Management Contract – sample

FEATURES:

  • The format is comprehensive, well organized and easy to read.
  • Each page is initialed by both parties.
  • The contract is signed by all the Board members.

Red Flag 1Embezzlement is pervasive at all levels of private community government – directors, management, employees and anyone else who has access to the community bank account and the general ledger accounts.  What level of due diligence have you and other community members performed to guard against this happening?    

It is recommended that the agent be required to carry Professional Liability Insurance at the agents expense.   Directors and management should be barred from using the association’s funds for their legal defenses.


XYZ PROPERTY MANAGEMENT – ASSOCIATION MANAGEMENT AGREEMENT Page 1 of 5

PARTIES

THIS AGREEMENT, made this ____ day of _________ 20__, by and between ___________________________________________, hereinafter called “Association,” and XYZ Property Management, Inc.. hereinafter called “Managing Agent,” upon the terms hereinafter set forth beginning on the ______ day of ________________, 20____.

WITNESSETH:

Appointment:

The Association hereby appoints Managing Agent and Managing Agent hereby accepts the appointment on the terms and conditions hereinafter provided, as exclusive agent of the ______________________________ Association (hereinafter called the “Association.” Managing Agent shall have the power, authority and duties to supervise the management and maintenance of the Association, and shall perform the duties and carry out the functions of the Association as provided and specified in the Declarations and Bylaws (hereinafter called the “Declarations”), a copy of which is here to attached, marked as Exhibit A and by this reference Incorporated herein, as though the terms and provisions were set forth in full.

Term:

The term of this Agreement shall be from the date of the execution thereof for minimum term of one (1) year; thereafter, this Agreement may be terminated by the Board of Directors of the Association upon thirty (30) days written notice, and by the Managing Agent upon 30 days written notice given to the Board of Directors of the Association.

Managing Agent’s Duties:

Agent shall render services and perform duties as Agent of the Association as follows:

Common Areas:

1. On site visits as necessary to effectively manage the grounds.

2. Contract with suitable Vendors in order to maintain common areas in accordance with acceptable standards as established by the Board of Directors.

3. Purchase or rent on Association’s behalf, all equipment, tools, appliances, materials, supplies, uniforms and other items necessary for the management, maintenance and operation of the property.

4. Ongoing evaluation of and recommendation for long term maintenance needs of the common areas.

5. Obtain and Collect bids for common area maintenance and major maintenance projects. Major projects shall require three bids.

6. Negotiate and retain contracts and services, including utilities, trash removal, fire equipment, building equipment and other contract services.

7. Liaise with consultants and engineers hired by Association.

8. Recruit, hire, train and supervise, from off site, all project personnel as directed by the Board of Directors.

9. Monitor water and sewer usage through monthly bills.

10. Agent shall not incur more than $1000.00 of expense for any one item of repair or replacement (excluding emergency repairs), unless said expense is already specifically authorized by the Association, without Agent getting prior approval from the Board of Directors.

Fiscal and Accounting Services:

1. Agent shall assist in the development of a proposed Annual Budget, for approval by the Board, at least 60 days prior to the end of the fiscal accounting year, which may serve as a basis for monthly maintenance fees for the ensuing year.

INITIALS: Pres __________ DATE ______ 20 V.Pres __________ DATE ______ 20 Sec__________ DATE ______ 20 Treas __________ DATE ______ 20

M.a.L __________ DATE ______ 20 AGENT__________ DATE ______ 20____

Page 2 of 5

2. Agent shall obtain, at associations cost, a reserve study in accordance with the direction of the Board of Directors.

3. Post and deposit monthly dues and assessments.

4. Preparation and posting on individual Unit ledgers.

5. Daily tracking of checking and reserve account balances maintained by Agent.

6. Payment and tracking of invoices.

7. Monthly reconciliation of all operating accounts and reserve accounts maintained by Agent.

8. Monthly preparation and distribution of Statement of Cash Receipts and Disbursements statement to Board of Directors and the Finance Committee Chairperson.

9. Assist with preparation of Annual Financial Reports prepared by CPA.

10. Collect assessments as provided in the Declaration and follow up on all delinquencies to effectuate collection of all amounts owed. Agents collection responsibility is limited to twelve regular monthly assessment collections per year and one special assessment collection per year.

11. Preparation and mailing of delinquency notice and collection letters as directed by the Board of Directors.

12. Arrange for Collections in accordance with the laws of the State of _______ and arrange for Liens when directed by the Board of Directors, through an attorney.

13. Assist in performance of audits in cooperation with auditors appointed by the Association.

14. Arrange through a payroll service to;

a. Have prepared and maintained accurate payroll time sheets for all personnel.

b. Have prepared payroll checks on a timely basis and disburse same to all project personnel.

c. Timely preparation and submission of reports and forms to governmental agencies.

Insurance:

1. Recommend insurance coverages as are required by CC&R’s to protect the property.

2. Prepare insurance specifications as per CC&R’s for bid proposals, and secure bids under direction of the Board of Directors.

