Exhibit 5
PROPERTY MANAGEMENT AGREEMENT
This Agreement is made as of the ____ day of ________________, 199___ between
the undersigned ▇▇▇▇▇ REALTY FUND, LTD.-III (The "Owner") and the undersigned
BERKSHIRE REALTY ENTERPRISES LIMITED PARTNERSHIP, (the "Agent").
1. APPOINTMENT AND ACCEPTANCE. The Owner appoints the Agent as exclusive
agent for the management of the property described in Section 2 of this
Agreement, and the Agent accepts the appointment, subject to the terms and
conditions set forth in this Agreement.
2. DESCRIPTION OF THE PROJECT. The property to be managed by the Agent
under this Agreement (the "Project") is a housing development consisting of the
land, buildings, and other improvements located in _______________ and known as
________________ Apartments, containing ______ dwelling units.
3. BASIC INFORMATION. The Agent will thoroughly familiarize itself with
the character, location, construction, layout, plan and operation of the
Project, and especially the electrical, plumbing, air-conditioning and
ventilating systems, the elevators and all other mechanical equipment.
4. MARKETING. The Agent will carry out the marketing activities designed
to attract tenants as described below.
5. RENTALS. The Agent will offer for rent and will rent the dwelling
units and commercial space, if any, in the Project. Incident thereto, the
following provisions will apply:
a. The Agent will show the Project to prospective tenants;
b. The Agent will take and process applications for rentals.
If an application is rejected, the applicant will be told
the reason for rejection, and will be given the rejected
application, with reason for rejection noted. A current
list of prospective tenants will be maintained;
c. The Agent will prepare all dwelling leases and, unless
otherwise directed by the Owner, will execute the same in
its name, identifying itself thereon as agent for the
Owner. Dwelling leases will be in a form approved by the
Owner;
d. The Owner will furnish the Agent with rent schedules, showing
contract rents for dwelling units, and other charges for
facilities and services. The Agent will periodically review such
rent schedules and make recommendations to the Owner with respect
to changes thereto;
e. The Agent will collect, deposit, and disburse security
deposits, if required, in accordance with the terms of
each tenant's lease;
f. The Agent will negotiate and prepare commercial leases and
concession agreements, if the Project shall now or hereafter
contain any commercial space, and will execute the same in its
name, identified thereon as agent for the Owner, subject to the
Owner's prior approval of all terms and conditions; and
g. The Agent will perform periodic market surveys with
respect to the market area in which the Project is
located.
6. COLLECTION OF RENTS AND OTHER RECEIPTS. The Agent will collect, when
due, all rents, charges and other amounts receivable for the Owner's account in
connection with the management and operation of the Project. Such receipts will
be deposited in an account, separate from all other accounts and funds, with a
bank whose deposits are insured by the Federal Deposit Insurance Corporation.
This account will be carried in the Owner's name and designated of record as
"▇▇▇▇▇ Realty Fund, Ltd.-III dba ___________ Apartments" (the "Project Rental
Account"). Subject to compliance with Section 11 hereof, the Agent is, however,
hereby authorized to make deposits to and withdrawals from the Project Rental
Account as agent for the Owner.
7. ENFORCEMENT OF LEASES. The Agent will secure full compliance by each
tenant with the terms of such tenant's lease. Voluntary compliance will be
emphasized, but the Agent may lawfully terminate any tenancy when, in the
Agent's judgment, sufficient cause (including but not limited to non-payment of
rent) for such termination occurs under the terms of the tenant's lease. For
this purpose, the Agent is authorized to consult with legal counsel, to be
designated by the Owner, to bring actions for eviction against such tenants;
provided, however, the Agent shall keep the Owner informed of such actions and
shall follow such instructions as the Owner may prescribe for the conduct of any
such action. Subject to the Owner's approval, attorney fees and other necessary
costs incurred in connection with such actions will be paid out of the Project
Rental Account as Project expenses.
8. MAINTENANCE AND REPAIR. The Agent will maintain the Project in good
repair and in compliance with local codes, and in a condition at all times
acceptable to the Owner, including, but not limited to, cleaning, painting,
decorating, plumbing, carpentry, grounds care, and such other maintenance,
repair, remodeling and refurbishing work as may be necessary, subject to any
limitations imposed by the Owner in addition to those contained herein. The
Agent will also assist the Owner in identifying and implementing capital
improvements to the Project. The Agent will perform such periodic physical
inspections as shall be appropriate in connection therewith. Incident thereto,
the following additional provisions will apply:
a. Special attention will be given to preventive maintenance,
and, to the extent feasible, the services of regular
maintenance employees will be used;
b. Subject to the Owner's prior approval, the Agent will negotiate,
review and sign, on behalf of the Owner, contracts with qualified
independent contractors for the maintenance and repair of heating
and air-conditioning systems and elevators, and for extraordinary
repairs to such items and other assets of the Project, which are
beyond the capability of regular maintenance employees;
c. The Agent will systematically and promptly receive and
investigate all service requests from tenants, take such action
thereon as may be justified, and will keep records of the same.
