maintenance, repairs, utilities, and insurance.

  • Payroll expenses, if applicable.

  • Capital expenditures, including a description of any large or non-recurring expenses.

  • Vendor and contractor payments, specifying the nature of services rendered.

(iii) Budget Variance Report

• A comparison of actual revenue and expenses to the Approved Operating Budget and Capital Budget, including:

  • Monthly and year-to-date variance calculations.

  • Explanations for any significant variances between actual and budgeted figures.

  • If requested by the Owner, a revised financial projection for the remainder of the calendar year, including anticipated collections and expenditures.

(iv) Property Condition and Operational Updates:

• A written report describing any material changes affecting the Property, such as:

  • Major repairs, capital improvements, or maintenance issues.

  • Significant tenant complaints, disputes, or operational challenges.

  • Pending municipal inspections, citations, or regulatory compliance updates.

  • Staffing changes, including new hires, resignations, or terminations of on-site personnel.

(v) Financial Reconciliation Statement:

• A reconciliation of amounts receivable or due to the Owner, including:

  • Any adjustments made to tenant accounts (e.g., rent credits, concessions, or abatements).

  • Reconciliation of security deposits, prepaid rents, or operating cost pass-throughs.

  • Accompanied by payment of amounts due to the Owner, where applicable.

(vi) Additional Reports as Required by Owner

• Any special reports or analyses requested by the Owner from time to time, including:

  • Market trends, financial forecasting, or occupancy analysis.

  • Legal updates affecting property management operations.

  • Other customized reports relevant to the Owner’s investment strategy.

(b) Monthly Management Report:

The Property Manager shall prepare and submit a monthly management report, which shall be delivered along with the monthly financial statements. This report shall include, but is not limited to:

(i) Property Condition and Operational Recommendations

• The Property Manager’s assessment of the physical condition and operational efficiency of the Property.

• Recommendations for improvements, preventative maintenance, or capital expenditures.

(ii) Leasing Status and Tenant Activity Report:

• Retail leasing updates, if applicable, including:

  • A list of retail leases executed during the month, specifying:

    • Tenant name.

    • Lease term and rental rate.

    • Security deposits and prepaid rent collected.

    • Leasing commissions earned on each executed lease.

  • Written lease proposals and negotiations in progress.

• Residential and commercial lease renewals, expirations, and move-outs.

(iii) Annual Retail Leasing Activity Report (if applicable):

• By January 30th of each year, the Property Manager shall submit an annual report summarizing all retail leasing activities for the prior calendar year, including:

  • Tenant turnover and occupancy trends.

  • Leasing incentives, concessions, or market adjustments applied.

  • Financial analysis of rental revenue performance.

(c) Periodic Reports and Special Requests:

The Property Manager shall provide the following additional reports to the Owner upon request:

(i) Market Surveys and Tenant Data Reports:

• Periodic market analyses, including:

  • Comparable rent surveys for similar properties in the market.

  • Tenant demographic and industry trends affecting leasing strategies.

  • Competing property occupancy and vacancy reports.

(ii) On-Site Inspections and Operational Reviews:

• Reports covering on-site physical inspections and:

  • Evaluations of property conditions, deferred maintenance, and upcoming repairs.

  • Operational compliance with safety, regulatory, and tenant satisfaction standards.

(iii) Inventory of Personal Property and Equipment:

• The Property Manager shall provide an updated inventory of all personal property, equipment, and fixtures used in connection with the Property.

• This inventory shall include:

  • Building systems and equipment (HVAC units, elevators, security systems, etc.).

  • Furniture, fixtures, and supplies used in common areas and management offices.

  • Vehicles, tools, and maintenance equipment assigned to the Property.

• The inventory report shall be submitted no later than 30 days prior to the end of each calendar year.

(d) Compliance and Audit Rights:

• The Owner reserves the right to audit any financial or operational reports submitted by the Property Manager.

• The Property Manager shall maintain complete and accurate records supporting all reports and make such records available for review upon request.

• Failure to provide required reports in a timely and accurate manner may be considered a material breach of this Agreement.

44. Audit:

The Owner shall have the right to conduct an audit of the Property’s financial records and operational activities at any time, ensuring full transparency, compliance, and accuracy in the Property Manager’s management of the Property.

(a) Scope and Frequency of Audits:

• The Owner, or its designated representatives, auditors, accountants, or legal counsel, may conduct an audit at any time to review:

  • Financial records, including revenue, expenses, bank reconciliations, and tenant accounts.

  • Leasing transactions, including lease agreements, security deposits, and commission payments.

  • Maintenance and capital expenditures, including vendor payments and contract compliance.

  • Operational performance, including adherence to budgets, regulatory compliance, and tenant relations.

  • Adherence to this Agreement, including any material breaches or mismanagement.

• Audits may be conducted annually, periodically, or as needed, depending on the Owner’s discretion.

(b) Property Manager’s Obligations During an Audit:

• The Property Manager shall fully cooperate with the Owner’s auditors and:

  • Provide unrestricted access to all books, records, invoices, contracts, and supporting financial documents.

  • Facilitate interviews with key personnel if required.

  • Respond promptly and accurately to any requests for clarifications or additional documentation.

• The Property Manager shall not modify, alter, or delete any records in anticipation of an audit.

(c) Correction of Errors and Implementation of Corrective Actions:

• If the audit identifies weaknesses, discrepancies, or errors, the Property Manager shall:

  • Promptly correct all deficiencies or errors identified.

  • Provide the Owner with a written report within 15 calendar days outlining:

    • The corrective actions taken.

    • The timeline for full resolution of any outstanding issues.

    • Any policy or procedural changes implemented to prevent recurrence.

(d) Allocation of Audit Costs:

• The cost of the audit shall be borne by the Owner, except in cases where the audit reveals significant financial discrepancies attributable to the Property Manager’s services under this Agreement.

• If the audit identifies errors or discrepancies equal to or greater than two percent (2%) of the Property’s annual gross receipts for the period audited, then:

  • The Property Manager shall bear the full cost of the audit.

  • The Property Manager shall reimburse the Owner within 15 calendar days of receiving the audit report.

(e) Financial Adjustments and Reconciliation:

• If the audit determines that funds are due to or from either party, such adjustments shall be:

  • Documented in a reconciliation statement, specifying amounts owed by either party.

  • Paid within fifteen (15) calendar days following the Owner’s receipt of the audit report.

• If the Property Manager fails to remit payment for any amount due within the 15-day period, the Owner may:

  • Deduct the amount owed from any future payments due to the Property Manager.

  • Pursue legal remedies if the deficiency is not corrected within a reasonable timeframe.

(f) Compliance and Audit Dispute Resolution:

• If the Property Manager disputes any audit findings, it must:

  • Submit a written objection to the Owner within 10 calendar days of receiving the audit results.

  • Provide supporting documentation justifying the dispute.

• The Owner and Property Manager shall work in good faith to resolve disputes, and if necessary, an independent auditor may be engaged to review contested findings at the expense of the party found to be at fault.

(g) Audit Rights Following Termination of Agreement:

• The Owner retains the right to conduct an audit up to one (1) year following the termination or expiration of this Agreement to:

  • Verify final financial reconciliations and outstanding liabilities.

  • Ensure that all funds, deposits, and records have been properly transferred.

  • Identify any undisclosed liabilities or mismanagement that may have impacted the Owner.

• The Property Manager shall continue to cooperate with the Owner during post-termination audits and shall provide all required records upon request.

45. Other Reports And Statements:

The Property Manager shall provide the Owner, as promptly as practicable, with any additional reports, statements, or operational data reasonably requested by the Owner to facilitate financial oversight, decision-making, and strategic planning regarding the Property.

(a) Owner’s Right to Request Reports and Statements:

• The Owner may request additional reports, statements, or data regarding any aspect of the Property’s operations, including but not limited to:

  • Financial performance and forecasting reports beyond standard monthly reporting.

  • Detailed rent roll reports, including historical and current rent trends, lease expiration schedules, and renewal forecasts.

  • Cash flow projections and anticipated income/expense variances.

  • Market analyses and competitive property surveys.

  • Capital expenditure tracking reports, detailing the progress and financial status of capital improvement projects.

  • Legal compliance reports, summarizing ongoing or pending legal matters affecting the Property.

  • Detailed maintenance and work order reports, including major repairs, upcoming capital improvements, and vendor performance evaluations.

  • Insurance claims tracking reports, including pending claims, settlements, and estimated liabilities.

  • Specialized tenant reports, including lease compliance, tenant satisfaction surveys, or incident reports.

