ICON Asset Management 

Commercial Real Estate Management

P.O. Box 12902, La Jolla, Ca 92039

702-769-7742

www.ICONAssetGroup.com 

PROPERTY MANAGEMENT AGREEMENT - CA.

THIS IS INTENDED TO BE A LEGALLY BINDING AGREEMENT – READ IT CAREFULLY

__________________________________________________ (hereinafter called “Owner”), and ICON Asset Management, hereinafter referred to as “Agent”, agree as follows:

__________________________________________________________________________________

upon the terms hereinafter set forth, for the Initial Term of twelve months, beginning _____________, 200_ and terminating on the last day of _____________, 20__; provided, however, that after the first twelve months of the contract (the “Initial Term”) either party hereto may terminate this contract by giving the other party a ninety-day written notice of intention to so terminate, the effective termination date being the last calendar day of the termination period.  In the event the termination date falls on a day other than the last day of the month the effective termination date shall then be the last day of the following full month.  Both parties agree and understand that the termination date may end only on the last day of a full month because of accounting and rent collection procedures.

This Agreement shall automatically renew for additional twelve month periods at the end of the Initial Term unless terminated earlier as provided for in the above paragraph.

 1.  Agent shall: 

a.  Use Due Dilligence in the performance of this Contract;

b.  Render monthly statements of income, expenses and charges and to remit to Owner all original documents (provided such originals exist) for payment(s) made on behalf of Owner along with copies of checks or cash receipts for such payment(s);

c.  In the event expected disbursements shall be in excess of the rents collected by the Agent, the Owner, upon 48 hours notice from Agent, shall promptly deposit with Agent funds sufficient to cover any expected disbursements.  In the event there are insufficient funds to cover all of the expected disbursements Agent may, at Agent’s sole discretion select and pay only those invoices Agent deems to have the highest priority of necessity for payment.  Expected disbursements may include, but not be limited to, mortgage(s), property management fees, utilities, insurance, employee wages, taxes and overhead, outside contractor expenses, attorney’s fees, and other such normal and reasonable expenses incurred in the operation and management of like property. In no event, however, will agent make payments in an aggregate amount which exceeds the cash balance in the account, regardless of any late fees or penalties that may be imposed by the delay of such payment(s);

d.  Deposit all income collected on behalf of Owner (less any sums properly deducted or otherwise provided for herein) in a trust account in an institution  qualified to engage in the banking, savings, or trust business, separate from Agent’s business account.  However, Agent shall not be held liable in the event of bankruptcy, insolvency, failure or cessation of operations of such depository;

e.  Agent shall interview all managers, assistant managers, independent contractors and other personnel required to staff and operate Owner’s property and Agent shall on the Owner’s behalf hire or contract for such services as Agent deems necessary.  However, it is expressly understood that all such personnel or independent contractors shall be employed or engaged by Owner and not Agent.  Agent agrees to provide this service to Owner, but Owner shall be responsible for all payroll, taxes, workman’s compensation, insurance and any other items or charges relating to such employment or engagement.  Owner further agrees to allow Agent to make payments for services rendered by such individuals or companies as part of the normal operations of the management of the property from the trust account.

 2.  The Owner  grants to Agent the following authority and powers and Owner shall pay the expenses in connection herewith: 

a.  To advertise the availability for rental of the herein described premises or any part thereof, and to display “for rent” signs thereon; to sign, renew or cancel leases or rental agreements for the premises or any part thereof; to collect rents or other charges and expenses due or to become due and give receipts therefore; to terminate tenancies and to sign and serve in the name of the Owner such notices as are appropriate; to institute and prosecute actions to evict tenants and to recover possession of said premises in the name of the Owner and to recover rents and other sums due; and when expedient, to settle, compromise and release such actions or suits or reinstate such tenancies;

b.  To make or cause to be made and to supervise repairs, alterations, and maintenance services and to do decorating on said premises; to purchase supplies and to pay bills therefore.  The Agent agrees to secure the prior approval of the Owner on all expenditures in excess of $ 2,000.00 for any one item, except for normal monthly or recurring operating charges and emergency repairs in excess of the maximum, if in the sole opinion of the Agent, such repairs are necessary to protect the property from damage or prevent damage to life or to the property of others or to avoid suspension of necessary services or to maintain services to the tenants as called for in their leases;

