What Is a Property Management Agreement?
A property management agreement is a contract between a property owner and a manager or management company. It gives the manager authority to handle the property’s daily operations, including:
- Core property management services such as tenant placement, lease negotiation, rent collection, maintenance, inspections, paying expenses, and providing reports to the owner.
- Additional responsibilities like marketing, supervising staff, handling taxes, and ensuring compliance with landlord–tenant laws.
Property management agreements can apply to residential, commercial, or mixed-use properties, and the terms change based on what the owner needs managed. In some states, such as Florida, managers must hold a real estate broker’s license if they lease or list units as part of their services. Owners may also choose an exclusive property management contract, which gives one manager full authority to handle the property for a set period.
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Types of Property Management
Different properties come with different demands. A residential building doesn’t need the same approach as a commercial office or retail space. Because of this, managers may specialize in one type of property or oversee several at once. The following are the main categories of property management.
- Residential property management handles the rental process for homes and vacation properties. This includes single-family houses, condos, apartments, townhouses, multifamily buildings, manufactured homes, and real estate owned (REO) properties.
- Commercial property management manages properties used for business. Examples include hotels, retail stores, malls, restaurants, gas stations, office buildings, and co-working spaces. If you plan to rent out a business space, a commercial lease agreement can help set clear terms with your tenant.
- Industrial property management oversees manufacturing and storage facilities. These range from heavy manufacturing plants and light manufacturing factories to warehouses and distribution centers.
- Special-purpose property management covers unique properties outside the usual categories. These can include theaters, sports arenas, resorts, senior living facilities, schools, universities, and places of worship.
A property manager who’s great in one category might not be the best match for another. Picking the right fit keeps the property running well and makes sure the agreement works in your favor.
What Is Included in a Property Management Agreement?
Once both parties agree on the scope of management, the next step is putting the terms in writing. A solid property management contract should cover every operational and financial detail that will guide how the property is run. Make sure your agreement includes:
- Full legal names of the property owner and the licensed property manager or management company.
- Exact property address of the asset under management.
- Start and end dates for the manager’s authority.
- Monthly reporting deadline for rent rolls, expense statements, and maintenance activity.
- Emergency repair fund amount and authorized spending limit for urgent issues without owner approval.
- Approval requirements for non-emergency repairs, capital improvements, or cosmetic changes.
- Deadline to lease or market the property after the agreement is signed.
- Excluded services such as property sales, major construction management, or legal representation.
- Manager’s compensation, whether a percentage of collected rents, a leasing commission, or a flat monthly fee.
- Termination duties, including transferring tenant files, financial records, and vendor contracts to the owner.
- Effective date of when the agreement becomes enforceable.
- Termination events resulting in the end of the agreement.
These details keep the agreement centered on the day-to-day realities of property management. They help make sure both parties know exactly how the property will be handled. You can cover all these points and more with our property management agreement template.
How Long Does a Property Management Agreement Last?
A property management agreement often lasts 12 months, but the length can vary. Some run for a shorter period, such as seasonal rentals or trial arrangements with a new manager. Others span several years, which is more common for commercial properties or large residential complexes.
Renewals can work in different ways. Some agreements renew automatically unless one party gives notice, while others require signing a new contract at the end of the term. Early termination is sometimes allowed if notice is given or specific conditions are met.
In some cases, the property management contract matches the property’s use cycle. Vacation rentals may follow fixed booking seasons, while affordable housing agreements often align with compliance periods. State laws can also influence contract length and may set rules for renewal notices.
Sample Property Management Agreement
Review the sample property management agreement template to see how everything fits together. When ready, personalize it to suit your requirements and download it in Word or PDF format.