(b) Timing and Format of Reports:

• Reports shall be provided as promptly as practicable, but in no event later than ten (10) business days following the Owner’s request, unless otherwise specified.

• Reports shall be submitted in a format approved by the Owner, which may include:

  • Digital spreadsheets or financial statements (Excel, PDF, or other approved format).

  • Summarized or detailed written reports.

  • Data exports from the our accounting system.

(c) Special or Urgent Requests:

• If the Owner requires an expedited report due to urgent financial, regulatory, or operational concerns, the Property Manager shall make reasonable efforts to prioritize and provide the requested information within five (5) business days.

• In emergency situations (e.g., legal disputes, government inspections, or material financial discrepancies), the Property Manager shall respond immediately and provide real-time updates as needed.

(d) Compliance and Accuracy:

• The Property Manager shall ensure the accuracy and completeness of all reports and statements submitted to the Owner.

• If discrepancies, errors, or inconsistencies are identified, the Property Manager shall:

  • Promptly investigate and correct the issue.

  • Provide a revised report with proper documentation explaining the corrections.

• The Owner retains the right to verify and audit the information provided, and the Property Manager shall cooperate fully with any such verification process.

(e) Record Retention and Accessibility:

• The Property Manager shall maintain records of all reports and statements submitted to the Owner for at least three (3) years, or as otherwise required by law.

• The Owner shall have access to these records upon request for review, audit, or compliance purposes.

46. Other Reports and Statements:

The Property Manager shall provide the Owner, as promptly as practicable, with any additional reports, statements, or operational data reasonably requested by the Owner to facilitate financial oversight, decision-making, and strategic planning regarding the Property.

(a) Owner’s Right to Request Reports and Statements:

• The Owner may request additional reports, statements, or data regarding any aspect of the Property’s operations, including but not limited to:

  • Financial performance and forecasting reports beyond standard monthly reporting.

  • Detailed rent roll reports, including historical and current rent trends, lease expiration schedules, and renewal forecasts.

  • Cash flow projections and anticipated income/expense variances.

  • Market analyses and competitive property surveys.

  • Capital expenditure tracking reports, detailing the progress and financial status of capital improvement projects.

  • Legal compliance reports, summarizing ongoing or pending legal matters affecting the Property.

  • Detailed maintenance and work order reports, including major repairs, upcoming capital improvements, and vendor performance evaluations.

  • Insurance claims tracking reports, including pending claims, settlements, and estimated liabilities.

  • Specialized tenant reports, including lease compliance, tenant satisfaction surveys, or incident reports.

(b) Timing and Format of Reports:

• Reports shall be provided as promptly as practicable, but in no event later than ten (10) business days following the Owner’s request, unless otherwise specified.

• Reports shall be submitted in a format approved by the Owner, which may include:

  • Digital spreadsheets or financial statements (Excel, PDF, or other approved format).

  • Summarized or detailed written reports.

  • Data exports from the accounting system.

(c) Special or Urgent Requests:

• If the Owner requires an expedited report due to urgent financial, regulatory, or operational concerns, the Property Manager shall make reasonable efforts to prioritize and provide the requested information within five (5) business days.

• In emergency situations (e.g., legal disputes, government inspections, or material financial discrepancies), the Property Manager shall respond immediately and provide real-time updates as needed.

(d) Compliance and Accuracy:

• The Property Manager shall ensure the accuracy and completeness of all reports and statements submitted to the Owner.

• If discrepancies, errors, or inconsistencies are identified, the Property Manager shall:

  • Promptly investigate and correct the issue.

  • Provide a revised report with proper documentation explaining the corrections.

• The Owner retains the right to verify and audit the information provided, and the Property Manager shall cooperate fully with any such verification process.

(e) Record Retention and Accessibility:

• The Property Manager shall maintain records of all reports and statements submitted to the Owner for at least three (3) years, or as otherwise required by law.

• The Owner shall have access to these records upon request for review, audit, or compliance purposes.

47. Final Accounting:

Upon termination of this Agreement, whether due to expiration of the term or early termination, the Property Manager shall be responsible for preparing and delivering a complete final accounting within thirty (30) days following the effective date of termination. This final accounting shall provide a comprehensive financial reconciliation of the Property’s operations, ensuring a smooth transition and full transparency for the Owner.

(a) Required Components of the Final Accounting:

The final accounting report shall include, at a minimum, the following details:

1. Income Summary

   • All rents collected through the termination date, itemized by tenant.

   • Any outstanding rent balances, including delinquencies and prepaid rents.

   • A detailed breakdown of other income sources, such as:

     • Parking, storage, and vending machine revenue.

     • Retail lease percentage rents (if applicable).

     • Security deposits held and any pending refunds.

2. Expense Summary

   • A comprehensive report of all expenses incurred as of the termination date, including:

     • Operating expenses, utilities, maintenance costs, and property taxes.

     • Vendor payments, payroll expenses, and management costs.

   • A list of outstanding invoices and accounts payable, including amounts due and payment status.

3. Unpaid Obligations and Future Expenses

   • A detailed schedule of expenses contracted on behalf of the Owner but not yet incurred, including:

     • Future work orders for repairs or maintenance.

     • Pending capital expenditures or service agreements.

     • Any upcoming obligations under existing vendor contracts.

4. Bank Reconciliations and Account Transfers

   • A full reconciliation of all operating accounts, including:

     • Cash balances as of the termination date.

     • Pending deposits and outstanding checks.

   • A final bank reconciliation statement for all property-related accounts.

5. Security Deposit and Tenant Obligation Report

   • A complete reconciliation of security deposits held, including:

     • Deposits refunded to tenants.

     • Deposits transferred to the Owner or successor manager.

   • Any tenant credits, overpayments, or prepayments that require reconciliation.

6. Outstanding Legal and Compliance Matters

   • A summary of pending legal issues, disputes, or tenant-related claims.

   • Any open compliance issues, such as government inspections or violation notices.

7. Other Items as Requested by Owner

   • Any additional reports or supporting documentation requested by the Owner to facilitate a complete financial transition.

(b) Compensation for Property Manager Upon Termination:

• The Property Manager shall be entitled to receive:

  • A prorated share of the Management Fee through the date of termination.

  • All earned but unpaid Construction Supervision Fees as of the termination date.

• The Property Manager shall not be entitled to any additional compensation beyond these amounts unless explicitly agreed upon in writing by the Owner.

(c) Handover of Financial Records and Supporting Documentation:

• Upon submission of the final accounting, the Property Manager shall promptly transfer all original financial records, contracts, leases, vendor agreements, and other operational documents to the Owner or the Owner’s designated representative.

• The Owner reserves the right to conduct a final audit of the Property’s financials, and the Property Manager shall fully cooperate in providing all requested records.

• Any adjustments in amounts due to or from either party as a result of the final accounting shall be settled within fifteen (15) calendar days after the Owner’s review and approval of the final accounting report.

(d) Compliance and Dispute Resolution:

• If any discrepancies or disputes arise regarding the final accounting, both parties shall work in good faith to resolve them within ten (10) business days of discovery.

• If a resolution is not reached, an independent third-party accountant or auditor may be engaged at the expense of the party found to be at fault.

48. Tax Returns:

The Property Manager shall be responsible for the timely filing and payment of all tax returns related to the operations of the Property, ensuring compliance with all applicable federal, state, and local tax laws.

(a) Property Manager’s Tax Filing Responsibilities:

The Property Manager shall file, report, and remit payments for the following taxes directly related to the Property:

1. Sales Taxes

   • The Property Manager shall file and pay all applicable sales taxes, including:

     • Taxes on rental payments, parking fees, and other taxable revenues.

     • Retail or commercial sales taxes, if applicable under state or local tax laws.

2. Payroll Taxes

   • The Property Manager shall be responsible for the filing and remittance of payroll taxes for all on-site employees, including:

     • Federal and state payroll tax withholdings, including Social Security (FICA), Medicare, and unemployment insurance.

     • State and local payroll taxes, including any applicable occupational or employment taxes.

     • Compliance with all withholding and reporting requirements for wages, bonuses, and employee benefits.

3. Other Taxes Related to the Property

   • The Property Manager shall file and pay any other taxes directly related to the operation of the Property, including:

     • Business license fees, gross receipts taxes, and other municipal levies required for property operations.

     • Occupancy taxes or lodging taxes, if applicable for short-term rentals or hospitality uses.

     • Utility taxes, environmental fees, or special property-related levies imposed by regulatory agencies.

