What is a property management agreement?
A property management agreement is a contract offered to an individual on behalf of the owner, which outlines the property’s management, whether commercial or residential. Depending on the type of property, this agreement may cover details for leasing units, the collection of rent from current inhabitants, and how to address current renters’ needs. It should align with your state’s housing laws, and it can also outline marketing efforts to prospective tenants.
If you don’t have the time or experience to manage the property yourself or the funds for management services, a property management agreement is a great starting point as it clearly outlines the duties and standards a property manager will be held to while also protecting the property owner from potential legal action.
You’ll need a real estate or property management license to become a property manager in most states. Unfortunately, the requirements vary from property to property and state to state, so there is no way to confirm or verify registration nationwide. This means you will need to research proper licensing in your state before accepting or offering a property management contract.
The value of a property management agreement.
A property management agreement is useful whether you’re a property owner or homeowner hiring someone to take care of your property or you’re being offered a property management role. It identifies the guidelines of a property manager’s position, but it also clearly states the operational costs, leaving no confusion about how resources are allocated in the management of the property. Additionally, this agreement should outline management fees, or what property managers charge for their services. Some managers might charge extra for different tasks that fall outside their traditional duties, and a property management contract addresses this upfront.
As a legally binding document, it’s crucial that the terms and provisions of this agreement are customized to fit your needs. If you're a property owner with a specific set of tasks in mind for the space, a property management agreement clarifies what those tasks will be and if they’ll be performed at the owner’s expense. It ensures written consent for property managers to act on behalf of the owner, preventing legal action against the individual. But be sure to consult an attorney before you finalize and sign the agreement to ensure no problems arise.