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What should I read closely in a property management agreement before signing?

DoorKeeping team

3 min read

Read eight clauses closely: the term and renewal, termination and its fees, the repair spending limit, who holds security deposits and rent, who signs leases and sets rent, what reports you receive, who owns the records, and who pays if the manager makes a mistake. They decide most of what goes wrong, and each can be changed before you sign.

Term, renewal and the quiet auto-renewal

Find the length of the first term and what happens at its end. Many agreements renew by themselves for another year unless you give written notice a set number of days before the end. If that window is 60 or 90 days, missing it commits you to another year. Put the notice date in your calendar the day you sign.

Ask for a term no longer than you can live with. A first-year term with a clean exit lets you test the manager before you commit.

Termination: how you leave and what it costs

Look for three things: how much notice you must give, whether there is a termination fee, and whether the manager keeps earning after you leave. The last one is a trap in some agreements: a fee on any tenant the manager placed, for as long as that tenant stays, even after you ended the relationship. Ask that it be removed or capped at a stated period.

Also check the reverse: how the manager can end the agreement and how long you would have to find a replacement. The handover checklist shows what to collect when it ends.

Authority: spending, rent and leases

The agreement says what the manager can do without asking you. Three limits matter most. The repair approval limit is the amount the manager can spend without your yes; see setting a repair approval limit. Next, who sets rent and decides whether to renew. Last, who signs leases, and in whose name: the manager as your agent, or you. Say plainly that anything unusual, such as a lease longer than a year, a concession, or a tenant with a pet the building does not normally allow, needs your approval.

Money: rent, deposits and who holds what

  • Rent account: does rent go into your account, or into the manager's account first and then to you? If the manager holds it, ask how soon it is paid out.
  • Security deposits: who holds them, in what kind of account, and whether the deposit is moved to you if the agreement ends. Deposit rules are set by state law, so ask the manager to name the rule they follow.
  • Reserve: many agreements let the manager keep a reserve from your rent for repairs. Ask for the amount and how you get it back.
  • Late fees and other tenant charges: who keeps them, you or the manager?

Records, reports and liability

Ask what you receive and when: a monthly statement, a year-end summary for your tax preparer, copies of every lease, receipts and invoices. See how to read an owner statement. Then ask who owns the tenant files, leases and vendor records, and whether you get a full copy on request or only at the end. Without that clause, getting your own records back can turn into a dispute.

Finally, read the liability and indemnity wording. Many agreements require you to hold the manager harmless for most things, and ask you to add them to your insurance as an additional insured. Both can be reasonable, but you should know about them. Ask your insurance agent how your policy treats an additional insured and what the manager must carry themselves. The agreement is a contract, so for anything you are unsure of, ask a lawyer licensed in your state to read it.

Where DoorKeeping fits

DoorKeeping does not replace a manager or change an agreement. If you keep your own books in DoorKeeping at $2 per unit per month, your bank-matched rent and ledger give you something to compare each statement against, so you can check what the manager reports before the next month closes.

Sources

  1. California Business and Professions Code section 10131, read Oct 30, 2026
  2. IRS Publication 583, Starting a Business and Keeping Records, read Oct 30, 2026

Questions

Can I negotiate a property management agreement?
Yes. Term, termination fees, spending limits, reserves and reporting are commonly negotiable, and a manager who will not discuss any of them is information too.
Who should hold the security deposits?
It depends on your state's rules and your agreement. Ask the manager to name the rule they follow and where the money is held.
What is an auto-renewal clause?
A clause that extends the agreement for another term unless you give written notice before a deadline. Put the deadline in your calendar when you sign.

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