(b) Exclusions – Owner’s Income Tax Returns:

• The Property Manager shall not be responsible for preparing or filing federal or state income tax returns for the Owner.

• The Owner shall remain solely responsible for reporting and filing:

  • Federal and state corporate or personal income taxes related to property ownership.

  • Tax filings related to ownership structure (LLC, partnership, REIT, or individual ownership).

(c) Tax Payment Deadlines and Compliance:

• The Property Manager shall ensure that all tax filings and payments are submitted on or before their respective deadlines, avoiding penalties or interest charges.

• The Property Manager shall:

  • Keep accurate tax records and receipts for all tax payments made on behalf of the Property.

  • Provide the Owner with copies of all tax returns and payment confirmations upon request.

  • Promptly notify the Owner if any tax disputes, audits, or discrepancies arise.

(d) Tax Record-Keeping and Audit Compliance:

• The Property Manager shall maintain complete and accurate records of all tax filings and payments for at least three (3) years, or longer if required by law.

• The Owner shall have the right to inspect or audit tax records at any time to verify compliance with tax obligations.

• If an audit or tax dispute arises, the Property Manager shall cooperate fully with tax authorities and the Owner to resolve any issues.

(e) Indemnification for Non-Compliance:

• If the Property Manager fails to file or pay required taxes in a timely manner, resulting in penalties, fines, or interest charges, the Property Manager shall be responsible for all associated costs, unless such failure was due to:

  • Incorrect information provided by the Owner.

  • A dispute with tax authorities that was unforeseeable or beyond the Property Manager’s control.

• The Owner shall not be held liable for any tax-related penalties due to the Property Manager’s negligence or non-compliance.

49. Certification Of Financial Statements:

The Property Manager shall certify that all financial statements and reports submitted to the Owner are true, accurate, and complete in all material respects, ensuring transparency, integrity, and compliance with financial reporting standards.

(a) Certification Requirements:

• All financial statements, reports, and reconciliations provided by the Property Manager under this Agreement shall be accompanied by a written certification confirming that:

  1. The financial statements fairly represent the financial condition and results of operations of the Property.

  2. The reported income and expenses are complete and accurate, with no material omissions.

  3. The financial data has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) or other accounting standards approved by the Owner.

  4. All supporting documentation (invoices, receipts, contracts, and other records) are available for audit and review.

• The certification statement shall be signed by an authorized representative of the Property Manager, such as:

  • The Chief Financial Officer (CFO) or equivalent financial officer.

  • The Senior Accounting Manager or Controller responsible for financial reporting.

(b) Certification Language:

Each financial statement submitted to the Owner shall include a certification statement in substantially the following form:

"I, [Name], [Title] of [Property Manager’s Company], hereby certify that the attached financial statements and reports, to the best of my knowledge and belief, fairly and accurately represent the financial position and operational results of [Property Name] for the period ending [Date]. These statements are true and correct in all material respects, and all known income and expenses have been properly reported. Supporting documentation is available for review upon request."

Signed: [Authorized Representative’s Name]
Date: [Date of Certification]
Title: [Title of Certifying Officer]

(c) Owner’s Right to Verify and Audit:

• The Owner shall have the right to verify the accuracy of certified financial statements by:

  • Conducting random or scheduled audits.

  • Requesting detailed supporting documentation for any reported transactions.

  • Requiring third-party review or external audits if discrepancies arise.

• If a material discrepancy is identified, the Property Manager shall correct the financial records and submit a revised, certified financial statement within ten (10) business days.

(d) Consequences of False or Misleading Certifications:

• If the Property Manager knowingly submits false, misleading, or materially inaccurate financial statements, the Owner may:

  • Initiate an independent audit at the Property Manager’s expense.

  • Recover any overpayments or financial losses resulting from inaccurate reporting.

  • Consider such actions as a material breach of this Agreement, subjecting the Property Manager to potential termination and legal liability.The

Bank Accounts:

50. Property Accounts:

The Property Manager shall ensure the proper handling, segregation, and security of all funds received from the operation of the Property, in strict compliance with applicable legal and fiduciary standards.

(a) Establishment and Maintenance of Property Accounts:

• All funds received by the Property Manager that are derived from the operation of the Property, including but not limited to rental income, tenant fees, and reimbursements, as well as any working capital furnished by the Owner, shall be deposited into a dedicated bank account (the “Property Bank Account”).

• The Property Bank Account shall be established by Legacy in the name of the Property and shall:

  • Be maintained separately from any accounts owned by the Property Manager.

  • Be fully compliant with all applicable laws, banking regulations, and fiduciary requirements.

  • Function as a trust account, with all deposited funds being held for the benefit of the Owner.

• Legacy shall also establish a separate custodial or trust account for the exclusive deposit of tenant security deposits (the “TSD Account”), which shall:

  • Be distinct from the Property Bank Account.

  • Be held in accordance with applicable state and local laws governing security deposits.

  • Accrue any legally required interest, which shall be accounted for in compliance with tenant lease agreements and regulatory obligations.

(b) Prohibition of Commingling of Funds:

• Under no circumstances shall non-Property funds be commingled with the funds maintained in the Property Bank Account or the TSD Account (collectively, the “Accounts”).

• The following strict segregation rules shall apply:

  • The Property Bank Account shall hold only funds related to the Property’s operations, including:

    • Rental collections and other property-generated income.

    • Owner-provided working capital.

    • Payments received from tenants for maintenance, utilities, or other approved charges.

  • The TSD Account shall be used solely for tenant security deposits, and:

    • No operating funds or rental revenue shall be deposited into the TSD Account.

    • No withdrawals shall be made from the TSD Account except as allowed by tenant lease agreements and applicable law.

• Funds from other properties or accounts managed by the Property Manager shall never be deposited into or withdrawn from the Property’s designated Accounts.

(c) Authority Over Accounts and Restrictions on Property Manager:

• The Property Manager shall not have direct access to, or control over, the Property Bank Account or the TSD Account.

• The Property Manager is strictly prohibited from:

  • Writing checks or withdrawing funds from the Accounts.

  • Transferring funds between Accounts or to any external account.

  • Using Property funds for purposes not expressly authorized by the Owner.

• Only those individuals specifically authorized by the Owner shall have the authority to:

  • Issue checks or electronic payments from the Accounts.

  • Approve transfers or withdrawals.

  • Perform bank reconciliations and financial oversight.

• The Owner shall establish a list of authorized signatories for all banking transactions, which shall be updated as needed.

(d) Compliance, Record-Keeping, and Audit Rights:

• The Property Manager shall maintain complete and accurate records of all funds received and deposited into the Property Accounts, including:

  • Tenant payment records.

  • Deposit slips and bank confirmations.

  • Monthly bank statements and reconciliations.

• The Owner shall have full access to and oversight of all financial transactions and reserves the right to audit the Accounts at any time to ensure compliance.

• If any discrepancies, unauthorized transactions, or banking irregularities are discovered:

  • The Property Manager must immediately report such issues to the Owner.

  • The Owner reserves the right to take corrective action, including freezing the Accounts, restricting access, or pursuing legal remedies.

51. Expenses Paid By Owner:

The Owner (or Legacy, acting on the Owner’s behalf) shall be responsible for the direct payment of all costs and expenses necessary for the management, operation, and maintenance of the Property, provided such costs fall within the scope of the Approved Operating Budget or are explicitly authorized by the Owner.

(a) Operating Expenses Paid by Owner:

• The Owner shall pay any and all costs necessary for the day-to-day management, operation, and maintenance of the Property, including but not limited to:

  • Utilities, including water, gas, electricity, sewage, and waste disposal.

  • Property insurance, including liability and casualty insurance.

  • Routine maintenance and repairs as outlined in the Approved Operating Budget.

  • Landscaping, janitorial services, pest control, and security services.

  • Payroll and benefits for on-site staff, if applicable.

  • Vendor and contractor payments for services provided under approved agreements.

  • Taxes, assessments, and governmental fees related to the Property.

• These operating expenses must be provided for in the Approved Operating Budget or specifically approved in writing by the Owner before payment.

(b) Capital Expenditures:

• The Owner shall pay for all capital expenditures that:

  • Are explicitly provided for in the Approved Capital Budget; or

  • Are authorized in writing by the Owner and directed to be incurred by the Property Manager.

• Capital expenditures may include:

  • Major building repairs, renovations, or structural improvements.

  • Upgrades to HVAC systems, elevators, roofing, and fire suppression systems.

  • Replacements of major equipment that extend the useful life of the Property.

  • Improvements required for code compliance, ADA upgrades, or environmental regulations.

