Property Management Contracts

[Larry Dowde]

We are somewhat new to the investment property rental world and have recently acquired a 3rd property that we plan to rent through a Property Management Company. This is not a matter of distrust of the Company, I just don’t see this as being as equitable for both parties as it should be.

I have been reviewing the contract and found a few items I am not comfortable with and wanted to see what others have experienced. Maybe T’s and C’s can be shared without disclosing and company names or any confidential information.

A few points of contention for me are:

• 1. Monies received are not acknowledged until after 48 hours of receiving them (understandable). Then they have 15 days to fund the owners account. That seem to be an excessive amount of time to hold your funds. I could understand 5 days, but 15 after 48 hours seems excessive.
• 2.The Defend and Hold Harmless clause has the Owner insuring them for their acts. Really? Should they not be Defending and Hold Harmless you as the owner with no direct contact with the lessor they put in your property? Sound right?
• 3.Management Company can charge you for advertising and other cost without your consent and deduct it from your funds?
• 4.They have a hold-back of a month’s rental fund for any maybe needed repairs. Puts the Owner in the hole from the start. That sound normal? 
• 5.Landlord agrees to report income when funds are received from Occupant Tenant and not when Master Tenant has actually disbursed funds to Landlord.  So…I report the funds received on my taxes when they have not been received so they don’t have to account for the tax impact?
• 6.They allow pets without your consent. How’s that work?
• 7.Added a First Right of Refusal to buy if you decide to sell for a discounted rate. What does that have to do with the price of tea in China?

A few more that have me concerned and asking is this normal?

Any thoughts or input is appreciated.