The language we use for our full-service property management agreement is derived from the standard California Association of Realtors Property Management Agreement.
We've tried our best to format and arrange the agreement to be straightforward. However, it is still dense with requisite legalese so here are some layman explanations to all the jargon.
We recommend looking over this while also having the full agreement in front of you. You can also search for a specific section by using Ctrl+F and typing in the section name as labeled in the agreement.
The legal language is italicized and the explanation is labeled below:
1. AGENCY & PROPERTY
"Owner understands that Agent may have or procure similar agreements on other properties, and that potential tenants may consider, make offers on, or lease property similar to owner’s property. Owner consents to Agent’s representation of other owners’ properties..."
Explanation: Onerent has this same agreement with multiple owners and the owner should understand that Onerent gives equal representation to all our clients and their properties.
"Owner agrees to cancel any and all sales and/or rental listings on the property with any other agency or website within 48 hours of signing this agreement. Owner understands that failure to do so may inhibit the ability for Agent to perform their contractual duties and may at the discretion of the Agent result in termination of the contract or monetary damages from the Owner..."
Explanation: If you're advertising your home for rent or sale, we'll need you to take down the listings otherwise ours are blocked from syndicating to those websites like Zillow. Plus, it can create confusion if there are duplicate listings. With our listings live, we'll handle all the inquiries instantly so your phone is not ringing off the hook.
Such termination shall not release the indemnities of the Owner to Agent and shall not terminate any liability or obligation of the Owner to the Agent for any payment, reimbursement or other sum of money due and payable to the Agent pursuant to this Agreement.
Explanation: Terminating this agreement does not release either party from any outstanding bills. For instance, if maintenance had been conducted at the property by Onerent on behalf of the owner, the bill is still payable by the owner as soon as the invoice is received by Onerent, regardless of the termination.
3. MANAGEMENT SERVICES
Agent’s rights to advertise and market shall be exclusive to all persons, including Owner and Owner agrees not to post, list, advertise and/or market the Property during the term of this Agreement.
Explanation: Exclusive listing rights is essential to properly advertising the home! Listing platforms try and prevent scamming by continually searching for multiple listings of the same property. If multiple listings are found, the sites will flag the listings and take all of them down!
Rental agreements are to be on Agent’s standard written form.
Explanation: Onerent’s lease is tried and tested--we use the standard state lease and add the addenda specific to your property and situation. Our lease is extensive and transparent and we have used our expertise to craft a lease that protects you and your investment to the best ability.
Agent shall contract, hire, supervise and/or discharge firms and persons, including utilities, required for the operation and maintenance of the Property...
Explanation: Onerent works with license, bonded and insured vendors only, and has stable, long term relationships with many, many tried and true vendors in your area. Additionally, we’re happy to work with vendors your prefer.
Thereafter, Agent will withhold a reimbursement for any authorized maintenance costs when paying out rent to Owner...
Explanation: Onerent pays for maintenance invoices upon receiving, verifies the work has been done completely and property, verifies the invoice amount is expected and fair, pays it and then deducts the amount from the next month of rent collection before paying out to the Owner.
...any maintenance deemed to affect habitability within 48 hours...
Explanation: Habitability concerns are maintenance issues that effect the health and well being of the home or tenant as defined by state laws.
For non-emergency items, owner may select their own vendors.
Explanation: In an emergency (defined as a maintenance concern that has immediate and negative effects on the health and safety of the tenant or well being of the property, ie an active water leak), Onerent will of course take past principal into account and select your preferred vendors (if any) but the primary goal is to resolve the issue fully and ASAP.
F. SECURITY DEPOSITS
Agent shall collect and hold security deposits in Agent’s account for disposition in accordance with the terms of the rental and lease agreement...
Explanation: Onerent will collect the security deposit after the lease is signed and before the move in date.
...Owner, and not Agent, shall have sole financial and legal responsibility for the return of the security deposit in accordance with applicable law
Explanation: Onerent cannot make deductions to the deposit because we do not have records of the move in condition of the home and therefore cannot make accurate determinations.
