What Is an Agency Relationship in Utah Property Management?
In Utah, when a landlord hires a property manager, they enter into a legal relationship known as agency. Under this arrangement, the landlord is the principal, and the property manager is the agent—with duties that go beyond just collecting rent or handling repairs.
Understanding this relationship is crucial, because agency law creates binding legal obligations and potential liability for both parties.
What Legal Duties Does a Property Manager Owe the Landlord?
Under Utah agency law, a licensed property manager must act in the best interest of the landlord. These duties include:
- Loyalty: Managers must prioritize the landlord’s interests above their own.
- Obedience: Managers must follow all lawful instructions from the landlord.
- Disclosure: Managers must notify landlords of material facts, such as code violations, tenant issues, or lawsuits.
- Accounting: All funds and property must be tracked, documented, and reported accurately.
- Reasonable Care: Managers must act competently and prudently when handling the property.
These obligations are codified under Utah law and also reinforced by Division of Real Estate rules. Violating them can lead to civil liability—or license discipline.
What About Fiduciary Duty?
Yes—an agency relationship creates a fiduciary duty, meaning the manager must act with the highest standard of care and honesty. This includes safeguarding rent payments, avoiding conflicts of interest, and keeping client funds separate (including proper use of trust accounts).
To learn more about potential pitfalls, see When Property Management Becomes a Legal Liability in Utah.
How Is the Agency Relationship Created?
Typically, it’s formed through a written property management agreement. Under Utah Administrative Code R162-2f-401a, the contract must include:
- A clear scope of duties
- Payment terms and fees
- Property address and parties involved
- Duration of the agreement
- Early termination conditions
- Disclosure of any affiliated services (e.g., if the manager owns the repair company they use)
Verbal agreements are risky and may not comply with Division requirements.
Who Is Liable for the Manager’s Actions?
Generally, a landlord is not liable for wrongful acts committed by a rogue manager—especially if those actions were unauthorized or outside the scope of the agreement.
However, if the landlord ratifies those actions (e.g., accepts illegal rent hikes or turns a blind eye to code violations), they could share liability.
That’s why it’s essential to maintain oversight, require transparency, and act quickly if something feels off.
Final Thoughts: A Legal Partnership with Real Consequences
In property management, agency is more than just a business relationship—it’s a legal commitment. Utah landlords who understand the structure of agency law can negotiate stronger contracts, prevent liability, and ensure their property is managed ethically.
And property managers who understand their duties can avoid complaints, discipline, and lawsuits.
If you need help reviewing or drafting a property management agreement—or resolving a dispute—Duckworth Legal Group can assist.
Call (801) 882-7444 or email info@duckworthlegalgroup.com to get started.