Whether you own a building or are considering taking on the responsibility of becoming a property manager, a well-written property management contract is a necessity. You must include all relevant services and fees required for a long-term and beneficial agreement in the operation of the property. You also have peace of mind that all your financial and legal obligations are protected. Often, in the excluded service part of the contract, it is important to describe whether the owner or property management company is responsible for the costs associated with certain types of property upgrades, etc. An easy way to avoid misunderstandings is to offer a reserve fund in the contract that is useful for specifically excluded services. The property manager expects you to have the reserve fund ready and receive the required amount of money when signing the property management contract. A good property management contract establishes all the specific responsibilities for renting properties, managing the property and complying with local regulations regarding the land and tenants. There should also be a list of tasks that need to take place at the end and the time window in which they need to be completed. For example, the property management company must provide the owner with copies of all leases within 14 days of termination of the contract; or that all money owed to either party must be paid within 30 days of termination of the contract. You usually have to cancel between 30 and 90 days in advance to cancel the contract. Make sure the agreement also states that the property management company must give you at least 30 days` notice if they decide to cancel the contract.

The most fundamental element of control that an owner will have is the right to approve the budget for the operation of the hotel. The owner must maintain strict control over the budget process, and expenses must be made in a manner that is on budget once it has been approved by the owner. If, for any reason, the owner and the management company cannot agree on a budget within a reasonable time after its submission (which should be at least once a year), the parties should agree to separate and terminate the contract. The management company will often try to negotiate some form of lump sum compensation in the event of termination after no agreement on a budget. The owner may object to this and may feel that the management company could arbitrarily propose a much higher budget than necessary, knowing that the owner will not approve it. .