General Information Only. This article is for general informational purposes and does not constitute legal advice. Laws may have changed since publication. Your situation may differ; consult a licensed Virginia attorney about your specific matter.
The information in this article is for general informational purposes only and does not constitute legal advice. Laws change and individual circumstances vary. Consult a licensed Virginia attorney about your specific situation. Reading this article does not create an attorney-client relationship nor does merely contacting our office through this website or any other means.
You signed a management agreement because you wanted the calls to stop.
What you actually signed decides who holds your guest money, who sets your rates, who absorbs the loss when something goes wrong, and what happens to your calendar if the relationship ends. Most of these documents are the manager’s form, and a manager’s form handles the owner’s questions briskly. Two Virginia statutes shape the analysis before you get to any of the terms, and one Virginia case shows the document doing work in a place nobody expects.
The Licensing Question Comes First
Virginia defines a real estate broker broadly. Under Va. Code § 54.1-2100, a “real estate broker” includes any individual or business entity who, for compensation or valuable consideration, “leases or offers to lease, or rents or offers for rent, any real estate or the improvements thereon for others.”
Hold that against what a management company does. It rents your property, for others, for compensation. The definition contains no carve-out for short-term rentals, and it does not turn on how the company describes itself.
Section 54.1-2103 sets out the exemptions, and their shape is instructive. An owner or lessor, and their regular employees, are exempt when performing those acts “with reference to property owned or leased by them” in the regular course of or incident to management of the property and the investment in it. Managing your own property is not brokerage. Managing someone else’s for a fee is a different question.
There is also a narrow exemption for a person “employed by a licensed real estate broker for and on behalf of the owner” whose duties are strictly limited to showing units, giving factual rental information, accepting applications and broker-approved rental agreements, and handling deposits and rent payments without negotiating terms. Notice what that exemption assumes: a licensed broker at the top of the chain.
Section 54.1-2103 was amended in 2025, so the current exemptions are worth confirming rather than taking from a summary.
This matters to you for a reason beyond compliance. Licensure decides whether the escrow rules below reach the person holding your money.
Where Your Guest Money Sits
This is the term owners most often accept without reading, and Virginia is specific about it.
Under Va. Code § 54.1-2108.1, rent paid to a real estate licensee acting on behalf of a landlord client in connection with a lease “shall be placed in an escrow account by the end of the fifth business banking day following receipt.” The same timing applies to security deposits, subject to written exception. Funds stay in escrow “until disbursed in accordance with the terms of the lease, the property management agreement, or the applicable statutory provisions.”
Two things follow from that.
There is a deadline. Money sitting in an operating account is not money sitting in escrow, and “we reconcile monthly” is not the standard the statute sets for getting it there.
And the statute names the property management agreement itself as one of the things governing disbursement. Your agreement is not decoration on this point. What it says about when and how funds reach you carries weight, which is a good reason to read that clause instead of accepting the form language around it.
The section also gives a licensed managing agent who complies immunity from liability for that compliance, absent gross negligence or intentional misconduct.
Percentage Is Not a Number Until You Know the Base
Owners compare managers by percentage and stop there. The percentage means nothing on its own.
Ask what the base is. Gross booking value, or the amount after platform fees? Does the commission apply to the cleaning fee, and if so, who keeps the difference between what the guest pays and what the cleaner is paid? Does it reach pet fees, damage recoveries, cancellation retentions, resort fees?
Then ask what else gets billed. Markups on maintenance work, charges for linens, technology fees, photography and listing setup. Those frequently sit outside the headline percentage. A lower percentage with a markup on every trade invoice can cost more than a higher percentage without them.
The useful exercise is not comparing quotes. It is taking one real booking from last season and tracing every dollar from what the guest paid to what landed in your account.
