APARTMENT MANAGEMENT AGREEMENT
Exhibit 10.17
APARTMENT MANAGEMENT AGREEMENT
THIS APARTMENT MANAGEMENT AGREEMENT is made this the 27 day of March, 2012, by and between VILLAS PARTNERS, LLC a Delaware limited liability company (“Owner”), and BROOKSIDE PROPERTIES, INC., a Tennessee corporation ("Manager"), to be effective the 27 day of March, 2012 (herein called the “Effective Date”) and in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
ARTICLE II
Management Responsibilities: Manager hereby accepts the following responsibilities, authorities and duties relative to the Property, and agrees:
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(a) Manager shall furnish to Owner, within fifteen (15) days after the end of each month, monthly reports for the Property, which reports shall be prepared showing monthly and year to date activity and which shall be furnished (without notice or demand by Owner) as specified in Exhibit A. All monthly reports shall be prepared on the basis of the last calendar date of each month, as contrasted with any earlier cutoff date in a month.
(b) Manager shall provide Owner with a weekly status report for the Property with a format to be specified by Owner utilizing Manager's existing software and chart of accounts. Manager to provide monthly marketing reports on locally competitive properties.
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2.6 Annual Reports and Budgets.
(a) Manager shall cooperate in good faith with Owner and/or Owner's Auditor in the preparation of (i) a year-end statement of continuing operation of the Property, including a balance sheet and related statements of income and cash flows, which shall be furnished not later than thirty (30) days after the end of each Fiscal Year and (ii) the other annual reports as specified in Exhibit A hereto or in the Limited Liability Company Agreement for Oak Crest Villas JV, LLC. All annual reports shall be prepared on the basis of the last day of the calendar year, rather than on an earlier cutoff date.
(b) All such annual reports shall be prepared on a GAAP Basis, and, at Owner’s option and expense, may be audited by a national firm of independent certified public accountants selected by Owner (the “Auditor”). Owner shall be responsible for arranging for such audit, and Manager shall cooperate in good faith with Owner and/or Owner’s Auditor in the preparation of Owner’s financial statements, including any audited financial statements required by Owner. A draft of any such report for each Fiscal Year shall, at the request of Owner, be submitted to Owner for approval by Owner before finalization of the same.
(c) Not later than thirty (30) days from the date hereof and not later than sixty (60) days prior to the beginning of each Fiscal Year, Manager shall submit to Owner for its approval a proposed annual budget (the “Budget”) for the Property for the ensuing Fiscal Year setting forth on a monthly basis Manager’s good faith estimates of Gross Revenues, Operating Expenses, and Interest Expense for the Property for such year and the recommended Capital Expenditures and extraordinary expenses for such year described in reasonable detail.
ARTICLE III
ARTICLE IV
Owner hereby grants to Manager the following authority and powers and further agrees to assume the expenses in connection therewith, to-wit:
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4.2 Rental Collections and Lease Enforcement:
(a) To collect rents and all other revenues due or to become due Owner and to give receipts there for; in the ordinary course of business, to terminate tenancies of all types and to sign and serve in the name of Owner such termination notices as are appropriate; to evict tenants and recover possession of apartment units, the Property or any part thereof; to xxx for in the name of the Owner or Manager, and recover such rents and other sums due; and when expedient, to settle, compromise and release such actions or suits or reinstate such tenancies. If permitted by applicable law, Manager may collect for Owner's account from tenants any or all of the following: an administrative charge for late payment of rent, a charge for returned or non-negotiable checks, a credit report fee, and an administrative charge.
(b) Manager is authorized to sign and serve such notices as Manager deems necessary for lease enforcement, including the collection of rent or other income. Manager is authorized, when expedient, to settle, compromise, and release such legal actions or suits or reinstate such tenancies. Any settlement of claims against Owner, Manager or the Property shall not exceed $1,000 without prior written approval by Owner. Attorneys’ fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants shall be paid out of the operating account or reimbursed directly to Manager by Owner. Manager may select the attorney of its choice to handle such litigation.
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(a) Manager is authorized to make or cause to be made, through contracted services or otherwise, all ordinary repairs, replacements and alterations reasonably necessary (i) to preserve the Property in its present condition; (ii) for the operating efficiency of the Property; and (iii) to comply with lease requirements, governmental regulations, or insurance requirements. Manager is also authorized to decorate the Property and to purchase or rent, on Owner’s behalf, all equipment, tools, appliances, materials, supplies, uniforms, and other items necessary for the management, maintenance, or operation of the Property. Such maintenance and decorating expenses shall be paid out of the operating account. This section applies except where decorating and/or maintenance are at the tenant’s expense as stipulated in a lease.
