The property management agreement is the contract that defines the relationship between a property manager and an owner-client. In Florida, where property management activities require a real estate license and where disputes between managers and owners can involve significant financial exposure, a well-drafted agreement is not a formality — it is a legal and operational necessity. A vague or incomplete agreement creates disputes; a clear, comprehensive agreement prevents them.
This guide covers the seven key provisions every Florida property management agreement must include, the Florida real estate licensing requirement for property managers, and how to present the agreement to new owner-clients.
1. Scope of Services
The agreement must clearly specify exactly what the property manager will and will not do. Ambiguity about scope is the single most common source of owner-manager disputes. The scope section should answer:
- Does the manager handle leasing, or only management of an existing tenancy?
- Does the manager coordinate maintenance, or just communicate requests to the owner?
- Does the manager handle evictions, or does the owner retain that responsibility?
- Does the manager handle accounting and owner distributions?
- What is included in the base management fee versus what is charged as an additional fee?
The clearer the scope, the fewer the disputes. If something is not in the scope, it is not the manager's responsibility.
2. Management Fee Structure
The fee section should itemize every fee the owner can expect to pay:
- Monthly management fee: Typically 8 to 12 percent of collected rent in Florida. The agreement should specify that this applies to collected rent, not scheduled rent.
- Leasing fee: Typically 50 to 100 percent of one month's rent for finding and placing a new tenant.
- Lease renewal fee: Typically $100 to $250 per renewal.
- Maintenance markup: Some managers add a percentage (typically 10 to 15 percent) to vendor invoices as a coordination fee. This must be disclosed.
- Eviction coordination fee: If the manager handles eviction logistics, this is typically a flat fee separate from the management fee.
- Annual inspection fee: If the manager performs periodic inspections, specify the fee.
3. Maintenance Authorization Threshold
The maintenance authorization threshold is the dollar amount below which the property manager can authorize and pay for repairs from the owner's reserve without prior approval. This provision exists because maintenance emergencies — HVAC failure, water intrusion, plumbing problems — cannot always wait for owner approval. Typical thresholds in Florida range from $300 to $500 per repair incident.
The agreement should specify that the threshold applies per incident, that the manager will document all repairs and provide receipts, and that the manager will notify the owner of all repairs within a specified period. For repairs above the threshold, specify whether verbal or written owner approval is required before the manager proceeds.
4. Owner Reserve Requirement
The agreement should require the owner to maintain a minimum balance in the property account to fund ongoing maintenance, repairs below the authorization threshold, and property expenses. A typical minimum balance requirement is $300 to $500. If the account balance falls below this minimum, the manager may be entitled to suspend non-emergency services until funds are replenished. This provision protects the manager from advancing funds on behalf of owners who are slow to fund the account.
5. Termination Clause
Both parties need a clear process for exiting the agreement. The termination clause should address:
- How much notice either party must give to terminate the agreement (typically 30 to 60 days)
- Whether the manager is entitled to a fee for tenancies that began during the agreement and continue after termination
- What happens to active tenant leases upon termination (they continue; the owner or successor manager takes over)
- The timeline for transferring tenant files, security deposits, and tenant funds to the owner
- Whether there is a fee for early termination
When a property management agreement ends, tenant security deposits held in trust must be transferred to the appropriate party in compliance with FL Stat 83.49. The tenant must be notified in writing of any change in the entity holding the deposit and the new account information. Failure to properly transfer deposits creates liability for both the manager and the owner.
6. Liability and Indemnification
The agreement should specify the scope of the manager's liability to the owner. A property manager who acts within the scope of their authority, follows the owner's instructions, and exercises reasonable professional judgment should not be liable for outcomes that result from the owner's own decisions or from circumstances outside the manager's control. Typical provisions include:
- The manager is not liable for owner decisions made against the manager's written professional advice
- The owner indemnifies the manager for claims arising from the condition of the property or from the owner's failure to fund required repairs
- The manager carries appropriate E&O insurance and the owner carries appropriate property and liability insurance
7. Florida Licensing Disclosure
Florida requires a real estate license to perform property management services for others for compensation when those services include leasing property or negotiating leases. The agreement should acknowledge the manager's licensure status (broker or licensed under a broker), the name of the brokerage, and the license number. This disclosure is both a legal requirement and a professional practice that builds owner confidence.
Walk new owner-clients through the agreement section by section at the initial meeting. Explain what each provision does and why it is there. Owners who understand the agreement are more likely to respect its terms, less likely to make unexpected demands outside the scope, and more likely to fund the reserve account properly. The time invested in a thorough onboarding conversation pays dividends throughout the management relationship.
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A well-drafted property management agreement protects the manager, sets clear expectations for the owner, and prevents the most common sources of dispute in the management relationship. For related topics, see the guides on Florida property manager legal responsibilities, Florida tenant screening best practices, and how to audit your Florida property insurance portfolio.