Property Caretaker Agreements: Terms of Use and Benefits Explained

What is a Property Caretaker Agreement?

A property caretaker agreement is a written agreement by which a person agrees to care for a property, or portion of a property, on behalf of an owner. Commonly, property caretakers are apartment managers, maintenance workers, concierge or front desk personnel, and similar individuals.
With the increase in owner occupied apartments, condominium towers, and other private residential properties, many owners wish to pay for caretaking services . In fact, many owners associations and strata corporations are passing by-laws to allow for the hiring and retention of caretakers.
Property caretakers may also be found on more traditional single family residential properties, where they care for the property in exchange for being able to live there rent free or at reduced rent. As with all caretaking agreements, the scope of the work to be performed by the caretaker should be detailed in writing and made part of a formal written agreement.

Key Elements of a Caretaker’s Agreement

Property caretaker agreements are unique to each situation; however, there are a few key sections that should always be included to ensure that the caretaker understands the property owner’s expectations. The following outlines the essential components of a caretaker agreement: Duties and Responsibilities. It is important to clearly define the specific duties and responsibilities that the property owner expects the caretaker to complete as part of their job. This can include caretaking duties such as security guard, light maintenance, and on-call handyman services. It can also include general property duties such as meeting with vendors, collecting mail and paying bills. A property owner may also want to specify any other responsibilities specific to their property. Duration. Establish an appropriate duration for the agreement. Generally, caretaker agreements should be a minimum of three months in length with automatic extensions. Unless there is a specific reason to include an end date, a rolling caretaker agreement is preferable. In a rolling caretaker agreement, the agreement is automatically renewed at the end of each period (generally on a monthly basis) unless terminated by the property owner or caretaker. Compensation. Specify the amount of compensation to be awarded to the caretaker. Although caretakers are typically paid in cash, the parties may agree to allocate a portion of the remuneration to free rent or utilities. If housing is not being provided, the property owner may also want to consider whether the caretaker will be compensated for housing costs if they are terminated before the end of the agreement. For example, when a caretaking relationship is scheduled to last for one year or more, the property owner may want to consider compensating the caretaker for the cost of alternative housing when their employment is terminated. Termination. Include provisions that address the process for terminating the relationship. If the caretaker has been performing work for very long, a property owner may not want to terminate abruptly. In these situations, property owners may consider a severance package to help cushion the caretaker’s exit from the property.

Advantages of Engaging a Caretaker on Your Property

There are a variety of benefits to hiring a property caretaker. First and foremost, security can be greatly increased with a property caretaker on the premises. Many properties are private and not always used or visited by the property owner. With a caretaker living on the property, there is always someone available on the property to view any disturbances, handle emergencies, and notify the appropriate authorities when necessary. Providing 24/7 security for your property is one of the most important benefits a caretaker can provide. It’s also important to remember that when your caretaker does not have to leave the onsite living quarters and travel around your property for general maintenance, there is less risk he or she will be a potential target of robbery or vandalism. With low-level theft a common concern, but high-level theft becoming a more frequent reality, a caretaker can help deter criminal activity by simply being present on the property grounds while the property is otherwise uninhabited.
Regular upkeep of your property can also be maintained more effectively due to a caretaker’s presence. Because they live on the property, caretakers have easy access to the land and can notice problems quickly or notice when routine work needs to be completed. An example of this would be the specific schedule of mowing grass or shoveling snow in winter months. Rather than the property owner or manager having to make weekly visits to the property to ensure the work is completed regularly, a caretaker can either complete the work himself/herself, or oversee and manage the hired company responsible for upkeep. A caretaker can also help with pest control or other specialized maintenance needs for the property.
Having a property caretaker provides the property owner with a consistent internal contact who can report issues about the property and keep the owner apprised of the conditions on the property. The caretaker can be used to try and retrieve unpaid rent or other funds from tenants or have the owner’s access to the premises. The caretaker can manage the sale of items in the building, whether furniture, cars, or other property. The caretaker can help with legal issues involving the property and, if needed, the caretaker can testify in court about the conditions or issues concerning the property, so the owner does not need to attend the court process.
Most importantly, a property caretaker can help bring peace of mind to the property owner. The owner knows their property is secured and that issues will be addressed as they arise. The property owner has someone to call about the security and upkeep of the premises, and knows the caretaker is available to assist with special needs for the property.

