Do the loan documents require professional property management?
GoDocs standard language in sections D.6(e) and D.11 of the GoDocs loan agreement identify the provisions regarding management of the property.
- 6.(e) of the loan agreement discusses that (a) the borrower shall provide for professional management by a property manager satisfactory to the Lender and approved by the Lender in writing and (b) inspection requirements.
- D.11 of the loan agreement identifies that the borrower shall within 5 days provide contact information for the property management company to arrange inspection of the property.
What is an Assignment of Management Agreement?
GoDocs does have an option to include a separate document called the Assignment of Management Agreement. The only time we believe Lender would need the Assignment of Management Agreement is if the borrower is not managing the property and there is a 3rd party manager with an existing management agreement in place. Otherwise, this document is not needed. When it is self-managed and there is not a property management company involved or a management agreement, the lender, at its discretion, can make a business decision to not require the assignment.
An Assignment of Management Agreement allows the Borrower to transfer its rights under the property management agreement to Lender. Upon the occurrence of an Event of Default, the Lender is able to enforce Borrower's rights under the property management agreement, ensuring the property is still managed during and after the foreclosure process. Typically, this also allows the Lender to terminate the agreement in the Event of Default if the property manager is a related party.
If an Assignment of Management Agreement is needed for a loan, the customer would select "yes" and fill in the below-needed information.
Complete the open data fields with the information for the Management Company.
Do pay attention to the checkbox for “Is Management Company a Related Entity (Include Subordination Language)."
When the box is “checked” the following language will be included in the Assignment of Property Management Agreement.
