Greetings to readers who have visited the HeatherBeaver website.
One of the authors of the project is with you, Maria Darovskaya, and today we will talk about the transfer of real estate to trust management.
You will learn:
- How to transfer commercial real estate to trust management?
- Where to order services for trust management of an apartment?
- What to do if real estate is poorly managed?
The article will help those who want less hassle and at the same time do not want to lose money. Don’t rush to say that this doesn’t happen. We will tell you how to get rid of the hassle of real estate and regularly make a profit.
- Step 1. Select a company to provide services
What is real estate trust management?
A trust is the transfer of an asset to the temporary management of another person for the purpose of making a profit.
Today we will talk about trust management of real estate (commercial or residential).
Trusted property management (TRM) is a set of services that the owner receives from the management company. The Civil Code of the Russian Federation regulates the relationship between the owner and the management company. His 53rd chapter is devoted to this type of management.
This type of service is needed by those who cannot (or do not want) to shoulder the burden of management problems - searching for tenants, maintaining the property, market analysis and other responsibilities. Another option is when the housing is rented out by the guardian of an incapacitated person, the owner of the property.
Example
Housing purchased in popular tourist destinations is often put into trust management. Such housing is purchased for the purpose of renting it out through a management company to make a profit.
DUN assumes that the owner will be paid a certain amount specified in the agreement.
It could be:
- a fixed interest rate monthly or annually on the cost of rent for this period and minus the interest of the manager and current expenses;
- a fixed amount that is guaranteed by the management company once a month or other period of time.
Renting housing under management often reduces the profit from the property, but significantly saves time and effort. After all, all the troubles of making a profit fall on the manager.
And if you choose a good manager, then profits can increase, because a specialized company has its own secrets of making money from rent. An employee of a management company, for whom renting out your property is a profession, will most likely cope with it better than you.
Causes:
- the responsible employee is only involved in the delivery of objects, but you will have to be torn between an important work meeting and showing the apartment;
- managers usually already have established relationships with cleaning companies and other necessary services.
Putting real estate under management allows you to make a profit passively without doing anything. You own the property and once in a certain period of time you receive money on a card or by transfer. This is where your labor costs end.
You can read more about trust management in general and its types in the article “Trust management”.
Apartment trust management agreement
The specifics of concluding an agreement for trust management of real estate are given in Article No. 1017 of the Civil Code of the Russian Federation. A prerequisite for the execution of a transaction is its written execution.
The agreement should be drawn up according to the same rules as in the case of writing a real estate purchase agreement. The transfer of rights must be registered in accordance with the procedure established by law. Otherwise, the agreement on transferring the object into trust management will be declared invalid.
The documentation package includes:
- receipt of payment of state duty;
- statement;
- applicant's passport;
- an agreement to transfer property into trust management to another person;
- act of acceptance and transfer of an object;
- constituent documents, registration certificates (for organizations);
- consent of the wife (husband) to the transfer of joint marital property, certified by a notary.
It is not necessary to visit this organization in person. Documents may be sent electronically or sent by registered mail. You can also call a Rosreestr specialist to your home. Many citizens decide to register an agreement through the Multifunctional Center.
It operates in a “single window” mode, provides a range of government services, acts as an intermediary between Rosreestr and legal entities and individuals, and has a more convenient work schedule for citizens. There are branches of this structure in all regions of the country.
Like any document that has legal force, the content of this sample is regulated by the Russian Civil Code. The most important conditions for concluding this agreement and what information should be indicated in it are written in Article 53 of the Civil Code of the Russian Federation. Here they are:
- Personal data of the parties. That is, information about the principal, person or company that wants to transfer its rights regarding the apartment to the manager is indicated. In addition, information about the manager who will perform the duties in relation to the real estate that he has been entrusted with is indicated. Also, the details of the beneficiary, which is a company or any other legal entity, are indicated;
- The address of the property, that is, the apartment that is being transferred for management. Coordinates must be accurate and up-to-date, for example, if the street may soon be renamed or other unforeseen circumstances arise;
- Information about the beneficiary if the income that the manager managed to achieve is transferred to the account of third individuals. For example, children of apartment owners, other close relatives, friends who can also claim the right to manage finances and are individuals. Also, the beneficiary can be a charitable organization or someone like that. The named persons are indicated in the document, and only after that profits can be transferred to them;
- The exact terms during which the contract is valid between the parties are specified. The contract is valid for no longer than 5 years, but it can be canceled if at least one of the parties makes this demand. A statement of termination of the agreement is written. If this procedure is not followed, the contract is automatically extended for the same period, assuming that the parties are satisfied with everything;
- Form and amount of remuneration for the manager. Of course, there are situations when the agreement does not provide for any financial benefit for the manager, for example, if his role is played by a close relative, but in this case it should be indicated that the work is being carried out free of charge.
