Property Management Agreement: Duties, Fees Template – Texas

Texas Property Management Agreement FAQ

What is a Property Management Agreement?

A Property Management Agreement is a legally binding contract between a property owner and a property manager or management company that defines the scope of services, responsibilities, and authority of the manager. It sets the framework for how the property will be operated, maintained, and rented out on the owner’s behalf. The agreement typically details how rent will be collected, how tenants will be managed, and how maintenance and repairs will be handled. It also specifies the manager’s compensation, reporting duties, and the duration of the contract.

In short, a Property Management Agreement ensures that both the owner and the manager understand their roles and expectations, providing clear rules for day-to-day management and helping prevent misunderstandings or legal disputes.

When to use a Property Management Agreement?

A Property Management Agreement should be used whenever a property owner hires another person or company to manage their property on their behalf. This includes situations where the manager is responsible for collecting rent, handling maintenance, finding or screening tenants, or overseeing daily operations.

The agreement is especially important if the manager has access to the owner’s funds or authority to make decisions regarding repairs, leases, or evictions. Having a written contract helps define the scope of responsibilities, prevent misunderstandings, and protect both parties legally.

Even if you’re working with someone you trust, a Property Management Agreement ensures that every term — from fees to termination rights — is clearly documented and enforceable.

What should be included in a Property Management Agreement?

A well-drafted Property Management Agreement should clearly outline all essential terms to protect both the property owner (or association) and the management company. It should include the following key components:

• Parties involved: Identify the property owner or association and the management company entering into the agreement.

• Property description: Specify the exact property or properties covered by the agreement.

• Scope of services: Detail the manager’s responsibilities, such as budgeting, financial reporting, maintenance oversight, staff supervision, regulatory compliance, and tenant or owner communication.

• Fees and payment structure: Explain how management fees are calculated — whether as a flat rate, a percentage of rent or assessments, or separate charges for specific services.

• Term of the agreement: Define the length of the contract, renewal terms, and any automatic extensions.

• Termination provisions: Describe how either party can end the agreement, including notice periods and valid reasons for early termination.

• Insurance and liability: Outline required insurance coverage and include indemnification clauses to protect both parties.

• Dispute resolution: Specify how disputes will be handled — for example, through mediation, arbitration, or legal proceedings.

• Reporting requirements: Set expectations for financial statements, maintenance reports, and other updates, including how often they must be provided.

Together, these elements ensure that the agreement is transparent, enforceable, and fair to both sides.

Can a Property Management Agreement be changed after signing?

Yes, a Property Management Agreement can be changed after signing, but only if both parties agree to the modifications. Any changes — such as adjustments to management fees, responsibilities, or contract duration — should be made in writing through an official amendment or addendum to the original agreement.

Both the property owner and the management company must sign and date the amendment for it to be legally valid. Verbal agreements or informal promises are not enforceable and can lead to disputes.

It’s also good practice to review the original contract before making changes, as many agreements include specific clauses outlining how modifications must be handled. Keeping all amendments properly documented ensures clarity and legal protection for both parties.

How do renewal and extension terms work in a Property Management Agreement?

In a Property Management Agreement, renewal and extension terms define how the contract continues once the initial term ends. Most agreements run for a fixed period and include a clause explaining whether the contract renews automatically or requires written notice from either party.

An automatic renewal clause means the agreement continues for another term under the same conditions unless one party gives notice to terminate, usually 30 to 90 days before the expiration date. If the agreement does not renew automatically, both parties must sign a written extension or new agreement to continue the relationship.

Clearly outlining renewal and extension terms helps prevent misunderstandings, ensures continuity in management, and gives both the owner and the manager time to review performance and renegotiate terms if needed.