A property management contract is signed by owners who read the fee percentage and skim the rest, and the rest is where the cost and the exit live. Four clauses decide how this arrangement ends and what it really costs. This page is those four, written for an owner about to sign one and useful to a manager writing one.
Termination, and what survives it
Notice either side gives, whether there is a minimum term, and whether a fee is payable on early termination. Then the part owners miss: what happens to tenancies in progress, whether a letting fee is still owed on a tenant the manager introduced, and how long any such tail runs. A tail clause can make leaving expensive long after the contract ends.
The fee stack, not the headline
Management percentage, and on what base. Letting or tenant-find fee. Renewal fee. Inspection fee. Any markup on contractor invoices, which is the one least often disclosed and most often material. Add them for a representative year and compare that to the headline percentage, because the gap between the two is usually large enough to change which manager you choose.
Spending authority
The figure above which the manager must obtain approval, the emergency exception, and how approval is recorded. Without a figure every repair is either a call or a surprise. Owners sometimes set this very low and then find they are approving light bulbs; the useful level is one where you would genuinely want to be asked.
What happens to the record
On termination the owner should receive the leases, the ledgers, the deposit accounting, the tenant contacts, the certificates and the work-order history, in a usable form and within a stated period. A manager who leaves with the record leaves the owner unable to answer their own tenant. This clause costs nothing to include and is the one owners most wish they had.
Questions people ask about property management contract
Is a management contract negotiable?
More than owners assume, particularly the fee base, the spending threshold, the notice period and the tail on letting fees.
What happens to deposits when a manager changes?
They transfer with an accounting of what is held for which tenancy, and it should be an express term rather than an assumption.
Should the contract name the properties?
Yes, in a schedule, so adding or removing one is a documented change rather than a conversation.