What Should Be in a Property Management Agreement? 15 Clauses Montgomery County Landlords Should Check

Most rental owners sign a property management agreement, skim it once, and never look at it again until something goes wrong. Then every clause suddenly matters. Whether you are about to hire a management company for a rental in Montgomery County or you already have an agreement in a drawer, it is worth knowing which sections protect you most when a repair, a disagreement, or a tough tenant situation comes up.

Fees and Repair Costs

Start with how you are being charged. Find out whether the management fee is a flat monthly amount or a percentage of rent, and if it is a percentage, whether it is based on rent actually collected or rent simply due. That difference matters a great deal. If a tenant falls behind, a fee based on rent due means you can keep paying for management during months when you receive no income at all. Look at leasing and renewal fees side by side, too. Renewing a current tenant takes far less work than marketing, showing, and screening for a new one, so the renewal fee should be meaningfully lower than the leasing fee.

Maintenance costs deserve the same attention. Some companies add a markup to repair invoices, charge a separate coordination fee, or both. Neither is necessarily unreasonable, but you want the structure written down rather than discovered on your first owner statement. Ask directly what the markup percentage is and whether a coordination fee applies. Then check the repair approval threshold, which is the dollar amount the company can spend without contacting you first. If it is too low, you will get a call about every dripping faucet. If it is too high, a significant expense could be approved without your input. A reasonable middle number, with notice to you even on smaller repairs, works well for most owners.

Services, Reporting, and Insurance

Next, read what the fee actually buys. Two companies charging the same percentage can offer very different services. Does the agreement include routine inspections, and how often? Does the company coordinate maintenance or only approve it? Who handles lease violations? The only way to know is to read the list of included services rather than assume. The same goes for reporting. Look for specifics such as monthly statements, a year-end summary for your taxes, and access to an owner portal. Vague language like regular updates leaves too much room for interpretation. If the agreement does not spell out how quickly the company will respond to your questions or to an emergency, ask, because written commitments hold up far better than verbal promises made before you sign.

Insurance and liability are easy to skip and important to understand. Check what coverage the management company carries, whether you are required to name the company as an additional insured on your own landlord policy, and how responsibility is divided between you and the company if something goes wrong at the property.

The Termination Clause

The termination clause is arguably the most important section in the whole agreement. Look for the required notice period, often 30 to 60 days, how notice has to be delivered, and whether there is an early termination fee and exactly what triggers it. Then look at what happens to an active lease if you end the relationship. Will the current company keep collecting rent during a transition? Is there a clear process and timeline for handing over tenant records, security deposit funds, and lease documents? Vague language here is what turns a simple change of managers into a complicated one. Many agreements also renew automatically unless you cancel within a specific window. That is not a red flag on its own, but you should know the deadline and put it on your calendar the same way you would a lease renewal date.

Other Clauses Worth Checking

A few more clauses are worth a quick look. The dispute resolution section should say whether disagreements go to mediation or arbitration first and which state's law governs the contract. If you own more than one rental, check whether the agreement covers a single property or your whole portfolio, and whether adding a property later requires a new contract or a simple addendum. Confirm the company is authorized to market the property and use the photos and descriptions it creates. And if you have firm preferences on pets or occupancy, make sure the agreement reflects them rather than defaulting to the company's standard policy, because it is far easier to clarify that before a lease is signed than after.

"A property management agreement isn't just paperwork you sign to get started. It's the document that determines exactly what happens the day something doesn't go according to plan," says Felicia Kaminker, of LST Property Management.

Put simply, know how you are being charged, know exactly what is included, and know how to get out if you ever need to.

If you own a rental in Montgomery County, Gaithersburg, or the surrounding area and would like a second set of eyes on a management agreement, whether it is one you are considering or one you have already signed, reach out to LST Property Management for a no-pressure review. You can watch the full walkthrough of all 15 clauses in our LST Property Management video Property Management Agreement: 15 Must-Have Clauses.