This type of activity is not licensed, so a power of attorney to manage an apartment can be entrusted to any person, even a professional, for example, a realtor who will find a tenant, or a lawyer who will help keep the apartment safe and sound.
But it is desirable that the manager be registered as an individual entrepreneur or commercial organization. Next, the agreement must be registered with the Cadastral Chamber, and only after that it will be considered legal.
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What does a trustee do - 7 main functions
We have already found out that real estate trust management is a complex of services. Let's figure out what is included in it.
This complex may include:
- market analysis to determine possible profit from renting;
- selection of an object for purchase for further delivery;
- analysis of options for using the facility to obtain maximum profit;
- searching for a tenant;
- showing the property to tenants;
- preparation of an agreement and other documents for leasing an object;
- control over the fulfillment of the contract by the tenant;
- transfer of payment for the use of the premises to the owner;
- timely payment of property maintenance bills;
- other services.
This list can be expanded. Just take your requirements into account when drawing up an agreement with the management company.
If you are interested in other types of trust management, we recommend reading the article “Trust management of property”.
In the meantime, we will take a closer look at the functions of the manager.
Function 1. Real estate market analysis
Market analysis is a necessary stage when starting any business, especially if you want to buy housing/office/warehouse space for rent or already own one.
Market analysis includes:
- price level;
- the amount of supply and demand in this segment;
- the amount of annual profit;
- payback period for real estate upon purchase;
- target audience of tenants;
- possible risks;
- amount of expenses.
The analysis will allow you to identify the target audience of people who are interested in your real estate properties, and effective ways to convey information about the properties to them.
The table clearly shows the factors influencing supply and demand in the real estate market:
| № | Factors | Impact on supply and demand |
| 1 | Changes in the level of income of the population | When income decreases, supply increases and demand decreases. With an increase, both supply and demand increase. |
| 2 | Change in business income level | The higher the business income, the higher the demand |
| 3 | Availability of credit resources | As credit availability increases, supply and demand increase |
| 4 | Construction cost | As prices rise, supply decreases and demand increases |
Function 2. Search for tenants
It seems that finding a tenant is the least of the problems. But this is just an appearance. In fact, finding a tenant is the most serious stage.
Tenant requirements:
- responsibility;
- solvency;
- timeliness of payment;
- compliance with the requirements of the owner of the facility;
- purity of intentions;
- careful attitude towards the object and the property in it.
Every real estate company has blacklists of tenants. They include scammers and those who did not fulfill the requirements of the contract: they damaged the premises, caused complaints from neighbors (and the police), did not pay utility bills, delayed payment, etc.
You don’t have such lists yet and you’ll have to fill the bumps yourself, as well as lose money when the property is idle or requires urgent repairs.
The task of the management company:
- find the most reliable and responsible tenants;
- solve problems urgently and look for another tenant in case of an error;
- pay for a two-week downtime of the property in the event of an emergency departure of the tenant (if this condition is in the contract).
Watch the video showing the main scams when renting apartments.
Function 3. Preparation and execution of the lease agreement
If the property has already been rented out, tenants should be warned that they should now contact the management company for any questions or payments that arise. New tenants enter into a tenancy agreement with a trustee, not the owner.
In this case, the manager himself will prepare the contract for the client and monitor its implementation. In case of damage to property or violation of the terms of the transaction, the trustee independently deals with issues of compensation and can sue the client. But when concluding any transactions, the company must indicate its status.
The owner signs only a trust management agreement with the selected company.
Function 4. Payment of utility bills
Utilities and facility maintenance fees (if any) must be paid on time.
If an object is transferred to management, control over the fulfillment of this responsibility falls on the shoulders of the manager.
