PROPERTY MANAGEMENT AGREEMENT

(North Carolina)

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Appointment & Scope of Authority
IV. Term; Renewal & Termination
V. Management Fees; Expenses; Accounting
VI. Owner Representations & Warranties
VII. Manager Representations & Warranties
VIII. Covenants & Operating Requirements
IX. Trust Account Handling
X. Insurance & Risk Allocation
XI. Indemnification; Limitation of Liability
XII. Default; Remedies
XIII. Dispute Resolution
XIV. General Provisions
XV. Execution Block

I. DOCUMENT HEADER

This Property Management Agreement (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

1. [FULL LEGAL NAME OF PROPERTY OWNER], a [STATE OF FORMATION] [ENTITY TYPE] whose address is [ADDRESS] (“Owner”); and
2. [FULL LEGAL NAME OF PROPERTY MANAGER], a [STATE OF FORMATION] [ENTITY TYPE] and duly licensed North Carolina real estate broker (License No. [_]) whose address is [ADDRESS] (“Manager”).

Owner and Manager may be referred to individually as a “Party” and collectively as the “Parties.”

Recitals:

A. Owner is the fee-simple owner of certain real property commonly known as [PROPERTY DESCRIPTION] (the “Property”).
B. Manager is duly licensed under Chapter 93A of the North Carolina General Statutes and the rules of the North Carolina Real Estate Commission (“NCREC”) to engage in property management activities.
C. Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, operate, control, rent, and lease the Property, all upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

II. DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below. Terms defined in the singular include the plural and vice-versa.

“Affiliate” – any person or entity directly or indirectly controlling, controlled by, or under common control with a Party.
“Applicable Law” – collectively, all federal, state, county, and municipal statutes, ordinances, rules, regulations, codes, and orders applicable to the Property or the activities contemplated herein, including without limitation Chapter 93A of the North Carolina General Statutes and all NCREC rules.
“Approved Vendors” – vendors, contractors, and service providers approved in writing by Owner.
“Gross Receipts” – all revenue collected from the operation of the Property, including rents, late fees, pet fees, parking fees, forfeited security deposits applied to charges, and other miscellaneous income.
“Management Fees” – the compensation payable to Manager pursuant to Section V.
“Operating Budget” – the annual operating budget prepared by Manager and approved by Owner pursuant to Section III.D.
“Trust Account” – the trust or escrow account required by Section IX in accordance with NCREC rules.
[ADD additional defined terms as needed]

III. APPOINTMENT & SCOPE OF AUTHORITY

A. Appointment. Owner hereby appoints Manager as the exclusive agent to manage and operate the Property, and Manager hereby accepts such appointment.

B. Authority. Subject to the limitations expressly set forth herein, Manager is authorized to:
1. advertise, lease, and license dwelling units;
2. execute, renew, and terminate leases on forms approved by Owner;
3. collect rents and other charges, issue receipts, and deliver late notices;
4. supervise maintenance, repairs, and capital improvements not exceeding the Spending Limit (defined below);
5. hire, supervise, and discharge on-site personnel (if any);
6. purchase supplies and services necessary for operation of the Property;
7. institute, settle, or compromise legal actions for rent collection or eviction, subject to Owner’s prior written consent for any matter involving potential exposure in excess of $[THRESHOLD]; and
8. perform all acts reasonably necessary to fulfill Manager’s obligations under this Agreement.

C. Spending Limit. Except in emergencies endangering life, safety, or property, Manager shall not expend more than $[AMOUNT] for any single non-budgeted item without Owner’s prior written approval.

D. Operating Budget. Manager shall submit to Owner for approval, no later than [DATE] of each calendar year, a detailed Operating Budget for the ensuing fiscal year. Absence of Owner objection within [___] days shall constitute deemed approval. Manager shall operate the Property in accordance with the approved Operating Budget.

[// GUIDANCE: Increase or remove Spending Limit for sophisticated commercial properties.]

IV. TERM; RENEWAL & TERMINATION

A. Initial Term. The term shall commence on the Effective Date and continue for [INITIAL TERM] (the “Initial Term”) unless earlier terminated pursuant to this Section IV.

B. Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive periods of [RENEWAL TERM], unless either Party delivers written notice of non-renewal at least [___] days prior to the end of the then-current term.

C. Termination for Cause. Either Party may terminate this Agreement upon [___] days’ written notice if the other Party materially breaches this Agreement and fails to cure within [CURE PERIOD] after receipt of notice.

D. Termination for Convenience. Owner may terminate this Agreement without cause upon [___] days’ written notice; provided, Owner shall pay Manager (i) all earned but unpaid Management Fees, and (ii) reimbursement of approved, non-cancellable third-party obligations incurred prior to the termination date.

