Property Management Agreement for Remington Hills at Las Colinas Apartments - Apple Residential Income Trust Inc. and Apple Residential Management Group Inc.
Exhibit 10.3
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 6th day of August, 1997,
by and between Apple Residential Income Trust, Inc., a Virginia corporation (hereinafter
referred to as "Owner"), and Apple Residential Management Group, Inc., a Virginia
corporation (hereinafter referred to as "Manager").
W I T N E S S E T H :
WHEREAS, Owner is the owner of Remington Hills at Las Colinas Apartments
(hereinafter referred to as the "Property"); and
WHEREAS, Owner and Manager desire to enter into this Agreement for the purposes
herein contained.
NOW, THEREFORE, in consideration of the promises herein contained, and for
other valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Designation of Manager as Manager for the Property. Owner hereby engages
Manager as sole and exclusive manager to rent, manage and operate the Property, upon
the conditions and for the term and compensation herein set forth. All or a portion
of the services being performed by Manager may be contracted or subcontracted to
another property management company, provide that such company agrees to be bound
by the terms of this Agreement.
2. Term of Agreement; Renewal. This Agreement shall be valid for an initial
term of two (2) years. In the event Owner sells its interest in the Property, this
Agreement will terminate upon the date of such sale. Unless either party by written
notice sent to the other party at least sixty (60) days before the end of any two-year
term hereof elects not to renew this Agreement, this Agreement shall renew automatically
for successive terms of two (2) years on the same terms as contained herein.
3. Acceptance of Engagement. Manager hereby accepts its engagement as the
manager of the Property and agrees to perform all services necessary for the care,
protection, maintenance and operation of the Property, including the following:
a. The collection of all rents and other income from the Property,
provided that nothing herein contained shall constitute a guarantee by Manager of
the payment of rent by tenants;
b. The purchase, at the expense of Owner, of all equipment, tools,
appliances, materials, supplies and uniforms necessary for the maintenance or operation
of the Property;
c. The contracting on behalf of Owner for water, gas, electricity
and other services necessary for the operation and maintenance of the Property;
d. The advertising for the rental of space in the Property, the
cost of which shall be paid or by Owner;
e. The use of all reasonable efforts to keep the Property rented
by procuring tenants for the Property and negotiating and executing on behalf of
Owner all leases for space in the Property;
f. The employment, discharge and payment of all employees or contractors
necessary to be employed in the management and operation of the Property. Owner agrees
that all wages (and federal and state unemployment insurance and other required charges)
of such employees, and all compensation of such employees and contractors, shall
be paid from Owner's funds;
g. The preparation and filing of all returns and other documents
(other than promissory notes, mortgages, deeds of trust or other documents or instruments
which would encumber the Property) required under the Federal Insurance Contributions
Act and the Federal Unemployment Tax Act, or any similar federal or state legislation.
Manager shall also file returns and reports, and pay from Owner's funds, all sums
as may from time to time be required by the state or locality in which the Property
is located;
h. The maintenance of full books of account with correct entries
of all receipts and expenditures, which books of account shall be the property of
Owner and shall at all times be open to the inspection of Owner or any of its employees
or duly authorized agents;
i. The furnishing to Owner of all lenders' annual property inspection
letters regarding repairs necessary to avoid mortgage loan defaults. The furnishing
monthly of a detailed statement of all receipts and disbursements for that month,
such statement to be furnished on or before the 20th day of each month for the preceding
month. Such statement shall show the status of collections and shall be supported
by canceled checks, vouchers, duplicate invoices and similar documentation covering
all items of income and expense, which shall be kept in Manager's office and shall
be available for inspection by Owner's representatives at all times. Manager shall
also furnish a monthly operating statement showing the income and expense for the
month, and year
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to date, and for the same month of the preceding year. The cost of performing the
accounting functions outlined in paragraphs h and i shall be paid for by Owner pursuant
to the terms of this Agreement;
j. The furnishing of annual reports to Owner which shall contain
a composite financial report of the monthly statements provided in accordance with
paragraph i, plus a statement by Manager as to the operations of the Property during
the previous year and recommendations, if any, as to necessary policy changes or
improvements which should be implemented in the forthcoming year, which recommendations
shall be accompanied by an estimated budget for such items;
k. The furnishing from time to time, at least semi-annually, of
a tentative budget of expenses;
l. The furnishing from time to time, at least annually, of the following
schedules: (1) forecast of rental and occupancy changes; (2) review of lease negotiations;
(3) annual analysis of leases; and (4) schedule of capital improvements and method
of financing such improvements;
m. The furnishing, on a regular basis, of all forms necessary to
operate and lease the Property and manage the personnel including, but not limited
to, form leases, contracts and management policies; and
n. During the initial term of this Agreement, supervising the transition
from former ownership of the Property and implementing new management systems with
respect to operation of the Property.
