A property management contract is the agreement in which an owner authorises a specialist company to run the property on their behalf: leasing units, collecting rent, handling maintenance and dealing with tenants. The clearer the contract, the fewer the disputes, and the better the owner knows exactly what they pay and what they get for it.
In this guide we explain the clauses we recommend every owner in Riyadh, Khobar and Dammam reviews before signing, how fees are usually calculated, and how the Ejar platform and the FAL licence relate to a management company's work.
Define what management covers: marketing vacant units, screening tenants, creating and registering leases, rent collection, preventive and emergency maintenance, and periodic reports. Any service that is not written down may later be billed as an extra, so spell it out.
Property management fees are usually calculated in one of two ways: a percentage of rent actually collected, or a fixed monthly or annual amount. We recommend linking fees to actual collections rather than contracted rent, and making sure the contract states leasing, renewal and any maintenance commission fees.
Set a spending cap the management company may use for maintenance without referring back to you; anything above it needs written approval. This clause alone prevents most surprises in account statements.
Residential and commercial leases in the Kingdom are registered electronically on the Ejar platform, and a registered lease becomes an enforceable instrument that protects both owner and tenant. The real estate brokerage regulations also require anyone practising brokerage and property marketing to hold a FAL licence from the Real Estate General Authority. Ask your management company for its licence number and make sure leases are registered in your name as owner.
A good contract defines the report format and schedule: occupancy rate, rent collected and overdue, maintenance requests closed and open, and expenses with invoices. A clear monthly report saves you from chasing every detail yourself and flags early any unit that needs a decision.