Free property management agreement template

How to fill it in

The agreement is a contract, so the details in the blanks are what protect both sides later. Be exact about the property, the fees, and the limits on the manager's authority.

• Parties and property: the owner, the manager or company, and the exact address and units being managed.
• Authority: confirm what the manager can do, and in particular whether they can sign leases on the owner's behalf.
• Fees: the management fee, the leasing and renewal fees, and any other charges, written as exact amounts or percentages.
• Money handling: the trust account, the reserve amount, and the day each month the owner is paid with a statement.
• Limits and term: the per-repair spending limit, the length of the term, and the notice each side must give to end it, then both parties sign.

What a property manager does

The heart of the agreement is the grant of authority, because it decides what the manager can do without calling the owner. A typical manager handles the full cycle of a tenancy: advertising the vacancy, screening and selecting tenants, preparing and signing leases where the owner allows it, collecting rent and deposits, coordinating repairs and vendors, responding to tenant issues, serving notices, and pursuing eviction when needed. It works as an agency relationship, so the manager acts in the owner's interest and is accountable for how that authority is used. Because the manager screens and selects tenants, those leasing decisions fall under the federal Fair Housing Act, enforced by the U.S. Department of Housing and Urban Development (HUD), which bars choosing tenants based on a protected class such as race, religion, sex, familial status, or disability. The agreement should draw the line clearly. Spell out where the manager can act alone and where they need the owner's sign-off, especially on larger repairs, new leases, and legal action, so nobody is surprised later. A common approach is to let the manager approve routine repairs up to a set limit, often somewhere between $300 and $1,000 per item, and to require the owner's written approval above that.

What property managers charge

Fees are the part owners most want to compare, and they come in layers rather than a single number. The core charge is a monthly management fee, usually 8 to 12 percent of the rent collected, though some managers use a flat monthly amount. On top of that, a leasing or tenant-placement fee for finding and signing a new tenant commonly runs from half to a full month's rent, since it covers marketing, showings, screening, and lease preparation. A lease renewal fee, often a flat $100 to $350 or a small percentage of rent, applies when an existing tenant stays on. Many managers also add a markup of roughly 10 to 25 percent to vendor invoices for coordinating repairs. Read the whole fee stack, not just the headline percentage, and make sure every fee you agree to is written into the agreement.

Trust accounts and your money

How a manager holds your money matters as much as what they charge. A property manager collects rent and deposits that belong to the owner, and in most states a manager who holds client funds is legally required to keep them in a separate trust or escrow account, apart from the company's own operating money. That separation is what stops an owner's rent from being mixed with, or spent as, the manager's funds. A well-drafted agreement names the bank, says who has signing authority, and sets how often the account is reconciled and when the owner is paid out. Reconciliation is usually monthly, with the owner paid by a set day each month against an income-and-expense statement. It should also fix the reserve the manager keeps on hand for expenses, commonly a few hundred dollars per unit, often around $200 to $500, to cover small costs between payouts. If a manager cannot explain plainly how they hold and account for your money, treat that as a warning sign.

Does a property manager need a license?

In most states, managing property for someone else is a licensed activity. The general rule is that a person or company doing it for others, and getting paid, must hold a real estate broker's license, because leasing and rent collection are treated as real estate brokerage under the state's Real Estate License Act, enforced by the state real estate commission. There are exceptions. A few states, such as Idaho, Maine, and Vermont, do not require a real estate license for property management, and some, such as Montana, Oregon, and South Carolina, offer a separate property management license instead of a full broker's license. Managing property you own yourself generally does not require a license. Because the rules are set state by state, confirm what your state requires, and this template has the manager represent that it holds whatever license the state calls for.

Management agreement vs. lease

These two documents are easy to blur, and keeping them straight avoids real confusion. A property management agreement is between the owner and the manager. It hires the manager and defines their authority, fees, and duties. A lease is a different contract, between the landlord side and each tenant, that sets the rent, term, and rules of the tenancy for a specific unit. The manager uses the authority in the management agreement to sign leases with tenants, but the two documents cover different relationships and should never be combined. If you are the owner, you sign the management agreement with your manager; your manager, acting for you, signs the leases with your tenants.

Common mistakes to avoid

Most disputes between owners and managers trace back to a few gaps in the agreement.

• Leaving the manager's authority vague, so it is unclear when the owner's approval is needed.
• Agreeing to the headline management fee without pinning down leasing, renewal, and vendor-markup fees.
• Skipping the trust-account and reporting terms, so the owner cannot see how their money is handled.
• Not setting a per-repair spending limit, which lets costs run without the owner's sign-off.
• Hiring a manager without confirming they hold the license the state requires.

Signing it

A property management agreement takes effect once the owner and the manager both sign it. You can print it, fill it in, and sign by hand, or fill it in and sign online, which gives both sides a clean dated copy to keep. Online signing is valid for this agreement under the ESIGN Act and UETA. Whichever way you sign, each party should keep a copy, and the owner should hold on to it along with the monthly statements the manager provides, since together they are the record of how the property is being run.