Is it okay for a property management company to directly contract with a service provider?

The notion that a property management company cannot directly contract with a service provider hinges on the typical governance structure and protocols that organizations within the real estate and property management sectors follow. Property management companies often operate under the oversight of a property owner or a managing entity that holds final authority over major contracts and expenditures.

In many cases, property management companies are delegated the responsibility of managing day-to-day operations, but they are usually required to act within the boundaries defined by their management agreement. This agreement typically outlines the extent of their authority to enter into contracts, which often includes stipulations that major contracts with service providers must receive prior approval from the property owner or developer. This requirement is in place to ensure accountability, transparency, and alignment with the property owner's strategic goals and budget considerations.

Consequently, the property management company must have clear guidelines indicating whether they may independently engage service providers or if they require permission. Such policies are fundamental to maintaining trust and professional integrity between the property owner and the management team.