Quick Answer: How property management agreements are structured in Texas comes down to four parts: a TREC-licensed broker as the contracting party, a written scope of authority, a fee schedule tied to collected revenue, and termination terms. State trust account rules govern how rent and deposits are held, so the money provisions are set by regulation as much as by negotiation.
What Is a Property Management Agreement in Texas?
How property management agreements are structured in Texas starts with a simple fact: the contract hands day to day operating authority over a rental property from the owner to a management company, and in Texas it doubles as a brokerage agreement. Leasing real estate for someone else for compensation is regulated under the Texas Real Estate License Act. For owners from Dallas and Fort Worth to Houston, Austin and San Antonio, that second point drives more of the document than they expect.
Who actually signs a Texas property management agreement
The counterparty is a licensed brokerage. TREC’s guidance on whether a property manager must be licensed requires a license where the manager shows or leases the property for pay, or controls the acceptance or deposit of rent from a single-family resident, citing TRELA Section 1101.002(1)(A)(x).
Multifamily owners get a narrower carve-out than they think. On-site apartment managers are exempt under Section 1101.005, but TREC limits that to apartments. Condominium and townhome managers need a license, and the “on-site” test means an office at the property, not residence there.
So the leasing agent in your clubhouse may be unlicensed while the firm collecting your management fee cannot be. Check the broker license number on page one.
What Does a Property Management Contract Actually Cover?
A standard property management contract in Texas covers six areas: appointment and term, scope of authority, owner obligations, compensation, funds handling and reporting, then indemnification and termination. Most disputes trace back to the authority and compensation articles.
Authority limits are the clause owners skim
Your agreement should name a dollar threshold above which the manager needs written approval before spending, and define “emergency” rather than assuming it. The same article decides who signs leases, approves concessions, selects vendors and files evictions. Vague authority language is how an owner learns about a $14,000 chiller replacement from a monthly statement.
The owner manager agreement decides who employs your on-site team
Here’s the question that separates multifamily property management from single-family work. On-site payroll is the largest controllable expense at an apartment community, and the agreement has to say whether leasing consultants, maintenance techs and the community manager work for the owner or the management company.
Most institutional agreements make them the manager’s employees and reimburse payroll, taxes and benefits at cost from property funds, under a named schedule. Silence on payroll burden becomes an argument at the first budget review.
How Are Property Management Fees Structured in Texas?
Property management fees in Texas are usually a percentage of collected revenue: roughly 8% to 12% for single-family and small portfolios, dropping to 4% to 7% or a flat $75 to $125 per door on larger multifamily assets, according to 2026 industry fee surveys.
| Fee model | Typical range | What it is charged on | Effect on the owner |
|---|---|---|---|
| Percent of collected revenue | 4% to 12% | Money actually received | Manager paid when you are paid |
| Percent of gross potential rent | 3% to 6% | Scheduled rent, occupied or not | Owner absorbs vacancy and bad debt |
| Flat per unit per month | $75 to $125 per door | Unit count | Predictable, favors higher rents |
| Base plus incentive | Lower base plus NOI bonus | Performance thresholds | Ties pay to results, harder to audit |
Collected revenue versus gross potential rent
One word changes the number. Take a modeled 200-unit community at $1,200 gross potential rent per unit, so $240,000 scheduled each month. At 93% collections, receipts are $223,200. A 4% fee on gross potential costs $9,600 a month; on collected revenue, $8,928. That is $8,064 a year, decided by a single defined term. Ask which basis a quote uses before comparing proposals.
Fees beyond the monthly management fee
Leasing fees commonly run 50% to 100% of one month’s rent in the single-family market, with renewals around $150 to $300, onboarding up to roughly $750, and maintenance markups of up to 15% on contractor invoices. A construction supervision fee on capital projects is standard too, so confirm whether it applies to full project cost or approved scopes.
What Does Texas Law Require Your Management Agreement to Address?
Three statutory obligations sit underneath every Texas management agreement: trust money handling, tenant disclosure of ownership and management, and security deposit accounting. None are negotiable, and your contract should track them.
Trust money is the strictest. Under TREC Rule 535.146, funds must reach a designated trust account by close of business the second working day, cannot be commingled with the broker’s own money, and require a monthly accounting of trust money whenever the account has activity. Tie reporting deadlines to that cycle so owner financial reporting and the trust accounting agree.
Chapter 92 of the Texas Property Code adds two more. Section 92.201 requires disclosure of the record title holder and, where an off-site entity manages the dwelling, the management company’s name and street address, in writing within seven days of a tenant request. Section 92.103 gives 30 days after surrender and a forwarding address to refund a deposit or itemize deductions, with bad-faith retention exposing the owner to triple damages plus $100 and attorney’s fees.
Eviction authority deserves a fresh look. Senate Bill 38 took effect January 1, 2026, rewriting how notices to vacate may be delivered, requiring a sworn petition, and setting trial 10 to 21 days after filing. Electronic delivery is permitted only where the lease authorizes it, so lease form and agreement need to match.
Termination, notice and what transfers back
Most agreements run one year, then renew month to month, with 30 to 60 days written notice for termination without cause. Termination for cause should be defined rather than implied.
Pin down the exit mechanics while everyone is friendly. Deposits, resident files, keys, vendor contracts and the final accounting all have to move, and a stated handover window prevents a gap in day to day property operations.
Frequently Asked Questions
1. Does a property manager have to be licensed in Texas?
Yes, in most cases. TREC requires a license when the manager shows or leases property for an owner for compensation, or controls the acceptance or deposit of rent from a single-family resident. On-site apartment managers are exempt under Section 1101.005. Condominium and townhome managers are not.
2. What is a typical management fee in Texas?
Single-family and small portfolio management generally runs 8% to 12% of collected rent. Larger multifamily assets price at 4% to 7% of collected revenue, or roughly $75 to $125 per unit each month, because cost per door falls as unit count rises.
3. How long is a standard property management agreement?
Initial terms are usually 12 months, followed by automatic month-to-month renewal. Termination without cause commonly requires 30 to 60 days written notice from either party. Confirm whether an early termination fee applies, and whether it is flat or the fees remaining on the term.
4. Can a property manager hold my rent in their business account?
No. TREC Rule 535.146 requires trust money to sit in a designated trust account and prohibits commingling with the broker’s own funds. Paying operating expenses from a trust account is prima facie evidence of commingling. Deposits are due by close of business the second working day.
5. What should I check before signing a Texas management agreement?
Five clauses decide most future disputes:
- The broker license number and the entity actually contracting with you
- Whether the fee is charged on collected revenue or gross potential rent
- The spending threshold requiring owner approval, and how emergencies are defined
- Who employs the on-site team and which payroll costs are reimbursed
- Notice period, termination triggers, and the handover list at exit
Conclusion
The structure of a Texas management agreement is not only a commercial question. Licensing, trust accounting and Chapter 92 set the floor; negotiated terms sit on top. Owners who read the authority limits, the fee basis and the exit clause as closely as the headline rate avoid the arguments that cost an operating year. AAM Living manages market-rate apartment communities across Texas on those terms.
