This overview of our operating policies is to help clarify what, when, why, and how we operate in order to fulfill the management agreement, best operate, and successfully manage your property. We hope the explanations found here are simple and easy to understand. Please let us know should you have any questions or need further clarification. For reasons of simplicity, the property owner(s) listed in the management agreement will be referred to as "client" in this overview.
Because of changes to market conditions federal and local requirements, or best practices, these operating policies and terms are subject to change.
Many properties are owned by two or more people. To make managing your property more efficient, approval by any person listed as "Owner" on the management agreement for any action or decision shall be sufficient for all owners. One or more owners of a property are considered our client.
All security and other deposits are held in a Property Management Trust Account. We control the deposits and refund all remaining deposits to the tenant(s). We are not liable for bankruptcy or failure of the depository or for uncollected rents as we can't guarantee rents or other rental income. Evictions and collections are not the norm and are the exception. However as they do happen, we will attempt to collect unpaid balances left by tenants or other parties through our own efforts or the efforts of our attorneys or collection agencies. Where possible, we will add the attorney or collection agency fees to the total balance owed (up to 40% of the balance). This allows for most or all of the fee charged by the attorneys or collection agencies to be covered by the tenant's payments. Additionally for our efforts, we will charge 30% of the remaining balance for our efforts. In essence, where we are able to collect payment in full for the balance plus collection fees, our clients should expect to receive 60-70% of the balance. Monies collected through collection efforts are generally first applied to fees, maintenance or repairs, and lastly rent.
The owner reserve referred to in the management agreement are funds used for utilities, maintenance, repairs, and monthly expenses. We use future rental income or any disbursements due to the client to replace used reserve funds. We will use future rental income or any disbursements due to our client to pay for any bills outstanding on the property (utility bills, HOA dues, maintenance invoices, management fees, etc). Should the client's account not have sufficient funds to cover outstanding bills, the client will need to have the outstanding balances paid within 15 days of being notified via monthly statement or other communication. Should the bills be left unpaid after 30 days of receipt, we may notify the client of such and provide a specified time period for the client to pay the balance in full. Following this specified period, if the balance is not paid, we may draw sufficient funds from the client's account on file to cover such bills. We may further our own funds or other escrowed funds to lend to the property owner's account with an added finance fee of 15% plus ongoing interest of 5% monthly until paid in full.
Maintenance is an area of concern to most property owners. We strive to do everything we can to minimize cost and headaches for our clients, while adhering to local regulations and requirements. You have hired us to make or cause to be made all decorating, maintenance, re-keying of locks, alterations and repairs to the property as reasonably necessary, and to hire and supervise all employees and other labor for the accomplishment of the same.
All advertising of rentals is at our discretion. Advertising tools may include but are not limited to property lists, internet postings, signage, internet web site usage, and networking resources. We reserve the right place a lockbox on the property and make the code available to staff, contractors, and other parties at our discretion. In order to secure a tenant more efficiently and effectively, the lockbox code may be available to prospective tenants for viewing the property without being accompanied by the manager or Manager’s agent so long as Manager has followed procedure to register each prospect with its or its partner system, properly pre-screen and verify prospective tenants, or other methods of verification and/or registration as determined by Manager.
We make disbursements from our client’s funds for repairs, maintenance, utilities, materials, banking costs, collection fees, legal fees, late fees, deposits, management fees, client contributions and draws, and any other disbursements needed to fulfill the agreement. In the case the disbursements and charges are in excess of the receipts, our clients agree to pay the excess promptly. We are authorized to initiate debit/credit entries for payments owed to and from our client’s account on file.
We provide to our clients monthly and yearly statements accounting for all expenses, income, management fees, client contributions, and draws. We are responsible for preparing annual summary reports referred to as "Year-End Reports" and to send them to our clients along with 1099 forms each year for the preceding year. At our discretion we may hire a 3rd party company to electronically process and distribute 1099 forms.
