Cancelling Your Property Management Contract: A How-To Guide

As a rental property owner, there may come a time when your property management arrangement no longer meets your needs. While no one wants to find themselves in a position where they need to cancel a property management contract, the reality is that it can happen. In this article, we’ll walk you through what’s typically included in a property management agreement, the most common reasons for ending one, and the steps to take for a smooth and professional termination—along with your options moving forward.

Key Takeaways

  • A property management agreement outlines the roles, fees, and expectations between the owner and manager.
  • Contracts can be terminated due to poor performance, financial issues, or changes in ownership or strategy.
  • Terminating a contract involves reviewing the agreement, giving written notice, and collecting all records.
  • Most property management companies include a termination clause specifying the required notice period (commonly 30 to 90 days) and any associated fees. It’s crucial to review this section to understand your obligations before initiating termination. (SJA has a ‘Easy No Fee Cancellation Guarantee’ plus 7 other guarantees.)
  • After cancellation, owners must decide whether to self-manage or hire a new property management company in Seattle.

What is a Property Management Agreement?

A property management agreement is a legally binding contract between a property owner and a property management firm. It outlines the responsibilities and obligations both parties hold to ensure the effective management of the property. The contract explains how the property manager will run the daily operations at the property.

Essential Elements of a Property Management Agreement

A typical property management agreement will include:

  • The full scope of the service provided by the property management company, including tenant screening and leasing, rent collection, handling tenant complaints, managing vendor contracts, and more.
  • Owner’s responsibilities
  • Management fees and compensation
  • Length of the agreement
  • Termination clause
  • How financial matters are handled

The agreement will also lay out how different situations that may come up will be handled during the property management process. This could include everything from emergency repairs and tenant communication to evictions and canceling your property management contract. Your contract should provide you with a full scope of all the services provided by your property management company. If you have any questions about your property management services, your contract should be able to give you the answers you need.

Reasons to Terminate a Property Management Agreement

When a new client comes to us from a previous management firm, there are a few common reasons we hear that property owners terminate their property management contract.

One of the reasons that comes up most often is unsatisfactory performance by the property management firm. Property owners can be unsatisfied with the service for many reasons including failure to maintain the property, prolonged vacancies, and poor communication with tenants and the owners. When a property manager does not live up to their obligations in the contract, it can affect the profitability of the property.

Financial disputes can also result in the termination of a property management contract. If there are hidden fees, improper use of funds, or discrepancies in financial reporting can chip away at the trust between a property owner and the property management company. These types of financial inconsistencies need to be addressed immediately, and can result in the dissolution of the contract.

Finally, a change in property ownership or management strategies can require the termination of a property management agreement. When new property owners come on the screen, they may prefer to work with a different property management company with their own management style. Or they may choose to self-manage their property independently.

Knowing these reasons can help you start to navigate the termination process efficiently and effectively.

What’s the Difference Between Owner and Property Manager Termination

It is quite rare that a property management company terminates a contract, but it does happen. When a property manager terminates a contract, it is most often because they are dealing with an uncooperative or abusive property owner. For example, if an owner cant be reached or refuses to approve necessary repairs it makes managing the property extremely difficult. In this case, it may be best for the property manager to cancel the contract.

Unrealistic expectations is another reason why property management companies may cancel a contract. If owners continually expect services beyond the agreed scope, property managers might decide to protect their reputation and their time by cancelling the contract.

6 Steps to Cancelling Your Property Management Contract

If you need to cancel your property management contract, there are steps you can take to ensure a smooth cancellation process.

Step 1: Review Your Contracts Cancellation Policy

Before you do anything else, take some time to review your contract’s cancellation policy. Every contract should include a cancellation/termination clause so taking the time to review it sets you up with all the information you need. The cancellation policy will include the allowable reasons for termination, the notice period, and any fees or penalties associated with early termination. Understanding this information is essential to ensure you have a smooth termination process. Reviewing your contract will help you know the steps you need to take to avoid breach of contract.

