Vacation Rental Management Agreements: What To Include (+ Sample)

As a property manager, without a solid legal agreement with the property owner in place, you could leave yourself unprotected from bearing the cost of in-stay damages and accidents, and wrongful contract determination.

So, to avoid the risk of drawn-out disagreements and legal fees payouts, you need to clearly define roles, responsibilities, rates, and expectations.

This is why a vacation rental management agreement is crucial. It’s an irrefutable signed contract with clearly outlined clauses that protect property managers and owners.

But it can be overwhelming to know what to include, especially if you’re not a vacation rental legal specialist. To help, we’ve examined the core sections of a vacation rental management agreement to provide a free, fillable sample you can use to start protecting your business today.

RueBaRue is much more than a guest communication tool. We’re adding new owner communication functionalities to our platform, so you can build lasting relationships with your owners. To see how it works, book a demo now.

Why is it important to have a detailed vacation rental property management agreement?

Your vacation rental management agreement holds you and the property owner accountable for carrying out your responsibilities.

As your scope of work usually covers many aspects of the property’s operations, a detailed agreement states these in writing in the event of any issues, helping to avoid any confrontation or ambiguity between both sides.

As a legally-binding agreement, it protects you should the property owner fail to fulfill their obligations—for example, if a guest suffers injury or loss of personal property as a result of a wobbly stair banister the property owner failed to repair.

In this case, if scheduling repairs is clearly detailed as the owner’s responsibility in your agreement, then the owner (and not you) will be held liable if a guest claims as a result of the injury or loss.

While you may initially be able to work well in property management without formal agreements, your need for them will intensify as you expand your portfolio and learn how to grow your property management business.

What should a vacation rental property management agreement include?

We recommend that a vacation rental property management agreement include these nine sections.

1. Agreement summary

The agreement summary is an overview of the entire agreement, and highlights the most relevant information in your contract.

It’s an overarching summary that states the name of the parties involved, the property’s address, and any other relevant data you may want to include.

2. Contract duration

Contract duration clearly states how long the signed agreement will legally bind you and your property owner. It should outline the vacation rental management agreement’s start and end dates.

This section is important as it designates a set period over which you’ll be responsible for generating revenue for the owner.

We recommend avoiding short-term property management agreements. To ensure a steady income, it's a good idea to create at least a one-year contract with the opportunity to renew at the end of the term.

This boosts owner retention as owners are more likely to renew the entire agreement in the future.

3. Property manager’s responsibilities

Property management can range from a few simple responsibilities such as coordinating cleaning and guest changeovers, to overseeing the whole operation of the property.

Property manager responsibilities you might typically see in an agreement include:

4. Homeowner’s responsibilities

This section of the vacation rental agreement is where you can specify what the property owner is required to do.

Some property owners may not know exactly what functions you'll be performing as a property manager and which are still their responsibility, so outline this here. Some homeowner responsibilities might include:

5. Fees

An explanation of your property management fees allows you to provide an estimate of how much the management services will cost. It also allows you to outline your preferred fee structure.

For example, you can charge owners a fixed rate or a percentage of the total rental income (this is more common, and could be anything between 15% and 40%).

In this section you can also outline costs such as cleaning fees and a reserve fund. Your reserve fund can come in handy as it serves as readily-available cash to cover inevitable emergency repairs. With the permission of your property owner, you can access this to make same-day repairs as and when needed.

6. Reporting responsibilities

Your contract should state when monthly reporting is required (from you to the property owner) and what the report should include.

Your reports will likely function similarly to a monthly statement, keeping track of all ins and outs, including all maintenance payments, management fees, short-term rental income, and how much money remains in reserve.

But it doesn’t stop there. A section on reporting responsibilities allows you to show your homeowners the value you bring to their property and how well your property management strategies have paid off.

Your reporting should highlight how your roles and responsibilities are improving the listing’s performance on sales channels to drive an increase in revenue.

To do so, your report should include stats such as the number of bookings received each month, your guests’ average length of stay (LOS), and the RevPAR (average revenue per available room).

7. Termination

The section on termination provides a safety net for you in the event of your homeowner wanting to terminate the vacation rental agreement, so it should include some important notes.

