Property management agreements: funds, maintenance, leasing, rents, and deposits

The agreement defines authority

A property management agreement identifies the owner, manager, property, term, compensation, reporting duties, and termination process. It governs the owner-manager relationship; the lease governs the landlord-tenant relationship. Applicable law can limit both agreements, and specific requirements vary by jurisdiction.

Funds and accounting

Define the owner's operating reserve, permitted disbursements, statements, and remittance of net proceeds. A reserve funds authorized property expenses; it is not an additional management fee. Keep money held for others separate from the manager's money. Commingling mixes funds; conversion uses another person's money without authorization. Separate accounts do not make unauthorized spending acceptable.

In Texas, rents and security deposits held for others are trust money. A sales agent must immediately deliver trust money to the sponsoring broker. Texas broker trust rules require documentary records and beneficiary accountings at least monthly when the account has activity. See 22 Tex. Admin. Code § 535.146.

Maintenance and leasing

State routine maintenance duties, spending limits, emergency authority, and procedures for obtaining additional owner funds. Scheduled filter replacement is preventive maintenance; fixing a failed faucet is corrective maintenance; a major addition is a capital improvement. Read spending limits with any emergency provision.

Define authority to advertise, screen applicants lawfully, negotiate rents, grant concessions, execute leases, and renew them. Rent collection authority does not itself establish lease-signing authority. Approved rent ranges and terms give the manager usable instructions.

Rents, deposits, and termination

Specify collection schedules, tenant ledgers, delinquency follow-up, and authorized enforcement. Distinguish rent due from rent collected. A fee based on collected rent uses actual collections as its base.

A security deposit secures lease obligations; receipt does not make it rent income. Record deposits separately, document condition, and support lawful deductions. Texas expressly requires accurate deposit records under Tex. Prop. Code § 92.106.

At termination, address final accounting, transfer of funds and records, and unfinished work. Ask: Whose money is it? What authority was granted?