Step 2: Send a Written Cancellation Notice

Once you’ve taken the time to review your contract, next up is sending your property management firm a written notice of cancellation. The notice should include your intent to cancel the contract, the reason for cancellation, and outline your plan to adhere to the notice period as well as any applicable fees. It’s best to send this via certified mail or other trackable delivery methods to ensure you have a record of the communication in case any legal disputes arise.

Step 3: Ensure the Tenant is Informed

As you move from one management company to another, it’s important to keep your tenant in the loop. Because the property manager acted as your tenant’s main point of contact, your management company should notify them of the change of management. While it is the responsibility of your management company, it’s the property owner’s responsibility to verify that tenants have been informed of the change and provided all necessary details about the new management company. This will help you avoid confusion and ensure tenants know where they can direct their questions and any concerns.

Step 4: Plan for Termination Fees

It’s standard for property management contracts to include a fee for early cancellation or other associated costs. Understanding what these fees are beforehand enables you to plan and helps you avoid any unexpected expenses. Make sure you review the costs in detail and plan accordingly. When you have a clear understanding of your financial obligations, you can be prepared to pay all fees promptly and avoid further complications or delays.

Step 5: Collect Copies of All Records, Documents, and Materials

Before the cancellation is complete, collect all records and documents from the property management company. This includes everything from tenant leases and financial statements, to repair logs, and communication records. These documents will help ensure your next property management company can hit the ground running, or help you seamlessly continue managing the property on your own. This is another area you can refer to your contract—it should explicitly state what documentation the management company should hand over upon termination.

Step 6: Prepare to Self-Manage or Look for a New Property Management Company

As your property management contract starts to wrap up, the next step is to decide how to move forward. Do you hire a new property management company, or take on the responsibility of managing the rental yourself? Both choices have their pros, and the decision depends on your goals, time, and comfort level.

Manage the Property Yourself

Choosing to self-manage your property puts you in full control of your rental. You’ll be handling everything from leasing and tenant communications to maintenance and bookkeeping. For some owners, this hands-on involvement is a great way to stay connected to their investment. It’s important to understand that self-management is time-consuming and often involves some level of stress. You need to be able to answer the phone 24/7—and deal with whatever issue your tenant brings to your attention. Self-managing is also seen as a strong financial decision but it’s important to note that there are some hidden costs associated with self-managing your rental property.

Hire a New Property Management Company

Bringing in a new property manager can help take the day-to-day responsibilities off your plate. If you go this route, take the time to interview a few candidates. Ask about their communication style, management approach, and fee structure to ensure they’re a good fit. It’s also worth checking reviews and speaking with current or past clients to get a sense of their reliability and track record. A strong partnership can make a big difference in how smoothly your rental operates.

Working with SJA Property Management

Whether you’re reviewing an existing property management contract, preparing to cancel one, or exploring your next steps, it’s important to understand the process to protect your investment and keep your rental property running smoothly. From knowing what to expect in your contract to knowing when to cancel your contract, each decision plays a vital role in your rental property’s success.

If you’re looking for reliable, experienced property management in Seattle, SJA Property Management offers the trusted support and local expertise you need. Our team is here to make property ownership easier—so you can focus on the returns, not the stress.

Canceling a Property Management Contract FAQs

What is the difference between a lease and a management contract?

A lease is a binding agreement between a landlord and tenant outlining rental terms, while a property management contract is an agreement between a property owner and a management company to oversee the daily operations of the rental.

How do you terminate a property management contract?

To terminate a property management contract in Seattle, review the termination clause for notice periods and any fees. Typically, written notice—30 to 90 days—is required. It’s important to confirm the handover process for keys, documents, and tenant communication to ensure a smooth transition.

How does a property management contract work?

A property management contract outlines the scope of services a manager provides, such as tenant screening, rent collection, and maintenance coordination. It also details fees, communication protocols, and legal responsibilities.

How long is a standard property management contract?

In Seattle, a standard property management contract typically lasts 12 months, with options to renew automatically. Shorter or month-to-month agreements may also be available, but most contracts include a notice period for cancellation.