July 2023 – Summary of July 2023 Property Management Forms Changes

The following forms have been revised effective July 1, 2023. This summary only covers the material changes that were made to each form. Click on the hyperlinks below to see all changes made to the form.

1.   Form 401 – Exclusive Property Management Agreement

1.1.      ¶10(d) – Some members have explained that the existing language in this paragraph is not sufficient for E&O carriers to issue coverage. Language has been added to cure this defect and clarify the existing language of this section.

1.2.      ¶20 – A warning has been added to alert the parties, and in particular the landlord, that if a lead-based paint disclosure is required, but not given, then the tenant may be able to back out of the lease. The warning is provided merely to alert the parties as to existing law, and it does not create a new right in the contract.

2.   Form 402 – Exclusive Property Management Agreement (Vacation Rental)

2.1.      ¶3 – This small change is significant. It states that the duties on termination will only be triggered if there is a termination allowed under the contract pursuant to ¶2. If the owner breaches the agreement, then the breach provisions will control the duties and damages instead of this paragraph.

2.2.      ¶12 – Language added to make clear that the owner’s selling the property during the term of agency will constitute an early termination of the agency relationship, triggering the remedies in this form for such a breach.

2.3.      ¶21 – Language added to harmonize the amendment discussed in 2.1 herein, and also to clarify that the fee in this paragraph is not an exclusive remedy. Collectively, these changes mirror the changes made to ¶4 of Form 401 last year.

3.   NEW Form 404 – Termination of Agency Agreement and Release

3.1.         There are issues unique to property managers when terminating an agency agreement. These issues, such as security deposits in trust, are addressed in this form. In the past, property managers have used Form 720 or an attorney drafted form to terminate agency. This form closes an important gap in our forms coverage.

4.   Form 405 – Exclusive Right to Advertise/Lease Agreement

4.1.      ¶9 – See 1.2.

5.   Form 410-T – Residential Rental Contract

5.1.      ¶1(b) – Language has been added to permit the landlord to increase rent by giving notice during a periodic tenancy following the initial term. This practice is common among property managers, however, the current language does not permit such increases as of right.

5.2.      ¶4 – Property managers often have unclaimed tenant deposits in their trust account. These deposits are usually nominal, and they create issues with trust account compliance. This option is adopted to give the tenant, not the landlord, the right to direct that their deposit, if unclaimed for one year, be given to a charity of tenant’s choice. If this option is selected by the tenant, property managers will be able disburse deposits in a quick and orderly fashion instead of escheating the deposit to the State, which is a time-consuming and onerous process.

6.   NEW Form 427-T – Notice and Demand for Possession

6.1.      This new form is a wholesale rewrite of the existing form. It performs the same function as the existing form, thus the form number stays the same, but it also adds important new options while clarifying existing language. The new version adds a late rent notice option and gives property managers an important tool for standardizing notices given to the tenant for late rent.

The forms will be updated on the NCR web site and provided to NCR members who license the forms by July 1st. The forms will be provided to NCR’s approved software vendors for a July 1st release. According to NCR Forms Policy, permitted users will have a 60-day grace period to transition to the new forms.

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