Emergency requests will be received and serviced on a twenty-four
(24) hour basis. Complaints of a serious nature will be reported
to the Owner after investigation;
d. The Agent is authorized to purchase all materials,
equipment, tools, appliances, supplies and services
necessary to the proper maintenance and repair of the
Project; and
e. Notwithstanding any of the foregoing provisions, the prior
approval of the Owner will be required for any expenditure
which exceeds Five Thousand Dollars ($5,000) in any one
instance for labor, materials or otherwise, in connection
with the maintenance and repair of the Project, except for
recurring expenses within the limits of the operating
budget and emergency repairs involving manifest danger to
persons or property or required to avoid suspension of any
necessary service to the Project. In the latter event,
the Agent will inform the Owner of the facts as promptly
as possible.
9. UTILITIES AND SERVICES. In accordance with the operating budget, the
Agent will make arrangements for water, electricity, gas, sewage and trash
disposal, vermin extermination, decorating, laundry facilities, and telephone
service. Subject to the Owner's prior approval, the Agent will make such
contracts as may be necessary to secure such utilities and services.
10. NONCUSTOMARY SERVICES. Notwithstanding any contrary provision in
this Agreement, the Owner shall cause any services, in connection with the
rental of the Project, that are not customarily furnished to tenants of
comparable buildings in the region (including, but not limited to, the provision
of maid service and the furnishing of parking facilities, other than on a
complimentary, unreserved basis), to be performed by an entity qualifying as an
independent contractor.
11. EMPLOYEES. Except as otherwise agreed, all on-site
personnel will be employees of the Owner, for purposes of their
compensation, and not the Agent, but will be hired, paid,
supervised, and discharged through the Agent, in the Agent's sole
discretion, subject to the following conditions:
a. The resident manager will have duties of the type usually
associated with this position;
b. Compensation (including fringe benefits) of bookkeeping,
clerical, and other managerial personnel will be within
the Agent's sole discretion, provided minimum wage
standards are met;
c. The Owner will reimburse the Agent for the compensation
(including fringe benefits) payable to the on-site
management and maintenance employees, and for all local,
state and federal taxes and assessments (including, but
not limited to, Social Security taxes, unemployment
insurance, and ▇▇▇▇▇▇▇'▇ Compensation insurance) incident
to the employment of such personnel. Such reimbursements
will be paid out of the Project Rental Account and will
be treated as Project expenses; and
d. Compensation (including fringe benefits) payable to the
on-site staff, and all bookkeeping, clerical and other
managerial personnel, plus all local, state and federal
taxes and assessments incident to the employment of such
personnel will be borne solely by the Project, and will
not be paid out of the Agent's management fee. The
rental value of any dwelling unit furnished rent-free to
on-site personnel will be treated as a cost of the
Project.
12. DISBURSEMENTS FROM PROJECT RENTAL ACCOUNT.
a. From the funds collected and deposited by the Agent in the
Project Rental Account, either the Owner or the Agent, as shall
be determined from time to time by the Owner, will make the
following disbursements, when payable:
(1) Reimbursement to the Agent for compensation payable to
the employees specified in Section 10 above, and for
the taxes and assessments payable to local, state and
federal governmental agencies;
(2) All sums otherwise due and payable by the Owner as
expenses of the Project, including compensation payable
to the Agent for its services hereunder and expenses of
the Project incurred by the Agent under the terms of
this Agreement;
(3) Any payment required to be made monthly by the Owner to
any mortgagee of the Project, including the amounts due
under the mortgage for principal amortization,
interest, ground rents, taxes and assessments, and fire
and other hazard insurance premiums;
b. Except for the disbursements mentioned above, funds will
be disbursed or transferred from the Project Rental
Account only as the Owner may from time to time direct;
and
c. In the event the balance in the Project Rental Account is at any
time insufficient to pay disbursements due and payable under
Section 11(a) above, the Agent will inform the Owner of that
fact and Owner shall immediately deposit sufficient funds. In no
event will the Agent be required to use its own funds to pay
such disbursements.
13. RECORDS AND REPORTS. The Agent will have the following
responsibilities with respect to records and reports:
a. The Agent will establish and maintain a comprehensive
system of records, books and accounts in a manner
satisfactory to the Owner;
b. With respect to each fiscal year ending during the term of this
Agreement, the Agent will furnish an annual financial report.
