NJIT The Standard Property Management Agreement Discussion

I’m working on a real estate writing question and need an explanation and answer to help me learn.

Attached is a Standard Property Management Agreement (this is one that I actually used for many years). Please review and answer the following questions:

1- Section 1.3 – Why are there so many clauses discussing termination? What do you think the reason for this is? Please share an example that you believe would require executing on one of the termination clauses.

2- Section 4.5 – Manager shall prepare and submit a proposed Operating Budget. What would be included in this budget? Whey is this necessary? What happens if there are variances to the budget? Why would the Owner want approval for any expense greater than $5,000? Why would Owner want prior approval granted to Manager before beginning any Capital Expenditures? I am looking for thoughtful answers and your opinions.

3- Section 6.3 and Exhibit X – Why are the Accounting Services provided by the Management Company so important? Look up 5 items listed in Exhibit X and explain what they are and why they are important for a Commercial Real Estate Owner to have.

4- Section 10.1 – What is Insufficient Gross Income? What is the Manager supposed to do when this happens? What do you think the Owner does to resolve this?

5 – Exhibit Y – Why do you think Property Manager should receive a Project Management Fee? What do you think of the Fee Structure? Explain 1 items from the Project Team list and 1 item from the Oversight list and share why you think it is listed and why it is important.