What is a property management agreement?

A property management agreement is primarily a document that outlines the responsibilities and fees associated with managing a rental property. This agreement is essential for establishing the relationship between the property owner and the property management firm or individual hired to manage the property. It details the scope of services provided, which may include marketing the property, screening tenants, collecting rent, maintaining the property, and handling tenant relations.

Furthermore, the agreement typically defines the fees that the property manager will charge, whether it’s a flat fee or a percentage of the rental income. This clarity helps both parties understand their respective obligations and ensures that the property is managed effectively. Properly drafted property management agreements also include terms regarding the duration of management, termination conditions, and any legal compliance that needs to be followed, ensuring a formal and structured approach to property oversight.

In contrast, the other options do not align with the function of a property management agreement. A contract for selling property pertains to the sale process rather than management. A lease is primarily focused on the tenant-landlord relationship regarding occupancy terms, and a financial agreement for purchasing property deals with financing rather than management of property. Therefore, the second choice accurately represents the nature of a property management agreement.