24 Questions to Ask When Evaluating a Property Management Contract

Don’t hire a PMC until you’ve read this!

Handing over property management responsibilities to a professional company is a significant decision for any landlord.

When done right, it streamlines operations and boosts returns. When done wrong, you’ll rue the day you ever chose to abandon self-managing.

The difference lies in asking the right questions.

For example, at the core of this partnership lies a document that often gets overlooked or skimmed over: the property management contract.

A poorly drafted or vague contract opens the door to hidden fees, disputes, and a lack of accountability.

On the flip side, a clear and comprehensive agreement acts as a roadmap for a successful landlord-PMC relationship.

This guide breaks down the critical aspects of property management contracts you should take a very close look at before you sign.

Why the Management Contract is Crucial

The property management contract is not just a document; it’s your investment’s first line of defense.

A well-crafted agreement clearly defines responsibilities for both parties, sets expectations, and ensures transparency. Without it, misunderstandings and unexpected costs become almost inevitable.

Fees and Charges

One of the most critical sections of a management contract is the fee structure. While the monthly management fee is typically the centerpiece, it’s not the whole story. Landlords need to analyze the full range of potential charges to avoid surprises.

Questions to Ask About Fees

• What is the monthly management fee, and what does it cover?
• Are there separate fees for tenant placement, lease renewals, or property inspections?
• How are maintenance costs handled? Are there markups on vendor invoices?
• Do you receive a portion of late payment fees?
• Are there any charges for vacant properties, such as vacancy fees?
• What are the fees related to evictions or handling past-due rents?

Why It Matters

A PMC with a low advertised management fee may compensate by including high-priced add-ons or hidden fees. For example, markups on maintenance work can dramatically increase costs over time.

By asking these questions upfront, landlords can compare PMCs more effectively and avoid unpleasant surprises.

Responsibilities and Expectations

A property management contract should clearly outline the responsibilities of both the landlord and the PMC. When roles are well-defined, it minimizes misunderstandings and ensures smooth operations.

Questions to Ask About Responsibilities

• Will the PMC handle all maintenance approvals, or will you be consulted? What is the threshold for requiring owner approval?
• Who selects vendors for repairs or improvements? Are you permitted to bring in your own contractors?
• Is the PMC responsible for ensuring code compliance?
• Does the contract specify responsibility for paying property taxes, utilities, or HOA dues?
• How are tenant disputes and legal matters managed?

Why It Matters

Undefined or vaguely described responsibilities can lead to disputes. For example, if the contract doesn’t specify who handles code compliance, you risk costly fines due to oversight.

A strong agreement ensures every task has clear ownership, making the partnership more predictable and productive.

Reporting and Communication

Another critical aspect of any management relationship is how and when updates are communicated. Property owners need a steady flow of information to make informed decisions and stay in the loop.

Questions to Ask About Reporting

• What types of updates will you provide regularly, and how will they be delivered?
• Will I receive alerts for major events, such as unpaid rent, tenant complaints, or maintenance emergencies?
• What are your response times for owner inquiries or urgent matters?
• Is there a portal or dashboard where I can check performance metrics or track maintenance progress?

Why It Matters

A lack of timely updates can leave landlords feeling in the dark. Imagine finding out about a major repair expense after it’s already completed or discovering tenant issues months too late.

Clear communication standards, outlined in the contract, keep things on track and allow you to make decisions before small issues become major problems.

Maintenance and Repairs

Maintenance clauses in the contract should explain how the PMC will handle property repairs. Since this is one of the most frequent sources of disputes, any ambiguity in this section is a red flag.

Questions to Ask About Maintenance

• What is the approval limit for repairs? At what dollar amount do they need your consent?
• Will the PMC provide multiple bids for large projects?
• How are repair requests documented and tracked?
• Will you receive detailed invoices showing labor, parts, and any fees or markups?
• How does the PMC verify that repairs have been completed to standard?

Why It Matters

Without transparency and accountability in maintenance processes, you could end up paying for unauthorized or low-quality work. For instance, if repair invoices do not include itemized details, you might unknowingly pay inflated costs.

A clear contract ensures effective cost control and quality assurance.

Termination Clauses

Even the best relationships can change over time, so it’s essential to understand the terms under which a contract can be terminated. A strong termination clause protects you from being locked into a failing partnership.

Questions to Ask About Termination

• Under what circumstances can the contract be terminated? Is cause required, or can you end the relationship without reason?
• How much notice is required for termination?
• Are there early termination fees?
• Does the PMC cooperate in transferring leases, records, and security deposits to a new manager?

Why It Matters

Termination clauses provide a safety net if the partnership doesn’t go as planned. For example, if the contract lacks provisions for a smooth transition, you may struggle to regain control of your property or switch to a new PMC.

Clarity in this area ensures the exit process is as painless as possible.

Final Thoughts

A property management contract sets the tone for your professional relationship with a PMC. It defines expectations, protects your rights, and ensures transparency in how your investments are managed. By carefully reviewing every clause and asking the right questions, landlords can confidently select a PMC that aligns with their goals.

What’s the first thing you look for in a PMC contract? Share your thoughts in the comments below!