Property Management Agreement

The relationship between the property owner and property manager is set in stone when the property management agreement is signed. This legally binding document should be reviewed and signed before any work begins and will define the relationship between both parties.

Depending on the scope of the document it will likely cover all aspects of the relationship including things like the management fee, when checks are sent out, how much say the owner will have in the tenant screening process, how long the contract will last etc. It is extremely important that owners review their management contract in its entirety before signing. Typically most owners should be able to understand everything in the property management agreement, but some owners choose to have their attorney review the agreement to make sure that their best interests are being protected.

Some important sections to review in every agreement are those dealing with fees, duties, termination and arbitration.

Make sure you review the contract to see how it answers the following questions before signing it:

• How long is the agreement for?
• How much is the management fee?
• What other fees does the property management agreement list?
• Who keeps late fees, interest on security deposits and rent collected after eviction?
• What responsibilities does it list out for the property management company?
• What requirements does it place on you?
• What happens if the contact is terminated early by your or the manager?
• How will disputes/arbitration be handled in the event of a dispute over the agreement?

For a more in depth discussion of management agreements, read our three part series "What to look for in a property management contract".

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