...Agent reserves the right to disburse the security deposit to Owner for Owner’s disposition.
Explanation: All security deposit deductions can only be made with the final approval of the owner. If there is some disagreement, Onerent must return the deposit to the owner so the owner may make the deductions they agree with.
G. COLLECT RENTS AND CHARGES
Deposit all rent receipts collected for Owner, less any sums properly deducted in accordance with this Agreement, in a financial institution whose deposits are insured by an agency of the United States government (“Bank”). The funds shall be held in a trust account separate from Agent's personal accounts. Agent shall not be liable in event of bankruptcy or failure of a financial institution.
Explanation: Onerent will deposit rent payments in the owner’s bank account of choice to ensure a speedy and reliable transfer of funds. If Onerent holds the security deposit, Onerent will hold it in a trust account. In the event the Owner’s financial institution folds, Onerent cannot be held accountable for the funds in that institution.
Agent shall be entitled to retain bad check and related charges and penalties, credit report fees, or early termination of lease charges.
Explanation: Any penalties that Onerent collects in relation to collecting rent will be kept by Onerent to help recoup the costs we incur from the time and money it takes to collect payment (ie creating and posting notices, etc).
H. MONTHLY DISBURSEMENTS
Agent has not approved and qualified the incoming tenant, and/or Agent commences property management services after Owner has commenced tenancy, Agent shall make a disbursement to Owner within 5 business days after Agent’s receipt of rent monies from tenant.
Explanation: For tenants not placed by Onerent, or who do not have the Onerent Guarantee, we will send the monthly rent to the owner within five business days after it is collected.
...Owner will receive the monthly rent disbursement funds for the Property deposited into Owner’s bank account on or before the third banking business day, depending on the Owner’s bank processing time.
Explanation: For Onerent guaranteed tenants, the owner will receive the rent payment no later than the third business day of the month, regardless of Onerent collecting the funds. The reasons the time can be a little variable are holidays and delays caused by the Owner’s bank’s processing time.
In the event tenant fails to cure a written notice of default, Onerent’s obligation to disburse monthly rent will terminate and the Supplemental Loss Coverage provision defined in Section 4(L) below will apply to pursue eviction of the defaulting tenant. Agent shall notify Owner of Tenant’s uncured default of the terms of the rental agreement.
Explanation: In the rare chance a guaranteed tenant decides to stop paying rent, Onerent will move forward with eviction proceedings but rental payments to the owner will stop occurring.
Notwithstanding the preceding, Agent shall have the right to retain rent payments during the last month of a tenancy for a period not to exceed thirty (30) days, in order to pay any outstanding invoices, costs to prepare the unit for re-rental, and any other costs to be reimbursed by Owner under this Agreement.
Explanation: At move out, repairs and security deposit deductions are made. Often times owners choose to take the opportunity to complete maintenance outside of what can be deducted from the deposit, ie a fresh interior paint job. Onerent can facilitate this, but in order to be sure we can pay our vendors for this work, we may retain the last month of rent to cover these costs and disperse the rest to the owner as usual.
J. RECORD STATEMENTS/TAXES
At the end of each fiscal year, Agent will generate IRS From 1099 indicating rents received for the Property.Non- California resident owners will be required to execute Addendum B, acknowledging Agent’s withholding obligations.
Explanation: In 2010, California extended this tax withholding obligations to require withholdings on rent payments made to non-resident landlords. Before Jan 31st of the following year, Onerent will sent a statement showing the total amount of income subject to withholding and the total amount withheld, using a FTB Form 592-B, Nonresident Withholding Tax Statement. Nonresident withholding is a prepayment of California state income tax or franchise tax for nonresidents, similar to wage withholding. After the landlord files a tax return, and the withheld amount is more than the landlord’s actual tax liability, the Franchise Tax Board will refund the overpayment.
