Property Management Agreement (Hong Kong)

A Property Management Agreement in Hong Kong sets out the rights and obligations the parties agree to be bound by.

Prior to Cap. 626, Hong Kong's property management sector operated without mandatory licensing. The Ordinance introduced a two-tier licensing system for individual property managers — Tier-1 for senior practitioners and Tier-2 for frontline managers — and a separate licence for property management companies. A PMC licence is a prerequisite for a company to lawfully carry on a business of providing property management services in Hong Kong. Owners' corporations and landlords should verify a company's licence on the PMSA public register before entering any management agreement.

The Building Management Ordinance (Cap. 344) provides the statutory framework for owners' corporations — the bodies of owners that collectively govern a multi-unit building in Hong Kong. An owners' corporation is formed under Cap. 344 by registration at the Land Registry, and once formed it has statutory power to appoint and terminate property managers, collect management fees, maintain the common areas, and take legal proceedings. Most medium to large residential buildings in Hong Kong are managed under the dual framework of Cap. 344 (governing the owners' corporation) and a property management agreement with a PMSA-licensed PMC.

The Deed of Mutual Covenant (DMC) registered at the Land Registry under the Conveyancing and Property Ordinance (Cap. 219) underpins the governance structure of multi-unit developments. The DMC allocates undivided shares among owners, defines common areas and exclusive areas, and sets out the management obligations binding on all owners. The property management agreement must operate within the framework established by the DMC — the manager's authority and obligations flow from both the DMC and the management agreement.

Property management agreements in Hong Kong typically cover: building administration and day-to-day operations; financial management and collection of management fees; maintenance coordination under Section 14 of the Buildings Ordinance (Cap. 123); fire safety compliance under the Fire Services Ordinance (Cap. 95); lift and escalator management under the Lifts and Escalators Ordinance (Cap. 618); staff management; insurance administration; and owners' corporation secretarial support. The scope is agreed between the parties and directly affects the management fee payable. Hong Kong imposes no GST or VAT, so all fees are net amounts in Hong Kong Dollars (HKD).

Section 18 of the Building Management Ordinance (Cap. 344) empowers the owners' corporation to appoint and dismiss a manager by ordinary resolution at a general meeting. The Lands Tribunal has jurisdiction under Section 44 of Cap. 344 to resolve disputes between owners' corporations and property managers in Hong Kong, including disputes over management fees, management fund balances, service standards, and termination of management agreements. The Court of First Instance may also be involved in urgent injunctive relief applications where immediate action is required to protect building management assets or records.

A Property Management Agreement in Hong Kong is needed whenever a building owner, owners' corporation, or landlord wishes to engage a licensed Property Management Company to carry out the day-to-day management of a property under the Property Management Services Ordinance (Cap. 626).

Residential buildings managed by an owners' corporation under the Building Management Ordinance (Cap. 344) require a formal written management agreement before a PMSA-licensed PMC can be appointed. The owners' corporation committee must approve the appointment by resolution at a general meeting in compliance with Cap. 344 procedures, and the agreement defines the scope of services, fees, and accountability mechanisms for the manager.

New property developments require a management agreement from the point of first occupation, when the developer or its nominee typically acts as the initial manager until an owners' corporation is constituted under Cap. 344. Developers are required by the Buildings Department and the Deed of Mutual Covenant to have management arrangements in place prior to handover of the common areas.

Commercial buildings — office towers, shopping malls, and industrial complexes — where a single landlord or asset manager appoints a licensed PMC to manage the property require a property management agreement setting out the services, key performance indicators, reporting obligations, and fees. For commercial properties without an owners' corporation, the agreement is between the building owner and the PMC directly.

Private landlords who own multiple residential units and wish to outsource day-to-day rental management, maintenance coordination, and tenant liaison to a licensed property manager should formalise the arrangement with a written agreement under Cap. 626. Without a formal agreement, the scope of the manager's authority and liability is unclear.

Transition situations — where an owners' corporation wishes to change from one PMC to another — require a new property management agreement with the incoming manager, together with a formal handover process to transfer management records, funds, and obligations from the outgoing manager under Cap. 344.

Buildings subject to statutory orders from the Buildings Department — such as Mandatory Building Inspection Scheme (MBIS) orders requiring inspection and repair of external walls — benefit from having an experienced licensed PMC appointed under a formal agreement to coordinate compliance and works supervision.

Renewing or updating an existing management agreement is also necessary when the scope of services changes materially, the management fee requires renegotiation, the PMSA introduces new licensing conditions, or the parties wish to update the agreement to reflect amendments to Cap. 344 or other applicable legislation.

A Property Management Agreement in Hong Kong should include the following essential elements to comply with the Property Management Services Ordinance (Cap. 626) and the Building Management Ordinance (Cap. 344), and to protect both parties. Forms-legal.com provides a structured template covering all key provisions.

Party identification: Full legal name, Companies Registry number, and PMSA licence number of the licensed Property Management Company (PMC). For the client: the owners' corporation's registration number under Cap. 344 (if applicable), or the individual owner's or landlord's full name and HKID or Companies Registry number. Confirmation that the PMC holds a valid PMC licence issued by the PMSA — this is a statutory requirement under Cap. 626 and should be verified on the PMSA public register.

Property details: The full address of the managed building or development, the relevant lot number as registered at the Land Registry, the total gross floor area, the number and type of units (residential, commercial, car parking), and a reference to the Deed of Mutual Covenant number and registration details at the Land Registry.

Scope of services: A detailed schedule listing all services to be provided by the PMC — building administration, financial management, maintenance coordination, security management, staff management, statutory compliance (Buildings Ordinance Cap. 123, Fire Services Ordinance Cap. 95, Lifts and Escalators Ordinance Cap. 618), insurance administration, and owners' corporation secretarial services. Services outside the agreed scope should be identified as additional services chargeable separately.

Management fee and payment terms: The monthly management fee in Hong Kong Dollars (HKD), the date of payment, and the bank account into which payment is to be made. The agreement should address annual review of the fee, mechanism for upward adjustment (e.g., by reference to changes in the statutory minimum wage under the Minimum Wage Ordinance, Cap. 608, or the Consumer Price Index), and consequences of late payment.

Management fund provisions: Details of the separate management fund account to be maintained by the PMC on behalf of the owners' corporation, including bank account details, investment restrictions, accounting standards, and periodic financial reporting obligations to the owners' corporation committee in accordance with Cap. 344.

Staffing: Identification of key personnel (e.g., the named property manager and their PMSA individual licence tier), standards for on-site staff, staff replacement procedures, and compliance with the Employment Ordinance (Cap. 57) and the Minimum Wage Ordinance (Cap. 608) in relation to staff employed at the property.

Performance standards and reporting: Key performance indicators for core services, frequency of management reports (monthly financial statements, maintenance reports, insurance renewals), requirements for owners' corporation committee meetings, and escalation procedures for urgent matters.

Term and termination: The initial term of the agreement, automatic renewal provisions, notice period for termination (typically one to three months), grounds for immediate termination (including loss of PMSA licence under Cap. 626, material breach, or insolvency), and handover obligations on termination including return of management records and funds.

Liability and indemnity: Allocation of liability between the PMC and the owners' corporation for negligence, breach of statutory duty, and acts of sub-contractors. Insurance requirements for the PMC — including professional indemnity insurance and public liability insurance — and confirmation that required insurances are maintained throughout the term.

Governing law and dispute resolution: Laws of Hong Kong SAR govern the agreement. Disputes to be referred to the Lands Tribunal (which has statutory jurisdiction over building management disputes under Cap. 344) or to mediation/arbitration as agreed.