Before you hand your Chicago apartment building over to a property management company, you’ll sign a property management agreement. This contract defines the entire relationship, what the PM does, what they charge, and how you can get out if things go wrong. Most building owners sign these contracts without fully reading them. Here’s what to watch for.
The Termination Clause
This is the most important clause in any PM contract. What notice period is required to terminate? 30 days is reasonable; 90 days is not. Is there an early termination fee? What triggers can void the contract without penalty (e.g., PM negligence, failure to perform)? A contract that makes it expensive or difficult to leave a bad PM is designed to protect the PM, not you.
Maintenance Markup Language
Look carefully at the section describing maintenance and repairs. Does the contract allow the PM to add a “coordination fee,” “administrative fee,” or “handling fee” to contractor invoices? Does it reference “preferred contractors” without specifying that you receive invoices at contractor cost? Any language that isn’t a clear “a clear explanation of how maintenance is billed” should be questioned in writing before you sign.
Fee Schedule Completeness
The contract should include a complete, itemized fee schedule. Common fees to look for:
- Monthly management fee (flat per unit or % of rent collected)
- Leasing / placement fee (per new tenant placed)
- Lease renewal fee
- Late fee handling, does the PM retain them or pass them to you?
- Eviction coordination fee
- Inspection fees (move-in, move-out, annual)
- Vacancy minimum fees
If the contract says “additional fees as mutually agreed” without specifying what those might be, that’s an open door for charges you didn’t anticipate.
Owner Approval Thresholds for Maintenance
What maintenance decisions can the PM make without your approval? Most contracts allow the PM to authorize repairs up to a certain dollar threshold (commonly $250-$500) without calling you. Anything above that should require owner authorization. Make sure this threshold is clearly defined and reasonable for your building’s scale.
Liability and Indemnification
Who is responsible if the PM makes a mistake that costs you money, a missed inspection deadline, a tenant screening error, a lease that wasn’t RLTO-compliant? The contract should clearly define the PM’s liability and the process for addressing PM errors. Blanket indemnification clauses that protect the PM from all liability are problematic.
Reporting Requirements
What reporting is the PM contractually required to provide, and how often? Monthly owner statements should be a minimum contractual requirement, not just a verbal promise. The contract should specify what financial information is included and when it’s delivered.
The Bottom Line
A well-written PM contract should be clear, fair, and simple. If you need a lawyer to parse the fee structure, something is wrong. The best PM companies have contracts that are straightforward because they have nothing to hide.
M Property Group LLC, operating as MF CashFlow Property Management, offers straightforward contracts with flat per-unit pricing starting at $85/unit/month, vetted-vendor maintenance with itemized invoices in writing, 30-day termination notice, and no hidden fees. We manage 5+ unit apartment buildings across Chicago’s South Side and believe the contract should build trust, not erode it.
Schedule a free consultation at cal.com/mike-f/30min.
M Property Group LLC | IDFPR Licensed | Chicago, IL
