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A property management agreement carries more legal weight than its name suggests. Under Oregon law, this written contract is the foundation that sets up a property manager as the owner's agent. Without a written, unexpired agreement, you cannot legally perform any rental management work.
The agreement sets the exact limits of your authority. It outlines how you will run daily operations, listing rent collection steps and limits on repair costs. By law, the contract must include:
* An identifying code
* Disclosures about any affiliated vendors
* A clear way to end the contract
* A plan for keeping or transferring records after the agreement ends
You must quickly give a clear copy of the fully signed agreement to the owner and keep written proof that they received it.
One limit is absolute: the agreement cannot allow you to sell, exchange, or lease-option the property. Any sales or listing activity requires a separate contract with a licensed broker.
Compensation transparency is required. The agreement must fully show all management fees, screening charges, and rebates. Hidden markups violate your fiduciary duty of honest dealing, which we covered in Chapter 1. If your firm wants to put owner funds into an interest-bearing clients' trust account and keep the interest, this specific deal must be clearly allowed in writing within the agreement.
Signature authority is also strictly controlled. As a property manager, you have the authority to negotiate and sign the agreement. A principal broker can delegate this signing authority to a supervised licensee in writing under Oregon Real Estate Agency rules. Unlicensed assistants, no matter their experience, can never sign this document.
Working without an agreement, or letting it expire while you still collect rent, is a major regulatory violation. The Oregon Real Estate Agency regularly disciplines licensees for managing properties under expired contracts or verbal agreements. To understand exactly how this contract shapes daily operations, we will first examine the specific agency relationship it creates and the precise role the property manager assumes.
Unlike a sales broker hired for a single transaction, a property manager has ongoing authority over a continuous series of repeating tasks. In the industry, we call this a general agency relationship. Its scope is much broader than a one-time job. As a manager, you advertise vacancies, screen applicants, collect deposits, coordinate repairs, and handle trust funds. You step into the landlord's shoes for daily operations over months or years. This ongoing delegation of power is what sets property management apart from other licensed real estate work.
That broad scope demands clear legal boundaries. Because you bind the owner to legal leases, handle their money, and make daily operational choices that affect their liability, the state requires all boundaries of your authority to be in writing. In Oregon, this agency relationship comes from state law governing property manager duties, with your written property management agreement serving as the contract that sets up and defines it. Under this framework, you act as the owner's agent, carrying out specific duties written into the state law.
Next, we look at the strict limits of this written authority.
Your property management agreement forms the strict boundary of your general agency authority. If the agreement limits routine maintenance to $500, making a $1,200 plumbing repair without the owner's direct consent breaks your statutory duty of obedience. If a power is not clearly given in writing, you do not have it at all. We must agree on and write down these limits before any management work starts.
Some rules stay in place no matter what the owner wants. A property management agreement cannot allow you to represent the owner in the sale, exchange, or lease-option of the real estate. Owners often get this wrong. If a long-term tenant wants to buy the property, the owner might ask you to set up a lease-option agreement. But if you only hold an Oregon property manager license, you cannot lawfully do this. Selling or lease-optioning property requires a separate brokerage agreement with a licensed principal broker or real estate broker.
While the owner is your primary client, your work with tenants follows a different legal system.
Your relationship as a property manager with tenants follows a different set of rules than your relationship with owners. Fiduciary duties under Oregon's real estate agency law go only to the property owner [1]. Tenants are not your clients in that same way. While Oregon's definition of property management includes representing a tenant or prospective tenant, this role is narrow. Legislative updates in 2026 made this boundary even clearer.
Starting January 1, 2026, you represent a tenant only when they rent or lease property already under an active property management agreement you hold with the owner [2]. As a licensed property manager, you are not a general tenant advocate. You cannot charge a prospective tenant a fee to help them find housing across the wider rental market.
All tenant-facing work must stay within your active inventory. Tasks like reviewing screening reports, negotiating lease terms, and accepting security deposits are legally defined management activities performed under the owner's agreement. When handling tenant funds, you must follow the same strict rules as you do for owner funds. This means keeping these funds in a property management trust account under Oregon administrative rules [3], rather than using the escrow framework under state escrow laws [4].
Since we do not owe fiduciary duties to tenants, there are real, practical consequences. For example, if a tenant tells you they lost their job and might miss next month's rent, you must tell the owner. This is a material fact, and as the owner's agent, your duty of disclosure does not change because of sympathy.
This relationship gives you daily control over an owner's property and financial accounts. Because of this, Oregon treats verbal permission as worthless. If you manage property without a written contract, you face immediate discipline. The agency relationship only exists when it is in writing. Your contract must include every element required by Oregon's property management rules.
We begin with a strict starting rule. You may manage rental real estate only under a written, unexpired property management agreement. Oregon Real Estate Agency rules and state law set this requirement. You cannot start any management work without this contract.
Oral agreements and informal setups have no legal power. Licensees sometimes let a set-term contract run out while they keep collecting rent, thinking an informal, month-to-month setup is enough. Oregon law treats this exactly like managing without an agreement. If a lease lasts longer than the management agreement, you lose the legal power to collect rent or pay out owner funds. A clear line separates sales work. A management agreement cannot allow a sale. If you are a principal broker, you must sign a separate contract under your brokerage power to list the property.
The Agency enforces this strictly. Managing properties without a signed, accessible contract often leads to license revocation and civil fines up to $10,000 for each violation. These actions are common. The Agency treats the lack of a written contract as a breach of fiduciary duty and public trust.
Next, we will look at the specific mandatory elements you must include in every compliant agreement.