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(b) The expense to be incurred for any one item of maintenance, alteration, refurbishing, or repair shall not exceed the sum of $2,500.00, unless such expense is (i) specifically provided for in the annual budget; (ii) otherwise authorized by Owner; or (iii) incurred under such circumstances as Manager shall reasonably deem to be an Emergency. An “Emergency” shall be defined as a circumstance where repairs or other action is immediately necessary for the preservation and safety of the Property, to avoid the suspension of any essential service to the Property, to avoid danger to life or property, or to comply with federal, state or local laws.
ARTICLE V
(a) Subject to the balance of the terms of this Section 5.1, the Owner agrees to indemnify and hold Manager and its officers, directors, members, managers and employees, harmless from all fines, suits, levies, proceedings, claims, actions or causes of action, of any kind and whatsoever nature, whether in contract, equity or in tort, including, but not limited to, court costs, litigation expenses and attorneys’ fees, (including attorneys’ fees upon appeal) arising from, growing out of, in connection with, or incidental to Manager's activities, operation, management or supervision of the Property in accordance with the terms of this Agreement. Maintenance of insurance by Owner or Manager as required by this Agreement shall not relieve Owner from its obligation to indemnify and hold Manager harmless.
(b) Manager shall not be liable for any negligence, error in judgment or for any mistake of fact or of law, or for anything which it may do or refrain from doing hereinafter so long as it is acting in good faith and in accordance with applicable law. It is expressly understood and agreed that the indemnification provisions of sections 4.5 and 5.1 hereof shall survive the expiration or termination of this Agreement.
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(c) Manager shall indemnify, defend and hold harmless Owner, and its members, partners, directors, officers, managers, employees, agents and Affiliates (each, an “Owner Indemnified Party”) from and against any and all claims, actions, suits, proceedings, losses, damages, liabilities, costs and expenses, including reasonable attorneys’ fees and disbursements (“Damages”) (including Damages relating to violations of environmental Legal Requirements), arising out or resulting from the acts or omissions of Manager and its directors, officers, employees, contractors, subcontractors and agents, which constitute gross negligence, fraud, malfeasance, breach of fiduciary duty, willful, reckless or criminal misconduct, a breach of this Agreement or any actions of Manager beyond the scope of the authority conferred upon Manager hereunder. Manager shall have the right to defend, and shall defend, at its expense and by counsel of its own choosing (subject to Owner’s approval of such counsel, not to be unreasonably withheld, conditioned or delayed), against any claim or liability to which the indemnity agreement set forth in this Section 5.1 would apply. Notwithstanding the foregoing, if (i) Manager has failed or refused to defend, indemnify and hold harmless Owner and any Owner Indemnified Party after written notice to Manager, (ii) an Event of Default exists on the part of Manager, (iii) Owner or any Owner Indemnified Party to be defended hereunder reasonably determines that a conflict of interest exists, or (iv) Owner reasonably determines that Manager is insufficiently liquid or creditworthy to adequately defend or pay the amount of any Damages when due, Owner, or such Owner Indemnified Party may, in its sole and absolute discretion, engage its own attorney and other professionals to defend or assist it with respect to such matters, and, at the option of Owner or such Owner Indemnified Party, its attorney shall control the resolution of such matters as to Owner. Manager shall not have the authority to settle any claim or liability as to Owner that is the subject of the indemnification agreement provided for in this Section 5.1 without first obtaining Owner’s prior written consent, such consent not to be unreasonably withheld. Manager or Owner, as applicable, shall regularly apprise the other of the status of all proceedings.
(d) Manager assumes no liability whatsoever for any acts or omissions of Owner, any previous owners or managers of the Property. Manager shall have no liability for (i) any failure of or default by any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owed by any tenant to Owner pursuant to any lease or otherwise; or (ii) any acts or omissions of any tenant or third party with respect to the Property. Manager shall have no liability for any violations of environmental or other laws or regulations with respect to the Property, unless the same are due to the gross negligence or willful misconduct of Manager and first arise during the term of this Agreement. Manager shall notify Owner in writing of any regulatory violations or hazards discovered by Manager, and Owner shall promptly cure them.
(e) Manager does not assume and shall have no liability for compliance of the Property or any improvement thereon or any equipment therein with the requirements of any building codes or with any applicable statute, ordinance, law or regulation of any governmental body or of any public authority or official thereof, except to notify Owner promptly and forward to Owner any complaints, warnings, notices, or summons received by Manager relating to such matters. Owner authorizes Manager to disclose the ownership of the Property to any such officials. Owner agrees to allow Manager to maintain the Property in compliance with applicable law, and Owner shall budget adequate amounts therefor.
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(e) Failure to Carry Insurance. If Owner fails to carry the insurance required hereunder or to provide Manager with the required certificates, Manager may, but shall not be obligated to, acquire such insurance. If Manager carries such insurance under its master policy. Owner understands and agrees that Manager is not an insurance agent, and will provide such coverage without any representations or warranties whatsoever, including, without limitation (i) whether any information describing coverage in place is accurate or complete, (ii) whether the coverage in place is adequate, or (iii) whether the insurance companies providing such coverage are financially sound. In the event Manager obtains the insurance on the Property, Owner shall pay all costs thereof attributable to the Property, including without limitation any uninsured claims or deductibles that may apply. Manager may charge the cost all of the foregoing costs to the operating account.
(a) Worker’s compensation and employer’s liability insurance subject to the statutory limits of the state in which the Property is located. Manager shall provide Owner with a certificate evidencing such coverage.
(b) Comprehensive automobile liability insurance covering owned, non-owned, and hired vehicles in an amount not less than $1,000,000 combined single limit for bodily injury and property damage. Such requirements may be satisfied by layering of comprehensive automobile liability, umbrella and excess liability policies.
(c) Fidelity bond and computer crime insurance with an annual limit of a minimum of
$1,000,000 for each director, officer, employee or agent of Manager associated with the management of the Property including the handling of receipts and disbursements.
(d) Commercial general and umbrella liability insurance, written on an occurrence basis, in an amount not less than $1,000,000 and $10,000,000, respectively. Such umbrella liability insurance shall apply in excess of the commercial general liability insurance and the insurance required in Owners Insurance obligations.
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(e) Professional liability insurance with an annual limit of not less than $1,000,000 per occurrence and in the aggregate with an extended period of indemnity. Such insurance policy shall survive the termination or expiration of this Agreement for a minimum period of two (2) years following the expiration or termination of this Agreement.
ARTICLE VI
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6.4 Expenses: Should Manager advance funds for and on behalf of the Owner and/or the Property, or incur out-of-pocket expenses for and on behalf of the Property, in furtherance of its duties set forth in this Agreement, Manager shall be reimbursed for such amounts monthly at the same time Manager is to be paid Management Fees. If Manager elects, in Manager’s sole discretion, to advance any money in connection with the Property to pay any expenses for Owner, such advance shall be considered a loan subject to repayment with interest, and Owner hereby agrees to reimburse Manager, including interest as provided in Section 7.7, and hereby authorizes Manager to deduct such amounts from the operating account.
6.5 Owner Responsible for All Expenses of Litigation:
(a) Owner shall pay all expenses incurred by Manager, including, but not limited to, reasonable attorneys’ fees, litigation expenses, court costs and Manager’s other costs and time, and any liability, fines, penalties or the like, in connection with any claim proceeding, or suit involving an alleged violation by Manager or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis of race, sex, creed, color, religion, national origin, or mental or physical handicap; provided, however, that Owner shall not be responsible to Manager for any such expenses in the event Manager is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Manager to employ legal counsel to represent Owner in any such proceeding or suit.
(b) Owner shall pay reasonable expenses incurred by Manager in obtaining legal advice regarding compliance with any law affecting the Property or other matters related to the Property. If such expenditure also benefits others for whom Manager in this Agreement acts in a similar capacity, Owner agrees to pay an apportioned amount of such expense.
ARTICLE VII
7.1 Applicable Law: This Agreement shall be construed under and in accordance with the laws of the State of Tennessee, the place of its making. All monies or sums due Manager shall be due and payable to Manager at its office in Nashville, Tennessee.
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7.4 Prior Agreement Superseded: This Agreement contains the sole and only agreement between Manager and Owner and it supersedes any prior understandings or agreements, whether written or oral, between the parties respecting the written subject matter hereof.
7.5 Attorney’s Fees: If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees from the other party.
7.6 Counterparts: This Agreement may be executed concurrently in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
7.7 Interest: Any sums due Manager under any provision of this Agreement, and not paid within thirty (30) days after such sums become due, shall bear interest at the rate of twelve percent (12 %) per annum.
Manager: | Brookside Properties, Inc. |
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000X | |
Xxxxxxxxx, Xxxxxxxxx 00000 | |
Attn: Xxxxxxx X. Xxxxxxxx | |
Owner: | Villas Partners, LLC |
0000 Xxxxxxxx Xxxx, Xxx 000 | |
Xxxxxxxxx, XX 00000 |
Such notice or other communication may be personally delivered, mailed by United States, certified mail, return receipt requested, or sent by commercial overnight courier such as Federal Express or UPS. For purposes of this Agreement, notices shall be deemed to have been “given” or “delivered” (a) upon personal delivery thereof; (b) forty-eight (48) hours after having been deposited in the United States mail; or (c) on the date delivered by overnight courier.
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ARTICLE VIII
8.1 Termination. This Agreement may be terminated as follows:
(d) Excessive Damage - Upon the destruction of or substantial damage to the Property by any cause, or the taking of all or a substantial portion of the Property by eminent domain, in either case making it impossible or impracticable to continue operation of the Property.
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ARTICLE IX
(a) Mediation shall be administered by the American Arbitration Association under its Commercial Mediation Procedures (or by any other person or association and in accordance with any rules, as acceptable to the dispute parties) before resorting to arbitration, litigation, or some other dispute resolution procedure.
(b) A dispute party may commence mediation by providing the other dispute party or parties a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties will cooperate in selecting a mediator and in scheduling the mediation proceedings and will share equally in its costs. The parties covenant that they will participate in the mediation in good faith. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.
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(a) Any dispute party may initiate binding arbitration with respect to the matters submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or 45 days after the date of filing the written request for mediation, whichever occurs first. Arbitration shall be administered by the American Arbitration Association in accordance with the provisions of its Commercial Arbitration Rules (or by any other person or association and in accordance with any rules, acceptable to the dispute parties). The arbitrator may, in the award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator and the reasonable attorneys' fees of the prevailing party. The determination or award of the arbitrator(s) shall be final and binding on the parties to the dispute and may be entered in a Court of appropriate and competent jurisdiction for enforcement.
(b) The mediation may continue after the commencement of arbitration if the parties so desire. Unless otherwise agreed by the parties, the mediator shall be disqualified from serving as arbitrator in the case.
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The undersigned being duly authorized execute and enter into this Agreement on the date first above written effective as of the Effective Date.
OWNER:
VILLAS PARTNERS, LLC, a Delaware | |||
limited liability company | |||
By: | Oak Crest Villas JV, LLC, a Delaware limited liability company, its sole member | ||
By: | Madison Oak Crest, LLC, a Delaware limited liability company, its manager | ||
By: | /s/ Xxxx X. Xxxxx | ||
Xxxx X. Xxxxx, Manager |
MANAGER:
BROOKSIDE PROPERTIES, INC.
By: | /s/ Xxxxxxx X. Xxxxxxxx | |
Name: Xxxxxxx X. Xxxxxxxx | ||
Title: Member |
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EXHIBIT A
MONTHLY REPORTS
1. Balance Sheet, including monthly comparison and comparison to year end (if applicable).
2. Budget Comparison (1), including month-to-date and year-to-date variances.
3. Detailed Income Statement, including prior 12 months.
4. Profit and loss statement compared to Budget with narrative for any large fluctuations compared to Budget.
5. Trial Balance that includes mapping of the accounts to the financial statements.
6. Account reconciliations for each balance sheet account within the trial balance.
7. Detailed support for each account reconciliation including the following:
a. Detail Accounts Payable Aging Listing: 0-30 days, 31-60 days, 61-90 days and over 90 days.
b. Detail Accounts Receivable/Delinquency Aging Report: 0-30 days, 31-60
days, 61-90 days, over 90 days and prepayments.
c. Fixed asset roll-forward and support (invoices and checks) for any new acquisition/additions and/or support for any disposals to fixed assets. Purchases will be accounted for using Bluerock’s capitalization policy.
8. Security Deposit Activity
9. Mortgage Statement
10. Monthly Management Fee Calculation
11. Monthly Distribution Calculation
12. General Ledger, with description and balance detail
13. Monthly Check Register including copies of all checks disbursed and copies of cancelled checks.
14. Market Survey, including property comparison, trends, and concessions.
15. Rent Roll
16. Monthly Reporting and evidence of withdrawal, if any, of the Property Enhancement Reserves, and any other operating reserve accounts and capital expense reserve accounts, including, but not limited to, any calculations evidencing shortfalls payable thereunder.
17. Variance Report, including the following:
a. Cap Ex Summary and Commentary
b. Monthly Income/Expense Variance with notes
c. Yearly Income/Expense Variance with notes
d. Occupancy Commentary
e. Market/Competition Commentary
f. Rent Movement/Concessions Commentary
g. Crime Commentary
h. Staffing Commentary
i. Operating Summary, with leasing and traffic reporting
J. Other reasonable reporting, as requested (e.g. Renovation/Rehab report)
(1) Budget Comparison shall include (i) an unaudited income and expense statement showing the results of operation of the Property for the preceding calendar month and the Fiscal Year to-date; (ii) a comparison of monthly line item actual income and expenses with the monthly line item income and expenses projected in the Budget. The balance sheet will show the cash balances for reserves and operating accounts as of the cut-off date for such month.