Understanding Your STR Management Agreement: What to Look For

A management agreement is the foundation of your relationship with a property management company. It defines what the manager will do, what it will cost, and how either party can end the arrangement. Before you sign anything, you should understand every key term and know what to look for, and what to watch out for. This guide walks through the most important sections of a typical STR management agreement so you can evaluate any contract with confidence.

What a Management Agreement Covers

A well-written management agreement should clearly define the scope of services, the fee structure, the responsibilities of both parties, and the terms for ending the relationship. It is a business contract, and like any business contract, the details matter. If something is not written in the agreement, do not assume it is included. A verbal promise from a sales meeting is not enforceable. What is in the signed document is what you can count on.

Here are the key sections you should expect to see, and the specific terms within each that deserve close attention.

Fee Structure: Percentage vs. Flat Fee

The most common fee model in STR management is a percentage of gross booking revenue, typically ranging from 15% to 25%. This aligns the manager's incentives with yours: they earn more when your property earns more. Some companies use a flat monthly fee instead, which can work well for high-revenue properties but creates misalignment on lower-performing ones, because the manager gets paid the same regardless of results.

Within the percentage model, pay attention to what "gross booking revenue" means in the contract. Does it include the cleaning fee? The platform service fee? HST collected? The definition of the revenue base directly affects how much you pay. A 20% fee on gross revenue including cleaning fees is meaningfully more than 20% on accommodation revenue only.

Also ask about the payment schedule. Most managers pay owners monthly, typically 10-15 days after the end of each month. Some pay bi-weekly. The agreement should specify the exact timing and method of payment.

What Is Included vs. What Costs Extra

This is where the most misunderstandings happen. The management percentage should cover the core services: listing management, guest communication, pricing optimization, booking management, and basic property oversight. But many additional services may or may not be included, and the agreement should be explicit about each one.

• Cleaning: Is cleaning coordination included in the management fee, or is there a separate coordination fee? Who hires and pays the cleaners? Is the cleaning cost passed through to guests via the cleaning fee, or does it come out of the owner's share?
• Linen service: Some managers provide hotel-quality linen service (laundered, pressed, and delivered). This is almost always an additional charge, typically $25-$50 per turnover. The agreement should state whether this is mandatory or optional.
• Maintenance: Routine maintenance coordination is usually included, but the cost of repairs and parts is the owner's responsibility. The agreement should define the manager's spending authority: how much can they spend on a single repair without your prior approval? A common threshold is $200-$500.
• Professional photography: Initial photography is often included as part of onboarding, but periodic re-shoots may be an additional cost.
• Deep cleaning and seasonal preparation: Beyond regular turnovers, deep cleans and seasonal prep (winterization, spring opening) are typically billed separately.
• Consumables and supplies: Toiletries, coffee, kitchen basics, and cleaning supplies. Some managers include a standard supply package in their fee; others bill these as pass-through expenses.

Contract Term and Minimum Guarantee Period

Most management agreements have an initial term, typically 6 to 12 months, followed by automatic renewal on a month-to-month or annual basis. The initial term exists because it takes time to optimize a listing: professional photography, listing optimization, review accumulation, and pricing calibration typically take 2-3 months to show results. An initial commitment period is reasonable; an excessively long one is a warning sign.

Look carefully at the renewal terms. Does the agreement auto-renew for another full year, or does it convert to month-to-month? Auto-renewal into long fixed terms can trap you in an underperforming relationship.

Cancellation and Termination Terms

This is arguably the most important section of the agreement. How can you end the relationship if things are not working?

A fair agreement should include a notice period for termination, typically 30 to 60 days. This gives the manager time to honor existing bookings and transition the property back to the owner. The agreement should specify what happens to bookings already confirmed at the time of termination. Are they honored by the outgoing manager? Transferred to the owner? Cancelled? What about the revenue from those bookings?

Watch for early termination penalties. Some agreements charge a fee if you leave before the initial term expires, which may be calculated as a percentage of projected revenue for the remaining term. This can amount to thousands of dollars. If the manager is confident in their performance, they should be willing to include a performance-based exit clause: if they fail to meet agreed-upon benchmarks, you can terminate without penalty.

