On July 1, a brand new form was released, the Commercial Property Management Agreement (Form CPMA).
PAR already had a property management contract that was recently converted to specifically be the Residential Property Management Agreement (Form PMA). That change from generic to residential spawned some member feedback from our commercial practitioners that a property management agreement specifically for commercial use would also be helpful. Upon first glance you will notice that it looks significantly similar to the PMA, but there has been great effort to make it applicable to the commercial setting.
Some differences to note are how commercial properties are described and rented, considering this form will be more entity focused, rather than individuals renting a residential location. The fee structure in commercial management contracts can also vary. You will see that the broker’s fee is based on what is called “gross rental income” and there are places for the parties to detail typical inclusions and exclusions from that calculation.
There is also a comprehensive section on utilities and expenses for the property. Not only is there a list of expenses that are particular to commercial property, there are protections for the broker included in the paragraph which clarify that the broker will not be responsible for the nonpayment of utility charges and prevents an instance where they would be accountable to the utility provider for nonpayment. Another noticeable difference is about a deeper look at insurance. Considering this is for a commercial location, there are some different factors to consider when discussing insurance.
Before using this brand new form, you should read the Guidelines for Preparation and Use, which contain some more information and explanations, as well as helpful tips to consider when negotiating this contract with your clients. We hope that adding this commercial form to our library we can benefit our members in commercial property management.
If you have any questions about how to use the form, please contact us.