Property management agreement: what to include

A property management agreement sets out what you do for the owner, what you charge and what you can decide alone. When it's vague, the questions come up at the worst time: a repair bill the owner didn't expect, a fee they don't recognize, a report that arrives late or never.

This guide is for property managers who sign agreements with one or several owners. It covers what to include, the gray areas to settle before signing, and how to keep the agreement useful after it's filed away.

Why vague agreements lead to disputes

Disputes between owners and managers usually start with something nobody wrote down: whether finding a new tenant costs extra, how much you can spend on a repair without asking, when the owner gets paid, what happens to the security deposit if you part ways.

Many agreements start from a generic template that nobody adjusts. The real arrangement then lives in a phone call from two years ago, a few WhatsApp messages and an email thread with the previous manager. If you and the owner remember it differently, neither of you has a page to point to.

What to include in a property management agreement

Go through these sections with the owner before signing. A lawyer should review the final text, because the rules for management agreements, licenses and handling other people's money vary by country and state. Check the rules where the property is.

Parties, property and term

• Full names and contact details for the owner and the manager or company, and who signs for each.
• The property's address and the units it covers, including parking spaces or storage units.
• The start date, how long it lasts and whether it renews on its own.

Services: what's included and what isn't

List each service, so nothing is assumed:

• Finding tenants: listing, showings, applications, signing the lease.
• Collecting rent and following up on late payments.
• Handling maintenance requests and coordinating pros.
• Move-in and move-out inspections.
• Lease renewals and rent changes.
• Paying property bills, such as utilities, insurance or condo fees, if you handle them.

Then write what's not included, or costs extra: major renovations, legal proceedings, insurance claims, tax filings. When an owner asks for one of these later, you can both read the same line.

Fees and extra charges

• The management fee: a percentage of rent collected, a flat monthly amount or a mix. Say whether it's charged on rent due or rent actually received, and whether it's charged while the unit is vacant.
• One-time fees: finding a new tenant, renewing a lease, setting up a new property.
• Markups: whether you add anything to repair invoices from pros, and how much. If you don't, say so.
• Taxes: whether the fees include sales tax or VAT where it applies.

Go through each fee with the owner before signing, so the first statement holds no surprises.

Spending limits and repair approvals

Small repairs that wait days for an owner's yes cause many of the calls you get. Agree on:

• A spending limit per repair, below which you can go ahead without asking, for example $500 (an example amount; set one that fits the property).
• What happens above it: how many estimates the owner wants to see, how you send them and how long the owner has to answer.
• What counts as an emergency (a burst pipe, no heat in winter, a broken lock) and what you can do before reaching the owner.
• A reserve the owner keeps with you for repairs, if any, and when it gets topped up.

Our guide on maintenance approval limits shows how to pick the amount and has a sample clause you can adapt.

If you compare estimates for the owner, our guide on comparing and approving repair estimates shows a simple way to present them.

Money: rent, deposits and payouts

• Where rent is collected and which account holds it until it reaches the owner.
• The day each month you pay the owner, and what you can deduct first (your fee, repairs, bills).
• Who holds the security deposit, in which account, and what happens to it if the agreement ends while the tenant still lives there.

Reports and communication

• What the owner receives each month and on which day: rent, expenses, your fee, the payout, open repairs. Our guide to the monthly owner report lists what to put in it.
• Year-end statements for the owner's taxes, if you provide them.
• Which news can't wait for the report (a tenant's notice, a missed payment, damage) and how you'll send it.
• How the owner can reach you, and how fast you reply on working days.

Responsibilities, insurance and liability

• What the owner keeps doing: insuring the property, paying the mortgage and property taxes, funding repairs.
• The insurance each side carries.
• What each side is responsible for if something goes wrong, written in plain terms and reviewed by a lawyer.

Ending the agreement

• How much notice either side gives, and whether there's a fee for ending early.
• What you hand over: keys, leases, deposits, records, open repairs and the tenants' contact details.
• How many days you have to hand over keys and records, transfer the owner's money you still hold and send the final statement. Local rules may set some of these deadlines.
• How long you keep copies of the records, and what you return in the final statement.

To work out the fees themselves, from your hours and costs, see our guide on property management fee structure.

Questions to settle before signing

Some topics cause trouble because both sides assume they're obvious. Ask them out loud:

1. Can you sign a lease or renewal on the owner's behalf, or does the owner sign every one?
2. Can you choose the pros, or does the owner have people they want you to call first?
3. Who decides on rent changes at renewal?
4. Does the owner want a call, a message or an email for urgent news?
5. If the owner lives far away or abroad, who can approve repairs when they can't be reached?

Write the answers into the agreement or an attached page, so a new person on your team can find them too.

Keep the agreement in use after signing

When a question comes up, both of you should be able to open the agreement in a minute:

• Save it with the property's documents, next to the lease and the inspection reports, where you and the owner can both open it.
• Put the key numbers somewhere you see every week: the spending limit, the payout day, the report day, the notice period.
• Write down changes. Follow the amendment steps in the agreement, and any form the local rules require. If the owner raises the spending limit by message, sign a short amendment now. If you wait for the renewal, the signed limit and the one you use won't match for months.
• Review it once a year, at the same time you look at fees and services.

Once it's signed, collect the keys, contacts and documents with our new property onboarding checklist.

How RentalThread will make it easier

With RentalThread, each property will have its rent, expenses and repairs in one place, and AI will read leases and invoices to pull out dates and amounts, which you'll check and correct before using them. When a repair goes above the spending limit you agreed on, the owner will approve it in the repair's thread, with photos and estimates attached, so the approval and the cost stay with the job.

AI will also draft the property summaries and owner updates the agreement promises, and you'll review and edit every draft before it goes out. See what we're planning for property managers.