Owner Use Restrictions

If you plan to use your property for personal stays, the agreement should clearly define how owner use works. Key questions include how much advance notice you must give to block dates, whether there are any restrictions on owner use during peak season, whether you are charged a cleaning fee for your own stays, and how owner use affects revenue projections and performance benchmarks.

A reasonable agreement allows owner use with advance notice (typically 30-60 days for peak season, shorter for off-season) without penalizing you for using your own property. Be wary of agreements that discourage or heavily restrict owner use, as this is your property and your right.

Insurance Responsibilities

The agreement should clearly state who is responsible for what insurance coverage. At minimum, the owner is typically responsible for property insurance that covers short-term rental activity, and liability coverage for guest injuries on the property. The management company should carry their own professional liability insurance and should be willing to provide a certificate of insurance upon request. The agreement should state that the manager will notify you if they become aware that your insurance has lapsed or may be inadequate. For more on STR insurance requirements, see our owner FAQ section on insurance.

Maintenance Authority Limits

The maintenance authority clause defines how much the manager can spend on repairs without getting your approval first. This is a balancing act: too low a threshold (say, $50) means the manager needs to call you every time a light bulb needs replacing, which slows down response times and creates unnecessary friction. Too high a threshold (say, $2,000) means you could face surprise expenses on your monthly statement.

A common and reasonable range is $200-$500 per incident for emergency repairs and routine maintenance, with anything above that requiring owner approval within 24 hours. The agreement should also define what constitutes an emergency that allows the manager to exceed the threshold, such as a burst pipe or a broken lock that compromises security.

Reporting and Transparency

You should expect monthly owner statements at minimum, and the agreement should specify what those statements include. A good monthly report shows gross booking revenue by channel, management fees deducted, cleaning costs, maintenance expenses with itemization, platform commissions, net owner payout, occupancy rate for the period, average nightly rate, and comparison to prior periods or projections.

Access to booking data and guest reviews should also be part of the agreement. You should be able to see who is booking your property, what they are paying, and what they are saying about their experience.

Red Flags to Watch For

Not every management company operates with the owner's best interests in mind. Here are the warning signs that should give you pause before signing.

No termination clause or unreasonable exit penalties. If a company makes it difficult or expensive to leave, ask yourself why they need to lock you in rather than earn your business through performance.

Hidden fees that are not disclosed upfront. If the agreement references "additional fees as needed" or "standard service charges" without defining amounts, insist on specifics before signing. Every fee should be enumerated and quantified.

No performance benchmarks. A manager who will not commit to any occupancy or revenue targets, even broad ones, may not be confident in their ability to deliver results. You do not need a guarantee, but you should expect a revenue projection and a willingness to be held accountable to it.

Vague maintenance authority. If the agreement gives the manager unlimited spending authority on maintenance or does not define approval thresholds, you are giving a blank check on your property's expenses.

Ownership of listing and reviews. Some agreements give the manager ownership of the listing, including reviews. This means if you leave, you start from scratch with zero reviews. The listing and its review history should remain your property. Make sure the agreement states this explicitly.

No provision for owner access to booking platforms. You should have read-only access to your listings on Airbnb, VRBO, and any other platform where your property is listed. If a manager refuses to grant you platform access, that is a transparency red flag.

Questions to Ask Before Signing

Before you sign any management agreement, get clear answers to these questions.

• What is the total cost I should expect per year, including all fees beyond the management percentage?
• What is the process if I am unhappy with performance after six months?
• Who owns the listing and reviews if I leave?
• What happens to confirmed bookings if we part ways?
• Can I see a sample monthly owner statement?
• What is your maintenance spending threshold before you need my approval?
• How do you handle guest damage claims?
• What is your average owner retention rate and average contract length?

A reputable management company will answer all of these questions openly and without hesitation. Evasive or vague answers are a sign to keep looking. For more on evaluating property managers, see our guide on self-managing vs. hiring a property manager, and for common questions about the management process, see our STR owner FAQs.