Before you sign, make sure the agreement clearly says what the manager does, what you pay, how repairs are approved, and how you can get out.
What this agreement is, in plain English
A property management agreement is the written contract between you, the owner, and the property management company. It should clearly describe services, fees, authority, reporting, trust handling, and how either side can end the relationship. If something important is not written down, assume it may become a problem later.
For many owners, this agreement matters as much as the rent amount. A manager may handle advertising, showings, tenant screening, lease signing, rent collection, maintenance coordination, inspections, owner statements, and notices. But different companies include different services, so the agreement needs to say exactly what is included and what costs extra.
This page is general information only, not legal, tax, accounting, or brokerage advice. Rules and contract terms vary by state and city, so confirm details with a licensed property manager and, when needed, a licensed attorney or accountant.
The clauses most owners should read first
If you do not want to read the whole agreement first, start with these sections: term length, cancellation, fees, repair approval limits, leasing authority, reserve requirements, and owner responsibilities. Those clauses often affect your money and your control more than the marketing language at the front.
Look for the contract term. Some agreements renew month to month after an initial period; others lock you in for 6 or 12 months. Check whether there is an early termination fee, required written notice, or a fee if a tenant stays after the agreement ends.
Then look at authority. Can the manager sign leases for you? Renewals? Serve notices? Approve repairs without asking you first? Hold a maintenance reserve? If the agreement is vague, ask for a clearer written limit.
Finally, check what happens when the agreement ends. You want to know how owner funds are returned, how records are transferred, who keeps keys and lease files, and whether there are any continuing fees after termination.
Fees you will usually see
Most agreements list several different fees, not just one monthly fee. A common monthly management fee is around 8% to 12% of collected rent, but some markets are lower or higher. Leasing or tenant-placement fees often run about 50% to 100% of one month's rent. Renewal fees, setup fees, vacancy fees, inspection fees, notice-posting fees, or maintenance coordination fees may also appear. These are common ranges, not quotes. The real number depends on the market, the property, the unit count, and the services included.
Read closely for maintenance markups. Some managers add a percentage or coordination fee to vendor invoices; others do not. Neither approach is automatically wrong, but it should be disclosed clearly in writing. If the agreement says the manager may use "affiliated vendors" or charge "administrative" repair fees, ask for a simple explanation and examples.
Also ask how rent is defined for fee purposes. Is the monthly fee based on rent collected, rent due, or lease amount? That difference matters if the tenant pays late or partially. Ask when owner statements are sent, what they show, and how trust funds and security deposits are handled under local rules.
If you want a broader overview before comparing proposals, see property management fees and other owner guides in our resource center.
Repair limits, emergencies, and reserve money
Nearly every management agreement gives the manager some authority to approve repairs without contacting you each time. That is normal, especially for true emergencies. But the dollar limit should be clear. For example, a contract may allow the manager to approve non-emergency repairs up to a stated amount and anything higher only with owner approval.
Emergency language matters. The agreement should explain what counts as an emergency, how quickly the manager can act, and whether they can spend above the normal limit to protect people or property. Burst pipes, no heat in cold weather, active leaks, electrical hazards, or sewage backups are typical examples, but exact handling varies by local law and company policy.
Many managers require an owner reserve in the trust account, often a few hundred dollars or more depending on the property. That reserve can help cover small repairs before rent is received. Make sure the agreement says the expected reserve amount, when you must replenish it, and how unused funds are returned at the end.
Owner responsibilities and fair, consistent screening
A good agreement does not only list what the manager does. It also lists what you, the owner, must do. That may include funding reserves, carrying proper insurance, maintaining habitability, approving major work promptly, disclosing known property issues, and providing accurate ownership and contact information.
If the manager handles leasing, the agreement should describe screening standards and how applications are handled. Screening should be consistent, documented, and applied the same way to every applicant. The contract should not suggest unlawful steering or different standards based on race, color, religion, sex, national origin, familial status, or disability. Local fair-housing and screening rules can add more requirements.
Owners should also check whether the agreement requires the manager to follow local registration, licensing, lead-paint, habitability, and notice rules where applicable. Since these obligations vary by location, confirm them with a licensed local professional.
Red flags and how to compare agreements
A management agreement should be detailed, readable, and willing to be discussed. Red flags include vague fee language, undisclosed maintenance markups, no written management agreement, no trust accounting language, no active license where one is required, no proof of insurance, or pressure to sign immediately.
Use a simple comparison checklist when you review proposals:
- Confirm the company is licensed if your state requires it, and ask for proof of insurance.
- Compare the monthly fee, leasing fee, renewal fee, setup fee, and any maintenance markup or coordination fee.
- Check the contract term, notice period, and any early cancellation fee.
- Review repair spending limits and emergency authority.
- Ask when owner statements are sent and what accounting detail they include.
- Ask how tenant screening is documented and kept consistent.
- Verify references and ask how communication works during vacancies, repairs, and delinquencies.
The owner stays in control. You compare proposals, read the agreement, verify the license and references, and choose who to hire. OwnerLedger is a free matching service, not a property management company or broker. We do not manage property. If you want to compare licensed, insured managers near you, you can get matched or explore more help for rental owners.