What is a management agreement?

A management agreement is a formal and binding contract that outlines the responsibilities, obligations, and authority of the property management company and the property owner. It clearly specifies the scope of services to be provided, such as rent collection, maintenance, tenant screening, and handling repairs, as well as the duration of the agreement and fees involved. This contract is essential for ensuring both parties understand their rights and responsibilities, thus minimizing misunderstandings and potential disputes.

The formal nature of the management agreement distinguishes it from informal arrangements, such as verbal agreements, which may lack enforceability and clarity. Additionally, it serves a purpose distinct from a temporary arrangement for property management, which might not be comprehensive enough to cover the ongoing management tasks. Furthermore, it is not about outlining property sales procedures, which pertains to a different area of real estate practice. The focus is solely on the management of rental properties. Thus, a management agreement is critical for establishing a structured relationship that supports effective property management.