c.  To interview, supervise, or discharge all labor or employees of Owner required for the operation and maintenance of the premises.  Agent may perform any of it’s duties through Owner’s attorney’s, agents, employees or independent contractor’s or other outside sources and shall not be responsible for their acts, defaults or negligence if reasonable care has been exercised in their appointment and retention.  Reasonable Care is defined as obtaining a copy some or all of the following documents to reasonably establish the identity of the person or business: business license, driver’s license, social security or worker’s card, temporary identification number, workman’s compensation policy, automobile or truck insurance, liability insurance, passport or visa.  Notwithstanding the foregoing, if the services of an attorney, CPA or other similar professional are required their business card shall be indicative of the fact that they are state licensed professionals and no further identification shall be required.  Additionally, it may be necessary to require that some employees be bonded or insured and Owner shall pay all costs incurred;

d.  To make contracts for electricity, gas, fuel, water, telephone, window cleaning, trash or rubbish removal, landscaping, boiler repair, HVAC services, termite or pest services, and other such services as are required for the normal operation of like properties.  Agent shall where necessary enter into service contracts for limited durations that may require monthly, semi-annual or annual payments, such as but not limited to HVAC, pest control, and roof warranties.  This Agreement is to serve as a  Limited Power of Attorney for such purposes as stated in this Paragraph (d).

e.  To pay all expenses incurred in the operation of this property including but not limited to loan indebtedness, property and employee taxes, special assessments, and insurance in a timely manner.  The amount paid to Agent shall be paid after the mortgage payment(s) but before all other obligations of Owner, including but not limited to taxes, insurance and utilities.  Notwithstanding the foregoing, all payments will be made in accordance with Paragraph 2 (c) above.

f.  Pursuant to California Law and the Franchise Tax Board (FTB) Owner must comply with Resident and Nonresident Withholding Guidelines as outlined in Form 1017 (Rev 11-2009).  California Revenue and Taxation Code (R&TC) Section 18662 and the related regulations require withholding of California income or franchise taxes from payments and distributions made to nonresidents on California source income.  Owners are required to either: 1) Sign a waiver provided by the FTB or, 2) Sign a consent form authorizing Agent to withhold the required funds requested by the FTB and to submit those funds to the FTB as required.

 

This is a state mandated requirement and cannot be waived.  These forms must be signed and received by Agent along with the Management Agreement.  For a more complete explanation Owner should contact a lawyer or CPA or other professional.

3.  The Owner shall:

a.  Indemnify and save the Agent harmless from any and all costs, expenses, attorney’s fees, lawsuits,  arbitration fees, damages or claim for damages, including but not limited to those arising out of any injury or death to any person or persons or damage to any property of any kind whatsoever and to whomsoever, belonging to any other person or entity including Owner, or in any way relating to the management of the premises by the Agent or in the performance or exercise of any of the duties, obligations, powers or authorities herein or hereafter granted to the Agent; to carry, at Owner’s sole cost and expense, such public liability, property damage and workman’s compensation insurance as shall be adequate to protect the interests of the Agent and Owner, the policies for which shall name the Agent as well as the Owner as both the party insured and/or the  additional insured, and to maintain such insurance in full force and effect throughout the term of this Agreement and any extensions or renewals thereof. Further, Owner agrees to continue Agent’s indemnification for a period of twelve months following the termination of this Agreement;

b.  Owner agrees to indemnify Agent for any and all claims which: a) have an origination date or time-of-injury date which pre-dates the Effective Date of this Agreement; b) a claim with a prior origination date which pre-dates the Effective Date of this Agreement and which continues through the Effective Date of this Agreement; c) any acts or omissions by any management company or Agent’s employed by or on behalf of Owner before the Effective Date of this Agreement; d) any acts, omissions, misrepresentations, or duplicity or complicity made on, by, or on behalf of, Owner and/or it’s Agents relating to the operation, management, fiscal condition, or physical condition or the premises that may have any impact whatsoever on Agent’s ability to adequately operate, maintain, and supervise the premises in a manner to like properties whether such acts pre-date the Effective Date of this Agreement or not;

c.  Prior to entering into a management agreement with ICON Asset Group, LLC Owner shall provide ICON Asset Group, LLC with: a) the prior twelve months income and expense statements; b) any contracts for service or otherwise which may be in force such as HVAC, roof, pest control, HUD or Section 8 tenancies; c) copies any outstanding items such as liens, judgments, current or past lawsuits or other items relating to the property or its tenants; d) any other items which may be germane to the operation and management of the premises; e) an accounting of all tenant deposits held by Owner or it’s Agents and including any pre-paid rent or deposits of record; f) copies of all police or private security incident reports relating to the property.