Legal Aspects of Caretaker’s Agreement

While most property owners are well versed in general legal terms and conditions that apply to real estate ownership and management, when it comes to property caretaker agreements, there are some additional legal considerations. If these issues are not carefully considered, the owner or manager may face legal repercussions down the road.
Zoning Laws
Zoning laws exist in every state to dictate what uses are allowed on a property. Some properties are governed by "zoned communities"—usually developed communities with a common homeowners association or similar governing body. These communities usually have strict rules about the allowable uses for the property. These zoning laws govern whether property caretakers can live on, occupy or work on the property, and even how long they may do so.
Most local government zoning ordinances will exempt property caretakers and supervisors from local ordinance governing the duration of a person’s occupancy or residence upon residential property for care taking and supervising purposes.
Employment Laws
Depending on the type of services provided, the financial arrangement with and the relationship between the parties, a property caretaker may be an employee or an independent contractor under the IRS rules, state employment tax laws and other legal classifications . If the caretaker is an employee, many employment laws will apply, including those governing: (1) minimum wage and overtime pay; (2) employee safety and health standards; (3) employee accident and sickness benefits and disability wage replacement benefits; (4) comparative fault or contributory negligence analysis when law enforcement treats the caretaker as a plaintiff.
Post-Foreclosure Property Caretaker
The process for engaging a post-foreclosure property caretaker is further complicated and regulated by state post-foreclosure laws. These laws provide post-Mortgagor foreclosure rights to certain secured Mortgagees under which, among other things, those Mortgagees may engage a property caretaker to occupy the property after foreclosure. These laws vary by state, and in some cases, by jurisdiction. Because these post-foreclosure caretaker services are typically not detailed, drafted or properly tendered, they are often heavily scrutinized by courts when a foreclosing Mortgagee seeks to enforce their terms post-foreclosure, particularly as courts have shown a reluctance to enforce vague, non-specific caretaker agreements which provide little more than a caretaker may occupy the property for a certain period of time.

Negotiation To Achieve An Amicable Property Caretaker Agreement

When it comes to agreeing to any contract, the art is in the negotiation. It is important to be firm about what is most important to you, but flexible on those things where you can be, in order to achieve a fair deal. The same philosophy applies to negotiating a caretaker arrangement. Whether you are the property owner or a prospective caretaker, there are certain elements that you need to be firm about, and other areas where you can afford to be more flexible if it is in the best interest of both parties.
As the property owner, you will want to ensure that the caretaker is not living on your property full-time for the low monthly fee in the agreement while doing very little work, or using the extra income from the caretaker unit rental to supplement their income from another job and thus forcing you to pay for basic unpaid housekeeping errands and breakfast at all hours. Likewise, you do not want to hear complaints from your other tenants about the caretaker’s behaviour. As the property owner, you should negotiate so that you can exit the agreement without cost if you are unsatisfied with the level of performance of the caretaker or their behaviour. You should also request that they report to you immediately any issues that could cause a liability to you or create disharmony with your other tenants.
As the prospective caretaker, you will want to avoid any obligations that will require you to be on duty 24 hours a day, seven days a week or to be "on call" constantly. Ideally, you will agree to a framework that divides up duties into specific areas where you will monitor certain common areas for maintenance and any required repairs or respond to minor issues with the tenants, each during specified times. You should also seek language that allows you to opt out of the agreement with no penalty due to circumstances beyond your control, such as in the case of a breakup or illness.
As with any contract, the note here is to be reasonable. Neither side wants an agreement that is not beneficial to both parties. Your aim is to ensure you are reasonable while also securing as many protections and as much control as you can in the agreement.

Common Pitfalls for Property Caretaker Agreements

When owners of condos, apartment buildings and other multi-residential properties engage caretakers and enter into a caretaker agreement, there are a number of potential pitfalls in the drafting of the agreement which may result in ambiguity in the performance of the terms or worse yet, a vacancy in the position of caretaker. We have listed the following mistakes, which should be avoided when entering into a caretaker agreement: 1 . Not including a Section or Schedule dealing with Rights of Owner and Rights and Privileges of the Caretaker. 2. Not including a Section dealing with the management of records and privacy issues. 3. Not clearly setting out the duties and responsibilities of the caretaker. 4. Allowing for unlimited vacation time and leave of absence or not providing for alternate coverage for the period of vacation and leave. 5. Not prohibiting the caretaker from being in a position of conflict of interest due to other occupations or business interests.