How Long Is the PMA Valid For

The term of the Property Management Agreement (PMA) always matches the lease term for the property being managed. Specifically:

  1. Initial Term:

    • The PMA begins on the execution date of the agreement and remains in effect for the duration of the current lease for the property.
    • If no lease exists, the PMA is valid for at least one year from the execution date.

  2. Automatic Renewal:

    • The PMA term automatically adjusts to match the term of any new or renewed lease unless the Owner terminates the agreement by providing proper notice.
    • If the Owner directs the Agent to renew the current lease or find new tenants, the PMA automatically renews to align with the new lease term.

  3. Termination Conditions:

    • By the Owner:
      • At the end of a lease term, by providing at least 45 days’ written notice prior to the lease’s expiration.
    • Automatic Termination:
      • Upon the sale of the property (on the closing date).
      • If the Owner loses legal title to the property (e.g., foreclosure).
      • By mutual agreement of both parties.
    • Early Termination Fee:
      • If the Owner terminates during an active lease term, they must pay an early termination fee equal to the remaining monthly management fees for the lease term.
      • If terminated during tenant processing (before the lease is signed), the fee equals one month’s proposed rent.

  4. Continuing Services Upon Non-Renewal:

    • If the PMA is not renewed, the Agent will continue providing services and collecting fees until the current lease term ends. The Agent will not actively pursue lease renewals or new tenants during this time.

 

Examples to Demonstrate PMA Terms:

Example 1: PMA Execution Date Differs from Lease Start Date

  • PMA Execution Date: January 1, 2024
  • Lease Start Date: February 1, 2024
  • Lease End Date: January 31, 2025

The PMA automatically remains in effect until January 31, 2025, aligning with the lease term, even though the lease started one month after the PMA execution date.

 

Example 2: Lease Term Longer Than One Year

  • PMA Execution Date: January 1, 2024
  • Lease Start Date: January 1, 2024
  • Lease End Date: June 30, 2025 (18 month lease).

The PMA term automatically extends to June 30, 2025, matching the lease term, even though the term exceeds one year.

 

Example 3: New Lease Agreement Signed During PMA

  • PMA Execution Date: January 1, 2024
  • First Lease End Date: June 30, 2024 (existing lease expires, or short term rental, or tenants early termination).
  • New Lease Signed: June 15, 2024, with a term from July 1, 2024, to June 30, 2025 (1-year lease).

The PMA automatically adjusts and extends to June 30, 2025, matching the new lease term.

 

Example 4: Sale of Property

  • PMA Execution Date: February 1, 2024
  • Property Closing Date: July 15, 2024

The PMA automatically terminates on July 15, 2024, the date of closing.

 

Example 5: Mutual Agreement

  • PMA Execution Date: April 1, 2024
  • Mutual Termination Date: October 1, 2024

Both parties agree to end the PMA effective immediately on October 1, 2024.