  1. A termination notice must be given, along with a specified timeline. Your termination notice should be between 30 and 90 days. A notice period is crucial because it gives both the owner and the rental property manager enough time to make any necessary arrangements in the event of a termination.
  2. You may also want to include a cost for early termination. If the property owner decides to terminate the contract before it expires.
  3. This section needs to include a reason for termination. This protects both parties from misconduct such as fraud.
  4. The last provision should clearly state the obligations of both the homeowner and property manager when the contract is terminated. This allows both parties to transition smoothly without disrupting business after the termination.

8. Liability

A section on liability protects the property manager in the event of harm to the property or guest.

For example, if your guest has an unauthorized party during their stay that causes property damage—despite you taking all the precautions to avoid it, such as clearly stating the house rules—this section of the agreement ensures you won’t be held liable for any damages or injuries caused.

At the very least, a liability section should state your liability insurance policy terms and detail where your policy (and therefore responsibility) stops, and where the responsibility of the property owner and/or the guest begins.

9. Miscellaneous

You should also add a section to group together any other clauses you feel necessary. It can include clauses that cover both parties when it comes to legal details, as well as anything else that hasn’t been covered elsewhere in the contract.

You can read more about miscellaneous contract details here.

Sample vacation rental property management agreement

Here’s a sample of a vacation rental management agreement contract. Please note that this isn’t legal advice and shouldn’t be treated as such.

We recommend that you always seek legal advice before using any contracts for your business.

Vacation Rental Management Agreement
(Sample)

Agreement Summary.

This Vacation Rental Management Agreement (the “Agreement”) states the terms and conditions that govern the contractual agreement between [Property Manager] having its principal place of business at [Property Manager Address] (the “Property Manager”), and [Owner Property Title] (the “Owner”) of [Vacation Rental Property Address] (the “Property”) who agrees to be bound by this Agreement.

WHEREIN, the Property Manager offers management services in the field of [Rental field]; and WHEREIN, the Owner desires to retain the services of the Property Manager to render management services with regard to [scope of management services] according to the terms and conditions herein. NOW, THEREFORE, In consideration of the mutual covenants and promises made by the parties hereto, the Property Manager and the Owner (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:

1. Contract Duration

This Agreement shall begin on [start date] and continue for [time period]. (See section 6 for Termination particulars.)

2. Property Manager’s Responsibilities:

The Property Manager agrees that it shall provide its expertise to the Owner for all things pertaining to [Scope of management services] (the Property Management Services).

2.1 Pricing and Revenue Management: The Property Manager shall determine and manage all listing pricing and revenue

2.2 Listing Distribution Management: The Property Manager shall List the Property on appropriate short-term vacation rental channels, sync calendars, and manage reservations.

2.3 Reporting: (see section 6)

2.4 [Insert responsibility]: [Description of responsibility]

3. Owner’s responsibilities:

3.1 Maintenance: Owner shall be responsible for all costs and expenses associated with maintaining the Property in good, clean working condition. Failure by Owner to make or approve any item of maintenance, replacement or repair recommended by Property Manager within [time frame] days shall constitute a default by Owner of this Agreement. Owner agrees that items of maintenance, replacement or repair with respect to the Property which do not exceed $_______ may be made by Property Manager without prior approval of Owner.

3.2 Furnishings: Property must contain furnishings of high quality, style, and utility which are consistent with other accommodations being offered for short-term rentals in the general vicinity of the Property. Such furnishings shall include, but not be limited to, [insert furnishing types]. A list of required furnishings and amenities will be provided.

3.3 Replacing Furnishings: The, Owner will need to replace the following items as deemed necessary by Property Manager: [items to be replaced].

3.4 Insurance: Owner shall purchase and maintain during the term of this agreement a comprehensive public vacation rental liability insurance policy with minimum limits of $______ per person and per occurrence for personal injury, bodily injury, or personal damage or all combined, an adequate insurance (or replacement value basis if obtainable) of contents, furniture, fixtures and equipment contained in the unit to protect Owner from theft and other casualties. Owner shall deliver to Property Manager a certificate of insurance indicating liability limits and coverage each [time frame].

3.5 Indemnification: The Owner agrees to indemnify, defend, and protect the Property Manager from and against all lawsuits and costs of every kind pertaining to the Owner’s business including reasonable legal fees due to any act or failure to act by the Owner based upon the Property Management Services.

