Tip of the Month - December, 2017
Property Manager Companies
Source: Leases & Rental Agreements
By: Martha Stewart & Attorneys Ralph Warner & Janet Portman
One advantage of working with a management company is that you avoid all the legal hassles of being an employer: paying payroll taxes, buying workers’ compensation insurance, withholding income tax. The management company is an independent contractor, not an employee. It hires and pays the people who do the work. Typically, you sign a contract spelling out the management company’s duties and fees. Most companies charge a fixed percentage about 5% to 10%-of the total rent collected. (The salary of any resident manager is additional.) This gives the company a good incentive to keep the building filled with rent-paying tenants.
Another advantage is that management companies are usually well informed about the law, keep good records and are adept at staying out of legal hot water in such areas as discrimination, invasion of privacy and returning deposits.
The primary disadvantage of hiring a management company is the expense. Management companies have their own contracts, which you should read thoroughly and understand before signing. Be sure you understand how the company is paid and its exact responsibilities.
Property management companies are often used by owners of large
apartment complexes and by absentee owners too far away from the
property to be directly involved in everyday details. Property
management companies generally take care of renting units, collecting
rent, taking tenant complaints, arranging repairs, maintenance and
evicting troubling tenants.
This web page was updated on 12/02/2017.