What should I watch out for in a property management agreement?

The clauses that hurt owners are seldom the ones on the first page. The monthly fee and the leasing fee are easy to see and easy to compare. The damage usually sits in the middle of the document, in clauses about who keeps which money, how much the company can spend without asking, what rights it keeps after you leave, and what you are agreeing to indemnify. Those are the ones to read slowly.

This article is a watch list: the specific clauses I see cause trouble for owners in Keller, North Richland Hills and Fort Worth, grouped by what each one shifts onto you. The section-by-section guide to what to look for in a property management agreement covers the whole document, including the term and renewal language; here the focus is on the clauses that move money, authority and liability.

Clauses that quietly move money

Start with every sentence that mentions a fee, a percentage or the word "retain." The ones to find:

• Who keeps tenant charges. Late fees, pet fees, application fees and returned-payment fees are sometimes retained entirely by the company. That is a business choice, not a scandal, but it should be stated, because those charges can add up to a meaningful share of the company's income from your house.
• Vendor markups and referral income. Look for language allowing the company to add a percentage to vendor invoices, to receive payments from vendors, or to use an affiliated maintenance company. Any of these is acceptable only if it is disclosed and the number is written.
• Fees that survive termination. A leasing fee owed if the tenant renews after you leave, a commission if the tenant buys, a fee for the file transfer. Each should be specific and limited in time.
• Fees charged on a vacant house. Some agreements charge the full management fee whether or not rent is collected. Know which basis yours uses.

The guide to hidden property management fees lists the full set. The written quote should match the agreement line for line; if a fee appears in one and not the other, ask why.

Clauses that decide how much the company can do without asking

Every agreement gives the company authority to act for you. The question is how far that goes. Three places to look:

• The repair spending limit. Agreements usually set an amount the company may spend on a single repair without approval, with an exception for emergencies. Read the exception. "Emergency" should mean a condition threatening health, safety or the structure, not anything the company finds inconvenient to wait on.
• Tenant selection. Some agreements give the company sole discretion over approving applicants under its written criteria. That is normal and often protects you under fair housing law, but you should see the criteria before signing so you know what sole discretion means in practice.
• Rent setting, concessions and renewals. Confirm whether the company can lower the asking rent, offer a move-in special or sign a renewal without your approval, and within what range.

None of these is wrong on its face. A company needs room to operate, and an owner who must approve every filter change is not getting the benefit of management. What you want is limits in numbers, exceptions in plain words, and a record of every decision in your portal. The guide to who sets the rent, the owner or the manager covers the pricing side of this in detail.

Exclusive rights to lease, sell or refer

Because most management companies are also brokerages, agreements often include an exclusive right to lease the property and sometimes an exclusive right to sell it, or a commission if the house is sold to the tenant or to anyone the company introduced. An exclusive right to lease during the management term is reasonable; that is the job. An exclusive right to sell, or a commission on any sale during or after management, is a separate commitment that you should decide on separately.

Read the time limit. A clause that keeps a commission claim alive for a period after termination on buyers the company introduced is common and usually limited to a few months. A clause with no time limit, or one that claims a commission on any sale regardless of who found the buyer, is worth striking before you sign. If you may sell within a few years, this clause matters more than the monthly fee.

Indemnification, insurance and limits on liability

Most agreements ask the owner to indemnify the company, meaning to cover its losses and legal costs arising from managing your property. In general terms that is standard, because the company is acting as your agent and the house is yours. What you want is a carve-out: the indemnity should not cover losses caused by the company's own negligence or misconduct. Read for that exception. If it is missing, ask for it.

Also check the insurance clause. Agreements commonly require the owner to carry landlord liability coverage at a stated minimum and to name the company as an additional insured. Confirm your policy can do that before signing, because a requirement you cannot meet is a breach waiting to happen. Finally, look for any clause limiting the company's liability to the fees paid, or waiving claims after a short period. Those clauses exist and are generally enforceable in Texas when clearly written, so know what you are accepting. This is general information, not legal advice; a Texas real estate attorney can review the liability language in an hour and it is money well spent on a long agreement.

The owner duties you are signing up for

Find every sentence that begins with "Owner shall" or "Owner agrees." These are your obligations, and a breach by you can let the company terminate, keep fees, or decline to act. Typical ones include funding a reserve, paying invoices within a set number of days, disclosing known defects and any lead-based paint for older homes, keeping the mortgage and taxes current, complying with fair housing law, and not contacting the tenant directly about management matters.

Say you own a house in Fort Worth and the agreement requires you to approve or decline any repair quote within forty-eight hours, with silence treated as approval. That is workable if you check email daily; it is a problem if you travel for work. Negotiate the window or the default before signing, not after a quote has been deemed approved while you were on a flight. Perpetual's maintenance service page explains how approvals and spending limits work in practice, and the owner portal is where every quote and decision is recorded.

Five questions that surface the problems quickly

If you only have ten minutes with the agreement, ask these and check the answers against the text: What fees do you keep that the tenant pays? What is the repair limit and what counts as an emergency? Do you keep any rights after I leave? Does the indemnity exclude your own negligence? What deadlines does the agreement put on me? A company with a fair agreement answers each in a sentence and can point to the clause. One that answers with reassurance instead of page numbers has told you what you need to know.

How Perpetual handles this

Perpetual Property Management is broker-owned and local to Keller, North Richland Hills and Fort Worth, and I wrote the agreement to pass the test above. You receive the full agreement and a written quote listing every fee before you commit to anything, and I go through the repair limit, what happens to tenant charges, what you are indemnifying and what survives termination, clause by clause, so nothing in it is new on signing day.

Once you are on board, the authority the agreement grants is exercised in the open: every quote, approval, invoice and inspection report sits in your owner portal, monthly statements reconcile to the dollar, vendors are vetted and their invoices are what you see, and screening criteria are written and applied the same way to every applicant under a Texas-compliant lease. If you have an agreement from another company in front of you now, send it over and I will tell you plainly which clauses I would push back on.

The takeaway: The clauses to watch move money, authority or liability onto you without saying so in plain words; read every "Owner agrees" and every "retain," and ask for page numbers, not reassurance.

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