Florida law requires that to manage rental property for the property owner for compensation, the manager must be licensed under F.S. ch. 475. There is an exception to this license requirement for persons managing an apartment and who are employed in a leasing capacity by the property owner or the registered broker for an owner and paid a salary. See F.S. 475.011(4).
To be clear, the property management business is a regulated profession, which requires real estate brokers and associates to comply with their obligations under law and professional regulations. There is more to consider, however, than minimum licensing and regulatory requirements. Property management is a business that warrants a lot of consideration and planning to properly and profitably manage rental property for property owners.
Property management operations have changed quite drastically over the past few decades. Property management agreements used to be created by a “handshake” or with a very simple written agreement, lacking in substance. Property managers were commonly “mom and pop” companies that operated in a simplistic and unsophisticated manner. But market developments and demands have changed our perception of what makes an effective and professional property management business.
The property management agreement is the agreement between the property management company and the property owner containing the terms and conditions of how the property is going to be managed. It contains the rights and obligations of each party, but more than that, for the property management company it serves as a structure of how they do business.
Property managers must prepare their business with the understanding of the risks of liability, the costs of operations, and market expectations. To do that, in part, property management companies need a comprehensive property management agreement. Indeed there are a vast number of subjects that need to be addressed in the property management agreement so that the property management company can effectively manage the property and enforce its business policies and procedures. To give you a sampling of the subjects that need to be addressed, see the table of contents provided below.
A well-drafted property management agreement is very important for both the property management company and property owner. The expectations of responsibilities need to be contained in the agreement to avoid unnecessary disputes and confusion. It must also be drafted in a way that fits the property management company’s business model.
In Florida, a property management company can use the property management agreement provided by the Florida Realtors Association (FAR) as a fill-in-the-blank agreement. Like the FAR-BAR residential lease agreement, the FAR property management agreement lacks a lot of substance that need to be addressed, especially from a business operations standpoint. To make the most from your property management agreement, you need to consult with an attorney who specializes in property management law to draft your property management agreement.
Sample Table of Contents
1. PARTIES AND TERM
A) Parties
B) Certification
C) Term
2. MANAGER SERVICES AND AUTHORITY
2.1 SERVICES AND AUTHORITY
2.2 INDEPENDENT CONTRACTOR
2.3 LICENSE LIMITATIONS
2.4 LEASING
A) Rental Rate
B) Lease Term
C) Lease Agreement and Legal Notices
D) Advertisement
E) Screening Tenants
F) Remedy For Tenant Early Termination
G) Liquidated Damages For Tenant Early Termination
H) Tenant Default
I) “Cash-For-Keys”
J) Evictions
2.5 FINANCIALS
A) Monies Held and Used for Owner
B) Costs and Expenditures
C) Receipt and Disbursement
D) Order of Disbursement
E) Payments on Owner’s Account
F) Survivability
G) Records
H) Tax Preparation and Filings
I) Mailing
J) Compensation and Fees
K) Onboarding
- Tenant Placement
- Renewal
- Management
- Vacancy
- Security Deposit Claims
- Landlord Protection Insurance
- Other Compensation
- Fees from Tenant
- Repair Commission. See Para. 2.6 below.
- Inspections. See Para. 4, et. seq. below.
2.6 MAINTENANCE & PROPERTY CONDITIONS
A) General
B) Rent-Ready Condition
C) Repairs That Fall Under F.S. ch. 489
D) Repairs, Materials, and Commission
1) Vendor
2) Maintenance Staff
3) Owner Hires
E) Utility and Service Bill Payments
F) Non-Emergency Repairs
- Pre-Authorization.
- Reserve.
- More-Than-8-Units Reserve Amount.
- Approval.
- Obligation Determination.
- Owner Response.
G) Emergency
H) Bids/Estimates
I) Move-Out
J) Contracted Services
K) Utilities and Landlord Agreements
L) Mold or Contaminant Testing
M) Swimming Pool (if applicable)
N) Compliance Costs
O) HVAC
P) Appliances
- Inventory.
- Fit for Use.
- Appliance Guarantee.
- Home Warranty
2.7 CORRESPONDENCE
A) Correspondence
B) Absence
2.8. PETS
A) Pets
B) Emotional Support and Service Animal
2.9 THIRD PARTIES AND NEIGHBORS
3. OWNER RESPONSIBILITIES
A) Owner Duties
B) Owner Provisions
C) Owner Liability and Casualty Insurance
D) Owner Certification
E) Lead-Based Paint Disclosure
F) Owner Default/Breach
G) Amenities and Community Property
H) Homeowner and Condo Association (HOA/COA) and Ordinances
H) Statutory Landlord Obligations under F.S. 83.51
4. INSPECTIONS
A) Routine
B) Tenant-Related
C) Government and Insurance Related
5. AMENDING AND TERMINATION OF PMA
A) Amending the Agreement
B) Termination of PMA
- Notice
- Termination Fee
- Turnover
- Immediate Termination
- Effect
- Portal
6. ADDITIONAL TERMS
A) Multiple Properties
B) Multiple Owners
C) Fair Housing
- General
- Military
- Animals
- Manager Decision and Notice
- Owner Dispute
D) Attorney’s Fees and Jury Trial
E) Acts of God
F) Construction Lien Prohibition Notices
G) Indemnification
H) Binding Agreement
I) Entirety Clause
J) Error & Omission
K) Tenant in Default
L) Assignment
M) Addenda
Property Management Law Solutions, LLC is a Florida law firm that specializes in landlord-tenant law and is a landlord-only law firm. We provide statewide services including evictions, consultation plans, education and training, membership plans, forms library, lease agreement plans and more. If you are a landlord or property manager, contact us today or subscribe to one of our online membership plans.