What is the primary purpose of a management contract?

The primary purpose of a management contract is to establish a legal relationship between the property owner and the property management firm. This legal relationship delineates the rights, responsibilities, and obligations of both parties. It serves as a formal agreement outlining how the property will be managed, what services will be provided, and how management fees will be structured.

This contract is essential in ensuring clarity and reducing misunderstandings regarding expectations and duties. By putting everything in writing, it protects both the owner and the management company by providing a framework for resolving potential disputes and ensuring compliance with local laws and regulations.

While other options, such as providing tax benefits, appointing a representative, or securing funding for renovations, might be tangential outcomes or implications of a property management agreement, they do not encapsulate the fundamental role of establishing the contractual relationship that governs the management of the property.