What A Property Management Agreement Look Like in Orange County, California

1. Parties Involved

The PMA begins by identifying:

• Property Owner: The landlord or entity that owns the property.
• Property Manager: The company or individual tasked with managing the property.

Key Details:

• Full names, addresses, and contact information for both parties.
• The exact address of the property being managed, including any specific units if it’s part of a multi-unit complex.

2. Scope of Services

Property Marketing:

• Listing the property on various platforms, including local real estate websites and national portals.
• Professional photography or virtual tours to enhance listings.

Tenant Screening:

• Conducting background checks, credit reports, employment verification, and previous landlord references.
• Ensuring compliance with fair housing laws, which is particularly strict in California.

Lease Management:

• Drafting, negotiating, and executing lease agreements that comply with California’s tenant laws.
• Handling renewals, amendments, and terminations of leases.

Rent Collection:

• Establishing procedures for collecting rent, including late fees and grace periods.
• Managing direct deposit or online payment systems.

Maintenance and Repairs:

• Coordinating all maintenance requests, with provisions for emergency repairs.
• Ensuring compliance with habitability standards under California law.

Financial Management:

• Managing all financial transactions, including rent distribution to the owner, expense tracking, and providing monthly or quarterly financial reports.

Legal Compliance:

• Adhering to state and local laws, including rent control (like AB 1482 in California), eviction processes, and property inspections.

Tenant Relations:

• Serving as the primary contact for tenant communications, from move-in to move-out.

Additional Services:

• Might include tenant move-out inspections, eviction proceedings, or handling insurance claims.

3. Compensation

Management Fees:

• Typically, a percentage of the collected rent (often between 5-10%) or a flat fee.
• Specifics on how fees are calculated and when they are due.

Leasing Fees:

• A one-time fee for securing a new tenant, commonly one month’s rent or a percentage of the annual rent.

Other Costs:

• Clarification on how expenses like marketing, maintenance, or legal fees are handled – whether they’re included in the management fee or charged separately.

4. Term of Agreement

• Duration: Usually one year with options for renewal, though this can vary.
• Termination: Conditions under which either party can terminate the agreement, including notice periods (often 30 to 60 days).

5. Owner’s Responsibilities

While the property manager handles day-to-day operations, owners are typically responsible for:

• Funding major repairs or capital improvements.
• Keeping insurance current.
• Providing the manager with necessary legal or financial documents.

6. Liability and Insurance

• Indemnification: Clauses where both parties agree to protect the other from certain liabilities.
• Insurance: Stipulations on maintaining adequate insurance for the property, covering both property damage and liability.

7. Dispute Resolution

• Details on how disputes will be resolved, often favoring mediation or arbitration over litigation to keep matters out of court.

8. Legal Compliance

California Specific:

• Adherence to the Tenant Protection Act of 2019 (AB 1482) for rent increases and eviction rights.
• Compliance with local ordinances, especially in cities like Santa Ana with additional rental regulations.

Licensing:

• Ensuring the property manager is licensed by the California Department of Real Estate if required for certain management activities.

9. Reporting and Communication

• Frequency and format of financial and operational reports.
• Methods of communication for routine matters and emergencies.

10. Property Access

• Rules on how and when the property manager can access the property, ensuring compliance with tenant privacy laws (24-hour notice requirement).

11. Eviction and Legal Proceedings

• The process for handling evictions, including who pays for legal fees and how decisions are made regarding eviction.

12. Amendments

• How changes to the agreement can be made, usually requiring written consent from both parties.

13. Exit Strategy

• What happens at the end of the management term or upon termination, including the transfer of tenant information, keys, and funds.

14. Special Considerations in Orange County

Environmental Factors:

• Provisions for dealing with coastal or weather-related issues (e.g., mold due to the humid climate near beaches).

High Demand Market:

• Strategies for maximizing occupancy rates in a market where properties can rent quickly but also where tenant quality is crucial.

Tenant Demographics:

• Adaptations for the diverse demographic of Orange County, possibly including language accommodations or understanding different cultural expectations around housing.

Local Laws:

• Ensuring the PMA reflects any city-specific regulations, like those in Santa Ana and Costa Mesa, concerning rent control or tenant rights.

Sample Clauses from a Typical Agreement

• Management Fee Clause: “The Owner agrees to pay the Manager a management fee of 8% of the monthly collected rent for each property managed under this agreement.”
• Lease Agreement Clause: “The Manager shall draft all new leases using the standard form provided by the Owner, ensuring compliance with all relevant California tenant laws.”
• Maintenance Clause: “The Manager will handle all maintenance requests up to $500 per incident without prior approval; expenses exceeding this amount require Owner’s written consent.”
• Termination Clause: “This agreement may be terminated by either party with 60 days’ written notice, except in cases of material breach where termination may be immediate.”

Conclusion