4. Fees

4.1 Compensation: In consideration for the Property Management Services, the Owner shall pay the Property Manager at [Payment Structure and Rate]. The Property Manager shall invoice the Owner once every [Invoice period] and such invoices shall be due and payable within [Invoices payable within period] days of the Owner’s receipt of the invoice.

4.2 Reserve fund: The Owner will provide Property Manager with $________ to be for used day-to-day operations and maintenance fees. In case of an emergency, Property Manager may make expenditures on behalf of Owner that Property Manager deems necessary to preserve the Property and prevent further damage.

4.3 Out of Scope Payments: Should any out-of-scope payments need to be added to any monthly invoice, the amount agreed upon by both Parties will be added to one of the amounts above.

4.4 [Fee Type]: [Brief description of fee purpose and conditions]

The (Property Manager) Company prefers that the payments be made as follows (include bank details):

_________________________________________________

The payment deadline for each monthly invoice is the last day of the current month.

5. Reporting

The Property Manager shall provide a report every [report period] and such reports shall include [report contents] to the best of the Property Manager’s knowledge.

6. Contract Termination:

6.1 Termination notice: Either Party may terminate this Agreement for any reason with [Days written notice] days written notice to the other Party.

6.2 Termination reason: A contract termination reason should be communicated with the contact information.

6.3 Early Termination Fee: If either Party terminates the Contract without prior notice, an early termination fee of $________ becomes payable by the Party.

In witness whereof the Property Manager and the Owner have entered into this Contract on the date first indicated above.

7. Liability

7.1 The Owner shall indemnify and hold Property Manager harmless from all damage suits in connection with the management of the Property and from liability from injury suffered by any person whomsoever, and to carry, at Owner’s expense, necessary vacation rental liability insurance in such an amount as to be adequate to protect the interests of the parties hereto, which policies shall be so written as to protect the Property Manager in the same manner and to the same extent they protect the Owner and guests, and will name the Property Manager as co-insured. The Property Manager also shall not be liable for any error of judgment or for any mistake of fact or law, or for anything which it may do or refrain from doing hereinafter, except in cases of willful misconduct or gross negligence.

8. Miscellaneous

8.1 Both Parties warrant that they have the power to enter into this agreement and have obtained all necessary approvals to do so.

8.2 Each party acknowledges that these documents contain the whole agreement between the parties hereto and that it has not relied upon any oral or written representations made to it by the other or its employees or agents. Nothing in this clause shall limit or exclude any liability for fraud.

Property Manager Company: (Signature)

Printed name:

Date:

Owner: (Signature)

Printed name:

Date:

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Vacation rental management agreements: The best way to protect your business

A vacation rental management agreement is a legally binding contract that provides an important layer of protection for both property owners and managers, protecting you from being held liable when you’re not at fault, and allowing you and your owners to clearly communicate your roles and responsibilities.

Also, a property management agreement establishes solid communication between you and your property owner right from the start, and lays out your duty towards guests too.

Finally, a good agreement starts and maintains an ethos of honest dialogue throughout your relationship—reducing the risk of confrontation, hefty bills, or legal wrangling in the future, and is the mark of any professional property management company.

RueBaRue is much more than a guest communication tool. We’re adding new owner communication functionalities to our platform, so you can build lasting relationships with your owners. To see how it works, book a demo now.

Vacation rental management agreements: Frequently asked questions

What is a vacation rental management agreement?

A vacation rental management agreement is a legally binding contract between property owners and property managers. The agreement holds property managers accountable for their scope of duties and protects their legal interests, and establishes clear and honest communication right from the start.

How long does a vacation rental management agreement typically last?

A vacation rental agreement typically lasts from six months to a year and is renewable to make continuing your relationship as frictionless as possible.

What should a vacation rental management agreement include?

A vacation rental management agreement should include a summary, the length of the contract, the property manager’s responsibilities, and those of the property owner.

It should also include details of insurance policies, fees charged, the property manager’s reporting responsibilities, and what to do in the event of contract termination or emergencies.

RueBaRue is much more than a guest communication tool. We’re adding new owner communication functionalities to our platform, so you can build lasting relationships with your owners. To see how it works, book a demo now.

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