• Any capital expenditure not included in the Approved Capital Budget must be pre-approved in writing by the Owner before any costs are incurred.

(c) Emergency Expenses:

• The Owner shall be responsible for all emergency expenses necessary to:

  • Prevent immediate danger to life, safety, or property.

  • Avoid service disruptions to tenants or occupants.

  • Comply with legal, regulatory, or governmental orders.

• As outlined in this agreement, the Property Manager may incur emergency expenses without prior written approval only if:

  • The situation requires immediate action to prevent significant damage or risk.

  • The Property Manager attempts to notify the Owner as soon as possible before or after incurring the expense.

  • The Property Manager provides a written report within 48 hours detailing:

    • The nature of the emergency.

    • Actions taken and expenses incurred.

    • Any further recommendations or corrective measures needed.

(d) Limitations on Property Manager’s Financial Responsibility:

• The Property Manager shall not be required to advance any funds to cover expenses on behalf of the Owner.

• The Property Manager shall not be responsible for paying any costs or expenses except as explicitly provided for in this Agreement.

• If an expense is not included in the Approved Operating Budget or Approved Capital Budget, the Property Manager shall not incur such expenses without the Owner’s written approval, except in emergency situations as specified in this agreement.

(e) Payment Procedures and Financial Oversight:

• The Owner (or Legacy, acting on the Owner’s behalf) shall be responsible for timely payment of all approved expenses.

• The Property Manager shall provide supporting documentation for all expenses incurred, including:

  • Vendor invoices and receipts.

  • Written work orders and service contracts.

  • Expense breakdowns and reconciliations.

• The Owner reserves the right to audit all expenses paid on behalf of the Property and may require additional documentation as necessary.

Insurance And Indemnity:

52. Indemnification:

(A) Indemnification by Property Manager:

To the maximum extent permitted by law, the Property Manager agrees to indemnify, defend, protect, and hold the Owner and its affiliates harmless from and against any and all claims, demands, liabilities, losses, damages, fines, penalties, taxes, injuries, legal fees, and related costs (collectively, “Damages”) that arise from or relate to:

1. Failure to Perform Contractual Obligations

   • Any failure by the Property Manager to perform its obligations under this Agreement, which causes damage to the Owner, but only to the extent such damages are not covered by the Owner’s insurance as described in this agreement,.

2. Acts Beyond the Scope of Authority

   • Any actions taken by the Property Manager that exceed its authority under this Agreement.

3. Negligence, Willful Misconduct, or Wrongful Acts

   • Any negligence, willful misconduct, or intentional wrongful act or omission committed by the Property Manager.

   • For standard negligence, the Property Manager shall only be liable to the extent that damages are not covered by the Owner’s insurance under this agreement.

4. Injury, Damage, or Death to Property Manager’s Representatives

   • Any injury, damage, or death suffered by the Property Manager, its officers, directors, partners, employees, agents, or representatives while performing duties under this Agreement.

5. Injury, Damage, or Death to Property Manager’s Independent Contractors

   • Any injury, damage, or death suffered by independent contractors hired by the Property Manager in connection with Property management activities.

• Scope and Survivability of Indemnification

  • The Property Manager’s indemnification obligations shall remain in full force and effect after the termination, expiration, or cancellation of this Agreement.

  • This indemnification shall bind all heirs, successors, assigns, and legal representatives of the Property Manager.

  • The Owner’s rights under this section shall extend to all affiliated parties, including principals, officers, directors, shareholders, partners, members, employees, agents, trustees, heirs, beneficiaries, and legal representatives.

(B) Indemnification by Owner:

To the maximum extent permitted by law, the Owner agrees to indemnify, defend, protect, and hold the Property Manager (and its employees, agents, successors, assigns, and transferees) harmless from and against any and all Damages that arise from or relate to:

1. Performance of Property Manager’s Obligations

   • Any claims arising from the Property Manager’s performance of its duties under this Agreement, provided that:

     • The actions fall within the scope of the Property Manager’s authority under this Agreement.

     • The claims are not related to the Property Manager’s indemnifiable liabilities as described in this agreement.

• Scope of Owner’s Indemnification

  • This indemnification ensures that the Property Manager is protected against claims arising from its work, except where the Property Manager is directly responsible for damages due to its own negligence, misconduct, or failure to act within the scope of this Agreement.

  • The Owner shall provide legal defense using counsel reasonably acceptable to the Property Manager, and shall bear all associated legal and expert costs unless the dispute arises from an indemnifiable obligation of the Property Manager.

(C) Additional Indemnification Rights:

1. Non-Exclusivity of Indemnification

   • The indemnification rights and obligations under this agreement, shall not be exclusive, meaning:

     • The parties may pursue additional rights and legal remedies outside of this section.

     • Any other legal rights or claims that exist under state or federal law remain in effect.

2. Additional Insurance Coverage Considerations

   • If either party has additional insurance coverage that applies to an indemnifiable claim, such coverage shall be exhausted before requiring out-of-pocket payments from the indemnifying party.

3. Duty to Notify and Cooperate

   • The party seeking indemnification shall:

     • Promptly notify the other party of any claim, lawsuit, or regulatory action that may trigger an indemnification obligation.

     • Cooperate fully in any legal defense, including providing records, witnesses, or other relevant information.

4. Legal Defense and Control of Litigation

   • The indemnifying party shall have the right to control the legal defense of any claim with counsel reasonably acceptable to the indemnified party.

   • The indemnified party shall have the right to participate in the defense, but the indemnifying party shall be responsible for all reasonable legal costs.

(D) Survival of Indemnification Obligations:

• The rights and obligations under this agreement, shall survive the:

  • Expiration or termination of this Agreement.

  • Transfer of Property management responsibilities to another entity.

  • Resolution of any disputes or claims arising under this Agreement.

Summary of Liability Allocation:

The allocation of liability between the Property Manager and the Owner is outlined as follows: The Property Manager will indemnify the Owner for claims arising from the Property Manager’s failure to perform contractual duties, unless such claims are covered by the Owner’s insurance. The Property Manager is also responsible for indemnification in cases of acts beyond their scope of authority, negligence, willful misconduct, or wrongful acts, unless covered by the Owner’s insurance. Additionally, the Property Manager will indemnify claims related to injury, damage, or death to their own employees or contractors. Conversely, the Owner will indemnify the Property Manager for claims arising from the lawful performance of the Property Manager’s duties and for any claims not within the scope of the Property Manager’s indemnification obligations. Legal fees for indemnifiable claims will be covered by the responsible party: the Property Manager if they are liable, and the Owner if they are liable.

53. Property Manager’s Insurance Responsibility:

The Property Manager shall maintain comprehensive insurance coverage throughout the entire term of this Agreement, including any extensions or renewals, to protect against financial and legal risks associated with the management, operation, and maintenance of the Property.

(a) Required Insurance Coverage:

The Property Manager shall maintain the following insurance policies, each with the minimum coverage limits specified below, to ensure financial protection and compliance with legal requirements:

(i) Workers’ Compensation Insurance:

• Coverage shall meet or exceed all statutory requirements mandated by applicable state and federal laws.

• Coverage shall include Employer’s Liability Insurance with limits of no less than:

  • $1,000,000 per accident for bodily injury.

  • $1,000,000 per employee for bodily injury by disease.

  • $1,000,000 policy limit for bodily injury by disease.

(ii) Non-Occupational Disability Insurance (if applicable):

• If required by law, the Property Manager shall maintain Non-Occupational Disability Insurance to cover employee claims for non-job-related disabilities.

(iii) Commercial General Liability Insurance:

• The Property Manager shall maintain Comprehensive General Liability (CGL) Insurance covering all operations, contractual liability, and premises liability with the following minimum limits:

  • $1,000,000 per occurrence (bodily injury and property damage).

  • $1,000,000 aggregate limit for products-completed operations.

  • $1,000,000 general aggregate limit.

• These coverage limits may be satisfied through a combination of primary and umbrella/excess liability policies.

(iv) Automobile Liability Insurance:

• The Property Manager shall maintain Automobile Liability Insurance for:

  • Owned vehicles.

  • Hired vehicles (rented or leased by the Property Manager).

  • Non-owned vehicles (used in connection with Property Manager’s operations).

• Coverage limits shall be no less than $200,000 combined single limit for bodily injury and property damage per occurrence.

(v) Additional Coverage as Required by Law:

• The Property Manager shall maintain all other insurance coverages required by applicable federal, state, and local laws governing the operation of the Property.

