Property Management Agreement Template

Use our property management agreement to specify the responsibilities of a property management company.

Updated April 19, 2024
Written by Sara Hostelley | Reviewed by Susan Chai, Esq.

A property management agreement form is a binding contract between a property owner and the property manager (agent) they hire to manage the piece of real estate. This contract covers all the responsibilities the property management company assumes for the owner and the applicable legal liabilities.

• What Is a Property Management Agreement?
• How to Hire a Property Management Company
• What Does a Property Management Company Do?
• Key Elements of a Property Management Agreement
• Other Property Management Forms
• Property Management Agreement Sample
• Frequently Asked Questions

What Is a Property Management Agreement?

A property management agreement lets you establish the terms of the relationship between you and the person or company handling management duties for your property. This agreement allows you to:

• Distribute responsibilities, such as tenant screening and rent collection, to another party,
• Enjoy peace of mind by ensuring the property is professionally managed,
• Outline clear expectations and responsibilities,
• Protect your interests as the owner, and
• Have a legal framework to address any issues that may arise.

This contract clarifies all the responsibilities of the property owner and management company (agent) since not all agents perform the same services. For example, some property managers accept responsibility for marketing rental properties and drafting rental agreements, while others leave these duties to the owners.

Types of Property Management Agreements

The type of property management agreement you need depends on the real estate type, your preferences as the property owner, and the services the manager shall provide. Explore some different types:

• Residential property management agreement: Includes details about managing single-family homes, duplexes, and condos.
• Multi-family property management agreement: Highlights elements relating to the management of apartment buildings with multiple units.
• Commercial property management agreement: Outlines real estate management for manufacturing, retail, industrial, and office buildings.
• Mixed-use property management agreement: Provides management guidelines for mixed-use properties containing livable spaces and retail buildings.

How to Hire a Property Management Company

Step 1 – Define Your Needs

Determine your needs and expectations regarding what you want a rental property management company to provide. Ponder factors such as your property’s type and size, budget, and the degree of involvement you want to accept in the management process.

Record specific property management services you want the company to assume. Note any tasks for which you’d like to remain responsible.

Step 2 – Research Potential Companies

Research property management companies in your local area. Ask colleagues for recommendations or obtain references from local real estate associations. Create a list of potential companies.

Be wary of companies outside your immediate local area. While these entities may have experience managing properties and efficient systems to operate remotely, they likely aren’t familiar with your area’s local landlord-tenant rules and regulations.

Step 3 – Evaluate Their Experience and Reputation

Narrow down your options further by assessing each company’s experience and reputation. Consider factors like their portfolio size and years in business. Compile evidence of their expertise, professionalism, and reliability in managing properties like yours.

For example, suppose you own an apartment building with 50 units. In this case, it would be ideal to only consider property management companies with a proven track record of managing apartment buildings. Even if you find a reputable property manager with experience overseeing individual homes, they may not be equipped to handle the needs of an entire apartment building.

Step 4 – Interview Multiple Candidates

Schedule interviews with several of your top contenders. Meet with them in person to ask detailed questions about their processes, services, and fees. Inquire about their tenant screening methods, communication protocols, and maintenance procedures. Assess their transparency and responsiveness. Ask behavioral questions to assess their customer service skills and willingness to address your concerns.

Step 5 – Check References

Ask each candidate to provide references from current or past clients. Contact the references to learn about their experiences working with the company. Inquire about the company’s communication effectiveness and ability to solve issues professionally and effectively.

Step 6 – Review Terms and Fees

Review the services and terms the property management company is willing to offer. Ensure they’re fair and transparent and align with your expectations and budget. Note their management fees, leasing commissions, and any additional costs for services like marketing and maintenance. Negotiate the cost of offerings if the company is open to

Step 7 – Draft and Sign an Agreement

Use a property management contract template to draft your agreement. Confirm that both the property owner and management company agree to the specified terms and conditions. Acquire signatures from all involved parties to execute the document.

Each agreement with a property manager or company should include customized language and clauses to fit the two parties involved and the property.

What Does a Property Management Company Do?

Tenant Screening and Placement

• Conduct thorough background checks and credit evaluations.
• Review rental applications to ensure tenants meet the property owner’s requirements.
• Check for signs of fraud in rental applications.
• Facilitate lease agreements, including negotiations, signings, and move-in inspections.

