What is the purpose of a property management agreement?

A property management agreement serves as a crucial document that defines the relationship between a property owner and a property manager. By outlining the terms under which a property manager operates, this agreement specifies the scope of the manager's responsibilities, the authority they have, and the expectations of both parties.

When a property owner hires a property manager, it is essential to clearly delineate what tasks the manager is responsible for—such as tenant procurement, rent collection, property maintenance, and bookkeeping. The agreement will typically cover aspects like management fees, the duration of the management relationship, and the process for terminating the agreement. This clarity helps prevent misunderstandings or disputes between the property owner and the manager.

In contrast, setting rental prices, establishing lease agreements with tenants, or communicating with local government officials may be part of the property manager's responsibilities outlined in the agreement, but they do not encompass the primary purpose of the agreement itself, which is to govern the relationship between the property owner and the manager directly.