A guide to your Massachusetts real estate management agreement

What is a real estate management agreement?

A real estate management agreement is a contract between a property owner, association, investor, or board and a property manager or management company. It explains what the manager is authorized to do, what services are included, how fees are paid, how money is handled, how maintenance decisions are approved, and how either party may end the relationship.
 

Types of real estate management agreements

Real estate management agreements can take various forms, depending on the scope of services, the property type, and the duration of the contract. Here are some common types:
 

Full-service management agreement 

In a full-service management agreement, the property manager assumes comprehensive responsibility for the property.

This includes everything from finding and screening tenants to handling maintenance, rent collection, and legal matters. Property owners who prefer a hands-off approach often opt for this type of agreement.
 

Leasing agreement 

A leasing agreement is more limited in scope, primarily focusing on tenant acquisition and lease administration. Property owners retain more control over day-to-day property management while delegating tenant-related tasks to the property manager.

Learn more in our article: Should I hire a management company for my rental property?
 

Maintenance and repair agreement 

This agreement specifically covers property maintenance and repairs. Property managers are responsible for confirming that the property is in good condition, and they coordinate and oversee any necessary maintenance work.
 

Consulting agreement 

In a consulting agreement, property managers provide advice and guidance to property owners, but they don't take an active role in management. This type of agreement is suitable for property owners who want to manage their properties independently but seek professional guidance.
 

Commercial agreement

Commercial properties, such as office buildings or retail spaces, often require specialized management. A commercial property management agreement outlines the unique responsibilities and expectations in managing these types of properties.
 

Residential agreement 

This is the most common type of agreement and covers residential rental properties, including single-family homes, multi-unit buildings, and apartments.
 

Elements of an effective agreement

While the specific terms and clauses in agreements can vary, there are several key components that should be included to support clarity and protect the interests of both parties.

• Identification of parties: Start by clearly identifying the parties involved: the property owner(s) and the property manager or management company. Include their legal names and addresses.
   
• Property description: Provide a detailed description of the property being managed. Include the property's address, type (e.g., single-family home, apartment complex), and any unique features or amenities.
   
• Term of agreement: Specify the duration of the agreement. Most real estate management agreements are for one year, but shorter or longer terms are possible. Outline any renewal options or termination clauses.
   
• Scope of services: Clearly define the property manager's responsibilities and services. This section should cover tenant screening, rent collection, maintenance, emergency response, and any other services provided.
   
• Fees and compensation: Detail how the property manager will be compensated. Common fee structures include a percentage of the monthly rent, a flat fee, or a combination of both. Include information on when and how fees will be paid. Learn more about average property management fees in Massachusetts.
   
• Termination procedures: Outline the procedures and conditions under which either party can terminate the agreement. This may include notice periods, reasons for termination, and any penalties for early termination.
   
• Insurance and liability: Specify insurance requirements for both parties. Property managers typically carry liability insurance, but property owners may need to maintain property insurance. Clarify how liability for damages or losses will be handled.
   
• Maintenance and repairs: Detail how maintenance and repairs will be managed, including the process for reporting issues, obtaining quotes, and authorizing repairs. Set a spending limit that requires property owner approval for larger repairs.
   
• HOA fee collection and deposits: Explain how fees will be collected from residents and when they will be remitted to the property owner. Address security deposits and how disputes or deductions will be handled.
   
• Resident screening: Describe the tenant screening process and criteria. Specify the property manager's role in drafting and executing leases, including fee increases and resident renewals.
   
• Accounting and reporting: Detail how financial records will be maintained and provided to the property owner. Regular financial reports should include income, expenses, and any outstanding issues.
   
• Conflict resolution: Establish a process for resolving disputes between the property owner and property manager. This may include mediation or arbitration clauses to avoid costly litigation.
   
• Additional provisions: Include any additional terms or provisions specific to your agreement. These could cover topics like property inspections, marketing strategies, or specific obligations unique to your property.
   
• Signatures: Both parties should sign and date the agreement, indicating their understanding and acceptance of the terms. Notarization may be required in some jurisdictions.

Real estate management agreement template

The following sample is only a simplified example. A real estate management agreement should be reviewed and customized by qualified counsel before use:
 

Real Estate Management Agreement

This Real Estate Management Agreement is entered into by and between [Owner/Association Name] (“Owner”) and [Management Company Name] (“Manager”) for the management of [Property Name and Address] (“Property”).

1. Term
   
   This Agreement begins on [Start Date] and continues until [End Date], unless renewed or terminated under this Agreement.
    
2. Management services
   
   Manager will provide property management services, which may include resident communication, 24/7 customer care services, rent or assessment collection, vendor coordination, maintenance coordination, financial reporting, budget support, inspections, and other services listed in Exhibit A.
    
3. Manager authority
   
   Manager may act on behalf of Owner for routine management matters described in this Agreement. Manager may not sign leases, approve major contracts, start legal action, approve capital projects, or spend more than $[Amount] on a non-emergency repair without Owner’s prior written approval, unless otherwise stated in this Agreement.
    