3. With the approval of the Board of Directors, place appropriate insurance coverages for fire and extended coverage, general liability, fidelity bonds, statutory and other approved forms of insurance coverages as specified in the Declaration.

4. Assist in processing insurance claims against the property.

Records and Correspondence:

1. Managing Agent shall maintain all financial records of the Association and its members for a period of 6 years in accordance to GAAP and deliver back to the Board of Directors, rather than disposal.

2. Individual files for each owner shall be maintained, together with all documents covering each unit in the project.

3. Agent shall maintain complete files for all correspondence.

4. Agent shall maintain current owners’ lists as provided by supporting information.

5. Agent shall research and maintain all data pertaining to new or transfers of ownership, including transfers of voting rights.

6. Agent shall regularly mail to all owners, those items designated by the Board.

7. Special mailings of newsletters requested by the Board of Directors shall be prepared, duplicated and mailed at the expense of the Association.

8. All requests for duplication of copies of project documents, correspondence, reports, etc., shall be at the expense of the Association.

Meetings – Board of Directors, Annual Meetings of the Association of Apartment Owners, and Special Meeting:

1. Managing Agent shall, as part of the Management Agreement, attend the Annual Meeting and 11 monthly meetings and one Annual Meeting.

INITIALS: Pres __________ DATE ______ 20 V.Pres __________ DATE ______ 20 Sec__________ DATE ______ 20 Treas __________ DATE ______ 20

M.a.L __________ DATE ______ 20 AGENT__________ DATE ______ 20____

Page 3 of 5

2. Agent shall prepare and mail notices, proxies, ballots, minutes, agendas, etc. In accordance with the requirements and provisions of the Association Bylaws. Duplication and mailing shall be at the expense of the Association.

Undisclosed Fees:

Agent agrees not to collect for Agent’s own account or benefit any undisclosed fees, rebates or discounts. Any such undisclosed fees, rebates or discounts shall be credited to the Association.

Bank Account:

Agent shall maintain bank accounts in a bank whose deposits are insured by the Federal Deposit Insurance Corporation, in a manner to indicate the custodial nature thereof, for the deposit of the moneys of the Association, as indicated below. Funds deposited shall remain the property of the Association subject to disbursement of expenses by Agent as described in this Agreement. No amounts deposited in said account shall in any event be commingled with any other funds of Agent or other Associations. Agent is authorized to make disbursements from the operating or other accounts for Association expenses within the Association’s budget or as authorized by the Board of Directors.

Reserve accounts may also be maintained as directed by the Board of Directors and as authorized by the Delcarations. All reserve accounts shall require at least two Board of Director signatures, as designated by a resolution as required by RCW 64.34.374, for any withdrawal.

In the event that the balance of any account shall at any time be insufficient to pay disbursements due and payable, Association shall, immediately upon notice, remit to Agent sufficient funds to cover the deficiency. In no event shall Agent be required to use its own funds to pay such disbursements, nor shall Agent be required to advance any monies to Association.

Agent shall not be liable in the event of bankruptcy or failure of a depository.

Agent shall open the following accounts:

□ Checking account.

□ Reserve account.

□ Insurance account.

□ _________ account.

Agent’s Fee:

Agent shall receive Management and Service fees for services rendered in terms of the Fee Schedule Addendum attached.

Agreement To Be Changed In Writing Only:

INITIALS: Pres __________ DATE ______ 20 V.Pres __________ DATE ______ 20 Sec__________ DATE ______ 20 Treas __________ DATE ______ 20

M.a.L __________ DATE ______ 20 AGENT__________ DATE ______ 20____

Page 4 of 5

or modification thereof shall be valid and enforceable, except by an agreement in writing.

Dispute Resolution:

If a dispute arises out of this Agreement, both parties will meet to resolve it. If agreement is not reached at this meeting, both parties will jointly employ the American Arbitration Association or any other arbitration panel mutually agreed upon by the parties, to arbitrate the dispute. The results of this arbitration are binding upon both parties and the arbitrator is authorized to file the decision in the applicable court of jurisdiction. The arbitrator is to award reasonable attorney’s fees and costs to the prevailing party.

Responsibility:

Managing Agent shall be responsible for any willful misconduct or negligence, but shall not be held responsible for any matters relating to error of judgement, or for any mistake of fact or law, or for anything which it may do or refrain from doing, which does not include any willful misconduct or negligence.

Hold Harmless:

FRAUD ON THE PART OF MANAGEMENT AND STAFF IS A PROBLEM OF MAJOR PROPOROTIONS.  (The defendants should be barred from using the association’s funds for their legal defenses).

The Association shall indemnify, defend and hold Agent harmless from all loss, damage, cost, expense (including attorney’s fees), liability, claims for personal injury or property damage, error of judgment, or for any mistake of fact or law incurred or incurring in, on, or about the property except in the case of willful misconduct or gross negligence by Agent.

