Property management agreements

This may sound like a strange thing to review in the agreement, but we believe it is one of the most important parts of the agreement because it shows the property management company's willingness to give you flexibility in allowing you to leave if you are ever unhappy with their service. A property management company should not handcuff you or force you to work with them, nor should they charge you termination fees or penalties if you leave. Ideally, you want a month-to-month agreement, allowing you to potentially leave anytime you want – and without penalty!

Our management agreement is month-to-month with NO termination fees or penalties.

You can expect a property management company to charge fees for the services they provide, but are those fees transparent and fair?

If the fees are 'hidden' throughout the agreement that could be an indication that the company is not being transparent in what they will charge you.

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The state of Colorado requires by law that an attorney prepare a Property Management Agreement specific for the company, and this must be disclosed in the agreement.

If the agreement does not have language stating it was prepared by a specific law firm, then you should assume the company is not operating under the required laws of Colorado.

Our management agreement is prepared by the Colorado law firm TSM PC.

Your Colorado property management company should open a banking escrow trust account for you and you will need to fund this account with what is commonly referred to as a reserve. This money is used to fund your account and may also be used to pay expenses on the property that are incurred before or after you receive the rental income each month.

Reserve amounts vary, but you should expect this amount to be anywhere from a few hundred dollars, up to one full month's rent.

We require an escrow reserve of $600.

When a tenant pays rent, how quickly does the property management company process the accounting of those funds and pay you?

You want your money quickly, ideally no later than the 15th day of the month.

We close our accounting cycle on the 10th day of each month and disburse funds via secure ACH directly into your bank account.

One of the reasons you hire a property management company is so that you don't have to be bothered with the day-to-day issues and problems that happen – including routine maintenance and repair items.

For the protection of your property and to comply with health and safety laws, your property management company must have strong maintenance protocols in place. These protocols should clearly define when repairs are tenant vs. owner responsibility, what constitutes a maintenance emergency, when to repair vs. replace, and when you (as the owner) should be involved.

Be sure you understand when you will have to become involved in repair requests.

We handle all repair issues and don't bother you for items under $500.

Two common fears we hear from owners are: What if my tenant does not pay rent and has to be evicted? What if a pet does damage to my property? If either of those things happen, how will the property management company respond and what will they do to help?

While it can't be guaranteed that a tenant will always pay on time – will your property management company re-rent the property for free? Or better yet, will they pay the legal fees on your behalf?

While it can't be guaranteed that a pet won't do damage to the property – will your property management company pay for any of the pet damage themselves?

While guarantees like these are not common – ask, "What do you guarantee for me?"

We will pay you up to $1,000 in legal fees or pet damage. Click here for details.

Although evictions should be rare, if a legal problem must be addressed, will the property management company do it for you or will they hand the problem back to you?

You want to be sure that the company will handle all legal problems on your behalf, including preparation and service of the many legal documents required to initiate the eviction process in Colorado.

Beware of any management agreement language that requires you to involve your own legal counsel in cases of tenant eviction.

Although rare, if an eviction is necessary, we oversee the entire legal process from start to finish. We even prepare and serve the legal notices required for this process – at no cost to you.