A property management agreement is a contract between the rental property owner (typically a landlord) and the company hired to manage the property. Much like the lease a tenant signs, the property owner will agree to pay a fee to a property management company for a certain duration to handle the tasks described in the agreement.

What is included in a property management agreement

Before you hire a property manager, ask for a sample of their contract and give it a thorough review. A property management agreement should include:

• The property management services provided and any additional fees
• The responsibilities of the property owner
• An Equal Housing Opportunity section that supports both state and federal fair housing laws
• A clause for the property manager’s liability in the case of neglect
• The duration of the contract (typically 1-2 years)
• A clause for terminating or cancelling the property management agreement

Kevin Ortner, chief executive officer of Renters Warehouse — a company that manages around 23,000 properties throughout the U.S. says, “Get the highlighter out. If you’re comparing property management firms, ask all of them, ‘Can you send me the property management contract so I can look through it?’ And that’s really the only way you’re going to get to the bottom of what might pop up.”

Questions to ask before signing a property management contract

Here are seven questions you should ask a property manager before signing a contract with them.

What types of properties do you manage? Will the property management company manage a single property, or do they only take on clients with multiple properties?

What vendors do you use for maintenance? Check the quality of their property management services and the prices they charge for them. You don’t want to overpay, but you don’t want to skimp on your investment.

What services are included? Some property managers will market the property, find a tenant, collect rent, maintain the rental and handle legal issues like evictions but other responsibilities may fall on the property owner.

What additional fees apply? Do they charge an additional fee for certain services? If so, how much?

How do you collect rent? Do they accept online rent payments? Can they take checks and money orders?

How do you handle late rent payments? They should be effective, but you should also feel comfortable with how they treat your tenant.

How do you screen tenants? Make sure they’re taking appropriate steps to finding a reliable tenant.

What happens if I decide to sell my property while under contract? Some property management companies require you to give them part of the commission if you decide to sell while under contract.

How to choose a property management company

Take the time to research and interview several property management companies. Choosing a property management company is a big decision, and not every property manager will offer the same level of service or be the best fit for your needs. 

A small property management company might be a good fit if:

• You want to work with a property manager who personally knows you and your property.
• You’re looking for more affordable services.
• You need minimal assistance with risk and liability.

A large property management company might be a good fit if:

• You want to minimize the risk of liabilities.
• You’re looking for a property manager with the most experience and knowledge.
• You’re willing to pay more for services.
• You like the idea of an in-house maintenance staff.

Ortner sometimes has clients who just want help finding a tenant but will manage the property themselves, and sometimes they already have a tenant but want someone else to manage their property. He tells his clients, “We’re your team ⁠— we’re working for you. You’re the CEO of your property, so you get to make the important decisions, but we’re going to execute it for you.”

For more articles, tips and trends about property management, property maintenance and being a landlord, visit our Rental Resource Center.