What is an overhead and service fee for work performed?

[Shivani Kumar]

Hello everyone,

I have reviewed a CAR property management contract with a company and they have 5% written in the line that states “ an overhead and service fee added to the cost of all work performed by, or at the direction of,  property manager”. They have a regular fee of $100 for services outlined in the agreement. What is this extra fee for? 

[Chris Seveney]

@Shivani Kumar

Let’s say they have to get a pest control company to do something and it’s a third party company - they will charge 5% which is very common as they have management to bill and coordinate that activity

Many places I see this 10-15%

I would make sure to check indemnifications clause with an attorney

[Nathan Gesner]

I agree with Chris. It sounds like they will add 5% to any invoice. This is to compensate them for the coordination and supervision of the work.

[Michael Smythe]

No one works for free