Function 5. Monitoring the timeliness of rent payments
Not all tenants are punctual when it comes to payment. Some are hampered by objective reasons, others by their own lack of organization. In the case of a management contract, payment control is assumed by the manager. The owner can only receive the money via card or other means.
Function 6. Provision of any household services
When renting out, the property must be regularly inspected for necessary work. They should be performed immediately when a problem is detected. Otherwise, the repair time will come faster than you expected.
It is necessary that the taps do not leak, there are no wiring problems, broken glass is replaced in a timely manner, and broken and damaged glass is repaired in a timely manner. If the tenants' door jams or they need to install an alarm, the company will call a technician themselves and monitor his work.
Such supervision makes life easier if you need to find a new landlord or sell the property. Regular maintenance significantly reduces the cost of planned repairs of the premises.
Function 7. Property insurance
Typically, a trust agreement includes a requirement to insure the property against fire, flooding and other incidents. If you don't want to pay for insurance, you can find a property manager who doesn't require it.
But it is worth considering that renting out always involves the risk of damage to the property. And no one can give you a guarantee against a fire in the wiring in the house or a burst pipe in the absence of residents. Therefore, it will be safer for your budget to insure the object. In the event of a plumbing failure, the insurance company will pay for repairs for you and your neighbors.
Example
The girl made expensive and labor-intensive renovations in her St. Petersburg apartment. Less than two weeks after the completion of the repair work, her pipe burst. She wasn't home for two hours.
During this time, the pipe managed to flood almost the entire riser. The girl had to pay for repairs in ten apartments below. The situation would have passed with much less financial and nervous losses if the home had been insured.
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How to put real estate into trust management - step-by-step instructions for beginners
Let's understand the mechanics of DUN. To place a property under management, you need to take the following steps.
Step 1. Select a company to provide services
The first thing you need to decide is which management company to entrust commercial or residential real estate to in trust.
In order not to make a mistake with the company, pay attention to the following points:
- company reputation;
- reviews;
- experience in the market;
- are there any complaints about her on the Internet;
- whether property owners are suing the company, and if so, why;
- what conditions the company provides, is it possible to make changes to the contract;
- what kind of reward does he want for his services?
Step 2. Collecting documents
To transfer an object to management, you will need to prepare a package of documents.
Among them should be:
- documents confirming your property rights;
- passport;
- sample agreement for transfer of property for management.
Step 3. Pay for services
In the case of transfer of real estate to trust management, the company's services are usually paid as a percentage of the rent. The percentage is calculated from the profit, that is, minus the costs of maintaining the facility.
Step 4. Conclude an agreement
A commercial real estate trust management agreement gives the manager the right to take any actions if they are in the interests of the owner of the property. These rights can only be limited by legislation and the terms of the contract.
The contract is concluded for a period of no more than 5 years. After this, the contract can be extended or terminated. It is also necessary to separately note the date of entry into force of the agreement. This date may differ from the signing date.
For tenants, utilities and other third parties, the agreement comes into force from the moment of its state registration, and not from the moment of signing.
Step 5. Organize a system for monitoring the performer
The contract must specify the desired form of reporting by the manager to the owner and the frequency of its submission. We also recommend setting out sanctions in case of non-compliance. Then the manager will not be able to avoid documentary evidence of income and expenses for the facility.
It is always better if the agreement is drawn up not by the management company’s lawyers, but by independent experts who protect your interests. And before signing a contract, you need to get legal advice. This can be done, as one of the convenient options, using.
The main advantage of this firm is that it operates online and provides professional legal services around the clock. More than 700 qualified lawyers from various branches of law are available online on the resource.
You can call the following numbers right now: Moscow: 8 (499) 348-93-89; St. Petersburg; toll-free number in all regions and get free advice from experienced lawyers. You can also ask a question directly on the website of the company Pravoved.ru. The answer will come within 15 minutes.
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Where to order trust management of real estate - review of the TOP 5 companies providing services
Many companies provide DUN services, but the greater the choice, the more difficult it is to choose. We have prepared for you an overview of five top companies.
1) Service technologies
The manager has been servicing residential, office, retail and industrial properties for 14 years.
