Property Management Agreement Template (2026): Fees, Duties, Maintenance Authority and Termination

Hiring a property manager hands someone else the keys, the rent, the tenant relationship, and the authority to spend your money on repairs. The agreement is the only document that defines how far that authority goes. The usual disputes (a fee nobody mentioned, a repair nobody approved, a security deposit nobody can account for when the tenant moves out) almost always trace back to a clause that was vague or missing.

Quick Answer

• Management fees are usually a percentage of collected rent. The National Association of Residential Property Managers (NARPM) has described the typical management fee as eight to twelve percent of collected rent, with separate charges for leasing, renewals and other services. Every fee beyond the base percentage should be listed in the agreement.
• Set a dollar threshold above which the manager needs your approval before spending. Define "emergency" narrowly, as the one exception.
• Rent and security deposits belong in a trust or escrow account separate from the manager's own money. Licensing rules in states such as California and Texas require this.
• Spell out termination: notice period, what's owed on exit, who keeps tenant files, keys and deposits, and what happens to leases already in place.

Confirm Who Is Signing and Whether They're Licensed

Before the terms, check the counterparty. In most US states, managing property for others for a fee requires a real estate license, though many states exempt on-site residential managers who don't lease units. Ask for the license number, verify it with the state licensing board, and put the number and the licensed entity's name in the agreement. If the person you're negotiating with works for a company, make sure the contract is with the company and not just the individual.

In England, letting and managing agents who hold client money must belong to a government-approved client money protection scheme under rules in place since April 2019. Requirements elsewhere vary, so check the current rule where the property is located.

Fees: Get Every Charge in Writing

The base management fee is only part of what a manager can charge. List each one, with an amount or formula, and say which ones are optional.

Fee type	What to specify
Management fee	Percentage of collected rent (not scheduled rent), or a flat monthly amount
Leasing / tenant-placement fee	Flat amount or portion of one month's rent; commonly around half to a full month's rent
Renewal fee	Flat amount per renewal, or none
Maintenance coordination	Whether the manager adds a markup or charges a supervision fee on repairs
Vacancy fee	Whether any fee applies while the unit is empty (many owners negotiate this to zero)
Setup and inspection fees	One-time onboarding fee; charge per inspection
Early termination fee	Amount, and whether it applies if the manager is at fault

For a sense of range, one 2022 survey of 722 property-management branches found an average advertised management fee of about 8.5% of rent (range roughly 3.75% to 14%) and an average tenant-placement fee of about 70% of one month's rent. That is advertised pricing from a private survey, not regulator data, so use it as a starting point for negotiation rather than a benchmark. Also decide which tenant-facing fees (application fees, late fees) the manager may charge, and who keeps them. Fees charged to tenants should be authorized by you as the owner.

Trust Accounts, Security Deposits and Owner Draws

Two questions decide most deposit disputes: where the money sits, and who is answerable for it.

• Require that rent and security deposits be held in a trust or escrow account separate from the manager's operating funds. Commingling owner money with the manager's own is prohibited under licensing rules in states such as Texas, and California's Business and Professions Code requires a broker holding others' funds to deposit them in a trust fund account.
• State how often you get paid (for example, by the 10th of each month) and what the manager may deduct before paying you.
• Deposit holding, return deadlines and itemization rules are set by state or local law and differ significantly. Write that the manager will comply with them, and specify who is responsible if they don't.

Maintenance and Repairs: Set the Approval Threshold

This is the clause that most affects your day-to-day cost.

• Approval limit. The manager may authorize routine repairs up to $[AMOUNT] per item without asking. Anything above needs your written approval. (Pick a number that matches your property. There is no standard.)
• Emergencies. Define them: active water intrusion, no heat in winter, gas leak, fire damage, anything threatening safety or security. Allow immediate action, but require notice to you within a set time, such as 24 hours.
• Vendors. Say whether the manager may use their own maintenance staff or affiliated companies. If so, require disclosure of the relationship and any markup, and reserve your right to get a competing quote on larger jobs.
• Invoices. Require copies of vendor invoices with the monthly statement.

Leasing, Screening and Fair Housing

Say who finds tenants, what screening criteria will be applied, and who signs the lease (usually the manager as your agent, in your name). Require written, consistent screening criteria applied to every applicant, and require the manager to comply with fair housing laws in advertising, screening and lease enforcement. These laws apply to how tenants are treated regardless of who is doing the work, so a contract clause committing the manager to compliance is the minimum. For the lease itself, see our residential lease template and, for non-residential property, the commercial lease guide.

Insurance, Indemnity and Liability

Ask for proof that the manager carries general liability and errors-and-omissions coverage, and require them to keep it in force for the life of the agreement. Add an indemnity clause covering claims caused by the manager's negligence or breach, and be aware that a manager will ask for the reverse for claims caused by the property's condition. You should also confirm your own landlord policy covers the arrangement. Standard clauses are covered in our vendor agreement template.

