Property Management Agreements in Texas: What Your Contract Needs to Say — and What It Probably Doesn’t

A Risk-Focused Review for Property Managers and Investors

A Property Management Agreement (PMA) is not just a business contract. In Texas, it is the document that defines your legal authority to act on behalf of a property owner — and it is the first thing reviewed when a dispute arises. If the PMA is outdated, ambiguous, or missing key provisions, the risk does not fall on the property owner. It falls on you.

In 2026, property managers in Texas are operating in a more demanding regulatory and legal environment. Updated Texas REALTORS® PMA forms, the January 1, 2026 eviction law changes, and increased scrutiny on documentation practices make this an important moment to review your agreements.

The Foundation: Authority Must Be Clearly Defined

A property manager in Texas must hold a real estate broker license — or work under one — to legally manage property for others. But licensure alone does not grant authority to act. That authority comes from the PMA itself. A well-drafted agreement must clearly specify:

  • The scope of management authority (leasing, maintenance, rent collection, legal proceedings)
  • Whether the manager has authority to execute leases on the owner’s behalf, and up to what term
  • Whether the manager can authorize repairs without owner approval, and up to what dollar threshold
  • Whether the manager has authority to initiate evictions and, if so, to retain counsel
  • How and when funds are disbursed to the owner

Ambiguity in any of these areas creates disputes — with owners, with tenants, and with courts. The manager who acts without clear contractual authority does so at personal professional risk.

The January 2026 Eviction Changes and Your PMA

Texas eviction law changed significantly on January 1, 2026. Justice Courts are now directed to focus exclusively on the right to possession — not habitability disputes, repair issues, or lease interpretation arguments. Timelines have been tightened, and procedural errors are less likely to be overlooked.

For property managers, this means your PMA must expressly authorize you to pursue evictions on the owner’s behalf. If that authority is not stated clearly in the agreement, you may lack standing to file, and a defective filing is now more likely to result in outright dismissal rather than a second chance.

Your PMA should also authorize the retention of legal counsel for eviction proceedings — and specify how those costs are handled.

Notice Provisions: Electronic Notice Is Not Self-Executing

The 2026 eviction framework allows electronic notice to tenants — but only when the tenant has agreed to electronic delivery in writing. That written authorization must live somewhere. The most logical place is your lease agreement, cross-referenced in your PMA.

If your lease forms do not include electronic notice authorization, or if your PMA does not address how notices are delivered and documented, you have a gap that will surface at the worst possible time — mid-eviction.

Trust Account and Financial Provisions

Texas law imposes strict requirements on property managers who hold owner or tenant funds. Your PMA should address:

  • How security deposits are held and accounted for (tenant funds vs. owner funds)
  • The manager’s fee structure and when fees are earned
  • The timing and method of owner disbursements
  • Procedures for handling maintenance reserves and emergency expenditures

Commingling of funds — even unintentionally — can create TREC disciplinary exposure and civil liability. The PMA is where those procedures start.

Indemnification and Liability Allocation

Whose problem is it when something goes wrong? Without a clear indemnification provision, that question gets litigated. A Texas PMA should address:

  • Manager liability: The manager should not be liable for acts taken in good faith pursuant to owner instructions, provided proper documentation exists.
  • Owner obligations: Owners should be required to maintain the property in a condition that allows for lawful habitation and to disclose known defects.
  • Third-party claims: The agreement should specify who bears responsibility and cost when a tenant or third party makes a claim arising from the property’s condition.

When Was Your PMA Last Updated?

Texas REALTORS® regularly updates its standard PMA form to reflect changes in law and practice. If your firm is using a form from 2022 or earlier without reviewing it against current law, it is likely missing provisions that matter. That is not a hypothetical risk — it is a foreseeable one.

The cost of reviewing and updating a PMA is small. The cost of a dispute arising from an inadequate one is not.

About The Brewer Firm, PLLC

The Brewer Firm provides strategic real estate, transactional, and risk-management counsel throughout Texas. Whether you are a broker, investor, property manager, or business owner, we help you structure operations so that problems are prevented — not just defended. Contact us for a free consultation at 210-900-4640 or info@brewerfirmpllc.com.