San Diego Commercial Property Management

General Policies and Procedures: Agent is responsible to establish the general policies under which the Project will operate. The Agent shall implement the policies and carry out the day-to-day operations of the Property or Project.

Annual Operating Budget: Within thirty (30) days of the date of Agreement, Agent shall prepare and submit to Owner proposed line item operating budget setting forth in reasonable detail the estimated income, cash on hand, and operating expenses of the Property, by month, for the remainder of the then calendar year, including real estate taxes, insurance premiums, employees’ salaries, if any, manager's compensation and like items. A similar operating budget shall be submitted to Owner for each semiannual period thereafter, at least thirty (30) days prior to the commencement of each subsequent semi-annual calendar year period for which this Agreement is in effect. The Operating Budget submitted by Agent, when approved by Owner, shall, in general, form the basis on which Owner shall incur items of expense incident to the operation of the property. Agent will submit in writing a variance analysis, both monthly and year to date, of the Budget and Actual Operating Statements.

Reserves: The Project shall have reserve accounts to be funded from operations and are to be included in the Annual Operating Budget. The reserve accounts are:

• Operating Reserves: To cover operating expense overruns of the Project.
• Capital Replacements Reserves: to cover capital improvements and replacement during the life of the Project.
• Leasing Reserves: To cover leasing expenses and brokerage fees for leasing of space during the holding period of the Project.
• Tenant Improvement Reserves: to cover funds that could be required to attract and secure new tenants in the future.

Accounting, Bookkeeping and Financial Reporting: There are two levels of Accounting, Bookkeeping and Financial Reports:

• Project Operations: Agent shall collect all receivables (including without limitation, rent and reimbursements from tenants), and shall pay all payables. Agent shall do all accounting and financial record keeping of the operation of the Project including but not limited to preparation of the Rent Roll, Balance Sheet and Income and Expense Statement.
• Individual Investor Accounts: Agent shall maintain book of accounts with correct entries of all receipts, expenditures, and distributions incident to the Investor(s) accounts, together with all records, correspondence, files, and other documents relating to the Investor. This also includes all verbal communications by and between Agent and the Investor(s).
• Book and Records: Agent shall maintain books of accounts with correct entries of all receipts and expenditures incident to the management of the Project and performance of this agreement, which books, together with all records, correspondence, files, and other documents relating to the operation and management of the Project, shall be paid for by Owner and shall remain the property of Owner. Such books of accounts, records, correspondence, files, and other documents are to be kept by Agent in proper order and in compliance with generally accepted accounting principles and procedures required of management firm performing similar services to those required hereunder, and the same shall always be available for inspection by Owner or any of its officers or duly authorized agents on MAIN’s website 24/7.
• Bank Accounts: Agent shall establish and maintain in a bank, whose deposits are insured by the Federal Deposit Insurance Corporation and in a manner to indicate the custodial and trust nature thereof, a separate Operating Account, as Agent on behalf of Owner, in to which all funds collected by Agent for the account of Owner, whether from tenants of the Property or otherwise shall be deposited. Such Operating Account shall be the property of Owner, subject to the right of Agent, as expressly set forth in this Agreement, to draw on this account. As may be required by law, a separate special bank account shall be opened for security deposits of tenants, if any, applicable law or regulation so provides for the handling of such deposits. No funds of Owner shall commingle with any funds of Agent. The Agent shall have the authority to draw on this account for any payment which it must make to discharge any liabilities or obligations incurred pursuant to this Agreement, and for the payment of Agent's fee, all which payments shall be subject to the limitations of this Agreement.
• Bonding: Agent, at Owner's expense, shall throughout the term of this Agreement, maintain in effect a Fidelity Bond covering Agent and each employee of Agent who handles or is responsible for the handling of the money of Owner in such amount as Owner from time to time requires securing Agent's faithful performance of its obligations hereunder. Evidence satisfactory to Owner shall be furnished to Owner that such bond is in effect.
• Monthly Reports: Agent shall furnish monthly to Owner a detailed statement of all receipts and disbursements for each month, such statement to be furnished on or before the 10th day of each month for the preceding month. Such statement shall show the status of collections and shall be supported by copies of checks, or vouchers, or duplicate invoices, etc., covering all items of income and expense, which shall be forwarded to Owner with such statements, duplicates thereof to be kept in Agent's office and be available for inspection by Owner's representatives always. Should it appear to Agent that the disbursements will exceed the rents collected by Agent. Agent shall also furnish to Owner a monthly operating statement showing both the actual income and expense for the month and year to date, and the budgeted income and expense for the month and for the year to date. All these Reports are available on MAIN’s Website via the Owner’s secured Portal to Owner by selected ID and Password: 24/7 for any computer worldwide.

Insurance: If Owner informs Agent of insurance to be carried with respect to the Property and its operations, and requests Agent to place and to maintain such insurance, Agent (at the cost and expense of the Owner) shall cause such insurance to be placed and kept in effect always. All such insurance will be placed with such companies, on such conditions, in such amount, and with such beneficial interests appearing' thereon as shall be acceptable to Owner and shall otherwise be in conformity with any mortgages encumbering the Property from time to time provided the same will include public liability coverage in such amounts as shall be acceptable to Owner. If Owner shall not request Agent to place and to maintain such insurance, Owner shall provide public liability insurance including bodily injury, property damage, and personal injury at Owner's cost and expense.

