Understanding Property Management Agreements

A management agreement defines what the manager will do, what the owner will decide, and how money moves between them. Clarity at the start prevents most later disputes.

Scope of services

The agreement should list the services included, such as leasing, rent collection, maintenance coordination, inspections and reporting, and those that are excluded or charged separately.

Fees

Fee structures vary: a percentage of rent collected, flat monthly fees, leasing fees and charges for specific tasks. All should be stated in writing.

Authority and approval limits

Set a dollar limit above which the manager must obtain the owner's approval before commissioning work, with an exception for genuine emergencies.

Handling of funds

Ask how rents and deposits are held, how often funds are remitted, and what statements you will receive.

Regulatory status

Some activities, particularly leasing property on behalf of others for compensation, can fall within Ontario's Trust in Real Estate Services Act, 2002. Owners may reasonably ask any manager how its services are authorised.

Term and termination

Note the length of the agreement, the notice required to end it, and how records, keys and funds are returned.