Commercial real estate property management agreement

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What is a Property Management Agreement in Commercial Real Estate?

A Property Management Agreement (PMA) is an essential document in the world of commercial real estate. A PMA is a contract that establishes a working relationship between the property owner (often referred to as the ‘landlord’ or ‘principal’) and a property manager (or property management company). The goal is to ensure that the commercial property is well-maintained, tenancies are managed effectively, and the property generates the expected return on investment.

While the specifics can vary, most agreements cover the following areas:

Services and Responsibilities: This section defines the scope of the manager’s duties and this will generally include maintenance, rent collection, tenant communications, handling emergencies, and more.

Why are Property Management Agreements Important?

Clear Responsibilities: Such agreements eliminate ambiguity in managing the property and various leases by detailing who is responsible for what.

Things to Consider Before Signing the PMA:

Due Diligence: Ensure that you have vetted the property management company or individual thoroughly. Check independent references, reviews, and credentials.

A Property Management Agreement ensures the smooth operation of the property, safeguarding the interests of both the owner and the manager. As with any legal document, it’s crucial to understand its terms thoroughly and seek expert advice when necessary.