What is important - and what a property management agreement CAN'T tell you
When entering a legal relationship with a property management company, signing a Property Management Agreement is essential. This document outlines the legal terms and obligations involved. Here, we outline six crucial elements within the agreement that warrant careful review before signing the agreement. Make sure to read to the end, as we also disclose the vital aspects that the agreement CANNOT tell you.
1. Check how easy it is to cancel the agreement.
Even though it might seem odd, it's crucial because it indicates how flexible the property management company is if you're not satisfied with their service. A good company won't restrict you or charge extra if you decide to leave. The best scenario is an agreement allowing you to terminate without any additional charges.
At Davies Property Management we sign an initial one year contract which automatically renews to a month-to-month agreement, allowing you to terminate anytime after the initial one year term with no additional charges or penalty.
2. Are there hidden fees in the agreement?
Make sure to check if the fees are transparent in the agreement. While it's normal for a company to charge fees for their services, hidden fees scattered throughout the agreement might signal a lack of transparency. It's important that the fees are clear and fair.
3. How much money do I have to place in reserve?
Understand how much money you need to set aside in reserve. Your Alberta property management company will create an account, known as a reserve, which covers various property expenses. This reserve, typically ranging from a few hundred dollars to a full month's rent, is crucial for handling costs before or after receiving monthly rental income.
- We ask for a reserve of $300 per property.
4. How fast do I get my money?
Consider the speed of receiving your rental income. It's important to know how promptly the property management company processes tenant payments and transfers the funds to you. A quick turnaround is desirable, and you should aim to receive your money on the same month.
- We complete our accounting cycle by the 20th day of each month and securely transfer funds directly into your bank account through auto deposit by the 25th of each month.
5. What is the maintenance trigger?
One of the reasons you hire a property management company is so that YOU don’t have to be bothered with the day-to-day issues and problems that happen – including routine maintenance and repair items.
Eventually the toilet is going to run, the sink is going to drip, and the oven is going to break.
For the protection of your property and to comply with health and safety laws, your property management company MUST have strong maintenance protocols in place. These protocols should clearly define when repairs are tenant vs owner responsibility, what constitutes a maintenance emergency, when to repair vs replace, and when you (as the owner) should be involved.
Be sure you understand when you will have to become involved in repair requests.
- We handle all repair issues and don’t bother you for items under $400
6. Who handles evictions?
Dive deeper into the eviction process consideration. While evictions are hopefully infrequent occurrences, it's vital to understand the property management company's role in handling legal issues. When faced with a legal problem, particularly an eviction, clarity is needed on whether the property management company will take charge or pass the issue back to you, the property owner.
It's advantageous to have a property management company that assumes responsibility for all legal aspects, encompassing the preparation and service of various legal documents required to initiate the eviction process in Alberta. Watch out for any management agreement language that places the onus on you to involve your legal counsel in cases of tenant eviction.
- In our approach, although evictions are rare, if the need arises, we take charge of the entire legal process from initiation to conclusion. This includes the preparation and service of all necessary legal notices. Our goal is to provide comprehensive support, ensuring that you are not burdened with legal complexities during challenging situations.
What Property Management Agreement CANNOT tell you.
Delve into the intangibles beyond the Property Management Agreement. While this legal document meticulously outlines the formalities of the relationship between a property owner and a property management company, it inherently falls short in conveying the most critical aspects of this partnership.
The agreement, cannot articulate the essence of the relationship in terms of expertise, integrity, honesty, professionalism, communication response time, compassion, and wisdom—qualities that are paramount in fostering a successful collaboration. These elements go beyond legalities; they define the character and reliability of the individuals and the company entrusted with managing your valuable real estate asset.
Entering into an agreement with a property management company is not merely a transaction; it is the initiation of a relationship. The keys handed over to the front door of your property symbolize a significant level of trust and confidence that should be cultivated through a genuine understanding of these intangible qualities.
Consider these factors diligently before making a decision. Confidence and trust in the people overseeing your property are essential for a harmonious and effective property management experience. As you navigate this decision-making process, view us as a valuable resource, ready to assist in any way to ensure your property management needs are met with the utmost care and professionalism.