(b) Insurance Documentation and Compliance Requirements:

1. Proof of Insurance Coverage

   • Within three (3) days after the Effective Date of this Agreement, the Property Manager shall provide the Owner with certificates of insurance or other satisfactory documentation evidencing that all required insurance policies are in full force and effect.

   • Upon request, the Property Manager shall provide copies of all insurance policies for Owner’s review.

2. Advance Notice of Cancellation or Material Change

   • The Workers’ Compensation, Non-Occupational Disability, and Automobile Liability Insurance policies shall include provisions requiring the insurer to provide the Owner with at least thirty (30) days’ advance written notice of any cancellation or material change in coverage.

   • The Commercial General Liability and Automobile Liability policies shall include provisions requiring the insurer to provide the Owner with at least thirty (30) days’ advance written notice of any cancellation or material change in coverage.

3. Additional Insureds and Policy Requirements

   • The Owner and its principals, officers, directors, shareholders, partners, members, trustees, beneficiaries, and employees shall be named as additional insureds on all liability policies required under this agreement.

     All liability policies shall be written to apply to bodily injury, property damage, personal injury, and other covered losses that occur in whole or in part during the policy period, regardless of when a claim is filed.

   • Policies shall include broad form contractual liability coverage, which extends coverage for obligations assumed by the Property Manager under this Agreement.

4. Policy Endorsements and Waivers

   • All liability policies shall include cross-liability and waiver of subrogation endorsements, ensuring that:

     • Cross-liability coverage allows separate insured parties to be treated independently under the same policy.

     • Waiver of subrogation prevents insurers from seeking reimbursement from the Owner for claims covered by Property Manager’s insurance.

   • Additional endorsements may be reasonably required by the Owner, based on risk exposure and evolving industry standards.

(c) Failure to Maintain Insurance:

• If the Property Manager fails to maintain the required insurance policies or does not provide the necessary proof of coverage:

  • The Owner reserves the right to purchase equivalent insurance and deduct the cost from any fees due to the Property Manager.

  • The Owner may treat the failure as a material breach of this Agreement, subjecting the Property Manager to termination and potential legal liability.

(d) Indemnification for Insurance Lapses:

• If a claim arises that would have been covered under an insurance policy that the Property Manager failed to maintain, the Property Manager shall be fully responsible for all resulting costs, including:

  • Legal fees.

  • Settlement amounts.

  • Damages awarded by a court.

• The Owner shall not be held liable for any uninsured losses resulting from the Property Manager’s failure to comply with this agreement.

54. Ratings Of Insurance Companies:

1. Minimum Insurance Carrier Rating Requirement:

   • All insurance policies required to be maintained by the Property Manager under this Agreement shall be issued by insurance companies that meet or exceed the following financial strength criteria:

     • A policyholder and asset rating of A-:VIII or better as assigned by A.M. Best’s Insurance Reports.

   • This rating ensures that all insurance providers have strong financial stability and the ability to fulfill policyholder obligations.

2. Owner’s Right to Approve Exceptions:

   • The Owner reserves the right to approve exceptions to the minimum rating requirement.

   • If the Property Manager seeks to use an insurance carrier that does not meet the A-:VIII rating, the Property Manager must:

     • Submit a written request to the Owner.

     • Provide justification and alternative measures ensuring equivalent financial protection.

   • The Owner may grant an exception at its sole discretion, provided the substitute insurer is deemed financially sound and reliable.

3. Periodic Review and Compliance:

   • The Property Manager shall annually verify and certify that all insurance policies remain in compliance with the minimum rating requirement.

   • The Owner reserves the right to request updated insurer ratings and financial documentation at any time.

   • If an insurance carrier’s rating falls below A-:VIII during the term of this Agreement, the Property Manager must obtain replacement coverage from a qualifying insurer within thirty (30) days of notification.

55. Owner’s Insurance Responsibility:

The Owner shall maintain primary and noncontributory insurance coverage for the Property throughout the term of this Agreement, including any extensions or renewals. The insurance policies maintained by the Owner shall serve as the first line of coverage for claims related to the Property’s operations and shall not require contribution from the Property Manager’s insurance policies.

(a) All-Risk Property Damage Insurance & Loss of Rents Insurance:

• The Owner shall maintain "All-Risk" Property Damage Insurance covering the full replacement value of the Property.

• This insurance shall provide comprehensive coverage for:

  • Fire, windstorm, hail, and other natural disasters.

  • Vandalism, theft, and malicious mischief.

  • Mechanical or structural failure caused by insured events.

  • Flood and earthquake coverage, if required or deemed necessary based on Property location and risk exposure.

• The Owner shall also maintain Loss of Rents Insurance, which shall:

  • Cover rental income losses resulting from an insured property damage event.

  • Provide coverage for the period of time necessary to restore the Property to tenantable condition.

(b) Commercial General Liability (CGL) Insurance:

• The Owner shall maintain Commercial General Liability (CGL) Insurance with a minimum general aggregate limit of $1,000,000, covering:

  • Bodily injury and property damage liability.

  • Personal injury and advertising injury liability.

  • Premises liability for accidents occurring on the Property.

  • Operations liability related to the management and use of the Property.

• Designation of Property Manager as an Insured

  • The Property Manager shall be designated as an insured under the Owner’s CGL policy, but only while acting within the scope of its authority as Owner’s property manager.

  • This designation does not extend coverage to acts outside of the Property Manager’s scope of responsibilities under this Agreement.

• Independence of Other Provisions

  • All other terms and conditions of this Agreement remain unaffected by this agreement, including:

    • The indemnification provisions in this agreement.

    • The Property Manager’s obligation to maintain its own insurance as described in this agreement.

(c) Insurance Policy Requirements and Compliance:

1. Primary & Noncontributory Coverage

   • All insurance policies maintained by the Owner shall be primary, meaning they will pay out first before any insurance maintained by the Property Manager.

   • The Owner’s insurance shall not require contribution from the Property Manager’s policies, except where required by law.

2. Policy Endorsements

   • The Owner’s All-Risk Property Damage Insurance and CGL Insurance policies shall:

     • Name the Property Manager as an additional insured while performing duties within the scope of this Agreement.

     • Include waivers of subrogation in favor of the Property Manager, preventing the Owner’s insurer from seeking recovery from the Property Manager.

3. Policy Verification & Updates

   • The Owner shall provide the Property Manager with a certificate of insurance upon request confirming compliance with this section.

   • If the Owner’s insurance policies lapse or are materially changed, the Owner shall notify the Property Manager in writing within thirty (30) days.

(d) Claims Handling & Coordination:

• In the event of a claim covered by the Owner’s insurance, the Property Manager shall:

  • Cooperate fully with the Owner’s insurance provider.

  • Assist in gathering documentation, reports, and evidence related to the claim.

  • Follow all loss reporting procedures required by the Owner’s insurance policy.

• The Owner retains full discretion over settlement negotiations for claims under its insurance policies.

(e) Indemnification & Financial Responsibility:

• The Owner’s maintenance of insurance does not limit its indemnification obligations under this agreement.

• The Property Manager remains responsible for maintaining its required insurance as specified in this agreement.

• Each party shall bear financial responsibility for claims arising from their respective negligence, misconduct, or contractual breaches.

56. Property Manager’s Duties In Case Of Loss:

In the event of property damage, personal injury, or any other loss affecting the Property, the Property Manager shall take immediate action to ensure proper reporting, coordination with the Owner, and compliance with legal and insurance requirements.

(a) Property Damage or Hazardous Incident Reporting:

1. Immediate Notification to Owner

   • The Property Manager shall notify the Owner immediately upon discovering any fire, structural damage, or other material loss affecting the Property.

   • In cases of serious damage, environmental hazards, or hazardous material releases, the Property Manager shall:

     • Call the Owner directly to provide immediate notification.

     • Refrain from initiating any repairs or remediation until the Owner has been consulted.

2. Coordination with Insurance Adjusters

   • If the damage is significant, the Property Manager shall wait for an insurance adjuster to inspect the Property before beginning repairs, unless:

     • Waiting would cause further damage, endanger tenants, or violate safety regulations.

   • The Property Manager shall not settle any insurance claims, adjust losses, or submit loss reports on behalf of the Owner without the Owner’s prior written consent.

3. Regulatory Compliance and Government Agency Interaction

   • The Property Manager shall not engage with federal, state, or local regulatory agencies regarding loss events without the prior written consent of the Owner.

   • If regulatory authorities arrive on-site due to a hazardous materials release, fire, or structural failure, the Property Manager shall:

     • Immediately notify the Owner.