Rent Collection and Financial Management

• Collect on-time rent payments.
• Monitor and enforce lease terms relating to rent payments.
• Issue warnings for late payments.
• Manage property finances, including accounting, budgeting, and reporting.
• Obtain the owner’s prior written consent before using funds for specific upkeep projects.

Property Maintenance and Repairs

• Perform property maintenance in individual units and common areas.
• Determine a property maintenance schedule based on the season.
• Conduct regular inspections to pinpoint maintenance issues and promote property upkeep.
• Arrange for routine maintenance and emergency maintenance requests from tenants.

Tenant Relations and Communication

• Serve as the primary point of contact for tenant requests, concerns, and inquiries.
• Organize community events encouraging tenant interaction.
• Address lease violations according to local rules.
• Resolve tenant disputes and deal with bad tenants.
• Facilitate effective communication between tenants and property owners.

Lease Enforcement and Eviction Proceedings

• Enforce all lease agreement terms, including violations and late fees.
• Initiate evictions when necessary.
• Manage legal proceedings related to eviction to ensure problematic tenants move out in a timely manner.

Marketing and Vacancy Management

• Upkeep the property during times of vacancy.
• Advertise vacant units via property management websites, signage, and online listings.
• Develop and implement marketing strategies to attract potential tenants.
• Screen potential tenants and conduct property showings to limit vacancy periods.

Legal Compliance and Risk Management

• Minimize risks associated with property ownership, such as safety concerns and liability issues.
• Stay current regarding changes in rental regulations and laws, and update lease agreements accordingly.
• Ensure compliance with federal, state, and local housing laws and regulations.

Financial Reporting and Documentation

• Provide detailed financial reports to property owners, including cash flow analyses, expense reports, and income statements.
• Find opportunities for tax deductions.
• Keep records of the property’s financial transactions, including taxes, maintenance expenses, and rent payments, so the property owner can file forms like Schedule 1 (Form 1040) and Schedule E (Form 1040).

Emergency Response and Crisis Management

• Implement emergency response protocols to address urgent situations such as earthquakes, floods, fires, hurricanes, and other natural disasters.
• Alert tenants of unsafe conditions and make arrangements for temporary housing until the situation is resolved.
• Coordinate with emergency services, insurance providers, and contractors to swiftly resolve crises while prioritizing property preservation and tenant safety.

Key Elements of a Property Management Agreement

Here are the key elements to include in the property management agreement:

• Services covered: List the services the agent will perform.
• Services excluded: Highlight any services the agent won’t perform, especially if they’re services that property management companies commonly offer.
• Payment structure: Discuss the property manager’s payment. Some owners issue a flat fee per month for their services. Others may pay a certain percentage of the rental income, ranging between 4 and 12 percent depending on the property’s size.
• Extra fees: Outline extra fees you’ll pay the rental property manager for accepting additional work or duties that the contract doesn’t explicitly state.
• Property owner responsibilities: State any responsibilities the property owner will have, such as carrying insurance of a specified type and minimum amount.
• Property owner limitations: Discuss the limitations the property owner will have so the management company can properly handle their assigned duties without interruptions.
• Fee remittance: If the property management company will collect fees (such as security deposits and HOA fees) on the owner’s behalf, discuss how they will transmit the money.
• Contract length: Specify the contract length. Even in cases where the arrangement lasts many years, consider making the contract just one year so both parties can review the fees and services annually.
• Termination clause: Provide a termination clause to protect both parties if the relationship isn’t mutually beneficial. Clarify if there’s a required notice period for termination.
• Liability: In most instances, the property owner will hold the agent harmless from any lawsuits, demands, debts, charges, and claims as long as the agent wasn’t negligent.
• Insurance coverage: Explain the insurance requirements for both parties. For example, property owners may be required to maintain property insurance, while property managers typically have liability insurance.
• Compliance issues: Outline the specific local codes and laws the property management company must abide by when performing their duties. The agreement may also list information related to equal-opportunity housing.
• Funding/advances: Property management contracts often have a section discussing the owner’s responsibility for funding the day-to-day running of the real estate investment and any emergencies that may come up.
• Governing law: State the jurisdiction that will govern the entire agreement.

Other Property Management Forms

Here are some essential forms for property managers:

Eviction Notices

Property managers use these forms to communicate to the tenant that they must vacate the property.

Lease Agreements

These forms establish the landlord-tenant relationship and outline both parties' rights and responsibilities.

Real Estate Purchase Agreement

This form helps a property manager facilitate the sale of a property if the owner decides to go that route.

Property Management Agreement Sample

Download a free property management agreement template in PDF or Word format below: