Thinking of hiring a property manager or property management company to help you run your vacation rental business? Before you take the plunge, make sure you have a short-term rental property management agreement ready.
This agreement is absolutely essential to protect both you and your property manager, so it’s in everyone’s best interest to have an up-to-date, thorough document.
Luckily, we’re here to help, with details on what your contract should include as well as a free template to get you started.
Don’t see the form to download our short-term rental property management agreement? Click here.
Disclaimer: Short-term rental management agreements are legally binding documents. Our template is not a substitute for legal advice, which we always recommend before entering into any legal agreement. Be sure to alter it for your individual needs and to reflect the local legislation and regulations in your area.
What is a short-term rental property management agreement?
A short-term rental property management agreement is a formal, written document signed by the property owner and property manager to regulate their relationship. It defines the duties of each party, how long the contract will last, and what happens if either party does not comply with the terms and conditions of the contract.
For this reason, it is crucial to protect both the owner and the manager in case anything goes wrong and there are any disputes or discrepancies.
Here’s what this type of contract typically looks like, to give you an idea:
Keep in mind that this kind of contract goes by many names, including short-term rental property management contract, vacation rental property management agreement, and vacation rental property management contract. Additionally, be careful not to confuse it with the vacation rental agreement, which is between the owner and guest of a short-term rental.
Who should sign the short-term rental management agreement?
The contract should define the parties entering into the agreement at the beginning of the document. In this case, the parties include the owner of the property and the property manager or management firm. It should also include the full and permanent address of both parties, either at the start or at the end of the agreement.
Why do you need a vacation rental management contract?
As a vacation rental owner, you’ll be faced with numerous things that could benefit your property, but aren’t strictly necessary. Vacation rental management agreements aren’t one of those things. A formal agreement is absolutely necessary for anyone who hires a property manager in order to provide:
- Clearly defined responsibilities: The agreement outlines the duties and responsibilities of both the property owner and the property manager, ensuring clarity on who is responsible for what tasks.
- Financial arrangements: It also specifies financial arrangements such as commission rates, rental fees, payment schedules, and handling of security deposits, ensuring transparency in financial matters.
- Legal protection: Establishing terms and conditions—including liabilities, insurance coverage, and dispute resolution procedures—is essential to protect both parties legally.
- Regulatory compliance: Finally, your contract will help ensure compliance with local regulations, zoning laws, tax requirements, and licensing obligations relevant to vacation rental properties, reducing the risk of legal issues.
At the end of the day, if you want your property manager to do their job professionally, you must begin your relationship professionally—with a formal contract in place.
How long will a vacation rental property management agreement last?
That’s up to you! The contract should stipulate the duration of the contract, under which circumstances parties can terminate, and the required notice period for termination.
Ensure that the notice period is not too cumbersome to allow you as the property owner to end the agreement if you are not entirely satisfied with the property manager’s results.
The usual notice period for this type of agreement is between 30 and 90 days on either side.
Other typical inclusions in the so-called termination clause would be, for example, giving the owner the right to cancel the contract if the property manager fails to find guests within a specified amount of time.
It also usually stipulates a period within which each party must pay the other any amount they owe them when the contract terminates early.
What should a short-term rental property management agreement contain?
Before you put pen to paper, take a look at the most important elements typically included in this type of contract. Contracts do vary considerably, but most of them will include the following basic components.
The address of the vacation rental property
The contract must state the full address of the property at the beginning of the document, including the region in which it is located.
The property manager’s responsibilities
This part of the property management service agreement should stipulate what services the property manager is expected to provide. This includes which exact services are included in the property management fees, any services available at an additional cost, and also which services are excluded from the contract.
Here it is important to note that some property managers may charge a lower fee initially, but could charge more for additional duties, such as paying the bills or dealing with the eviction of difficult guests. These costs add up and could increase the overall cost of the contractual fee considerably. The more specific the contract spells out the duties of the manager, and both parties for that matter, the better.
In the case of additional fees, the short-term rental management contract should also stipulate what these services may be and whether they’ll incur a flat rate or a percentage-based fee.
So, for example, many rental property management companies will exclude extensive refurbishment costs. Vacation rental managers shouldn’t typically exclude the cost of collecting rental revenue, cleaning fees, or booking fees.
The property owner’s responsibilities
This section of the vacation rental management contract describes which duties the property manager can expect the owner to perform, such as providing sufficient funds in a reserve fund to enable the property manager to cover costs related to maintenance or emergency repairs, for example.
Another key responsibility of the owner is to ensure that the property is sufficiently insured. The insurance agreement should also cover the property manager or company.
It’s also important to ensure that the owner is not responsible for finding tenants for the property. The contract may also restrict the owner from using the property themselves or allowing friends or family to use the property during its duration. If there are exclusions to this (for example, if the owner wants to use the property during a certain time of the year), you should state them explicitly in the agreement.
This is to ensure that the property manager is not expected to manage tenants who weren’t recruited through the agreed-upon process or lose out on their fee during this period.
Additionally, the owner is usually precluded from entering the property unless they notify the guest via the property manager beforehand.
Limitation of the property manager’s liability
The contract should feature a clause that protects the property manager from responsibility for damage caused by guests or contractors hired by the manager to perform specific duties, provided that the manager had taken “reasonable care” when hiring the third party or accepting the guest.
For example, the property manager should verify that guests don’t have a record of negative reviews.
Vacation rental management fee
The contract should, of course, include the property manager’s fees and how and when the owner will pay them.
Sample vacation rental property management agreement
Here’s a sample of what this type of contract typically looks like:
Looking for a customizable version? Scroll down to download our vacation rental property management contract template!
Before you sign on the dotted line…
This article should give you a starting point for your agreement. Download our property management service agreement template as a Word Document below. After downloading, complete the blanks and alter it to represent your circumstances and the features of your vacation rental. Then, consult a legal expert to ensure you haven’t missed anything.
In these cases, it’s always better to be safe than sorry. After all, a solid agreement could save you a lot of pain and money in the long run.
Download our vacation rental property management agreement template
Good luck with your property management agreement!
Don’t see the form to download our short-term rental property management agreement? Click here.
Disclaimer: Short-term rental management agreements are legally binding documents. Our template is not a substitute for legal advice, which we always recommend before entering into any legal agreement. Be sure to alter it for your individual needs and to reflect the local legislation and regulations in your area.
