Bali Property Management Agreement: Key Clauses, Fees and Owner Risks

A property management agreement defines the relationship between a property owner and the individual or company responsible for operating, maintaining or commercially managing the property.

For Bali villa owners, the agreement may affect far more than routine maintenance.

The manager may be responsible for:

- advertising the property;
- communicating with guests;
- managing bookings;
- collecting rental income;
- paying operational expenses;
- supervising staff;
- arranging repairs;
- purchasing supplies;
- coordinating contractors;
- preparing financial reports;
- maintaining licences and operational records;
- handling complaints and emergencies.

Without a clear agreement, the owner may not know which decisions the manager can make independently, which expenses require approval and how the property’s income should be reported.

This becomes especially important where the owner lives outside Bali or does not participate in daily operations.

A remote owner may depend entirely on the manager for information about:

- occupancy;
- rental rates;
- guest payments;
- operating costs;
- staff performance;
- repairs;
- taxes;
- platform accounts;
- bank deposits;
- the physical condition of the property.

The property management agreement should therefore establish a transparent operating framework.

It should explain:

- the scope of the manager’s authority;
- the services included;
- the management fee;
- any additional commissions or mark-ups;
- the treatment of rental income;
- permitted expenses;
- approval thresholds;
- reporting obligations;
- access to records;
- maintenance responsibilities;
- insurance and liability;
- termination and handover.

The agreement should also distinguish between property management and other legal relationships.

A property manager is not necessarily:

- the tenant;
- the property owner;
- the operator under a separate lease;
- the employer of all property staff;
- the legal representative of the owner for every purpose;
- the holder of all required business licences.

The actual structure depends on how the property is operated.

For example, one management arrangement may involve the manager providing limited operational services for a fixed monthly fee.

Another may involve the manager controlling the booking channels, collecting revenue, paying expenses and receiving a percentage of gross or net income.

A more complex arrangement may combine:

- property management;
- hospitality operations;
- marketing;
- revenue management;
- staff administration;
- procurement;
- maintenance coordination;
- financial administration.

The agreement should reflect the real operating model rather than relying on a generic template.

### Manager Authority Should Be Defined

One of the most important issues is the authority granted to the manager.

The agreement should specify whether the manager may:

- enter booking arrangements;
- set or change rental prices;
- offer discounts;
- issue refunds;
- purchase goods and services;
- appoint contractors;
- hire or dismiss staff;
- access bank accounts;
- receive cash or online payments;
- sign documents;
- communicate with government authorities;
- settle guest complaints;
- approve emergency repairs.

The owner should understand which decisions the manager can make without prior consent.

A broad statement allowing the manager to “operate the property” may be too vague.

The agreement should use clear approval limits and financial thresholds.

### Income Collection Requires Transparency

The agreement should identify how rental income is collected and transferred.

Possible models include:

- payments made directly into the owner’s bank account;
- payments collected by the manager and transferred periodically;
- payments processed through booking platforms;
- payments received by an operating company;
- cash collected at the property.

Each model creates different control and reporting risks.

The agreement should define:

- which accounts may receive revenue;
- who controls booking-platform accounts;
- how often income is transferred;
- what deductions may be made;
- which records must support each deduction;
- how cancellations and refunds are handled;
- whether the manager may hold reserves.

The owner should be able to reconcile bookings, guest payments, platform statements, bank deposits and management reports.

### Fees Should Be Fully Disclosed

Management fees may be structured as:

- a fixed monthly fee;
- a percentage of gross rental income;
- a percentage of net operating income;
- a hybrid fee;
- a performance-based fee.

The agreement should define the calculation basis precisely.

Terms such as “gross revenue” or “net profit” should not be used without explanation.

The agreement should also identify additional charges, including:

- booking commissions;
- marketing fees;
- procurement mark-ups;
- maintenance coordination fees;
- staff administration charges;
- accounting fees;
- emergency call-out fees;
- platform management fees;
- contractor commissions.

A low headline management fee may not reflect the total economic cost where the manager receives several additional payments.

### Operational Responsibilities Should Be Allocated

The agreement should identify who is responsible for:

- routine maintenance;
- structural repairs;
- utilities;
- internet;
- pool and garden care;
- cleaning;
- linen;
- security;
- pest control;
- equipment replacement;
- staff salaries;
- insurance;
- licences and permits;
- taxes and service charges.

It should also state whether the manager performs the work directly or appoints third-party contractors.

Where contractors are used, the agreement should address:

- approval;
- pricing;
- conflicts of interest;
- warranties;
- invoices;
- supervision;
- liability for defective work.

### Reporting and Record Access Are Essential

A property owner should not depend only on informal messages or verbal updates.

The agreement should require regular written reports.

These may include:

- booking reports;
- occupancy reports;
- revenue statements;
- expense reports;
- bank reconciliations;
- maintenance logs;
- staff cost summaries;
- tax and licence updates;
- incident reports;
- guest complaint records.

The owner should also have access to supporting documents, including invoices, receipts, booking-platform records and bank statements.