4. Maintenance and emergencies
   
   Manager may coordinate routine maintenance and repairs up to $[Amount] per item. In an emergency involving safety, habitability, property damage, or building systems, Manager may take reasonable action to protect the Property and notify Owner as soon as practical.
    
5. Compensation
   
   Owner will pay Manager [Fee Structure]. Additional fees, if any, are listed in Exhibit B. Manager will not charge fees not listed in this Agreement unless approved in writing by Owner.
    
6. Funds and accounting
   
   Manager will collect and deposit funds as authorized by this Agreement. Manager will provide financial reports on a [Monthly/Quarterly] basis. Owner funds, security deposits, reserve funds, and operating funds will be handled in accordance with applicable law and the account procedures described in Exhibit C.
    
7. Records and reporting
   
   Manager will maintain records related to management services, including invoices, work orders, owner communications, financial reports, vendor contracts, and other records required by this Agreement. Owner may request reasonable access to management records related to the Property.
    
8. Insurance
   
   Owner will maintain property insurance and any required liability coverage. Manager will maintain business insurance appropriate for its services. Vendor insurance requirements are listed in Exhibit D.
    
9. Legal compliance
   
   Owner and Manager will comply with applicable federal, state, and local laws. Manager is not providing legal, tax, insurance, or accounting advice unless specifically stated in a separate written agreement.
    
10. Termination
    
    Either party may terminate this Agreement with [Number] days’ written notice. Upon termination, Manager will provide a final accounting, transfer available records, and cooperate with a reasonable transition process.
     
11. Indemnification
    
    Owner and Manager will be responsible for their own acts, omissions, negligence, and willful misconduct as provided by applicable law and the terms of this Agreement.
     
12. Governing law
    
    This Agreement is governed by the laws of Massachusetts.
     
13. Signatures
    
    Owner: ___________________________ Date: __________
    
    Manager: _________________________ Date: __________

Real estate management agreement tips

1. Define authority in plain language

   A real estate management agreement should clearly state what the manager can do without additional approval. List ordinary duties separately from higher-risk actions, such as signing leases, approving large repairs, handling insurance claims, using reserve funds, or hiring contractors above a set amount. Clear authority language reduces delays while protecting the owner or board from surprises.
    

2. List every fee

   A real estate management agreement should identify recurring, one-time, and pass-through fees. That may include management fees, leasing fees, renewal fees, onboarding fees, inspection fees, technology fees, postage, administrative charges, project management fees, and vendor markups. If a fee is not listed, the owner or board may not expect it later.
    

3. Include a transition plan

   The end of the management relationship should not create confusion. A real estate management agreement should describe the final accounting, transfer of keys, vendor lists, leases, owner records, association records, bank access, digital portals, work orders, resident lists, insurance documents, and open projects. A clean transition protects both the property and the residents.
    

4. Match the agreement to the property type

   A real estate management agreement for a condo association should not look the same as one for a single-family rental, retail center, apartment building, or mixed-use property. Each property type has different risks, reporting needs, resident expectations, governance requirements, and maintenance responsibilities. The contract should match the property’s actual operations.
    

5. Get legal review before signing

   A management agreement is a legal contract, not just a service proposal. Owners, associations, and managers should have qualified counsel review the agreement before signing, especially when the property involves tenant deposits, association assessments, regulated housing, leasing authority, employment issues, large contracts, or complex insurance requirements. Legal review can help prevent disputes later.

Frequently asked questions

What is the standard term for a real estate management agreement?

The common standard term for a management contract is typically between one and five years, but this can vary depending on the specific needs and goals of the parties involved.
 

What is a management agreement between an owner and a manager?

A real estate management agreement is between a property owner and a manager who is hired to maintain the property. It is common for the manager to be paid a percentage of the total revenue generated from the property, plus fees for maintenance, leasing, and evicting tenants.
 

What is the most important aspect of property management?

Communication with owners and residents. One of the most important aspects of property management is maintaining good relationships with residents and owners.
 

What occurs when a property manager signs an agreement with an owner?

A property manager becomes an authorized representative when the property owner and manager execute a legally binding contract that details a manager's responsibilities and the owner's expectations regarding the property's managerial tasks.

Pro tip: check out our resource library for more information, tips, and resources on effective community management here!
 

Connect with the leading property management company

Real estate management agreements are vital documents that establish the framework for a successful property management partnership. They protect the interests of both property owners and property managers by defining roles, responsibilities, and expectations. When creating or entering into such an agreement, thoroughness, clarity, and open communication are essential to support a mutually beneficial relationship.

Before finalizing an agreement, it's advisable to consult with professionals who specialize in real estate to confirm that your contract complies with local laws and regulations. By doing so, you can embark on a property management partnership with confidence, knowing that both parties are on the same page and well-prepared for the responsibilities ahead.

This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.