What to know about your building manager agreement

What is a building manager agreement?

A building manager agreement is an essential contract that defines the relationship between property owners and building managers. Whether you're a landlord looking to hire a professional to manage your rental property or a building manager seeking to formalize your services, understanding the ins and outs of these agreements is crucial.

In this comprehensive guide, we'll delve into the key aspects of agreements, their types, essential components, and best practices.
 

Elements of an effective building manager agreement

While the specific terms and clauses in agreements can vary, there are several key components that should be included for clarity and to protect the interests of both parties:

• Identification of parties: Start by clearly identifying the parties involved: the property owner(s) and the building manager or management company. Include their legal names and addresses.
   
• Property description: Provide a detailed description of the property being managed. Include the property's address, type (e.g., single-family home, apartment complex), and any unique features or amenities.
   
• Term of agreement: Specify the duration of the agreement. Most building manager agreements are for one year, but shorter or longer terms are possible. Outline any renewal options or termination clauses.
   
• Scope of services: Clearly define the building manager's responsibilities and services. This section should cover tenant screening, rent collection, maintenance, emergency response, and any other services provided.
   
• Fees and compensation: Detail how the building manager will be compensated. Common fee structures include a percentage of the monthly rent, a flat fee, or a combination of both. Include information on when and how fees will be paid. Learn more in our guide to management fees in New Jersey.
   
• Termination procedures: Outline the procedures and conditions under which either party can terminate the agreement. This may include notice periods, reasons for termination, and any penalties for early termination.
   
• Insurance and liability: Specify insurance requirements for both parties. Building managers typically carry liability insurance, but property owners may need to maintain property insurance. Clarify how liability for damages or losses will be handled.
   
• Maintenance and repairs: Detail how maintenance and repairs will be managed, including the process for reporting issues, obtaining quotes, and authorizing repairs. Set a spending limit that requires property owner approval for larger repairs.
   
• HOA fee collection and deposits: Explain how fees will be collected from residents and when they will be remitted to the property owner. Address security deposits and how disputes or deductions will be handled.
   
• Resident screening: Describe the tenant screening process and criteria. Specify the building manager's role in drafting and executing leases, including fee increases and resident renewals.
   
• Accounting and reporting: Detail how financial records will be maintained and provided to the property owner. Regular financial reports should include income, expenses, and any outstanding issues.
   
• Conflict resolution: Establish a process for resolving disputes between the property owner and building manager. This may include mediation or arbitration clauses to avoid costly litigation.
   
• Additional provisions: Include any additional terms or provisions specific to your agreement. These could cover topics like property inspections, marketing strategies, or specific obligations unique to your property.
   
• Signatures: Both parties should sign and date the agreement, indicating their understanding and acceptance of the terms. Notarization may be required in some jurisdictions.

Contract best practices

To create a stronger agreement and reduce avoidable disputes, focus on contract terms that are specific, practical, and easy to apply in day-to-day management.
 

Use clear language

Write the agreement in plain English so both parties can quickly understand responsibilities, expectations, and processes without relying on vague wording or overly technical contract language.
 

Set approval limits

Explain when the manager can act without approval and when owner or board consent is required, especially for repairs, contracts, major expenses, or policy changes.
 

Clarify fees completely

State all management fees, extra charges, billing timelines, and reimbursable costs upfront so there are no surprises about compensation once the agreement is in effect.
 

Review the agreement regularly

Revisit the contract from time to time to confirm it still matches the property’s needs so you’re getting the full benefits of working with a management company.
 

How do you secure a building management agreement?

Securing building management contracts requires a strategic approach aimed at demonstrating value and trustworthiness to potential management companies:

1. Research management companies: Start by researching reputable management companies in your area. Look for management companies with experience managing properties similar to yours and a track record of success.
    
2. Request proposals: Reach out to select management companies and request proposals outlining their services, fees, and approach to management. Be clear about your community's needs and expectations.
    
3. Evaluate proposals: Carefully evaluate the proposals you receive, considering factors such as experience, services offered, pricing, and the company's reputation. Look for a company that aligns with your community's values and goals.
    
4. Schedule interviews: Narrow down your choices and schedule interviews with the top management companies. Use this opportunity to ask questions, clarify any concerns, and get a sense of the company's communication style and responsiveness.
    
5. Review references: Request references from the management companies and reach out to current or past clients to inquire about their experiences. Pay attention to feedback regarding communication, professionalism, and the quality of services provided.
    
6. Negotiate terms: Once you've selected a preferred management company, negotiate the terms of the contract. Discuss services, fees, contract duration, and any other relevant details to support mutual understanding and agreement.

By following these steps and carefully selecting a management company that aligns with your community's needs and values, you can successfully secure an agreement that benefits your community in the long term.

Learn more in our guide: How to choose the right New Jersey property management company.
 

Frequently asked questions

What is the standard term for a building manager agreement? 

The common standard term for a building manager agreement is typically between one and five years, but this can vary depending on the specific needs and goals of the parties involved.
 

What is the most important aspect of building management?

Communication with owners and residents. One of the most important aspects of building management is maintaining good relationships with residents and owners.
 

What occurs when a building manager signs an agreement with an owner?

A building manager becomes an authorized representative when the property owner & manager execute a legally binding building management agreement, a legal contract that details a manager's responsibilities and the owner's expectations regarding the property's managerial tasks.

Pro tip: check out our resource library for more information, tips, and resources on effective community management here!
 

About FirstService Residential

As North America’s leading property management company, FirstService Residential serves New Jersey boards and owners with local expertise backed by national resources. Our teams offer support with meetings, recordkeeping, financial management, banking and insurance programs, resident communication, and 24/7 customer care teams. This way, board members can focus on long-term goals instead of day-to-day administration.

With more than 25 years of experience in New Jersey, we help HOAs, condo associations, high-rises, and master-planned communities operate smoothly and meet their goals with confidence. To learn how we can support your association, contact our New Jersey team today.

This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.