E. Post-Termination Duties. Upon termination, Manager shall: (i) provide a final accounting; (ii) transfer all leases, tenant records, keys, and trust account balances to Owner or Owner’s designee; and (iii) cooperate to facilitate an orderly transition.

V. MANAGEMENT FEES; EXPENSES; ACCOUNTING

A. Management Fees.
1. Monthly Fee. Owner shall pay Manager a monthly fee equal to [ %] of Gross Receipts (the “Management Fee”).
2. Leasing Commission. For each new lease of [] months or longer, Owner shall pay Manager a leasing commission equal to [__ %] of the first month’s rent.
3. Other Fees. [If applicable, insert fees for renewals, project management, or ancillary services.]

B. Expense Reimbursement. Owner shall reimburse Manager for all reasonable, out-of-pocket expenses incurred in connection with the management of the Property and approved in the Operating Budget.

C. Accounting & Reporting. Manager shall furnish Owner with (i) monthly statements of income and expense no later than the [] day of each month, and (ii) annual operating statements within [] days after fiscal year-end.

D. Audit Rights. Owner may, at its expense and upon [___] days’ notice, audit the books and records maintained by Manager. Manager shall retain all records for at least seven (7) years following the fiscal year to which they relate.

VI. OWNER REPRESENTATIONS & WARRANTIES

Owner represents and warrants to Manager that:

A. Ownership. Owner holds good and marketable title to the Property and has full authority to enter into and perform this Agreement.

B. Legal Compliance. To the best of Owner’s knowledge, the Property is in compliance with Applicable Law, including all habitability, environmental, zoning, and building code requirements.

C. Hazardous Substances. Owner has disclosed to Manager all known violations, environmental conditions, or hazardous substances affecting the Property.

D. Funds Availability. Owner shall maintain sufficient funds to satisfy operating expenses and capital improvements authorized herein.

The representations and warranties in this Section VI shall survive termination of this Agreement for a period of one (1) year.

VII. MANAGER REPRESENTATIONS & WARRANTIES

Manager represents and warrants to Owner that:

A. Licensing. Manager and all associated brokers responsible for trust monies hold active licenses issued by the NCREC and will maintain such licenses in good standing throughout the Term.

B. Compliance. Manager shall perform all Services in a commercially reasonable manner and in compliance with Applicable Law and the MLS®, Fair Housing Act, and NCREC rules.

C. Insurance. Manager maintains and will maintain throughout the Term (i) errors & omissions insurance with limits of not less than $[LIMIT] per claim and $[LIMIT] aggregate, and (ii) general liability insurance with limits of not less than $[LIMIT] per occurrence.

D. No Conflicts. Execution and performance of this Agreement will not violate any agreement to which Manager is a party.

VIII. COVENANTS & OPERATING REQUIREMENTS

A. Fair Housing. Manager shall strictly comply with all federal, state, and local fair housing laws and shall implement nondiscriminatory policies.

B. Disclosure Obligations. Manager shall timely provide all statutorily required disclosures to tenants, including but not limited to lead-based paint pamphlets for pre-1978 residential properties and any radon or mold disclosures mandated by Applicable Law.

C. Maintenance Standards. Manager shall keep the Property in a condition meeting or exceeding all applicable housing codes, and promptly address all safety or habitability issues.

D. Vendor Selection. Manager shall use Approved Vendors; deviations require Owner’s written consent, except in emergencies where delay would risk injury or material damage.

E. Notice Obligations. Manager shall promptly notify Owner of: (i) any legal action, governmental notice, or violation affecting the Property; (ii) casualties or material damage; and (iii) any tenant default exceeding [___] days.

IX. TRUST ACCOUNT HANDLING

A. Establishment. Manager shall establish and maintain a Trust Account in a federally insured depository located in North Carolina, titled “[OWNER] Trust Account,” segregated from Manager’s operating funds.

B. Deposits & Disbursements. All tenant security deposits, rents, and other trust funds shall be deposited within three (3) banking days of receipt (or as otherwise required by NCREC rules). Disbursements of Owner funds shall be made only for purposes authorized herein.

C. Interest. Unless otherwise directed in writing by Owner, interest earned on trust funds may be retained by Manager to offset administrative costs.

D. Reconciliation. Manager shall reconcile the Trust Account monthly and provide Owner with copies of bank statements and reconciliations upon request.

[// GUIDANCE: Some owners prefer to maintain their own trust account; adjust accordingly.]

X. INSURANCE & RISK ALLOCATION

A. Owner Insurance. Owner shall maintain (i) all-risk property insurance covering the full replacement value of the Property, and (ii) commercial general liability insurance with limits not less than $[LIMIT] per occurrence and $[LIMIT] aggregate, naming Manager as an additional insured.