Property complies with all warranties of habitability and report matters concerning the condition of the Property to the Owner...
Explanation: Onerent’s goal is to ensure that the home matches the condition in which we turned it over to the tenant, that not habitability concerns have developed that have not been reported by the tenant, and that all the terms and conditions in the lease are still being upheld.
Agent will take all reasonable security measures, but Agent is not liable for any damages to the rental unit and/or the Property.
Explanation: A vacant home has a natural list of security risks and Onerent’s actions will not exacerbate these risks.
Agent will notify Owner in writing of any mold condition of which Agent has actual knowledge; provided, however that Agent will not have any duty to inspect for such a condition.
Explanation: Testing for mold is only something a certified lab technician can complete, the best any layman can do is identify signs and maybe rule out mildew- a far more common and harmless culprit easily mistaken for mold by tenants.
N. FAIR HOUSING
The Property will be shown and made available to all persons without regard to race, color, creed, religion, natural origin, sex, familial status, handicap or age, in compliance with all applicable federal and state and local fair housing laws and regulations.
Explanation: Onerent will present all qualified applicants to the owner- detailing credit, background, employment, and eviction history as well as group details such as number of persons in the home. All other details are miscellaneous and have no bearing on qualification of a tenant.
4. OWNER DUTIES & REPRESENTATIONS
B. DELIVERY OF PROPERTY/WARRANTY OF HABITABILITY
Owner agrees to deliver the rental unit to with all conditions of habitability including but not limited to those set forth in the statutory requirements imposed by the State in which the rental unit is located.
Explanation: Habitability items are a specific category of maintenance concerns that the state or country regard as being non-negotiable as to whether or not they should be resolved.
Agent shall arrange for an initial meeting at the Property with Owner. Agent will identify any habitability issues and Owner can elect either Agent or Owner to address and remediate the identified habitability issues.
Explanation: At the walkthrough, Onerent will help identify habitability concerns and either you can elect Onerent to take care of them, or the owner can take care of them, but either way the issues must be resolved in order for the home to qualify for human habitation.
In addition, Owner shall remove of all of Owner’s personal property with the exception of those items which will remain in the rental unit or on the premises as part of the rental to Tenant.
Explanation: Unfortunately, when renting out the property, some Owners try and use the home as storage space for odds and ends. A good rule of thumb is if the storage space is not locked and separated, the items cannot stay there. Even items like patio furniture are not advised to keep on premises. Personal items that are alright to keep on the premises are appliances.
Owner shall hold Agent harmless and indemnify Agent for all tenant claims for habitability issues which Owner has elected to address whether at the inception or during the term of a tenancy.
Explanation: In the event that an owner has elected to use their own means to fix habitability issues and the issues remain unresolved, the owner is responsible for fixing the issue and any legal ramifications that come from the failure to resolve.
Owner shall be responsible for the timely payment of mortgages, real estate taxes, condominium association fees, special assessments or other charges against the Property that may come due and pay any late charges, penalties and/or interest imposed by lenders or other parties for failure to make said timely payments.
Explanation: It’s important to keep up with these payments otherwise a mortgage lender can repossess the property and rent payments will go to that party.
(1) disclosure of all known material facts affecting the value or desirability of the property which could affect a tenant’s use or enjoyment of the property; (2) disclose known environmental hazards on or affecting the property; (3) disclose known information which could have a material impact on either party’s ability to fulfill their obligations under the rental agreement;
Explanation: Has your property had a death inside recently? Have there been any issues with drug use or production on the premises? Does the property desperately need a new roof in the next year or so?
Such disclosures cannot be grounds for Owner claims of Agent breach of fiduciary and confidentiality duties to Owner.
Explanation: If Onerent acts on any of these disclosures, you cannot hold Onerent in contempt.
