Termination Clause Management Agreement

Did you know that 42% of the 3,000 real estate owners we talked about make property management their biggest pain? Will there be any fees or penalties for early termination of the contract? Not all managers charge a fee; If they do, it`s either a fresh flat straight forward (300-500) or something conditional. The conditions can be very different, from paying a tax if you cancel during the first vacancy period, to paying a tax, if you cancel after a tenant has landed, or within the first 12 months. Worst-case scenario? We have seen contracts that, in the event of early termination, still require the payment of monthly administrative fees for the duration of the remaining tenancy period and others that impose the full administrative costs for the duration of the contract (based on expected rents) as a precondition for early termination. Mutual agreement – both parties agree to cancel the agreement and all obligations it has established. Pay attention to the circumstances in which the management company terminates the contract, the communication it will give you and the financial impact it will have. Below are some excerpts from actual contracts that describe the circumstances that allow management to terminate the contract: Most property management companies require a contract term of 1 to 2 years with very few monthly services. Note that the contract is legally binding for its execution (signature), even if the start date or “effective deadline” may start later. At the end of the initial or “primary” term, the contract can automatically renew itself for another term that repeats the process each time the expiry date occurs. Find out how long the automatic extension will commit you, it could be longer than the original duration was, which would be important to know. In case you want to prevent this automatic extension, you may need to provide a written notification at least 15-30 days before registration.