     • Follow legal reporting requirements while awaiting Owner instructions.

     • Refrain from making statements or commitments without Owner approval.

(b) Personal Injury or Third-Party Property Damage Reporting:

1. Incident Notification and Documentation

   • If a tenant, visitor, contractor, or other third party sustains an injury or claims property damage on or related to the Property, the Property Manager shall:

     • Immediately notify the Owner.

     • Document all details of the incident, including:

       • Date, time, and location of the event.

       • Description of injuries or damages claimed.

       • Contact information of all involved parties and witnesses.

       • Photos, video footage, or other supporting evidence (if available).

2. Legal Document Handling

   • If the Property Manager receives a legal document related to actual or alleged liability involving the Owner, Property Manager, or Property, the Property Manager shall:

     • Immediately forward copies to the Owner upon receipt.

     • Refrain from responding to summonses, subpoenas, or legal complaints without Owner’s legal counsel involvement.

     • Cooperate fully with the Owner’s legal team in preparing responses, collecting evidence, and providing witness statements if required.

(c) Additional Duties and Compliance:

• The Property Manager shall maintain accurate records of all reported incidents, including:

  • Correspondence with the Owner, insurance adjusters, and legal representatives.

  • Copies of all reports submitted to insurance carriers, governmental agencies, or third parties.

  • Any repairs, medical assistance, or remediation efforts undertaken.

• The Owner reserves the right to conduct its own investigation into any reported loss and may require the Property Manager to assist in gathering documentation or testimony as needed.

Relationship Of Parties And Representations And Warranties:

57. Relationship Of Parties And Representations And Warranties:

In performing the duties and obligations under this Agreement, the Property Manager shall act as an independent contractor and not as an employee or agent of the Owner. The parties acknowledge and agree to the following terms regarding their professional relationship:

(a) Independent Contractor Status:

• Property Manager shall be considered an independent contractor with respect to the Owner, and nothing in this Agreement, expressed or implied, shall:

  • Create a partnership, joint venture, or employment relationship between the Property Manager (or any employee of the Property Manager) and the Owner.

  • Establish a principal-agent relationship between the parties.

• The Property Manager shall not be entitled to any employee benefits (e.g., health insurance, retirement contributions, workers' compensation, or vacation time) from the Owner, as the Property Manager is not an employee.

(b) Control and Decision-Making:

• As an independent contractor, the Property Manager shall have full control over the manner and method of performing the services outlined in this Agreement, subject only to the Owner’s specific instructions or written approval for certain decisions that require Owner’s consent (e.g., capital expenditures, budget changes, and contract execution).

• The Property Manager is responsible for hiring, managing, and compensating its own employees, agents, and independent contractors without interference from the Owner, provided they comply with the terms of this Agreement.

(c) No Authority to Bind the Owner:

• Except as expressly authorized in this Agreement, the Property Manager shall have no authority to bind the Owner to any contracts, agreements, or obligations. The Property Manager may not represent itself as having authority to act on behalf of the Owner, except in the specific duties and powers granted under this Agreement.

(d) Tax and Legal Responsibilities:

• As an independent contractor, the Property Manager is solely responsible for:

  • Paying any and all applicable taxes related to the income it receives under this Agreement, including but not limited to income tax, self-employment tax, and any other taxes imposed on independent contractors.

  • Complying with all local, state, and federal laws, regulations, and employment requirements that pertain to its operations.

  • Holding the Owner harmless from any tax liabilities or penalties resulting from the Property Manager's failure to meet such obligations.

(e) Relationship with Property Manager’s Employees and Contractors:

• Employees, agents, or contractors of the Property Manager shall be considered employees of the Property Manager, and not employees or agents of the Owner.

  • The Property Manager shall be solely responsible for all costs related to its employees, including salaries, benefits, insurance, and taxes.

  • The Owner shall have no responsibility for the hiring, firing, compensation, or benefits of any employees, agents, or contractors employed by the Property Manager.

(f) No Right to Control Property Manager’s Operations:

• The Owner shall not control the day-to-day operations or activities of the Property Manager, other than the approval of major decisions (such as leasing terms, capital expenditures, etc.) as outlined in the Agreement.

• The Property Manager retains full discretion over how it manages the Property, provided it adheres to the Owner's objectives, the terms of the Agreement, and applicable laws.

58. Communications Between Parties:

While the Owner relies on the Property Manager to direct and control the day-to-day operations of the Property, the Owner retains the right to communicate directly with certain individuals and entities related to the Property’s operations. The parties acknowledge and agree to the following communication guidelines:

(a) Property Manager’s Role in Communication:

• The Property Manager shall have primary responsibility for directing and controlling all operations at the Property. This includes overseeing:

  • Leasing activities, including tenant relations and lease negotiations.

  • Vendor and service provider management (e.g., cleaning, maintenance, landscaping, security).

  • Financial and operational oversight, including working with Property Manager’s accounting teams.

  • Supervision of employees, contractors, and independent service providers.

• Property Manager shall be the primary point of contact for day-to-day communications and operational management, ensuring that all tasks and responsibilities are handled efficiently and in line with the Owner’s expectations.

(b) Owner’s Right to Direct Communication:

• While the Property Manager is responsible for handling operations, the Owner retains the right to communicate directly with certain parties to ensure alignment with the Owner’s interests. This includes communication with:

  1. Manager Specified in this agreement

     • The Owner may directly communicate with the Manager or key personnel specified in this agreement (e.g., on-site property manager or senior operations personnel).

  2. Property Manager’s Accountant(s)

     • The Owner may engage directly with the accounting team or accountants working on matters related to the Property’s finances, including audits, financial reports, and tax filings.

  3. Tenants and Tenants’ Representatives

     • The Owner may communicate directly with tenants and their representatives, including but not limited to:

       • Requests for lease renewals or modifications.

       • Issues concerning tenant satisfaction, disputes, or compliance.

       • Negotiation of rent adjustments, rent collections, or lease enforcement.

  4. Lease Prospects

     • The Owner may also engage directly with prospective tenants regarding lease negotiations, leasing terms, and occupancy matters.

  5. Advertising, Management, Cleaning, and Servicing Firms

     • The Owner may communicate directly with any advertising, management, cleaning, or service providers involved with the Property’s operations to ensure that services align with the Owner’s standards and expectations.

  6. Contracting Parties

     • The Owner may communicate with any contracting parties involved in agreements related to the Property, including contractors, vendors, service providers, or entities holding contracts with the Owner or Property Manager. This communication may involve:

       • Contract negotiations, project updates, and performance monitoring.

       • Resolving disputes or clarifications on contractual obligations.

(c) Communication Channels and Coordination:

• The Owner and Property Manager shall maintain open lines of communication to ensure efficient operation of the Property, with the following protocols in place:

  • Regular updates from the Property Manager to the Owner on property management activities, financial performance, and tenant issues.

  • Written reports or meetings for any significant matters requiring Owner’s review or approval, including leasing, major capital expenditures, or significant tenant issues.

  • Clear communication channels should be established for specific issues (e.g., emergency maintenance, tenant disputes, financial matters).

• The Property Manager shall ensure that communication with tenants or contractors does not compromise the Owner’s interests or interfere with the Owner’s direct involvement where applicable.

(d) Ownership of Communication and Documentation:

• Any documents, correspondence, or reports produced by the Property Manager, related to the communications with tenants, vendors, contractors, or other parties, shall be shared promptly with the Owner upon request.

• The Owner retains the right to direct and control any final decision-making based on these communications, particularly with respect to key issues that impact the Property’s financial performance, tenant relations, or overall operation.

59. Relationship Of Owner And Property Manager With Respect To Leasing:

This section outlines the responsibilities and expectations related to leasing activities, tenant selection, and commission structure, as well as the rights and obligations of the Property Manager and Owner regarding residential and retail leasing at the Property.

(a) Commission and Fees:

• The Property Manager shall not be entitled to any commission or other fees for leasing apartment units at the Property unless specifically provided for in Article 3 of this Agreement.

• On-site employees of the Property Manager may be entitled to incentive leasing bonuses, which will be outlined in the Approved Operating Budget. These bonuses may be based on metrics such as leasing volume, occupancy rates, or other performance-related criteria.

(b) Tenant Selection and References:

• The Property Manager shall procure references from prospective tenants and investigate the references to determine the suitability of applicants.

• The Property Manager shall use its best judgment in the selection of prospective tenants, considering factors such as:

  • Creditworthiness.

  • Rental history.

  • Background checks.

  • General suitability for the Property.