The company will provide the following services:
- develop a development strategy for the facility;
- select contractors;
- resolve issues with utilities and municipal services;
- will provide maintenance of buildings and their modernization;
- will carry out interior finishing work;
- will improve the territory;
- will provide cleaning of premises;
- will provide administrative management;
- will find tenants, conduct negotiations, and monitor compliance with the terms of the contract;
- will provide security for the facility.
2) Arteko
The manager manages 600 thousand objects, of which half a million are commercial real estate and 100 thousand warehouse premises. Over 13 years in the market of management companies, from a company with a staff of three people, Arteko has grown into a company serving the Raddison Hotel in Sheremetyevo and one of the departments under the Russian Ministry of Foreign Affairs. At this stage, Arteko services 700 thousand sq.m. areas.
Arteko can:
- attract tenants, operators, management companies (brokerage);
- come up with a concept for more profitable use of the facility;
- draw up a business plan;
- obtain the necessary permits, approvals, documentation;
- carry out construction and engineering supervision;
- provide concierge service (reception);
- manage parking;
- ensure the protection of the facility with the help of its own security service;
- provide consulting services in the field of real estate;
- provide cleaning services for residential and non-residential premises and the surrounding area, industrial mountaineering services, post-construction cleaning;
- maintain engineering systems and equipment using its own emergency service.
3) Zeppelin
During its existence, it managed 2.5 million sq. m of commercial real estate.
The company cooperates with Rosreestr and participates in the development of Russian “green standards”. Zeppelin conducts seminars and consultations on technical operation, maintenance, and commercial use of buildings.
The company provides services:
- market analysis, assessment of the competitiveness of the facility;
- developing a concept for the development of the facility;
- brokerage (attracting tenants, monitoring departures and arrivals);
- advertising and marketing;
- maintaining a register of concluded contracts;
- invoicing, payment control;
- tax services;
- accounting and tax accounting;
- development and execution of the annual budget;
- object insurance;
- work with control and supervisory services.
4) Kraus-M
Kraus-M has been on the Moscow trust management market for 15 years. The company offers services for the technical operation of engineering equipment and economic maintenance of buildings and structures.
The company is actively introducing new technologies and products in its segment, taking care of the comfort and health of customers. Cleaning services are carried out using environmentally friendly and safe products. Particularly difficult stains are removed using professional equipment and detergents.
Kraus-M employees are regularly certified in the following subjects:
- rules for the technical operation of building engineering systems;
- cleaning technologies;
- ethics of communication with clients.
The company will undertake the entire cycle of cleaning and maintenance work.
5) Aktavest
Aktavest manages shopping centers, entertainment structures and other commercial facilities. The company will develop a development concept and attract tenants, conduct business negotiations in the interests of the owner, and undertake the promotion and development of the business. Provides technical operation and maintenance of engineering systems, equipment and networks. Develop a budget, organize a dispatch service with round-the-clock operation. Will carry out cleaning and provide care for the territory.
The company will provide:
- functioning of buildings;
- repair;
- availability of tenants;
- timely commissioning;
- optimal income for the object.
Sample DDU
"_____" ________________ 2020
Gr. __________________________________________________________ (personal data of the principal), passport: _______________________________ (passport data), living at the address:________________________________ (address of the principal), hereinafter referred to in the text of the agreement as “ Principal ”, and c.__________________________________________________________________________ (personal data of the trustee), _____________________________ (data of his passport ), residing at the address: _____________________________________ (address of the manager), hereinafter referred to in the agreement as the “ Trustee ”, and together referred to as the “Parties” to the agreement, have agreed as follows:
1. Item
1.1. The Principal, acting as the owner of the housing, transfers to the Trustee an apartment owned by the Principal, located at the address: __________________________________________________________________________ (address of the transferred housing), with a total area of _________ sq. m. m, into trust management within _______ days after the Parties sign this agreement, and the Trustee, according to the acceptance certificate, accepts the housing.
1.2. The apartment that is the subject of the agreement has the following characteristics: number of rooms _____, total usable area _______; living area _______ sq.m.
1.3. The principal guarantees that at the conclusion of this agreement the apartment is not mortgaged to third parties, is not under arrest, and is not burdened with any other obligations.
1.4. The manager has the right to use the apartment during the validity period of the agreement in accordance with its intended purpose (for living).
