This Property Management Agreement (the "Agreement") is entered into as of the day of , 20, by and between the following parties:
WHEREAS, Owner is the legal owner of certain residential rental property or properties located in McHenry County, Illinois, more particularly described in Exhibit A;
WHEREAS, Manager is engaged in the business of managing residential rental properties and possesses the expertise, systems, and resources to effectively manage such properties;
WHEREAS, Owner desires to retain Manager to manage the Property on Owner's behalf, and Manager desires to accept such engagement, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
2.1 Initial Term. This Agreement shall commence on the date first written above (the "Effective Date") and shall continue for an initial term of twelve (12) months (the "Initial Term").
2.2 Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive twelve (12) month periods (each, a "Renewal Term"), unless either party provides written notice of non-renewal at least sixty (60) days prior to the expiration of the then-current term.
2.3 Termination Notice. Either party may terminate this Agreement at any time by providing the other party with no less than sixty (60) days' prior written notice, subject to the provisions of Article IX hereof.
Manager shall perform the following services on behalf of Owner with respect to the Property, exercising the degree of care and diligence that a reasonably prudent property manager would exercise under similar circumstances:
In consideration of the services rendered by Manager under this Agreement, Owner shall compensate Manager as follows:
| Fee Type | Description | Amount |
|---|---|---|
| Management Fee | Percentage of gross monthly rent collected from all units on the Property, payable monthly. Calculated on actual rent received, not rent due. Industry standard range: 8%–12% of gross rent | 8% |
| Leasing Fee | Fee for procurement and placement of a new tenant, including marketing, showing, screening, and lease execution. Payable upon tenant move-in and first month's rent collection. Applies to new tenants only, not renewals | 50% of 1st month's rent |
| Lease Renewal Fee | Fee for negotiation and execution of a lease renewal with an existing tenant, including market rent analysis and lease document preparation. Per renewal, per unit | $150.00 |
| Maintenance Markup | Coordination and oversight fee applied to contractor invoices exceeding $500.00 per occurrence. Covers vendor management, quality verification, and project oversight. Does not apply to invoices at or below $500.00 | 10% |
| Late Fee Retention | Manager's share of late fees collected from tenants in accordance with the lease terms. Remaining 50% remitted to Owner with monthly disbursement. Incentivizes diligent collection efforts | 50% of late fees |
| Eviction Coordination Fee | Administrative fee for coordination of eviction proceedings, including preparation of notices, court filing coordination with legal counsel, and lockout scheduling. Does not include attorney fees or court costs, which are Owner's responsibility. Per filing, per unit | $250.00 |
4.2 Payment. All management fees shall be deducted by Manager from the monthly rent receipts prior to disbursement to Owner. Owner disbursements shall be made no later than the 15th day of each calendar month for the preceding month's collections. Manager shall provide a detailed accounting statement with each disbursement.
4.3 Fee Adjustments. Manager may propose adjustments to the fee schedule upon thirty (30) days' written notice. Any fee increase shall not take effect until the commencement of the next Renewal Term, and Owner retains the right to terminate in lieu of accepting increased fees.
7.1 Manager shall establish and maintain a separate trust account (the "Trust Account") at a federally insured financial institution located in the State of Illinois for the deposit and holding of all tenant security deposits, rent payments, and other funds received on behalf of Owner.
7.2 All funds held in the Trust Account shall remain the property of the Owner and/or tenants, as applicable, and shall not be commingled with Manager's own funds under any circumstances. Manager shall comply with all requirements of the Illinois Security Deposit Return Act (765 ILCS 710/) regarding the holding, accounting, and return of tenant security deposits.
7.3 Manager shall maintain detailed records of all Trust Account transactions and shall provide Owner with Trust Account statements upon request. Owner shall have the right to audit Trust Account records at any time upon reasonable notice.
7.4 In the event of termination of this Agreement, all funds held in the Trust Account shall be transferred to Owner or Owner's designee within thirty (30) days, accompanied by a full accounting of all deposits and disbursements.
8.1 Manager's Insurance. Manager shall maintain, at Manager's sole expense, the following insurance coverage throughout the term of this Agreement:
8.2 Owner's Insurance. Owner shall maintain, at Owner's sole expense, the following insurance coverage throughout the term of this Agreement:
8.3 Each party shall name the other party as an additional insured on their respective general liability policies and shall provide certificates of insurance upon request. Each party shall provide the other with thirty (30) days' advance written notice of any cancellation, non-renewal, or material change in coverage.
9.1 Termination by Either Party. Either party may terminate this Agreement at any time by providing the other party with no less than sixty (60) days' prior written notice (the "Termination Notice").
9.2 Early Termination Fee. If Owner terminates this Agreement during the Initial Term for reasons other than Manager's material breach, Owner shall pay Manager an early termination fee equal to three (3) months of management fees based on the average monthly management fee earned during the preceding three (3) months (or the actual months of service if fewer than three months have elapsed).
9.3 Transition Procedures. Upon termination, Manager shall:
9.4 Termination for Cause. Either party may terminate this Agreement immediately upon written notice if the other party: (a) commits a material breach that remains uncured for thirty (30) days after written notice of such breach; (b) files for bankruptcy or becomes insolvent; or (c) engages in fraud, willful misconduct, or gross negligence in connection with this Agreement.
10.1 Owner shall indemnify, defend, and hold harmless Manager and its members, officers, employees, and agents from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or related to: (a) the ownership, operation, or condition of the Property; (b) Owner's breach of this Agreement; or (c) Owner's negligence or willful misconduct; except to the extent caused by Manager's negligence, willful misconduct, or breach of this Agreement.
10.2 Manager shall indemnify, defend, and hold harmless Owner from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or related to: (a) Manager's breach of this Agreement; (b) Manager's negligence or willful misconduct in the performance of its duties hereunder; or (c) Manager's violation of any applicable law or regulation; except to the extent caused by Owner's negligence, willful misconduct, or breach of this Agreement.
10.3 Limitation of Liability. In no event shall Manager's total aggregate liability under this Agreement exceed the total management fees paid to Manager during the twelve (12) month period immediately preceding the event giving rise to such liability.
11.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflict of laws principles.
11.2 Venue. Any legal action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the Circuit Court of McHenry County, Illinois, or the United States District Court for the Northern District of Illinois, and each party hereby irrevocably consents to the jurisdiction of such courts.
11.3 Mediation. Prior to commencing any legal action, the parties agree to first attempt to resolve any dispute arising under this Agreement through good faith mediation, with the costs of mediation to be shared equally between the parties.
11.4 Attorneys' Fees. In any action or proceeding to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.
12.1 Entire Agreement. This Agreement, together with all exhibits and attachments hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written.
12.2 Amendments. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both parties.
12.3 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect.
12.4 Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed given when: (a) delivered personally; (b) sent by certified mail, return receipt requested, postage prepaid; or (c) sent by recognized overnight courier service, to the addresses set forth in Article I, or to such other address as either party may designate in writing.
12.5 Assignment. Manager shall not assign this Agreement or delegate any of its duties hereunder without the prior written consent of Owner. Owner may assign this Agreement in connection with a sale or transfer of the Property, provided the assignee assumes all of Owner's obligations hereunder.
12.6 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving party. No failure or delay in exercising any right shall operate as a waiver thereof.
12.7 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same agreement. Electronic signatures shall be deemed valid and binding.
IN WITNESS WHEREOF, the parties hereto have executed this Property Management Agreement as of the date first written above.
The following properties are subject to the terms and conditions of this Property Management Agreement:
Additional properties may be added to this schedule by written amendment signed by both parties.