• For residential units, the Property Manager shall take steps to minimize vacancy periods by:

  • Preparing rental listings as soon as practicable prior to any residential unit vacancy.

  • Actively attempting to find a new tenant for any vacant unit, ensuring the Property’s occupancy rates remain high.

(c) Leasing Arrangements for Retail Tenants:

• For retail tenants (if applicable), the Property Manager shall:

  1. Prepare and submit to the Owner a written lease proposal before entering into any leasing arrangements.

  2. The lease proposal must include, at a minimum:

     • Proposed leasing terms, such as:

       • Lease duration.

       • Rental rate and escalations.

       • Tax and operating expense escalations, including Consumer Price Index (CPI) adjustments.

       • Common area maintenance charges or any other rental adjustments.

       • Concessions, such as rent discounts or parking allowances.

       • Insurance requirements.

       • Expansion and renewal rights.

       • Tenant improvement allowance (if applicable).

       • Desired mix of tenants, considering the overall goals for the Property.

       • Policy on tenant guarantees and any other factors deemed important by the Owner.

• The Owner’s approval is required before finalizing any retail lease arrangement.

(d) Leasing Exposure and Comparison with Other Properties:

• The parties agree that the Property Manager shall provide leasing exposure for residential units and retail space at the Property that is at least equal to the exposure given to similar units or spaces at other properties owned, leased, managed, or operated by the Property Manager or its Affiliates.

• If the Property Manager fails to meet this expectation, the Owner reserves the right to terminate the Agreement pursuant to this agreement below.

(e) Efforts to Retain Existing Tenants:

• The Property Manager shall use reasonable efforts to retain existing tenants at the Property by addressing tenant needs, renewing leases, and ensuring tenant satisfaction.

• If the Property Manager fails to make reasonable efforts to retain existing tenants, the Owner has the right to terminate the Agreement pursuant to this agreement.

59.1. Sales Brokerage Agreement:
This section defines the Property Manager’s role and compensation concerning the sale of the Property and the involvement of real estate brokers or agents.

(a) Sales Brokerage Agreement:
The Owner hereby appoints the Property Manager as the exclusive sales brokerage and agent for the Property. The Property Manager shall have the sole authority to represent the Owner in the sale of all or part of the Property, including negotiating and executing sales agreements, either directly or through collaboration with external brokers or agents unless not agreed upon in writing.

In the event of a sale of the Property, the Property Manager shall be entitled to compensation, fees, commissions, or other payments as outlined in this Agreement. Such compensation shall apply regardless of whether the sale is conducted directly by the Property Manager or facilitated through external brokers, agents, or third parties.

(b) Authority for Sales Fees or Commissions:
The Property Manager shall have the right to obligate the Owner to pay reasonable fees or commissions to external real estate agents or brokers involved in the sale or lease of the Property, provided that such fees and commissions are pre-approved in writing by the Owner.

All agreements with external brokers or agents, including fee structures and commission arrangements, shall be documented and approved by the Owner before execution.

(c) Responsibility for Employee Compensation and Cooperating Brokers:
The Property Manager shall be fully responsible for compensating its own employees, including salaries, bonuses, and benefits. Additionally, the Property Manager shall manage compensation for any real estate brokers or agents cooperating in leasing or sales activities related to the Property.

This includes:

• Payment of commissions or fees owed to brokers involved in tenant lease negotiations, property management, or sales transactions.

• Any costs associated with engaging external brokers or agents, unless otherwise agreed upon by the Owner in writing.

(d) Indemnity for Compliance with Sales Brokerage Provisions:
The Property Manager shall indemnify and hold harmless the Owner from any claims, liabilities, costs, expenses, or damages arising from actions related to sales or brokerage activities under this Agreement. This includes:

• Any claims for brokerage or finder’s fees not authorized by the Owner.

• Any liabilities related to unauthorized fees associated with the sale or lease of the Property resulting from the Property Manager’s actions.

• Reasonable attorneys' fees incurred by the Owner in defending against any such claims.

The Property Manager’s indemnification obligations shall survive the expiration or earlier termination of this Agreement.

(e) Summary of Broker and Commission Rights:
The Property Manager shall earn commissions or fees related to the sale of the Property as explicitly authorized by the Owner in writing. The Property Manager is responsible for compensating its employees and any cooperating brokers or third parties involved in leasing or sales activities under the terms of this Agreement, unless otherwise agreed to by the Owner.

Indemnification provisions ensure that the Owner is protected from any claims or liabilities resulting from unauthorized sales or leasing fees and commissions, reinforcing the Owner's security in all transactions.

60. Confidentiality:

The Property Manager and the Owner agree to uphold strict confidentiality regarding all aspects of this Agreement and the operations of the Property, with certain exceptions as noted below.

(a) Confidential Information:

• Both parties agree that the following shall be treated as confidential information and shall not be disclosed to any third party without the express written consent of the other party:

  1. Terms and conditions of this Agreement, including financial details, compensation arrangements, and any proprietary or sensitive business information.

  2. Operational details regarding the Property, including but not limited to:

     • Tenant identities and lease terms.

     • Rental rates, concessions, and occupancy rates.

     • Maintenance, repair, or upgrade plans.

     • Vendor or service provider contracts and financial terms.

  3. Any proprietary business practices or strategies that pertain to the Property’s management, marketing, or leasing operations.

  4. Financial records and reports related to the Property, including balance sheets, profit and loss statements, and tax filings.

  5. Tenant information, including personal data, credit histories, and background checks (in accordance with applicable privacy laws).

(b) Exceptions to Confidentiality:

• Notwithstanding the confidentiality obligations above, the following exceptions to confidentiality apply:

  1. Required by Law: If a party is required to disclose any confidential information by law, regulation, court order, or government authority, the party shall provide prompt written notice to the other party before disclosure, to allow the other party an opportunity to seek protection or a protective order.

  2. Subcontractors and Agents: Disclosure of confidential information may be made to the Property Manager’s or Owner’s employees, agents, consultants, or contractors who need such information in order to perform their duties, provided that these parties are bound by confidentiality obligations no less restrictive than those in this Agreement.

  3. Publicly Available Information: Confidential information does not include any information that becomes publicly available through no fault or breach of this Agreement by the disclosing party, or any information that was independently developed or obtained by the receiving party without reference to the confidential information.

(c) Duration of Confidentiality Obligations:

• The confidentiality obligations of both parties under this Agreement shall remain in effect for the duration of this Agreement and for a period of three (3) years after its termination or expiration, unless the parties mutually agree in writing to release any particular information earlier.

(d) Return or Destruction of Confidential Information:

• Upon termination or expiration of this Agreement, the Property Manager shall return or destroy any confidential information in its possession, including electronic and physical records, unless otherwise required to retain such information by law or for ongoing legal or tax purposes.

• The Owner shall similarly return or destroy any confidential information provided by the Property Manager that is not necessary for the Owner’s continued operations or for legal compliance.

(e) Breach of Confidentiality:

• If either party breaches the confidentiality obligations under this section, the breaching party shall indemnify and hold harmless the other party from any damages, losses, or costs (including legal fees) incurred as a result of the breach.

• Both parties agree to take immediate corrective action in the event of a confidentiality breach and to promptly notify the other party in writing.

61. Property Manager Not To Pledge Owner’s Credit:

This section defines the restrictions on the Property Manager’s authority concerning financial obligations and the use of the Owner’s credit. It clarifies the Property Manager’s limits in conducting business on behalf of the Owner and the Owner's protection against unauthorized financial commitments.

(a) Restrictions on Property Manager’s Use of Owner’s Credit:

• The Property Manager shall not pledge or commit the Owner’s credit for any purpose, except in the following limited circumstances:

  1. In the purchase of goods, wares, merchandise, materials, supplies, and services that are:

     • Reasonably required in the ordinary course of business for the operation of the Property.

     • Necessary for the performance of the Property Manager’s obligations under this Agreement.

  2. In either case, such purchases or commitments must have been previously approved by the Owner.

• The Property Manager is prohibited from:

  • Borrowing any money, taking out loans, or creating any financial obligations that would be binding on the Owner or the Property.

  • Executing any promissory notes, installment purchase agreements, bills of exchange, or other obligations that would bind the Owner’s financial resources or credit.

(b) No Authority to Bind Owner to Financial Obligations:

• The Property Manager shall not have the authority to:

  • Borrow funds in the name of the Owner or use the Owner’s name for any financial obligation, including loans, lines of credit, or financial instruments.

  • Execute any contractual obligation that would require the Owner to pay money or assume any financial responsibility, unless it is explicitly outlined and approved in this Agreement.