The Ten Terms
| Term | What to look for |
|---|---|
| 1. Commission structure | The exact base, and whether it reaches cleaning fees, pet fees, damage recoveries, and cancellations |
| 2. Guest funds and escrow | Who receives the money, which account it sits in, the deposit deadline, and whether the manager is licensed |
| 3. Accounting and statements | Frequency, level of detail, your right to see underlying records, and your right to audit |
| 4. Booking authority | Whether the manager can accept a booking you would refuse, set rates without you, or offer discounts |
| 5. Maintenance spend threshold | The dollar figure above which the manager needs your approval, and the definition of an emergency that bypasses it |
| 6. Indemnity | Who indemnifies whom, for what conduct, and whether it runs both directions |
| 7. Insurance and additional insured | What each party carries, who is named on whose policy, and whether the certificate matches the promise |
| 8. Standard of care | What the manager actually commits to do, as opposed to what it will try to do |
| 9. Termination | Notice period, whether it can end without cause, exit fees, and what happens to bookings already on the calendar |
| 10. Dispute resolution | Governing law, venue, arbitration, and who pays attorney fees |
The Clause You Did Not Know Was Evidence
Here is the part almost nobody anticipates, and it is the reason this document deserves more attention than it usually gets.
In Haynes-Garrett v. Dunn (2018), a guest was injured at a Virginia Beach vacation rental and sued the owners and the management company. The question that decided the case against her was what duty the owners owed, and that turned on whether they had kept possession and control of the house during her stay.
The Supreme Court of Virginia worked through the management agreement to answer it. The agreement appointed the manager as sole and exclusive agent to rent the property, authorized it to collect all rents and deposits, provided for cleaning between guests, set the security deposit rules, and provided that the owners could not enter the property while it was occupied without first notifying the manager. Those terms, along with the absence of food service, room service, daily maid service, or security, showed that the parties did not intend the owners to keep control during the occupancy. The duty that followed was the narrower one a landlord owes a tenant.
So a document written to allocate fees and responsibilities ended up as evidence about tort duty. Worth knowing before you sign one, and worth re-reading in that light if you already have.
One more detail from that case is worth carrying. The management company argued it owed the injured guest no duty at all, because it had no relationship with her. The trial court agreed and that ruling was not appealed, so the Supreme Court expressly did not decide it. Still, it is a live position a manager may take, which puts your indemnity clause in a different light.
The Three That Produce Disputes
Indemnity running one direction. Manager forms commonly have the owner indemnify the manager with nothing running back. Virginia enforces indemnity provisions, including ones reaching a party’s own negligence in personal injury cases, which is not how most people expect it to work. A one-way clause is not a formality. If the manager’s crew causes the problem, the question of why you are absorbing it is a fair one to raise before signing.
A standard of care made of adjectives. “Commercially reasonable efforts” and “industry standards” are hard to breach because they are hard to measure. Specific commitments are a different thing: inspection frequency, response times, how fast a reported hazard gets addressed, what documentation gets kept and where it goes. That last one runs straight back to your own exposure, because the inspection records your manager keeps are the records you would need if a guest is hurt.
Termination that strands your calendar. The clause to read is not the notice period. It is what happens to bookings already accepted. Who honors them, who holds those guest funds through the transition, who has the guest contact information, and who owns the listing account. An agreement that is easy to terminate and silent on transition is not actually easy to terminate, and the ownership fight that follows is worth avoiding in advance.
The Questions Worth Sitting With
- Ask your manager in writing whether they hold a Virginia real estate broker license, and keep the answer. One email.
- Ask which account guest funds sit in between receipt and disbursement, and how quickly they get there.
- Take one real booking and trace every dollar. That exercise answers the commission question better than any quote comparison.
- Mark every place your agreement says “reasonable” and ask what specific commitment could replace it.
- Read your agreement once more asking a different question: what does this document say about who controls the property while a guest is in it?
Whether any particular clause is enforceable, and what it means in practice, depends on the whole agreement and on how the relationship has actually run. If your management agreement is the manager’s standard form and nobody has read it against Virginia’s licensing and escrow provisions, that is a contained piece of work and a good place for a Virginia attorney to start.
This article is general information only and is not legal advice. Laws change and individual circumstances vary, and outcomes depend on the specific facts of each situation. Do not rely on this article to make decisions about your specific situation; contact Valley Legal or a licensed Virginia attorney to discuss your case. Reading this article does not create an attorney-client relationship, nor does contacting our office through this website or any other means. Attorney advertising.
Valley Legal, PLLC is located at 107 Pepper St SE, Christiansburg, Virginia 24073, and serves the communities of the New River Valley of Virginia, including Montgomery County, Blacksburg, Radford, Pulaski County, Floyd County, and Giles County.