Property Management Service Level Agreement – Mixed-Use Property
This Property Management Service Level Agreement – Mixed-Use Property is designed for use by a property management company that manages one or more mixed-use (residential/commercial) developments on behalf of the owner.
This service level agreement, which reflects the changes made to the Smoke and Carbon Monoxide Alarm Regulations from the 01 October 2022 (which affects England only), sets out (in Schedule 1) a list of the properties which the management company will manage. This list can change over time as the agreement is designed to be flexible and to form the basis of a long-term relationship between the parties. The residential units within each property are to be let on assured shorthold tenancies and the commercial units on business leases. All the units are managed by the management company for the term of the agreement.
The agreement sets out in detail the rights and obligations of each party. It includes clauses dealing with key issues such as insurance, liability and indemnity, financial record keeping, confidentiality and non-solicitation. There are also provisions for monitoring the management company’s performance and for reviewing and varying the contractual relationship between the parties. Penalty fees and termination rights may apply if the management company does not perform to the required standard.
Clauses 6.9 and 6.10 are optional. These address the freedom of the parties to deal with third parties. You may wish to include one or both of these depending on the bias you wish the agreement to adopt. It should be understood that clause 6.9, whilst allowing the client to obtain similar services from a third party, should not harm the service provider’s interests under the agreement at hand as its provisions and binding effect upon the client will remain unchanged. Clause 6.10 has the potential to limit the service provider’s freedom to deal with the client’s competitors. This should be used with care and the consent referred to in that clause should generally be given without hesitation, lest the restrictions in clause 6.10 be challenged on the grounds of restraint of trade. If you are the client and are considering withholding such consent, legal advice from a commercial law firm is strongly recommended.
The scope of the management company’s role is set out in Schedule 2. An example scope of work is included in the template but this should be reviewed carefully and amended as appropriate to suit the needs of the management company and to reflect the particular transaction.
Fees and payment are covered in Schedule 3. There can be a monthly fee, ad hoc payments or a combination of the two. Penalty payments can apply if the management company fails to meet the expected standards of service.
Schedule 4 contains a list of service levels – the standards to which the management company must perform the services – and details of the performance monitoring that must be carried out. Example provisions are included but these should be amended to suit the management company’s working practices.
Schedule 5 contains the owner’s obligations. The example wording should be reviewed and amended as necessary.
This Agreement includes provisions relating to the mandatory requirements for property managers to be members of a Client Money Protection Scheme. This statement must be included if the Manager holds client money.
This Property Management Service Level Agreement – Mixed-Use Property contains the following clauses:
- Definitions and Interpretation
- Term of Agreement
- Manager’s Obligations
- Client’s Obligations
- Fees, Payment and Records
- Provision of the Services
- Service and Agreement Monitoring
- Performance Management and Monitoring
- Intellectual Property Rights
- Liability and Indemnity
- Force Majeure
- No Waiver
- Further Assurance
- Assignment and Sub-Contracting
- Relationship of the Parties
- Third Party Rights
- Entire Agreement
- Dispute Resolution
- Law and Jurisdiction
And the following schedules:
- List of Properties
- Specification of Services
- Fees, Payment and Penalty Fees
- Service Levels, Performance Monitoring and Performance Reports
- Client’s Obligations
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
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