Liability Insurance:

The Association shall obtain and keep in force adequate insurance against physical damage and against liability for loss, damage, or injury to property or persons, which might arise out of the occupancy, management, operation, or maintenance of the property. The amounts and types of insurance shall be acceptable to both Association and Agent, and any deductible required under such insurance policies shall be the Association’s expense. Agent shall be covered as an additional insured on all liability insurance maintained with respect to the property. Liability insurance shall be adequate to protect the interests of both Association and Agent and in form, substance and amounts reasonably satisfy Agent. Agent may, but shall not be obligated to, place said insurance and charge cost thereof to the operating account.

Agent Assumes No Liability:

Agent assumes no liability whatsoever for any acts or omissions of Association, or any previous owners of the property, or any previous management or other agent of either. Agent assumes no liability for any failure of or default by any resident in the payment of any monthly assessment or other charges due Association or in the performance of any obligations owed by any resident to Association. Nor does the Agent assume any liability for previously unknown violations of environmental or other regulations which may become known during the period this Agreement is in effect. Any such regulatory violations or hazards discovered by Agent shall be brought to the attention of Association in writing.

Association Responsible For All Litigation Expenses:

Association shall pay all expenses incurred by Agent, including but not limited to, reasonable attorney’s fees and Agent’s cost and time, and any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Agent or Association, or both, including but not limited to any law pertaining to fair employment, environmental protection, taxes, or fair housing, including but not limited to, any law prohibiting or making illegal discrimination, provided, however, that Association shall not be responsible to Agent for such expenses in the event Agent is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Agent to employ legal counsel to represent Association in any such proceeding or suit.

INITIALS: Pres __________ DATE ______ 20 V.Pres __________ DATE ______ 20 Sec__________ DATE ______ 20 Treas __________ DATE ______ 20

M.a.L __________ DATE ______ 20 AGENT__________ DATE ______ 20____

Page 5 of 5

Fees For Legal Advice:

Association shall pay reasonable expenses incurred by Agent in obtaining legal advice regarding compliance with any law affecting the property or activities related to the Association.

Relationship:

The relationship of the parties shall be that of Principal and Agent, and all duties to be performed by Agent under this agreement shall be for and on behalf of Association, in Association’s name, and Association’s account. In taking any action under this agreement, Agent shall be acting only as Agent for Association, and nothing in this Agreement shall be construed as creating a partnership or employee relationship.

Notice:

Any notice by either party to the other shall be in writing and shall be given, and shall be deemed to have been duly given, if either delivered personally to a party, or mailed by US Mail to the party to whom notice is to be given as follows:

Agent: XYZ Property Management

(Address)

(City, State, Zip)

Association: _________________________________

___________________________________________

___________________________________________

___________________________________________

Successors And Assigns:

This Agreement shall inure to the benefit of and constitute a binding obligation upon the Association and the Managing Agent, and their respective heirs, administrators, successors or assigns.

WITNESS WHEREOF, the parties hereto have executed the Agreement the day and year first above written.

AGENT:

XYZ PROPERTY MANAGEMENT

By:_____________________________ Date:_______________

11555 SE 8th Street #130, Bellevue, WA 98004

ASSOCIATION OF OWNERS OF ________________________________________________

BOARD OF DIRECTORS:

President:______________________________________________Date:_____________________

Vice President:______________________________________________Date:_____________________

Secretary:______________________________________________Date:_____________________

Treasure:______________________________________________Date:_____________________

Member At Large:_________________________________________________Date:____________________

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59 Responses to Management Contract – sample

  1. anonymous says:

    The contract is pretty straight forward, the addition of adding requirements such as being licensed and governing laws are possibly left out for being of a generic purpose.

    Like

  2. Lisa Harris says:

    I agree with the comments listed above regarding CAM requirement and Governance Policies, I would like to add this contract needs to include under “Common Areas” that they will contract with only Licensed and Insured Vendors – and under “Insurance” state they will obtain all CCIOA required Insurance coverages.

    Like

  3. Wayne Mattox says:

    There is a great deal of generality that is poorly chosen such as “effectively” and “suitable” at the beginning. The contract needs to specify what “major” is in conjunction with bid requirements. In fiscal it should refer to all accounts instead of only operating and reserves. Enforcement should be in accordance with the Collection Policy. Record retention per that policy as well “Undisclosed fees should be credited to the Association is non sequitur. Insurance section is worded poorly and coverage should be according to the Decs, not as acceptable to the agent. Definietly needs reference to CAM licensure of Entity and Agent.

    Like

  4. Anonymous says:

    Good Agreement but doesn’t include the required responsible governance policies and should reference adherence to CCIOA if it is a CCIOA property.

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  5. Anonymous says:

    Agree it needs CAM requirement. Probably needs reference to ‘governed by the laws of the state of Colorado’. Overall, I think it’s OK.

    Like

  6. This is a very straight forward agreement. I believe the association should discover if the agent is a licensed CAM prior to entering the agreement.

    Like

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