In order for us to be successful at managing the property, lease, and tenants, we must handle all communications with any tenant. Our clients agree that they will not communicate directly with the tenants or modify any term of the lease agreement (or any other related document signed by us and the tenant), or make any other oral or written assurances to the tenant without the our approval. Any communication by a tenant to our clients for any reason must be directed to us. Our clients agree to indemnify us for any damages incurred as a result of a tenant’s reliance upon an unapproved modification authorized by our clients.
Due to challenges associated with homeowner’s associations ("HOA") and their affiliated management companies, we will not be liable for the failure of our client or tenant to comply with HOA rules, regulations, or covenants codes and restrictions ("CC&Rs") or for any associated fees, costs, or penalties assessed for noncompliance. However, we will work in good faith with the HOA/management company, client, and tenant in attempting to comply with HOA requirements. Our clients further agree to notify any governing HOA that we are the primary contact for any violation concerns and to include us on any mailings/notices sent by the HOA. Since it is not a part of normal management responsibilities, we will not attend HOA meetings unless agreed upon and our time billed and invoiced to our client.
We need authority to manage utilities and other ongoing service contracts in order to effectively manage and oversee the properties we manage. Our clients give us this authority so they don't have to deal with the day to day hassles of it. Some utility companies and cities still require a signature from the property owner to establish landlord agreements and such though we are authorized through the management agreement to sign on our client's behalf. We are further indemnified and not held liable for any injury, damage to the property, or damage to neighboring property due to the failure of utility service being provided. We are also authorized to manage the utilities and coordinate the billing on behalf of our clients and for the tenants as we deem most appropriate for the situation.
It is important that our clients provide us with evidence of insurance which we may verify to determine the adequacy of coverage. If necessary, additional changes in insurance coverage may be made upon the approval of our client. Our clients must notify us and provide documentation in the event the mortgage, taxes, and any other liens on the property are delinquent and will in any way affect the management agreement or any lease of the property. In the event the premises is occupied and/or we did not complete the move-in inspection for a tenant, we are not able to accurately complete a move-out disposition of charges. For this reason, we can't be required to assess charges to the tenant.
As licensed real estate professionals, we want to be your agent for all things real estate related. If you decide to buy or sell property, we have great solutions for you. Our agreement with you requires that you utilize our sales services in the event you decide to sell the property tenant occupied. Simply put, selling a house with a tenant has many challenges and most agents do not experience it enough to understand how to make it successful. There are many ways we have witnessed over the years that 3rd party real estate agents create a more problems than solutions. If you do decide to sell through a 3rd party brokerage, we will need to set some expectations with them in order for it to be successful. Since we will not be a party or agent to the sale, following our introductory conversation with the tenant the 3rd party agent will take over to build rapport, get the tenant's buy-in, and see that the relationship will be positive. The agent will then work directly with the tenant. We can help the agent by giving recommendations however, it will be their sole responsibility to create a successful situation. If they do not handle it properly, the tenant could very well sabotage the sales process.
Due to the sensitive nature of the sales process with a tenant, most of our property owners decide to list through our brokerage rather than a 3rd party brokerage. We know the property, have exclusive marketing networks, know the tenants and the process well, etc. If you decide to have the rental vacant prior to listing, we would also love to help at that point.
Local or municipal ordinances may require certain property owners to license their rental properties and/or provide a current in-state agent to accept legal service on behalf of any such owner. It is the duty of our clients to become familiar with any local or municipal ordinances and the obligations they impose. Our clients are also responsible to ensure that the properties are in compliance with these ordinances and that any associated fees have been paid or licensing requirements have been fulfilled. We do not assume and are not given responsibility for the property's compliance with the requirements of any statute, ordinance, law or regulation of any governmental body, and public authority, or any official hereof having jurisdiction, or any complaints, warnings, notices or summonses, received by it in relation to those matters.