 4.  Compensation Schedule Paid by Owner to Agent;

a.  Agent’s fees shall be as follows:

 i.      For properties which have had a stable rental history over the past twelve months, including normal levels of rentals and vacancies (normal defined as the same levels experienced by other properties in the same market area), the fee is _______________ % of the gross collected revenue (GCR) per month.  This amount shall be paid monthly to Company as follows: a) the  first payment shall be made on the 10^th of the month based on all rents collected by the 9^th of the month; b) the second payment, if any, shall be made on the last day of the month based on all rents collected from the 10^th of the month through the last day of the month; c) any rents due and unpaid in any given month when collected in any subsequent month  shall be paid according to either a) or b) as noted above at the time of collection; d) any rent collected subsequent to eviction or termination of a tenancy shall be paid according to either a) or b) above;  or

ii.      For properties that have an unstable rental history, abnormally high eviction rates, drug and crime related problems, or other issues affecting the income and cash flow the fee is ______________ % of the gross scheduled revenue (GSR) per month less a 7% vacancy factor.  This amount shall be paid  to Company as follows: a) the monthly payment shall be made on the 10^th of the month based the gross scheduled rents regardless of how much rent has actually been collected.  The GSR has been determined to be: $____________________ per month including a 7% vacancy factor, based on comparable rent schedules of other properties in the local market area;  and/or

iii.  Owner agrees to pay Agent a minimum monthly fee of ___________ % of the gross scheduled rent (GSR) for properties which are under construction, are in initial lease-up period, have had major damage and tenants have been displaced or relocated, or where the property has experienced a reduction in rental income for any reason and current occupancy is less than fifty percent (50%).

b.      In the event Owner’s shall request Agent to undertake work which exceeds usual and normal management functions, then an additional fee shall be required and agreed upon before such work or services are performed.  Normal management does not include modernization, refinancing, fire restoration, obtaining tax services or advice, presenting petitions or plans to zoning, housing authorities, advising on proposed new construction, rehabilitation of existing units, or other tasks outside of normal property management duties;

 

c.       If this Agreement is assigned either voluntarily or by operation of law at the request of the following, including but not limited to, Owner, Owner’s attorney, bankruptcy court, arbitration findings, probate or trust, Agent shall be entitled to be compensated by the party or parties requesting such an assignment for Agent’s services rendered during the assignment.  The parties agree that such a fee shall be equal to one months fee based on either 5 a. i or 5 a. ii above.

5.  Notices.  If it shall become necessary for Agent or Owner to give notice of any kind, the same shall be in writing and my be delivered by: a) USPS; b) hand delivered; c) e-mail; d) facsimile, and sender shall obtain proof of delivery to recipient by whatever means is customary for the delivery method used.

6.  Binding Effect.  This Agreement shall be binding upon the successors of the Agent, and the heirs, administrators, executors, successors and assigns of the Owner.  In the event of notification of bankruptcy proceedings relating to the Owner Agent shall cooperate with the proceedings and may petition the Court to remain as a compensated property manager for the duration of the proceedings.  However, if the Court has not agreed to a compensation schedule for Agent within thirty days of the initiation of  Agent’s petition for compensation Agent shall cease all management functions, close out the accounts, including trust accounts, and return all items to the Court for safekeeping,

7.  Binding Arbitration/Venue.  If either party herein brings an action to enforce the terms hereof or declare rights hereunder, the non-prevailing party in such arbitration shall pay all the costs associated with such action including attorney’s fees, witness fees, and other customary and reasonable costs as determined by the arbitrator..  The parties hereto agree that the State of California, County of San Diego, is the proper jurisdiction for arbitration of any matters relating to this Agreement and service to the parties may be made either by personal service or mailed return receipt requested. The parties shall use the services of the American Arbitration Association.

8.  NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF ANY PROVISION IN THIS AGREEMENT.  IF YOU NEED LEGAL ADVICE AS TO THE VALIDITY OR ADEQUACY OF THIS AGREEMENT OR YOUR RIGHTS AND OBLIGATIONS HEREUNDER YOU ARE ADIVSED TO CONSULT AN ATTORNEY.

9.  Amendments.  This Agreement may only be amended in writing executed by the parties herein.  In the event that any clause in the Amendment conflicts with this Agreement then the Agreement shall prevail.

10.  Entire Agreement.  This Agreement represents the entire agreement and understanding of all parties who have executed this Agreement below.  Any changes to this Agreement must be made in a written form captioned “Addendum to Property Management Agreement” dated as of the full execution of the Agreement and signed and dated by all parties to the original Agreement.

Parties acknowledge having read the foregoing prior to execution and the receipt of a duplicate dated this ________ day of ___________, 20__.  Parties also acknowledge that this Agreement must be fully executed, signed, dated and accepted by ICON Asset Management to be a binding Agreement.

THIS AGREEMENT HAS BEEN ACKNOWLEDGED AND ACCEPTED BY:

Phillip E. Bonham Broker                                                    DATED: