MANAGEMENT AGREEMENT American Management 2903 North Charles Street, Baltimore MD ; fax

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1 MANAGEMENT AGREEMENT American Management 2903 North Charles Street, Baltimore MD ; fax In consideration of the covenants herein, (Owner), and American Management II LLC, DBA American Management (Agent), agree as follows: 1. EXCLUSIVE AGENCY: The Owner(s) hereby employs the Agent exclusively to rent, lease, operate and manage the property(s) listed in paragraph 10 herein upon the terms hereinafter set forth for the period of One (1) Year beginning and ending and shall automatically renew thereafter for annual periods. Owner acknowledges receipt of the form Whom Your Real Estate Agent Represents as prescribed by the Maryland Real Estate Commission. 2. AGENT S DUTIES: The Agent accepts the engagement and agrees: a. To use due diligence in the management of the property(s) and to furnish the services of its organization for the renting, leasing, operating and managing the herein described property(s). b. To render monthly statements of and expenses and to remit to the Owner(s) proceeds of income receipts less disbursements. Agent is under no obligation to pay expenses if there are not sufficient funds in reserve for Owner. c. To provide year end financial operating statements and accompanying IRS Form 1099-Misc for all rents received in Trust on behalf of Owner. Agent reports to the IRS on a cash basis and statements to Owner(s) will be consistent with a cash basis accounting method. d. To deposit all receipts collected for the Owner(s) in an account in a qualified national or state banking institution. Agent will not be liable in the event of bankruptcy or failure of a depository. e. To file required legal registration renewals to include the following: MDE Lead Poisoning Prevention Program Rental Property Registry; Baltimore City Residential Rental Property Registration, Multi-Family Rental Registration; and any other mandated registration programs that may be implemented federally or locally. If property has not been registered previously, the initial registration(s) will be processed for a fee of $100 per registration. 3. AGENTS AUTHORITY: The Owner(s) gives to the Agent the following authority:

2 12/10/2010 Page 2 of 6 a. Agent is authorized to advertise for rent said property(s) or any part thereof; to display signs; to rent same; to sign leases for a period not to exceed twenty-four months and to renew or cancel leases; to institute and prosecute action to evict tenants and to recover possession of property(s). Agent is under no obligation to pursue evicted or past Tenants for judgment, or collections, of expenses or damages that exceed Tenant security deposit monies. b. Agent is authorized to retain, from monies due the Owner, a minimum reserve equal to the greater of: $ per building, $ per unit, or the amount of monthly recurring charges of $ (such as mortgage, etc). This reserve shall be used to pay expenses in the event expenses exceed income. Agent has the right to increase the amount of the minimum reserve in anticipation of impending expenses. At no time will Agent pay expenses in excess of both income and the reserve. c. Agent is authorized to retain the services of companies, independent contractors, and Agent s own maintenance employees and to order service contracts required for the operation and maintenance of the property(s). Owner shall be responsible for the payment of the services rendered. Agent shall not be responsible for their acts, defaults or negligence if reasonable care has been exercised in their appointment and retention. d. Agent is authorized to make, or cause to be made, and supervise repairs, maintenance, and alterations and to purchase supplies and pay all bills therefore. The Agent agrees to notify the Owner(s) of all expenditures in excess of $ for any one item, except monthly or recurring operating charges and/or emergency repairs in excess of maximum if, in the opinion of the Agent, such repairs are necessary to protect the property from damage, comply with local safety or building codes, or to maintain services to the tenants as called for in their leases. Agent is authorized to immediately make any repairs to chipping or peeling paint, consistent with MDE Lead Paint Poisoning Prevention program. e. Agent is authorized to standardize building with Agent s current maintenance operations procedures. This is to include, but not limited to, the following: change all locks to Agent s master keyed lock system; when turning over units or performing maintenance repairs to walls, to paint unit or repaired wall the Agent s standard paint color of Sherwin Williams Shell White; to purchase trash cans and recycle bins and implement building policies to ensure compliance with Baltimore City Real Property Code regarding trash collection. f. Agent is authorized to perform, or hire vendor to perform, routine preventative maintenance inspections and services including, but not limited to: common area cleanings, trash removal, gutter cleaning, HVAC filter cleaning, boiler flushing,