B. Subrogation Waiver. To the extent permitted by Applicable Law and without affecting coverage, Owner and Manager waive all rights of recovery against each other for insured losses.

C. Notice of Claims. Each Party shall promptly notify the other of any claim or suit involving potential liability of the other Party and shall cooperate in the defense.

XI. INDEMNIFICATION; LIMITATION OF LIABILITY

A. Indemnification by Manager. Manager shall indemnify, defend, and hold harmless Owner and Owner’s Affiliates from and against any and all claims, damages, losses, liabilities, judgments, and expenses (including reasonable attorneys’ fees) to the extent arising out of (i) Manager’s gross negligence, willful misconduct, or violation of Applicable Law; or (ii) material breach of this Agreement.

B. Limitation of Liability. EXCEPT FOR (i) GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (ii) BREACH OF THE TRUST ACCOUNT OBLIGATIONS, OR (iii) INDEMNIFICATION OBLIGATIONS, MANAGER’S CUMULATIVE LIABILITY TO OWNER UNDER THIS AGREEMENT SHALL NOT EXCEED THE TOTAL MANAGEMENT FEES ACTUALLY PAID TO MANAGER DURING THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO LIABILITY.

C. No Consequential Damages. Neither Party shall be liable to the other for any consequential, special, or punitive damages, except to the extent awarded to a third party and subject to indemnification.

XII. DEFAULT; REMEDIES

A. Events of Default. The following constitute Events of Default:
1. Failure to pay any monetary amount when due, continuing five (5) days after written notice.
2. Material breach of any non-monetary obligation, continuing ten (10) days after written notice (or such longer period as may be reasonably required to cure, provided diligent efforts are pursued).
3. Bankruptcy or insolvency of either Party.
4. Revocation, suspension, or expiration of Manager’s real estate license.

B. Remedies. Upon an Event of Default, the non-defaulting Party may:
1. terminate this Agreement immediately upon written notice;
2. recover actual damages and amounts due;
3. seek injunctive relief to prevent further default; and
4. exercise any other remedy available at law or in equity.

C. Attorneys’ Fees. The prevailing Party in any action arising out of this Agreement shall be entitled to recover reasonable attorneys’ fees and costs.

XIII. DISPUTE RESOLUTION

A. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to principles of conflicts of law.

B. Forum Selection. Any action arising out of this Agreement shall be instituted in the state courts located in [COUNTY], North Carolina, and each Party irrevocably submits to such jurisdiction.

C. Optional Arbitration. [SELECT ONE: ☐ Arbitration Not Elected ☐ Arbitration Elected]
If elected, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, held in [CITY], North Carolina. Judgment on the award may be entered in any court of competent jurisdiction.

D. Jury Trial Waiver. [SELECT ONE: ☐ Jury Waiver Not Elected ☐ Jury Waiver Elected]
If elected, EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY in any action arising out of this Agreement.

E. Injunctive Relief. Notwithstanding the foregoing, either Party may seek temporary or permanent injunctive relief in any court of competent jurisdiction to protect its confidential information, trust funds, or other proprietary interests.

XIV. GENERAL PROVISIONS

A. Amendment; Waiver. No amendment or waiver of any provision shall be effective unless in writing and signed by both Parties. Waiver of any breach shall not be deemed waiver of any other or subsequent breach.

B. Assignment. Neither Party may assign its rights or delegate its duties without the prior written consent of the other, except that Owner may assign to a purchaser of the Property upon written notice to Manager.

C. Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

D. Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the Parties shall negotiate in good faith to modify the invalid provision to reflect the Parties’ original intent as closely as possible.

E. Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter and supersedes all prior or contemporaneous understandings.

F. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original. Signatures delivered by facsimile, PDF, or electronic signature platform shall be deemed effective for all purposes.

G. Notices. All notices shall be in writing and delivered (i) by hand with signed receipt, (ii) by nationally recognized overnight courier, or (iii) by certified U.S. mail, return receipt requested, to the addresses set forth in the preamble (or such other address as either Party may designate in writing). Notices shall be deemed given on actual delivery or refusal.

[// GUIDANCE: Adjust notice methods to include email for speed, but preserve certified mail for evidentiary purposes.]

XV. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above.

OWNER:

[NAME & TITLE]
[ENTITY NAME]

MANAGER:

[NAME & TITLE]
[ENTITY NAME]

[NOTARY ACKNOWLEDGMENT BLOCKS IF REQUIRED]
[// GUIDANCE: North Carolina does not require notarization for validity of a management agreement, but notarization may aid in recordability or evidentiary matters.]