Definition
A Property Management Agreement is a written contract between a property owner (landlord) and a licensed real estate agent that authorises the agent to manage a rental property on the owner’s behalf. The agreement outlines the services the agent will provide, the management fees charged, and the responsibilities of both the landlord and the agent.
In New South Wales, property management agreements are regulated under the Property and Stock Agents Act 2002 (NSW). This agreement formally appoints the agent to perform tasks related to the leasing and ongoing management of the property, including tenant communication, rent collection, inspections, and maintenance coordination.
Where Property Management Agreements Apply
Property management agreements are commonly used when landlords appoint a licensed real estate agency to oversee the day-to-day management of a rental property.
Common situations where these agreements are used include:
Residential Rental Properties
Landlords often appoint property managers to handle tenant relations, rent collection, and property maintenance.
Investment Properties
Property investors frequently rely on agents to manage their rental properties, especially when they own multiple properties or live in a different location.
Long-Term Rental Arrangements
Properties rented under fixed-term or periodic tenancy agreements are often managed by agents under a property management agreement.
Interstate or Overseas Owners
Owners who do not live near the property commonly appoint local agents to manage the property on their behalf.
Services Typically Included in Property Management
A property management agreement outlines the specific services the agent will provide to manage the rental property.
These services commonly include:
Tenant Selection and Leasing
Advertising the property, conducting inspections, screening applicants, and preparing the residential tenancy agreement.
Rent Collection and Financial Management
Collecting rent from tenants, issuing receipts, and transferring rental income to the landlord after deducting agreed management fees.
Property Inspections
Conducting routine inspections during the tenancy and preparing condition reports.
Maintenance Coordination
Arranging repairs and maintenance when issues arise at the property.
Handling Tenant Communication
Managing tenant enquiries, requests, and notices throughout the tenancy.
Fees and Authority Under the Agreement
The property management agreement also specifies how the agent will be paid and what authority they have to act on behalf of the landlord.
Common provisions may include:
Management Fees
A percentage of the weekly rent paid to the agent for managing the property.
Letting Fees
A fee charged when a new tenant is found and a lease agreement is prepared.
Maintenance Approval Limits
The agreement may specify the dollar amount the agent can approve for repairs without seeking the landlord’s approval.
Trust Account Handling
Rental income is typically held in the agency’s trust account before being transferred to the landlord.
The agreement helps ensure that both the landlord and the managing agent clearly understand their roles and responsibilities in managing the rental property.