4. Deposits of Rent and Other Income. All sums received from rents, tenant
security deposits or other deposits on space in the Property, deposits on keys and
other income from the Property, shall be deposited from time to time as collected
by Manager to the credit of Owner in such bank or banks as may from time to time
be designated by Owner. Such funds shall be disbursed only in accordance with the
terms of each individual lease and in accordance with any applicable federal, state
or local laws, regulations or ordinances.
5. Insurance. Owner shall place all insurance policies with respect to the
Property and its operation. Manager shall be included as an insured in the policies
covering general liability, public liability and workers' compensation insurance.
In the event Manager is authorized by Owner to place insurance policies, the companies,
the general agents, the amounts of
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coverage and the risks insured shall be subject to the approval of Owner.
6. Indemnification. Owner hereby agrees to indemnify and hold harmless Manager
against and in respect of any loss, cost or expense (including reasonable investigative
expenses and attorneys' fees), judgment, award, amount paid in settlement, fine,
penalty and liability of any and every kind incurred by or asserted against Manager
by reason of or in connection with the employment of Manager hereunder, the performance
by Manager of the services described herein or the occurrence or existence of any
event or circumstance which results or is alleged to have resulted in death or injury
to any person or destruction of or damage to any property and any suit, action or
proceeding (whether threatened, initiated or completed) by reason of the foregoing;
provided, however, that no such indemnification of Manager shall be made, and Manager
shall indemnify and hold Owner harmless against, and to the extent of, any loss that
a court of competent jurisdiction shall, by final adjudication, determine to have
resulted from willful misconduct, gross negligence or fraud by or on the part of
Manager.
7. Compensation of Manager for Managing the Property. Owner shall pay to
Manager a "Property Management Fee" for management of the Property pursuant to this
Agreement in an amount equal to five percent (5%) of the monthly gross revenues from
the Property. The Property Management Fee shall be paid to Manager on or before the
10th day of each month and shall be based upon the income received by Owner (for
such month) which has been obtained by such date. If additional gross revenues are
received by Owner after the day Manager is paid, the sum due to Manager on account
of such additional income shall be paid to Manager when Manager is paid its fees
for the next succeeding month.
8. Reimbursement of Expenses. Owner shall reimburse Manager for Manager's
expenses, including salaries and related overhead expenses, associated with bookkeeping,
accounting and financial reporting services pertaining to the Property.
9. Reserves for Capital Items. Owner acknowledges that the budget prepared
by Manager, pursuant to paragraph 3(k), will contain a category labeled "Reserve
for Capital Items." Owner agrees to place rents and other income in a bank account,
or to permit Manager to transfer Owner's funds to such account, or to permit Manager
to transfer Owner's funds to such account, in sufficient amounts to meet the needs
reflected in such budget. Such funds shall be placed in the account on a monthly
basis as reflected in the budget.
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10. Cash Flow. Owner acknowledges that the budget prepared by Manager, pursuant
to paragraph 3(k), will contain a category labeled "Cash Flow." Owner agrees, in
the event that the budgeted cash flow for the Property is "negative" in any month
covered by the budget, to place sufficient funds in a bank account, or to permit
Manager to transfer Owner's funds to such account, to make up the budgeted operating
deficit. These funds must be placed in such account at least forty-five (45) days
before the budgeted deficit is to occur.
11. Power of Attorney. Owner hereby makes, constitutes and appoints Manager
its true and lawful attorney-in-fact, for it and in its name, place and stead and
for its use and benefit to sign, acknowledge and file all documents and agreements
(other than promissory notes, mortgages, deeds of trust or other documents or instruments
which would encumber the Property) necessary to perform or effect the duties and
obligations of Manager under the terms of this Agreement. The foregoing power of
attorney is a special power of attorney coupled with an interest. It may only be
terminated by canceling this Agreement as provided herein.
12. Relationship of Parties. The parties agree and acknowledge that Manager
is and shall operate as an independent contractor in performing its duties under
this Agreement, and shall not be deemed an employee or agent of Owner.
13. Entire Agreement. This Agreement represents the entire understanding
between the parties hereto with regard to the transactions described herein and may
only be amended by a written instrument signed by the party against whom enforcement
is sought.
14. Governing Law. This Agreement shall be construed in accordance with
and be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
OWNER:
APPLE RESIDENTIAL INCOME TRUST, INC.,
a Virginia corporation
By: /s/ S. J. Olander
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Title: Secretary
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MANAGER:
APPLE RESIDENTIAL MANAGEMENT GROUP, INC.
By: /s/ S.J. Olander
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Title: Secretary
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