Presenting a live 90-minute webinar with interactive Q&A Property Management and Leasing Agreements: Key Provisions for Multi-Family, Office, Retail and Industrial Properties Navigating Fees and Expenses, Agency, Property Improvements, Early Termination Provisions, Licensing Requirements, and More WEDNESDAY, MARCH 1, 2017 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Scott D. Brooks, Partner, Cox Castle & Nicholson, San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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I. Property Management Agreements for Different Property Types A. Office B. Industrial C. Retail 5
II. Term/Termination Rights A. Duration of Initial Term; Automatic extension (month to month or year to year) unless terminated. B. Termination by Owner or Manager for Cause (uncured default, bankruptcy, gross negligence, willful misconduct, fraud). C. Termination by Owner upon Transfer. D. Termination by Owner upon Change of Ownership/Control by Owner or Manager. E. Termination by Owner or Manager on 30 days notice without cause. F. Transition/coordination with new manager on termination (delivery of books and records, preparation of final accounting, etc.). 6
III. Performance of Services A. Standard of care. Manager not a guarantor of 3rd party performance. B. Preparation of budgets for Owner approval. C. Management of Tenant relationships - Collection of rents, reconciliation of additional rent charges, Tenant evictions.. D. Performance of maintenance, repairs and other work. E. Standards for service contracts Insurance requirements. Bidding requirements. Limited authority to execute as agent for Owner (below $X) or Owner execution required. 7
III. Performance of Services F. Owner insurance and Tenant insurance requirements. Does Manager advise or administer? G. Establish security, life safety and other property management procedures. H. Administration of compliance with Owner loan documents, leases, matters of record and applicable laws (including environmental issues and any licensing/certificates of occupancy). I. Retention of counsel. J. Supplemental services without additional compensation only if customary for property management services in applicable market. 8
IV. Accounting, Reporting and Operating Budgets A. Operation within budget. 1. Permitted deviations (x% per line item, y% overall). 2. Emergencies. B. Maintenance of Books and Records. C. Monthly, Quarterly and other periodic reporting. 1. Monthly rent roll. 2. Operating (income and expense) statements. 3. Operating bank account reconciliation. 4. Budget deviation reports. 5. Leasing updates. D. Audit by ownder 9
IV. Accounting, Reporting and Operating Budgets E. Bank Accounts 1. Manager account funded by Owner in advance based on Approved Budget allowing payment of Property expenses and drawing of Manager fees monthly in arrears. 2. Items paid separately by Owner (may include debt service, insurance, taxes). 3. Tenant rent usually directed to separate account (not allowing Manager access). 4. Separate account for Tenant Security Deposits if required by law. 10
V. Management Fees A. Percentage of gross project revenue with minimum (especially if lease up). B. Exclusions 1. Rent allocable to amortization of excess tenant allowance amount. 2. Early termination payments. 3. Unapplied security deposits. 4. Proceeds from sale or financing. 5. Insurance proceeds (unless allocable to lost rent). C. Reimbursable expenses. 1. May or may not include employee salary and benefits (limit to on-site and prorated if not full time), accounting costs, out of pocket costs. 11
VI. Leasing Services and Leasing Fees A. Listing broker services (leasing/sale) or Coordination with separate leasing broker. 1. Development of leasing plan. 2. Assist Owner s counsel in negotiations. 3. Status updates for Owner. B. Leasing fees (varies market to market) as listing broker. 1. Amounts payable without Tenant broker vs. with Tenant broker. 2. Timing of payment of leasing fees (50% on execution and waiver of contingencies, 50% on move-in/rent start). 3. Amounts payable on extensions/expansions. 4. Exclusions (owner related parties/tenants with ongoing negotiations). 12
VI. Leasing Services and Leasing Fees C. Leasing fees after Termination for leases later entered into with existing prospects. 1. Delivery of prospects list. 2. Time frame. 3. Continuous negotiations. 13
VII. Construction Management and Construction Management Fees A. Detailed description of construction management activities (Owner work and Tenant work) 1. Plan review. 2. Architect/engineer/contractor/subcontractor selection. Review of bids. 3. Negotiation of Architect/Contractor contracts. 4. Coordination of work. 5. Inspections/Meetings. 6. Approval of construction payment draw requests. 7. Review of substantial completion and punch list work. 8. Assisting with warranty claims. B. Percentage of work (typically sliding scale depending on scope of work). C. Exclusions (separate third party or related party contactor/manager). 14
VIII. Indemnity and Insurance A. Standard of Manager Indemnity of Owner Negligence/Gross Negligence, Willful Misconduct, Fraud, Default. B. Standard of Owner Indemnity of Manager. C. Owner insurance. 1. All risk with waiver of subrogation. 2. Liability with Manager as additional insured. D. Manager insurance. 1. Liability with Owner as additional insured. 2. Crime insurance. 3. Professional liability insurance. 4. Worker s compensation and employer s liability insurance. 15
XI. Other Issues A. Non-compete. B. Limitation of liability. C. Limitation on assignment/change in control by Manager. D. Manager licensing. Broker licensing requirements. E. Manager estoppel. F. Manager subordination of Management Agreement to lender s Deed of Trust/Mortgage. G. Manager personnel as employees of Manager (not Owner). Manager as third party contractor. 16
Thank You Scott D. Brooks Cox Castle & Nicholson 50 California Street, Suite 3200 San Francisco, CA 94111 415.262.5110 sbrooks@coxcastle.com 17