(c) Owner’s Approval for Financial Commitments:

• Any financial commitments or purchases that would involve the Owner’s credit or financial resources (beyond ordinary operational expenses) must receive the prior written approval of the Owner before the Property Manager proceeds with such obligations.

(d) Breach of This Section:

• If the Property Manager violates this section by pledging the Owner’s credit or creating unauthorized financial commitments:

  • The Owner shall not be bound by such actions, and the Property Manager shall indemnify and hold the Owner harmless from any damages, liabilities, or costs resulting from the breach, including legal fees.

  • The Owner may choose to terminate the Agreement under this agreement in the event of such breach.

62. Representations And Warranties:

This section outlines the representations and warranties made by both the Property Manager and Owner, confirming their legal authority to enter into this Agreement and their commitment to fulfill their respective obligations.

(a) Property Manager's Representations and Warranties:

The Property Manager represents and warrants that:

1. Full Power and Authority

   • The Property Manager has full power, authority, and legal right to:

     • Execute, deliver, and perform this Agreement.

     • Fulfill all of its obligations as outlined under this Agreement.

2. No Violation of Law or Governmental Requirements

   • The execution, delivery, and performance of this Agreement will not:

     • Require any consent or approval from any governmental authority (except as may be expressly required by law).

     • Violate any applicable laws, regulations, or government orders.

     • Conflict with, result in a breach of, or constitute a default under:

       • The charter or bylaws of the Property Manager.

       • Any instrument or agreement to which the Property Manager is a party or by which it or its property is bound (including contracts, agreements, and obligations).

(b) Owner's Representations and Warranties:

The Owner represents and warrants that:

1. Full Power and Authority

   • The Owner has full power, authority, and legal right to:

     • Execute, deliver, and perform this Agreement.

     • Fulfill all obligations outlined in this Agreement and ensure the Property Manager can perform its duties.

(c) Acknowledgment of Reliance:

1. Property Manager's Acknowledgment

   • The Property Manager acknowledges and agrees that the Owner is relying upon the representations and warranties set forth in this agreement, when entering into this Agreement. The Property Manager affirms that these warranties are true and correct, and the Owner is relying on them to ensure the legality and enforceability of this Agreement.

2. Owner's Acknowledgment

   • The Owner acknowledges and agrees that the Property Manager is relying upon the representations and warranties set forth in this agreement, when entering into this Agreement. The Owner affirms that it has the legal authority to bind itself and fulfill the terms of the Agreement.

(d) Remedies for Breach of Representations and Warranties:

• In the event that either party’s representations and warranties are found to be false or materially misleading:

  • The non-breaching party may have the right to pursue legal remedies, including termination of this Agreement and claims for damages resulting from the breach of these representations and warranties.

  • The breaching party shall be responsible for indemnifying the non-breaching party against any losses, damages, or legal costs incurred due to the breach.
    
    

  63. Rental Guidelines:

  The Property Manager may enter into new leases for space at the Property, as well as renew or extend existing leases, without the Owner’s prior written consent, provided that each such lease adheres to the following guidelines:

  1. Standard Lease Form for Residential Apartment Units:

  • Documentation: All leases must be documented using the standard lease form attached as Exhibit C to this Agreement, with no material deviation from the form unless required by law or a governmental agency.

  • Legal Compliance: Any changes to the lease form must align with legal requirements or be mandated by government regulations.

  2. Lease Term for Residential Units:

  • The lease term for residential apartment units shall be:

    • At least six (6) months and no more than twelve (12) months, unless a longer lease term is specifically outlined in the Annual Business Plan.

  • This ensures that leases are kept to a reasonable duration and aligns with the annual planning for the Property’s rental strategy.

  3. Rental Rates and Terms:

  • Rental Rates: Leases must provide for rental rates that are no less than the suggested daily rates provided by BPO, unless otherwise approved by the Owner.

  • Broker Price Opinion: This ensures that rental rates are aligned with market rates and are competitive while also maintaining profitability for the Property.

  4. Corporate Apartments:

  • Corporate Apartments: The Property Manager may lease up to 10% of the total number of apartment units as corporate apartments, provided:

    1. The lease is an arms-length transaction.

    2. These leases are not for corporate use unless specifically approved in the Annual Business Plan.

  • The Owner’s approval is required for more than 10% of units to be leased as corporate apartments, and there shall be no more than 10 corporate leases allowed to expire in any given month unless otherwise approved.

  5. Arms-Length Transactions:

  • Tenant Relations: Leases must be entered into with tenants who are not Affiliates of the Owner or the Property Manager, ensuring that the leasing process is fair and impartial.

  • Exception for Affiliates: The exception is for apartment units leased to employees of the Owner’s or Property Manager’s Affiliates, which may occur provided the rental rates are at least as high as those set forth in the Annual Business Plan.

  6. Equal Housing Opportunity:

  • The Property Manager will ensure compliance with Federal Fair Housing Law and will engage in fair and equal treatment of all prospective tenants, promoting Equal Housing Opportunity.

  7. Resident Income Requirements:

  • Income Requirement: Prospective tenants must have a monthly income that is at least three times the monthly rent unless written approval is obtained from the Owner.

  • This ensures that tenants have the financial capability to pay the rent and reduces the risk of late payments or defaults.

  8. Credit History:

  • All prospective residents must have satisfactory credit, as determined by the Property Manager’s best judgment.

  • Background Check: The Property Manager is required to procure a background check and credit report from a national reporting agency to verify the creditworthiness of potential tenants.

  9. Employment Verification:

  • Employment and Salary: The Property Manager must verify the employment and salary of prospective tenants for at least the prior three years. This can be done by, among other methods, contacting prior employers of the prospective tenants to ensure stability and reliability.

  10. Previous Residency Verification:

  • Residency Verification: Where appropriate, the Property Manager must confirm satisfactory residency for prospective tenants by contacting previous landlords to ensure the tenant’s history of reliable payment and good standing.

  11. Changes in Rental Guidelines:

  • Changes in Guidelines: Any material changes to the above rental guidelines must be submitted to the Owner for review and approval.

  • This ensures that the Owner remains informed and in control of significant changes in the rental strategy or leasing terms.

  
  

Termination:

64. Termination By Owner Without Cause:

The Owner retains the right to terminate this Agreement at any time without cause, subject to the following terms and conditions:

(a) Right to Terminate Without Cause:

• The Owner may terminate this Agreement for any reason or no reason at all, without needing to provide justification.

• The Owner has the right to terminate at its sole discretion, regardless of the Property Manager's performance or compliance with the terms of this Agreement.

(b) Notice of Termination:

• To exercise the right to terminate, the Owner must provide written notice to the Property Manager.

• The written notice must clearly state the Owner’s intention to terminate the Agreement and must be delivered to the Property Manager in accordance with the notice provisions set forth in this Agreement.

• The written notice shall specify the date of termination, which will be 30 days from the date of notice.

(c) Effective Date of Termination:

• The effective date of termination will be thirty (30) days from the date of the written notice.

• After the 30-day notice period, this Agreement will automatically terminate, and the Property Manager will no longer be authorized to act on behalf of the Owner.

(d) Obligations Following Termination:

• Upon termination, the Property Manager shall:

  • Cease all activities related to the Property, including management, leasing, and other property operations.

  • Return all property-related documents, keys, records, and equipment to the Owner or to any third party designated by the Owner.

  • Ensure a smooth transition, cooperating with the Owner to facilitate the transfer of property management duties to another party, if applicable.

• The Owner remains responsible for paying any outstanding fees or compensation earned by the Property Manager up to the effective date of termination, in accordance with the terms outlined in this Agreement.

(e) No Liability for Termination Without Cause:

• The Owner shall not be liable for any compensation, fees, or damages to the Property Manager in the event of termination without cause, except for amounts owed for work completed up to the date of termination.

• The Owner shall have no further obligation to the Property Manager beyond the payment for services rendered prior to termination.

65. Termination By Owner For Cause:

The Owner retains the right to terminate this Agreement for cause at any time during the term, with immediate effect, by providing written notice to the Property Manager. This termination may occur for any of the following causes:

(a) Suspension or Discontinuation of Business:

• If the Property Manager suspends or discontinues its business operations in relation to the Property or its overall business activities, the Owner has the right to terminate the Agreement immediately.

• Suspension or discontinuation of business may include, but is not limited to:

  • Failure to perform operational duties.

  • Interruption of services essential for property management.

  • Inability or unwillingness to fulfill obligations set forth in the Agreement.