F. NO ADVERSE ACTIONS
(i) any recorded Notice of Default affecting the Property; (ii) any delinquent amounts due under any loan secured by, or other obligation affecting, the Property; (iii) any bankruptcy, insolvency or similar proceeding affecting the Property; (iv) any litigation, arbitration, administrative action, government investigation, or other pending or threatened action that does or may affect the Property or Owners ability to transfer it; and (v) any current, pending or proposed special assessments affecting the Property. Owner shall promptly notify Agent in writing if Owner becomes aware of any of these items during the term of this Agreement.
Explanation: This is mainly geared toward owners who have recently acquired a property and are unaware of any defaults that could affect our agreement. We are only able to work with properties and owners who have no defaults or ongoing litigation on their property.
H. TERMINATION FEE
If Owner terminates this agreement prior to execution of a rental agreement with a prospective tenant, Owner shall pay a one-time termination fee of $250.00.
Explanation: We ask for $250 in the event of early termination of the agreement prior to tenant placement. The reason is because we do not charge anything up front, yet we do start expensing costs on the property starting with the property walkthrough. The $250 covers our costs.
I. PREPARATION OF RENTAL UNIT
Owner authorizes the use of a lockbox or electronic door keypad to allow entry into the Property.
Explanation: During the property walkthrough, we will place a lockbox on site with an extra copy of any access door keys. This will allow us to show the unit. If your community does not allow lockboxes, our Field Ops Specialist can help figure out an alternative while doing the walkthrough.
Owner shall provide at Owner’s sole effort and cost to Agent all access keys and security codes necessary for management of the Property.
Explanation: In order to show the unit and also have keys ready for the move-in of new tenants, we ask for copies of all keys and multiple copies of the primary access door keys.
K. HOME WARRANTY
In the event Owner decides not to use Agent’s vendors to repair major systems and appliances, Owner is responsible at its sole effort and cost, including the payment of any applicable deductible, for submitting all home warranty maintenance issues to their personal home warranty policy.
Explanation: We are happy to coordinate maintenance issues related to home warranty but the owner must be responsible for the payment and any applicable deductibles.
L. CONDOMINIUM RENTAL UNITS
Owner will provide Agent all pertinent Homeowner Association documentation and contact information...
Explanation: We need all HOA contact info so that we can effectively communicate with your HOA in time-sensitive situations. We also need all CC&Rs or other documents that should be provided to the tenants so that they are aware and obligated to follow the community rules if there are any.
Owner shall not engage in any negotiations or direct communications with the Tenant including the direct acceptance of rents and other monies from Tenant during the term of this Agreement...
Explanation: It makes it nearly impossible for us to be an effective property manager if the owner steps in to manage the tenants or other related aspects of their property. Communication becomes fragmented and isolated, and the tenants can use the multiple parties to create leverage in difficult situations.
Owner agrees, to the fullest extent permitted by law, to indemnify and hold harmless Agent, its officers, directors, agents, employees and contractors (collectively, Agent) against all damages, liabilities or costs including reasonable attorneys' fees and defense costs, arising out of or in any way connected with this Agreement or the performance of the property management services under this Agreement, excepting only those damages, liabilities or costs attributable to the negligent acts or negligent failure to act by the Agent.
Explanation: At the end of the day, the partnership between an owner and Onerent is largely built on trust. It is our fiduciary duty to protect your property and execute on the duties outlined in this agreement. What's best for your property is best for us. However, as is expected in the course of property management, situations do come up that are adverse (eg. tenant leaves AC on too long and runs up the bill). Indemnification says that, if one of these situations were to occur and it were outside Onerent's control, you will not hold us accountable.
6. DIRECT DEPOSIT AUTHORIZATION
Agent shall direct deposit all monthly disbursements to Owner’s bank account listed below.
Explanation: We are collecting your account information now so that we can avoid any delays in the payout process once we collect rent and/or security deposit monies from an incoming tenant. This is a standard clause and language provided by our bank.
And that's it! Thank you for reading through this layman's terms version of our agreement.
If you have any other questions about the agreement that you do not see reflected here, please contact your Onerent sales representative or email@example.com