A property management agreement is a legal document that allows a landlord to enter into a business relationship with a property management company. Once a lease is signed, a property will be managed for a monthly or agreed-upon fee.
Having a basic knowledge of what is needed for a property management agreement is key to making profits on your property while it is managed by a professional. It will also help you negotiate your contract with a property management agency more wisely.
What you need to know
What is the purpose of a Property Management Agreement?
Having a property manager on your team can provide a lot of advantages for you as a landlord. A property manager will take on the responsibilities for renting, repairing, and other day-to-day running of the property, which frees your time and allows you to concentrate on growing your business. The property management agreement allows you to clarify responsibilities for each party signing the contract, the identity of the property that will be managed, as well as the specific terms and conditions.
What Should a Landlord Include in a Property Management Agreement?
We highly recommend including a thirty-day notice kick-out clause because it will provide security to the owner. It guarantees safe conditions if the property stays vacant and the property manager is not performing duties effectively.
We recommend including these six things in a property management agreement:
- Service charges and fees
- The property owner's obligations
- Equal and fair housing
- Accountability
- The length of the contract
- Termination clause
When Does a Property Management Agreement Become Effective?
The typical duration of a property management agreement is one year, with wording that allows either party to terminate at any point if the terms are not satisfied.