To be legal, every property management agreement in Oregon must contain several required elements under state rules. Your written agreement must include:
Pay close attention to two specific compliance markers. First, the contract must feature a unique identifying code. This code connects the document to your owner ledgers and trust account records, creating a clear audit trail. Second, you must disclose if you have a financial interest in any employees or connected businesses used for the property. If you do not know these providers when signing, you must include a written promise to disclose them before any service is given.
Once drafted, the agreement must be properly signed and delivered.
Only a licensed real estate professional can sign a property management agreement. As a managing principal broker, you may delegate signing authority for certain closing tasks to a supervised licensee in writing. However, unlicensed assistants cannot sign these agreements under any circumstances. You may authorize assistants separately in writing to sign trust account checks and perform account reconciliations. Once the agreement is fully signed, you must promptly deliver a legible copy to the owner and keep written proof of that delivery.
If you hold owner funds in an interest-bearing clients' trust account, the contract must state who receives the interest. If you keep this interest, the agreement must specify the exact payout timing. Any tenant referral fees, rent credits, or other forms of tenant compensation allowed by Oregon law must also appear in the contract text.
Any changes made after signing these agreements must follow strict amendment protocols.
References:
1. Property management agreement delivery and recordkeeping
2. Interest-bearing clients' trust accounts
3. Tenant compensation and referral fees
Your relationships with clients will change over time. As properties age or owner goals shift, fees and maintenance limits often need updates. Every change must be in writing. An amendment must include the original identifying code, the amendment date, your signature, and the signatures of all owners who signed the first agreement. A one-sided email approving a fee change is not enough to meet this rule.
You must keep both the original agreement and all amendments for six years. This six-year timeline depends on the record type:
* For closed sales, the clock starts when the transaction closes or fails.
* For property management files, it starts when the agreement expires, ends, or is replaced.
* For other records, it starts on the day you created or received the document.
You must keep these files in Oregon. If you store them outside the state, you must notify the Real Estate Commissioner in writing and keep them open for Agency inspection at a U.S. location. Failing to show an agreement during a compliance review can trigger daily civil penalties that quickly add up.
Now that we have established these rules, we will next explore how the agreement sets your exact scope of services and authority boundaries in daily business.
With those structural requirements in place, the actual scope of services defined in the agreement dictates every daily action you can take as a property manager. Oregon law does not rely on assumed industry standards. The agreement must explicitly state the exact authority and powers the owner gives to you. If a specific task or power is not written down, you lack the legal authority to perform it.
The contract must clearly address tenant screening criteria, rent collection protocols, and eviction processing. Lease signing needs careful attention. As a manager, you hold general authority to sign rental agreements on the owner's behalf. However, you must have a written delegation of authority before your unlicensed employees may negotiate rent, review leases, or accept tenant agreements. Under Oregon real estate licensing laws and rules, unlicensed staff may perform these specific delegated tasks, including reviewing, approving, and accepting tenant leases. Still, their activities must stay strictly within administrative boundaries to avoid triggering state licensing requirements. Both you and the employee must sign this delegation, and you must keep it with your firm's written policies. You keep full statutory liability for every lease your staff approves. Exemptions previously tied to the repealed state statute no longer apply.
Beyond staff delegation, recent legislative updates have established strict new supervisory mandates.
As we look at the scope of services, note that House Bill 3137 changed supervision rules on January 1, 2026. State rules changed managing principal broker authority. These changes also made clear how licensed managers oversee delegated tasks.
If a managing principal broker and a property manager work under the same registered business name, they must sign a written supervisory agreement. You must have this detailed agreement; it is not just a best practice. It must also clearly outline the manager's financial authority over property maintenance.
Oregon law does not set a flat dollar limit on routine maintenance. Instead, the Oregon Real Estate Agency requires your property management agreement to define your authority over repairs and spending. The best approach is to build a clear authority matrix directly into the contract. This matrix shows exactly how much you can spend before you must get the owner's approval.
Emergencies will test these limits. If a pipe bursts at two in the morning, it needs immediate action. If you do not have an emergency exception in your agreement, paying for a two thousand dollar extraction service violates your contract's spending limit. It also violates your legal duties of reasonable care and loyalty. Having a clear emergency clause protects the property and your license by allowing these urgent costs in advance. If a problem is not a true emergency and costs more than your limit, you must get written approval from the owner before starting the work.
Choosing vendors works the same way. If we have a financial interest in a landscaping or maintenance company, we must disclose this in the agreement before assigning any work. The owner must formally approve using these affiliated providers. This satisfies our legal duty of honest dealing and prevents hidden markups.
While the agreement defines what you can do, the law strictly bans certain actions.
Building on our earlier exploration of a property manager's scope of authority, some actions remain off-limits no matter what an owner requests. The most critical restriction is real estate sales. A property management agreement cannot authorize you to represent the owner in the sale, exchange, or lease option of the real estate [1]. If an owner decides to sell a rental unit, your management agreement provides no legal coverage for that transaction. Sales activity requires a separate brokerage agreement. If you only hold a property manager license, you cannot legally list or sell the property [2] and must refer the transaction to an authorized principal broker or real estate broker.
Financial control presents another hard boundary. Owners sometimes request direct access to their rental revenue accounts or the ability to pay vendors directly from trust funds. You cannot legally grant this. Oregon rules ban owners from being authorized signers on any client trust or security deposit account [3]. They cannot deposit, hold, or pay out funds from these accounts under any circumstances. As the property manager, you act as the sole authorized signer and bear full responsibility for all receipts and payouts [4]. If an owner demands direct account access, you must refuse. This trust account model keeps client funds under your exclusive control. This requirement is entirely separate from the state's Escrow Law [5].
Finally, any changes to these set boundaries must follow a strict amendment process.
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