3 12/10/2010 Page 3 of 6 radiator bleeding, roof integrity inspections, tub/shower caulking, plumbing integrity inspections, smoke and carbon monoxide detector functionality inspections, rat and rodent infestation inspections and abatement, and all other preventative maintenance or inspections Agent deems as necessary to ensure proper upkeep of buildings and property. 4. TERMINATION: Either party may terminate this Agreement by giving sixty (60) days notice in writing. Notice of termination directed to Agent shall become effective only after all indebtedness or advance made by Agent on behalf of the Owner, plus interest, has been repaid in full to Agent and all compensation due Agent has been paid to and received by Agent. Agent may terminate this Agreement by written notice, and with an immediate effective date, if the Owner fails to, or refuses to, authorize and pay for repairs to Property(s) that are required to (a) fulfill the terms of a lease with a tenant, (b) comply with a building code or governmental ordinance or law, or (c) make the property safe and habitable. Failure of the Owner(s) to comply or allow the Agent to comply with all laws, regulations and building codes of any governmental authority shall be sufficient cause for immediate termination of this contract by the Agent. 5. COLLECTION OF RENT: The following forms of rent shall be collected on behalf of the Owner from Tenant: base monthly rent; monies collected as additional rent such as reimbursement for repairs, reimbursement for damages, reimbursement of environmental and code violation fines, reimbursement of water and other utilities. Agent shall retain the following monies charged to the Tenants, even though they may be charged as additional rent to Tenant: late charges and fees for checks returned by the bank for nonsufficient funds. Management Fees apply to the collection of all monies from Tenants. Tenant rent checks will be made payable to American Management. If tenant rent checks are made payable to the Owner(s), Agent reserves the right to charge Management Fees. 6. SECURITY DEPOSITS: The Owner(s) agrees to fund the Tenants security deposit account for currently held security deposits. Security deposits will be held in a noninterest bearing escrow account set up to exclusively hold security deposits. The Owner(s) further acknowledges to assume, and reimburse to Agent, the expenses associated with funding and paying interest due to Tenants in accordance with Maryland Real Property Code. 7. SAVE HARMLESS: The Owner(s) agrees to save the Agent harmless from all damage suits in connection with the management of the herein described property and from liability from injury suffered by any employee or other person whomsoever, and to carry, at owner s own expense, necessary public liability insurance to protect the interests of the

4 12/10/2010 Page 4 of 6 parties hereto in an amount not less than $500, and shall have same endorsed to protect the Agent in the same manner and to the same extent as the Owner(s). The Agent also shall not be liable for any error of judgment or for anything which it may do or refrain from doing hereinafter, except in cases of willful misconduct or gross negligence. 8. FEES: The Owner agrees to pay to the Agent: a. For management: Ten Percent (10%) of all monthly collections, including collections of rent and all reimbursable items collected as additional rent such as repair reimbursement, utility reimbursement, or any other reimbursable expenses. b. For management: A flat fee of $ per unit for any vacant units that Agent is not authorized by Owner to offer for Lease. c. For Improvements or Renovation Projects: Agent reserves the right to charge ten percent (10%) additional management fee for any projects in excess of five thousand dollars ($ ) requested by Owner and supervised by the Agent. This fee does not apply to recurring service contracts, such as janitorial service, lawn service, etc. d. For Leasing vacant residential units: a leasing fee equal to one (1) month s rent will be charged. Agent agrees to cooperate with all Realtors. Leasing fees include sourcing the Tenant as well as those administrative services associated with the turnover and re-letting of a unit. Leasing fees are waived if the owner has on-site staff on payroll who perform leasing functions. e. For Leasing vacant commercial units: 6% of the first year s rent, 4% of the second and third years rent, 3% of the fourth and fifth years rent, and 2% of the rent for each year thereafter, including renewal options, payment of which shall survive any termination of this Agreement. f. If Owner brings a qualified Tenant to the Agent and a lease is signed with the Tenant, Agent will charge a leasing fee equal to one quarter (1/4) month s rent for processing administrative paper work. g. For all Section 8 renewal leases, Agent will charge a flat leasing fee of $ per unit.

5 12/10/2010 Page 5 of 6 9. Owner s Federal Tax ID # is:. Owner agrees to submit a copy of IRS Form W9 attached to this agreement. 10. Property(s) known as: ; ;. This agreement shall be binding upon the successors and assigns of the Agent and the heirs, administrators, successors and assigns of the Owner(s). Witness Owner Date Witness Owner Date Attest American Management, LLC, Agent Date Attest Owner Address:. Business Phone: Home Phone: Mobile Phone: Fax: Emergency Contact:

6 12/10/2010 Page 6 of 6

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