An owner engaging a manager should define authority precisely, because the manager acts as agent and binds the owner.
Scope. Leasing, collections, maintenance, vendor engagement, accounting, budgeting and reporting, with approval thresholds for expenditures and for leases.
Authority limits. Dollar thresholds for unbudgeted expenditures, emergency authority with prompt notice, and a prohibition on entering leases outside approved parameters.
Funds. Segregated accounts in the owner’s name, with the manager as signatory; no commingling; a defined operating reserve; and prompt remittance of net proceeds.
Fees. A percentage of collected revenue, leasing commissions, construction management fees, and the treatment of affiliate services — the last is where conflicts sit and should be at market with owner approval.
Reporting. Monthly financials on a defined timetable, rent rolls, variance commentary, and an annual budget for approval.
Insurance and indemnity. The manager as additional insured under the owner’s policies; the manager’s own errors and omissions and crime coverage; and mutual indemnities with the manager responsible for its own negligence.
Term and termination. Termination for cause with a short cure, and for convenience on notice, with an orderly transition obligation covering records, funds and keys.