The Agent will also prepare and review budgets and cash flow
projections for the Project in such manner and at such times as
may be agreed with the Owner;
c. The Agent will furnish such information (including
occupancy reports) as may be reasonably requested by the
Owner from time to time with respect to the financial,
physical, or operating condition of the Project; and
d. By the twenty-fifth (25th) day of each month, the Agent will
furnish the Owner with a statement of receipts and disbursements
during the previous month, a schedule of accounts receivable and
payable, as of the end of the previous month and reconciled bank
statements for the Project Rental Account, as of the end of the
previous month.
14. ON-SITE MANAGEMENT FACILITIES. Subject to the further agreement of
the Owner and the Agent as to more specific terms, the Agent will maintain a
management office within the Project, for the convenience of the Owner, for the
sole purpose of the Agent's performing its duties under this Agreement, and the
Owner will make no rental charge for such office.
15. INSURANCE. The Owner will inform the Agent of insurance
to be carried with respect to the Project and its operations, and the Agent,
when authorized by the Owner, will cause such insurance to be placed and kept in
effect at all times. The Agent will pay premiums out of the Project Rental
Account, as an expense of the Project. All insurance will be placed with such
companies, on such conditions, in such amounts, and with such beneficial
interests appearing thereon as shall be acceptable to the Owner and shall be
otherwise in conformity with any mortgage relating to the Project, provided that
the same will include public liability coverage, with the Agent designated as
one of the insured, in amounts acceptable to the Owner, Agent and any mortgagee
of the Project. The Agent will investigate and furnish the Owner with full
reports as to all accidents, claims, and potential claims for damage relating to
the Project and will cooperate with the Owner's insurers in connection
therewith.
16. AGENT'S COMPENSATION. The Agent will be compensated for its service
under this Agreement by monthly fees to be paid out of the Project Rental
Account to be treated as Project expenses. Such fees will be payable monthly.
Each such monthly fee will be in an amount equal to five percent (5%) of the
gross receipts (including rentals and other operating income of the Project)
actually received during the preceding month. In addition, the Agent shall
receive reimbursement for all proper expenditures, obligations and liabilities
incurred by the Agent in connection with the operation of the Project. Such
reimbursement shall be limited to the actual cost of goods, services and
materials used for or by the Project, and in no event shall such cost exceed the
cost of such items if supplied by persons or entities other than the Agent or
its affiliates. Such reimbursement shall not include reimbursement for costs of
services rendered by employees who are not employed in the operation of the
Project (except that employees servicing more than one property (whether or not
owned by the Owner) may have their costs prorated based upon the respective
number of units or square footage in each property), or other expenses for which
managing agents of real estate would not customarily receive reimbursement in
addition to stated compensation.
17. INDEMNIFICATION BY THE OWNER. The Owner shall indemnify and hold
harmless the Agent, to the full extent permitted by the Delaware General
Corporation Law (in effect at the time indemnity is sought), from all liability,
claims, damages or loss arising out of the performance of its duties hereunder,
and related expenses, including reasonable attorneys' fees, to the extent such
liability, claims, damages or losses and related expenses are not fully
reimbursed by insurance; provided, however, that the Agent shall be entitled to
indemnification, under this Section 17, only if the Agent, in connection with
any liability, damages, claim or loss for which it seeks indemnity, acted in a
manner which would not constitute gross negligence or wilfull misfeasance.
18. INDEMNIFICATION BY THE AGENT. The Agent shall indemnify and hold
harmless the Owner from contract or other liability, claims, damages, losses and
related expenses, including attorneys' fees, to the extent that such liability,
claims, damages, losses and related expenses are not fully reimbursed by
insurance and are incurred by the Owner by reason of the Agent's deliberate
dishonesty or gross negligence.
19. RIGHT TO ASSIGN. The Agent may assign some or all of its rights or
obligations under this Agreement, provided that the Agent remains principally
responsible hereunder, and the Owner is given notice of such assignment. The
Owner may assign its rights and obligations under this Agreement to any
successor in title to the Property, and upon any such assignment, the Owner
shall be relived of all liability accruing after the effective date of such
assignment.
20. TERM OF AGREEMENT. This agreement shall be in effect for
a period commencing on the date hereof. This agreement may be
terminated, without penalty, by written notice of either party to
the other as of the end of any calendar month, provided at least
sixty (60) days advance notice thereof is given.
IN WITNESS WHEREOF, the parties hereto (by their duly authorized
representatives) have executed this Agreement on the date first above written.
OWNER: AGENT:
▇▇▇▇▇ REALTY FUND, LTD.-III BERKSHIRE REALTY ENTERPRISES
By: The ▇▇▇▇▇ Corporation, LIMITED PARTNERSHIP
its General Partner
By: By:
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