1.5. The owner’s rights to the subject of the agreement are confirmed by the following documents: _______________________________________________________________________________________________.
1.6. The Trustee shall own and dispose of the housing transferred to him solely in the interests of the Trustee.
1.7. The transfer of housing into trust management by the Principal does not entail the transfer of ownership rights to the transferred apartment to the Trustee.
2. Terms of agreement
2.1. The validity period of the agreement is determined from _____________________ to _______________________.
2.2. The rights and obligations of the Trustee regarding the management of the transferred housing arise from the moment the relevant premises are transferred to the Trustee. The transfer of housing is formalized by a transfer deed signed by the Parties.
2.3. If the parties to the agreement do not terminate the document upon expiration, the agreement is extended under similar conditions.
3. Conditions for early termination of the agreement
3.1. The agreement may be terminated early, before the period specified in clause 2.1., if:
- declaring the Trustee bankrupt;
- liquidation of the Trustee;
- commission of actions (inaction) by the Trustee that are clearly directed to the detriment of the interests and rights of the Trustee;
- refusal of the Trustee to further manage the apartment due to the inability to personally fulfill the duties of trust management of the transferred housing;
- existence of an agreement between the Parties;
- the occurrence of other circumstances provided for by law, this agreement or additional annexes or agreements to it.
3.2. The Principal may refuse to implement the agreement at any time, subject to payment to the Trustee of his remuneration for the last reporting period (month) of the agreement.
3.3. If either party refuses to fulfill the agreement, the other party must be notified of this no less than ________ days before termination of the agreement.
4. Rights and obligations of the parties
4.1. When executing the agreement, the trustee is obliged to:
- transfer to the Trustee all benefits and income received from the trust management of housing, with the exception of financial resources allocated to cover expenses related to the trust management of the apartment and the remuneration due to the Trust Manager, as well as other payments and costs provided for in this agreement;
- carry out settlements with the Principal in the manner and within the time limits established by the agreement;
- timely make all required utility payments (for gas, electricity, water, Internet, telephone and others) in the prescribed manner;
- control the proper use of the transferred housing, taking into account its purpose and technical features;
- require the tenant to comply with the rules for the use of housing, including safety rules, and constantly take the required measures to ensure the safety of the transferred housing and the equipment installed in it;
- demand from the tenant proportionate compensation for damage caused to housing and property installed in it due to the fault of the tenant or third parties;
- fulfill other duties of a housing tenant as determined by current legislation;
- provide reports on activities at the request of the Principal.
4.2. The trustee is responsible for resolving any risks related to damage, loss, theft and premature wear and tear of the property in the apartment that occurred during the term of the agreement. In the event of loss or damage to property assets, the Trustee is obliged to carry out the necessary repairs or replace the damaged (lost) property with property similar or satisfactory to the Trustee at the expense of the tenant.
4.3. The Trustee undertakes to promptly inform the Principal regarding all circumstances relating to the transferred property.
4.4. The trustee has the monthly right to remuneration specified in clause 6 of the agreement.
4.5. The principal has the right:
- verify compliance with the agreement by the Trustee;
- demand compensation for damage caused to the transferred housing or property located in it during the period of validity of the agreement;
- if you lose confidence in the manager, terminate the agreement early;
- receive income from the transferred housing minus the amounts of remuneration to the Manager and compensation for expenses required under trust management.
4.6. The principal is obliged to transfer to the manager all documentation and information required to fulfill the obligations under the agreement.
5. Calculations of the parties
5.1. The Trustee pays the Trustee _________ rubles monthly.
5.2. The trustee has the right to receive remuneration ______% of the income received under trust management. Payment for utilities _____________________________________________ (list of services) is made by the Trustee at the expense of the tenant.
5.3. The Trustee has the right to fully reimburse the expenses incurred by him, agreed upon with the Trustee, relating to the management of the apartment, from the income received from the use of this apartment.
5.4. Payments are made in cash.
6. Dispute resolution
6.1. Any disputes not resolved by the Parties to the agreement shall be resolved in court.
7. Addresses, details of the parties
Principal _____________________________________________________________________________________
Trustee______________________________________________________________________________
8. Signatures of the parties
You can edit the trust in .docx format for future use.
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