A property management agreement is the document that decides how the next several years of owning your rental will feel. It sets who can spend your money and how much, how quickly you can leave if it isn’t working, and what happens when something goes wrong. Most owners read the fee line closely and skim the rest — which is unfortunate, because the fee is rarely the clause that causes regret.
This is a walkthrough of what to look for, clause by clause. It’s general information rather than legal advice: before signing, have a Vermont attorney review the agreement against your circumstances.
Clause by clause
Scope of services
The agreement should say plainly what the company will do, and by implication what it won’t. Look for named services — marketing, screening and placement, rent collection, maintenance coordination, inspections (with how many, and whether interior), monthly and year-end reporting, lease enforcement — rather than a vague promise to “manage the property.”
Anything you assume is included and isn’t will be an invoice later. Compare the wording against the scope the manager describes publicly, and ask about anything that appears in one place but not the other.
Fees, and what triggers them
Expect the common structure: an ongoing monthly management fee calculated on rent actually collected, plus a leasing fee when a tenant is placed. Then look for the specifics that structure alone doesn’t tell you.
- Is the monthly fee on collected rent or scheduled rent? Collected aligns the manager’s interests with yours.
- Does the monthly fee continue while the unit is vacant?
- Is there a lease renewal fee, and is it smaller than a new placement fee?
- Are vendor invoices passed through at cost, or marked up?
- Is there a minimum monthly charge, a setup fee, or an annual administrative fee?
Pricing legitimately varies by property, which is why any honest quote comes after someone has looked at yours. What shouldn’t vary is your ability to see every fee in writing before you sign. How Much Does Property Management Cost in Vermont? breaks the structure down further.
Term, termination, and what happens after
This is the clause to read twice. Check:
- The initial term, and whether it renews automatically.
- Notice required to terminate, and whether either side can terminate or only the manager.
- Whether there’s a termination fee, and how it’s calculated.
- Whether you can terminate for cause without penalty if the company doesn’t perform.
- What happens on exit — how quickly funds, records, keys, leases, and tenant contact information are transferred to you.
An agreement that’s hard to leave is a bet on everything going well. A reasonable one lets you go with fair notice, and treats your documents as yours.
Maintenance authority and spending limits
Your manager needs authority to fix things quickly; you need a ceiling on that authority. A well-drawn clause sets a dollar threshold below which repairs proceed without asking, requires your approval above it, and carves out a genuine emergency exception for situations affecting safety or the building itself — a burst pipe in February doesn’t wait for email.
Also confirm how vendors are chosen and paid, whether the manager or an affiliate performs the work (and if so, that it’s disclosed), and whether there’s a reserve held from your funds for repairs. The mechanics of that day-to-day work are described under maintenance and repairs.
Handling of rent and owner funds
Look for how tenant funds and owner funds are held and separated, when your monthly disbursement is sent, what your statements contain, and whether you get year-end reporting suitable for your accountant. Security deposits deserve particular attention: Vermont has specific requirements for how deposits are held, accounted for, and returned, and the agreement should be explicit about who is responsible for compliance. Confirm the details with a Vermont attorney, and ask a tax professional how the reporting you’ll receive fits your return. Rent collection and accounting covers what good reporting looks like.
Screening standards and fair housing
The agreement should confirm that applicants are screened against written criteria applied consistently to everyone, and should say whether you approve tenants or the manager does. Both arrangements are workable — but inconsistency isn’t, and this is exactly where fair housing exposure arises. Make sure the standard is documented, not improvised.
Liability, indemnification, and insurance
Read who indemnifies whom, and for what. Some indemnity language is normal; language that leaves you covering the manager’s own negligence is not. Check whether the manager carries liability coverage and errors and omissions coverage, and what the agreement requires of your policy — most managers ask to be named as an additional insured, which is standard.
Enforcement and legal proceedings
If a lease has to be enforced, the agreement should say who serves notices, who attends court, what’s included in the fee, what’s billed separately, and who pays attorney’s fees. Vermont’s landlord-tenant process has its own notice and procedural requirements, and vagueness here gets expensive quickly. See lease enforcement for how that work is typically divided.
A quick reference before you sign
| Reassuring | Worth questioning |
|---|---|
| Fees on rent collected | Fees on rent scheduled |
| Every fee itemized in writing | ”Additional fees as applicable” |
| Either party may terminate on notice | Only the manager may terminate |
| Clear repair threshold plus emergency carve-out | Unlimited spending authority |
| Vendor invoices at cost, markups disclosed | Silence on markups or affiliates |
| Written, consistent screening criteria | Screening left undefined |
| Records and funds returned promptly on exit | No exit provisions at all |
None of the items on the right are automatically disqualifying. They’re the ones to ask about — and a manager who answers them clearly is telling you something useful about how they’ll handle everything else.
We’re happy to walk you through our agreement line by line before you commit to anything, including the parts other owners ask hardest about. Call (802) 780-0780 or get in touch for a free rental consultation, and we’ll show you exactly what full-service property management covers on a property like yours.