San Diego Property Management Agreements: Clause by Clause

Reviewed by Brendan McKee, Managing Broker, DRE #01882732, on October 21, 2026.

A property management agreement is the contract that says what your manager may do with your San Diego rental, what you will pay, how your money is held and how either side can end the relationship. The clauses that matter most are the term and termination terms, the fee schedule, the manager's authority to sign leases and approve repairs, and how rent, deposits and reserves move through the broker's trust account. Read those before you sign, because anything not written down is open to dispute later.

Key takeaways

• California does not have one statute that requires every management agreement to be in writing, but a written agreement is required in some situations, such as authorizing a manager to lease for longer than a year (Civ. Code § 1624). Use one regardless.
• An agreement that makes the manager your only authorized agent must have a definite end date, or the licensee cannot claim a fee under it (Bus. & Prof. Code § 10176(f)).
• Every fee, including markups on repairs, should be written into the agreement. Undisclosed compensation is a ground for license discipline (§ 10176(g)).
• Rent and deposits a broker holds go to a trust account (unless paid to you or a neutral escrow), with a separate ledger for you (10 CCR §§ 2831.1, 2832).
• The termination clause decides what you owe and what you get back when the relationship ends. Read it first.

Is a written agreement required?

We found no California statute that requires every property management agreement to be in writing. What the law does say:

• Leases longer than a year. An agreement authorizing or employing an agent to lease real estate for longer than one year, or to find a tenant for such a lease, for compensation, is invalid unless it is in writing and signed (Civ. Code § 1624(a)(4)). A lease longer than a year signed by an agent is also invalid unless the agent's authority is in writing (§ 1624(a)(3)).
• Agreements that make the manager your only agent. Under Bus. & Prof. Code § 10176(f), a licensee may be disciplined for claiming a fee under such an agreement if it has no "definite, specified date of final and complete termination."

In practice, a written agreement that states fees, authority and how it ends protects both sides. Our guide to property manager licensing in California covers who may sign one: managing a rental for another person for pay requires a broker license (Bus. & Prof. Code § 10131(b)).

Term, renewal and termination

Term and renewal

Look for the start date, the length of the first term, whether it renews automatically, and how much notice stops a renewal.

Termination by you

Check the notice period either side must give, any termination fee (and whether it changes early in the term), and whether you can end it sooner for cause, with "cause" defined.

Tenant placement clause

Some agreements include a clause about tenants the manager placed. It may require a fee if you end management but keep a tenant the manager found, or if you take over the lease yourself. Read it carefully: it is part of the real cost of leaving. Our guide to switching property managers in San Diego explains how a clean handover works.

Authority: leasing, rent, repairs and emergencies

• Leasing authority. Whether the manager may sign leases on your behalf, for what terms, and whether you approve each tenant. Remember the written-authority rule for leases longer than a year.
• Rent setting. Whether the manager sets the asking rent, or proposes and you approve. Any rent must respect the state cap for covered rentals: 8.2% over 12 months for increases effective August 1, 2026 through July 31, 2027 in San Diego County (Civ. Code § 1947.12). As of October 2026, San Diego County is also under a state of emergency after Tropical Storm Rachel, so Penal Code § 396 generally bars advertising or charging rent more than 10% above the pre-emergency amount, including at turnover, stated through November 14, 2026; check whether it has been extended.
• Repair approval limit. A dollar amount the manager may spend on a single repair without your approval. You choose the figure; the agreement should state it.
• Emergencies. What counts as an emergency, whether the manager may exceed the limit to protect the property or the tenant, and how soon you are told.
• Vendors. Who does the work, and whether it must go to licensed contractors. See hiring licensed contractors for rental repairs.
• Legal notices and evictions. Who decides to serve notices, who hires an attorney, and who pays. In the City of San Diego, a termination notice that misses a step under the Tenant Protection Ordinance is void (SDMC § 98.0710), so the agreement should say who is responsible for preparing it.

Fees and compensation

The fee section should list every way the manager is paid. Common items include a monthly management fee, a leasing or tenant placement fee, a renewal fee, a setup fee, maintenance coordination or markups, a vacancy or minimum fee, and charges for special work such as court appearances or insurance claims. Our guide to San Diego property management fees explains each type.

Two rules make written disclosure important. A licensee may be disciplined for a "secret or undisclosed amount of compensation, commission, or profit" (Bus. & Prof. Code § 10176(g)). Markups are not illegal, but they should be stated. And any benefit a broker receives for where it places the trust account belongs to you by law, unless you give written permission otherwise (10 CCR § 2830).

Your money: trust account, reserves and statements

Trust account

A broker who receives rent or deposits for you must place them, within three business days, into a trust account, a neutral escrow, or your hands (10 CCR § 2832; Bus. & Prof. Code § 10145). The broker keeps a record of all trust funds, a separate ledger for each owner, and reconciles them at least monthly (10 CCR §§ 2831, 2831.1, 2831.2). One owner's money cannot be used to cover another owner's bills without the written consent of every owner with funds in the account (10 CCR § 2832.1). The agreement should name the account type and say whether interest applies. An interest-bearing account is used only at your request, and the interest cannot benefit the broker (Bus. & Prof. Code § 10145(d)).

Reserves

Some agreements ask you to keep a reserve balance so routine repairs can be paid without waiting for you. The reserve is your money held in trust, not a fee. The agreement should state the amount, when it is topped up, and when it is returned.

Distributions and statements

Look for when and how rent reaches you, and ask for a sample statement. The manager reports rent paid over to you on Form 1099-MISC; the threshold is $600 for payments made in 2025 and $2,000 for payments made in 2026. If you live outside California, the agreement should explain the Franchise Tax Board's 7% nonresident withholding. More in how a manager handles your money.

Security deposits

The agreement should say who holds the tenant's deposit, in which account, and who prepares the itemized statement due within 21 days after the tenant moves out (Civ. Code § 1950.5).

Risk clauses: insurance, indemnity and compliance

• Your insurance. An agreement may require you to carry landlord liability coverage and ask you to name the manager as an additional insured. Ask your insurance agent what that involves.
• The manager's insurance. Ask what coverage the manager carries and request a certificate. The agreement may not require it unless you ask.
• Indemnity. These clauses say who covers losses and legal costs in a dispute. They may run both ways, and may carve out the manager's own negligence or willful misconduct. Have an attorney read the wording.
• Compliance. The agreement should say who keeps leases, notices and disclosures current, for example the City of San Diego Tenant Protection Ordinance notice, or the exact single-family exemption statement under Civ. Code §§ 1946.2 and 1947.12 where your home qualifies. It should also state that both sides follow fair housing law, including the source-of-income protections in Gov. Code § 12955.

This is general information, not legal or tax advice. Confirm the details for your situation with a California attorney or tax professional.

What happens at the end

A good agreement lists what the manager hands over when it ends: current leases, the tenant ledger, the deposit accounting and funds, move-in photos, keys and access codes, vendor and warranty records, and the final owner statement. The broker must keep trust records and related documents for three years (Bus. & Prof. Code § 10148), so ask how you can request copies later. When a property changes managers, the tenant should get the new manager's contact and rent payment details within 15 days (Civ. Code § 1962). Our overview of San Diego property management shows how management works day to day.

Frequently asked questions

Does a property management agreement have to be in writing in California?

No single statute requires every management agreement to be in writing. California does require a written, signed agreement to employ an agent to lease property for longer than one year (Civ. Code § 1624(a)(4)), and an agreement that makes the manager your only authorized agent must have a definite end date for the licensee to claim a fee (Bus. & Prof. Code § 10176(f)). Use a written agreement in every case.

What should a property management agreement include?

At minimum: the term and exit terms, every fee and what it covers, leasing and repair authority, the approval limit, emergency handling, how rent, reserves and deposits are held, when you are paid, insurance and indemnity, and what is handed over at the end.

What is a tenant placement clause?

It is a clause about tenants the manager found. It may charge a fee if you end management but keep that tenant, or if you take over the lease yourself. It changes the cost of leaving, so read it before you sign and ask the manager to explain it.

Can a property manager keep the interest on my trust account?

No. An interest-bearing trust account is used only at the owner's request and under listed conditions, and the interest may not benefit the broker directly or indirectly (Bus. & Prof. Code § 10145(d)). Any benefit a broker gets for where it places the trust account belongs to the client unless the client agrees in writing (10 CCR § 2830).

Can I cancel a property management agreement early?

That depends on the termination clause. Look for the notice period, any termination fee or tenant placement fee, and whether you can end it sooner for cause. If the agreement has no clear exit terms, ask for them in writing before you sign.

Next step: compare agreements side by side

Ask each manager you are considering for a sample agreement and a written fee schedule, and read them against this list. McKee Properties has managed San Diego rentals since 1982. Start with a free San Diego rental analysis to see expected rent alongside the agreement terms.