Understanding Property Management Agreements in Colorado
Managing rental properties can be a rewarding investment, but it comes with legal and financial responsibilities that many property owners underestimate. In Colorado, property management is a regulated profession with strict requirements for licensing, trust accounting, and compliance with tenant protection laws. Without a properly drafted Property Management Agreement (PMA), owners risk legal exposure, financial loss, and misunderstandings that can lead to disputes.
What a PMA Should Cover
A PMA is more than a contract—it's a legal framework that defines the business relationship between a property owner and their property manager. It should clearly outline the scope of services, the term of the agreement, tenant screening criteria, maintenance procedures, rent collection, and how security deposits are handled. These details are critical to preventing conflict and ensuring that each party knows their rights and responsibilities.
Licensing and Compliance Requirements
In Colorado, leasing or managing real estate for compensation requires a real estate broker’s license. Property managers must operate under a licensed employing broker and comply with competency standards under state law. Associate brokers must confirm they have the authority to provide property management services before getting involved.
It’s important to distinguish between leasing and ongoing property management. Leasing is typically a one-time activity—finding tenants and executing leases—while management includes continuous responsibilities like rent collection, maintenance coordination, and tenant communication. Brokers performing both must use the appropriate contracts: the Exclusive Right-to-Lease Listing Contract for leasing, and a Management Agreement for property management.
Financial Oversight and Trust Accounts
Brokers and managers must also follow strict rules when handling client funds. Under the Colorado Real Estate Commission’s Rules 5.7 through 5.11, all rent and security deposits must be placed in designated trust accounts within five business days. Funds must be kept separate and properly documented. Violations—especially related to mishandling security deposits—can lead to serious penalties, including treble damages under C.R.S. §38-12-103.
Transferring Management Responsibilities
When switching management from one brokerage to another, the outgoing broker must deliver tenant records, financial documents, and security deposits to the new manager. Tenants must also receive written notice of the change to maintain continuity and compliance.
Guidance from CP-15
The Colorado Real Estate Commission’s CP-15 outlines best practices in property management, emphasizing the importance of staying current on laws affecting rent increases, late fees, lease terms, and tenant protections. It also requires fair housing compliance and transparency in fee structures and third-party relationships. For example, brokers must disclose if they have an ownership interest in service companies involved in the property’s operations.
How GLO Can Help
GLO helps clients draft, review, and negotiate PMAs that are fully compliant with Colorado law and tailored to their specific needs. We simplify complex legal language, reduce risk, and help clients avoid costly mistakes. Whether you’re an owner looking to protect your property or a broker navigating compliance, our attorneys provide legal clarity and peace of mind throughout the property management relationship.
Contact GLO today to ensure your Property Management Agreement is clear, compliant, and customized to protect your interests from day one.
EXPLORE OUR CLIENT REVIEWS
Take a moment to read what our clients have said about their experience working with GLO.
Read more