Reporting, Records and Access

Require a monthly statement showing rent collected, expenses paid, fees taken and the amount sent to you, plus a year-end summary for your tax preparer. Say who owns the tenant files, leases, applications and keys, and that they are delivered to you promptly on termination.

Term and Termination

• Term. A one-year term that renews automatically is common. Make sure you can exit renewal without a penalty.
• Notice. Set the notice period for termination without cause, such as [30] days' written notice, and a shorter cure period for termination for cause (missing an owner payment, commingling funds).
• On exit. The manager delivers all funds held, the deposit ledger, keys, leases and records within [DAYS] days, and you agree to keep leases in place and pay fees for tenants already placed.

Property Management Agreement Template (Copy This)

PROPERTY MANAGEMENT AGREEMENT

This Agreement is made on [DATE] between [OWNER NAME] ("Owner") and
[MANAGER NAME / COMPANY], License No. [LICENSE NUMBER] ("Manager").

1. PROPERTY. Manager is engaged to manage [PROPERTY ADDRESS] (the "Property").

2. TERM. [1] year from [START DATE], renewing for successive [1]-year terms
   unless either party gives [30] days' written notice.

3. MANAGER'S DUTIES. Manager will: advertise and lease the Property; screen
   applicants using written, consistently applied criteria and in compliance
   with fair housing laws; collect rent and deposits; coordinate repairs;
   inspect the Property [FREQUENCY]; enforce the lease; and keep records.

4. FEES. Owner will pay Manager:
   (a) Management fee: [__]% of rent actually collected.
   (b) Leasing fee: $[AMOUNT] / [__]% of first month's rent per new lease.
   (c) Renewal fee: $[AMOUNT] per lease renewal.
   (d) No other fees or markups unless agreed in writing.

5. TRUST ACCOUNT. Manager will hold all rent and security deposits in a
   separate trust/escrow account at [BANK] and will not commingle them with
   Manager's own funds. Deposits will be handled as required by [STATE] law.

6. DISBURSEMENTS. By the [10th] of each month Manager will send Owner all
   collected rent less fees and approved expenses, with an itemized statement
   and copies of vendor invoices.

7. REPAIRS. Manager may authorize non-emergency repairs up to $[AMOUNT] per
   item. Larger repairs need Owner's prior written approval. In an emergency
   threatening safety or property, Manager may act immediately and must notify
   Owner within [24] hours. Manager will disclose any interest in a vendor it
   hires.

8. INSURANCE. Manager will maintain general liability and errors-and-omissions
   insurance of at least $[AMOUNT] and provide proof on request.

9. INDEMNITY. Each party will indemnify the other for claims arising from its
   own negligence or breach of this Agreement.

10. TERMINATION. Either party may terminate without cause on [30] days'
    written notice, or for cause on [10] days' notice if uncured. Within
    [15] days of termination Manager will deliver all funds, records, keys and
    the deposit ledger to Owner.

11. GENERAL. Governed by the laws of [STATE]. Entire agreement. May be signed
    electronically.

OWNER: ______________________   Date: __________
MANAGER: ____________________   Date: __________

Common Mistakes

• Percentage of scheduled rent instead of collected rent. You end up paying a fee on rent the manager never collected.
• No spending cap. "Reasonable repairs" is not a number.
• Undisclosed affiliations. A manager who steers repairs to their own maintenance company should have to say so.
• Deposits with no accounting. Require the ledger, and make delivery on termination a specific deadline.
• Auto-renewal with a long notice window. Missing it means another year.

Draft the Agreement and Get It Signed

AiDocX's AI lease agreement generator and AI contract generator can draft a management agreement from a plain-language description of your property, fees and repair limits. Send it to the manager for e-signature and both parties get a signed record with an audit trail. Free to start at app.aidocx.ai.

FAQ

How much does a property manager charge?

Commonly a percentage of collected rent plus separate leasing and renewal fees. NARPM has described the typical management fee as eight to twelve percent of collected rent, but actual pricing varies with the market, the size of the portfolio and the services included.

Do property managers need a license?

In most US states, yes, a real estate license is generally required to manage property for others for a fee, with exceptions such as on-site residential managers in some states. Confirm the rule for the state where the property is located and ask to see the license.

Who is responsible if the manager makes a mistake?

The agreement decides. Require insurance, an indemnity for the manager's negligence, and clear approval limits. Without them, you may bear the cost of decisions you never authorized.

Can I fire my property manager?

Usually yes, on the notice the agreement allows, but check for early termination fees and for fees owed on leases the manager already placed. Negotiate both before you sign.

This guide is general information, not legal advice. Licensing, trust-account, deposit and fair housing rules vary by state and country. Consult a licensed attorney or your local real estate regulator before signing.