What to Look for in a Management Agreement

Dec 25th 2016

For many property owners, day-to-day operational demands get to be too much to handle alone. If you find yourself short on time, desire, or resources to handle the managerial duties that come with owning a property, it’s time to consider a property management company.

Once you’ve decided to seek help from a property management company, the next step is to create a Management Agreement that meets your needs. The right agreement will allow you to shift risk, increase efficiency, and even increase your profits.

There are a few primary needs that every Management Agreement should address. Let’s cover the basics to give you a good understanding of what you need to know!


Risk-shifting is one of the biggest factors in any Management Agreement. Adding indemnity and insurance provisions are a couple of ways to shift risk.

When it comes to insurance provisions, the quantity and difficulty of the services provided by the management company determine the policy. A policy’s limits tend to be higher in situations where the management company is taking on repairs, evictions, and marketing. (2) Conversely, policy limits may be lower when maintenance and rent collection are the only requirements.

An indemnity provision may protect the property’s owner from any third-party claims resulting from the management company’s negligence. Further indemnification may be appropriate in some special circumstances.


Carefully laying out the financial burden to be incurred by each party is an essential part of any Management Agreement. Provisions should address the financial targets the management company is expected to hit and clearly spell out how compensation is to be paid by the owner.


Your property management agreement should also specify the types of expertise to be provided by the management company. Expertise provisions should primarily address the most highly regulated areas of property ownership — eviction policies, marketing claims, and repair work.

Lender Cooperation

Before finalizing the Management Agreement, ensure it is in alignment with any loan documents attached to the property. For instance, if the terms of a loan require the use of a particular lease form, the Management Agreement must state the same requirement.

Lastly, talk through each area of concern — risk-shifting, expertise, money, and lender cooperation — with an attorney before finalizing your property management agreement. If you keep all of the above factors in mind, you’ll be able to lay the groundwork for a mutually beneficial relationship.

Property Management as it Should Be: New Vistas Corporation

New Vistas Corporation currently manages over 250 properties throughout New Jersey, Pennsylvania and New York. These projects consist of over 4,000 residential units, one million square feet of commercial space and over 200 retail stores. Our services are holistic, ranging from brokerage services to tenant screening and rent collection for portfolios of any size. Please visit our homepage to learn more.

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