Negotiation of Leases By Agent: Agent shall have the responsibility, power, and authority to negotiate all new leases, renewal of lease(s) for all apartment units and/or space in the Property. The lease(s) of all units and/or space of the Property including the premises, common areas and parking areas shall be subject to the execution of a Formal Lease Agreement in a form satisfactory to Owner’s counsel. Owner hereby grants to Agent the authority and power to sign leases and lease renewals on behalf of Owner for term not more than one (1) year and/or cancel leases for the Project or any part thereof. Owner hereby grants to Agent the power and authority to negotiate and sign on behalf of Owner all documents that could be required to implement and to consummate any lease including, but not necessary limited to, Subordination, Non-Disturbance, and Attornment Agreements, as required by all lenders and/or third parties.

Real Estate Commissions: Subject to the terms of an Agreement, Owner agrees to pay Agent and Agent agrees to accept as full compensation for its services about each executed and binding lease(s) or lease renewal(s), legally enforceable by Owner, a commission to be computed on the rental payable to Owner.

Enforcement of Leases: Agent shall use its best efforts to secure full and timely compliance by every tenant with the terms of its lease. Voluntary compliance will be emphasized. However, subject to the pertinent procedures prescribed in the tenant leases, Agent may, institute proceedings to lawfully terminate any tenancy when (in Agent's judgment) there is sufficient cause under the terms of the tenant's lease, including, but not limited to, nonpayment of rent. For this purpose, Agent, at the expense of Owner, is authorized to consult with legal counsel to bring actions for eviction and to serve notices to vacate and to cause judicial pleadings to be drafted incident to such actions provided, however, that Agent shall keep Owner informed of such actions and shall follow such instructions as Owner may prescribe for the conduct of any such action, if so desired by Owner. Attorney’s fees and other necessary costs incurred about such actions shall be paid out of the Operating Account as operating expenses.

Maintenance, Repairs, and Operation: Agent at the sole cost and expense of Owner, shall cause the Property to be maintained and repaired in accordance with local codes, and in a condition acceptable to Owner. Without limiting the foregoing, the Property shall be kept in such condition as competitive projects are maintained in that locality, such maintenance to include, without limitation, interior and exterior cleaning, landscaping, painting, repairs, and replacements.

Other Services: The services to be performed by Agent under the terms of this Agreement are normal management services; and in the event that Agent is required to perform services beyond the normal scope expected by a managing agent (such as, but not limited to, involvement in major renovation or remodeling, reconstruction after fire damage, installations of tenant improvements, complying with unanticipated government regulations requiring substantial administrative duties) Agent shall be separately compensated for such extraordinary services. In the event that Agent is required to provide any major renovation or remodeling, reconstruction after fire damage or installation of tenant improvements complying with unanticipated governmental regulations requiring substantial administrative duties, Agent shall be paid by Owner at the rate of __________ (__%) of the total construction costs, including all hard construction and soft costs such as architectural/engineering fees or plan permits at an hourly rate of __________ ($______) Dollars per hour, which is more applicable to the specific circumstances. The hourly rate shall increase year-to-year by the change in the consumer price index all consumers for the local area where the Property is located.

Agent’s End of the Year Responsibilities: Agent's responsibilities hereunder shall include the duty (a) to coordinate leasing and negotiate final terms and conditions of each and every lease; (b) to recommend and solicit all service and supply vendors, which arrangements shall be embodied in written contracts approved and signed by Agent on behalf of Owner; (c) to supervise performance of all service and supply contracts and to provide liaison with Agents thereunder; (d) to inspect the Premises which is part of the Property and to initiate any required corrective or maintenance actions which fall within the scope of the maintenance budget Owner will promulgate; (e) to obtain prior approval from Owner for any work items which are not budgeted and for any work items, the cost of which exceeds the budgeted allowance; (f) to submit monthly inspection reports to Owner; (g) to maintain liaison with tenants, which shall include collecting late or overdue rent and dealing on behalf of Owner with tenant requests and complaints; and, (h) to confer with each tenant. Agent shall have the authority to hire agents, consultants, and on-site agents to carry out specific duties hereunder. Each such hiring shall be pursuant to a written contract executed by Agent on behalf of Owner.

Agents Compensation: Property Management. For services rendered pursuant to this Agreement, the Owner shall pay Agent Monthly _______ (__%) Percent of the gross revenues from the Property collected, but in no event, shall the management fee be less than ____________ ($________) Dollars per month. The compensation to be Agent shall be equitably prorated as of the date of termination of this Agreement.

Partnership Filings of Federal and State Taxes and Submittal of K-1 to Investors: Agent will submit all required end of the tax year project accounting and books to Owner’s accountant at Owners sole cost, for the preparation and filing of the federal and state tax returns for the Project and Investors. Agent upon receipt of the tax year filings from the Owner’s accountant will prepare and submit in a timely manner, the K-1’s to the Investors for the taxed year.

MAIN is a cloud-based Property Management Company with transparency of all information, correspondence, records, agreements, and documentation online available to the Owners anytime, 24/7 from any computer. The Owner can communicate with the Property Manager through MAIN’s website at the Owner’s sole convenience.