Reporting should be delivered at defined intervals and in an agreed format.

### Termination Should Protect Operational Continuity

The agreement should explain how either party may end the relationship.

A termination clause should address:

- notice period;
- immediate termination events;
- unpaid fees;
- pending guest bookings;
- guest deposits;
- staff;
- keys;
- passwords;
- booking-platform accounts;
- property records;
- supplier contracts;
- financial reconciliation;
- transfer of operating information.

A poorly managed termination may leave the owner without access to bookings, accounts, staff records or operational systems.

The handover process should therefore be planned before the agreement is signed.

A strong property management agreement does not simply describe services.

It creates a control system for authority, income, expenses, reporting, maintenance and exit.

For a Bali villa owner, that control system is essential where another party manages the property and handles the owner’s commercial and operational interests.

A property management agreement should define the manager’s responsibilities in sufficient detail to show what the manager must do, what the manager may do and what remains the owner’s responsibility.

A general clause stating that the manager will “manage the property” is rarely sufficient.

Property management may involve several different functions, including:

- physical maintenance of the property;
- accommodation operations;
- guest services;
- booking administration;
- revenue management;
- staff supervision;
- procurement;
- financial reporting;
- regulatory coordination;
- marketing.

These functions should not be combined into one undefined obligation.

The agreement should describe each service category separately and identify the expected performance standard.

### Property Operations

The manager may be responsible for routine operation of the property.

This may include:

- opening and closing procedures;
- daily property inspections;
- guest arrival preparation;
- coordination of cleaning;
- linen and laundry management;
- pool and garden care;
- waste disposal;
- security coordination;
- inventory control;
- utility monitoring.

The agreement should state how frequently these tasks must be completed and how performance will be recorded.

For example, the agreement may require:

- daily inspection reports;
- cleaning checklists;
- monthly inventory records;
- maintenance logs;
- photographic evidence of significant damage.

The owner should not have to rely only on verbal confirmation that the property is being maintained.

### Booking and Guest Management

Where the manager handles short-term accommodation, the agreement should define the manager’s role in the booking process.

The manager may be responsible for:

- responding to enquiries;
- confirming reservations;
- managing check-in and check-out;
- collecting guest information;
- coordinating deposits;
- responding to complaints;
- arranging refunds;
- managing cancellations;
- enforcing property rules;
- handling guest damage.

The agreement should explain whether the manager may accept every booking or whether certain reservations require owner approval.

The owner may wish to restrict:

- large events;
- commercial filming;
- long stays;
- high-risk groups;
- bookings below a minimum rate;
- bookings made outside approved platforms.

The agreement should also state which party bears the financial impact of:

- cancellations;
- chargebacks;
- guest refunds;
- platform penalties;
- fraudulent bookings;
- property damage.

### Pricing and Revenue Management

A manager may be given authority to set nightly rates and adjust pricing according to demand.

The agreement should define whether the manager may:

- change rates without approval;
- apply seasonal pricing;
- offer promotional discounts;
- use dynamic pricing software;
- create package offers;
- grant complimentary stays;
- accept direct bookings;
- negotiate long-stay rates.

The owner may set:

- minimum nightly rates;
- maximum discount percentages;
- blackout periods;
- owner-use periods;
- minimum-stay requirements;
- approval thresholds.

The agreement should also state whether revenue-management services are included in the management fee or charged separately.

### Marketing Responsibilities

The manager may be responsible for promoting the property.

Marketing services may include:

- creating listing descriptions;
- arranging photography;
- managing social media;
- running paid advertising;
- maintaining a website;
- communicating with agents;
- managing booking-platform listings;
- responding to reviews.

The agreement should clarify:

- who owns the photographs and marketing content;
- who controls the domain and social media accounts;
- who pays advertising costs;
- whether the manager may use the property in its own portfolio;
- what happens to listings and reviews after termination.

The property’s digital presence should not become permanently controlled by the manager without clear contractual rights for the owner.

### Staff Management

The manager may supervise housekeepers, gardeners, security staff, maintenance personnel, drivers or other workers.

The agreement should define whether the manager:

- employs the staff directly;
- hires staff on behalf of the owner;
- only supervises staff employed by another entity;
- arranges independent contractors.

This distinction affects responsibility for:

- salaries;
- benefits;
- payroll administration;
- discipline;
- termination;
- workplace incidents;
- statutory employment obligations.

The agreement should not simply state that the manager is “responsible for staff” without identifying the legal and financial structure.

The owner should also know whether the manager may:

- hire additional personnel;
- change salaries;
- approve overtime;
- grant bonuses;
- terminate employees;
- replace contractors.

Financial approval thresholds should apply to staffing decisions where appropriate.

### Maintenance and Repairs

The manager’s maintenance responsibilities should be divided into:

- routine maintenance;
- preventive maintenance;
- emergency repairs;
- major repairs;
- capital improvements.

Routine maintenance may include minor repairs, cleaning equipment, replacing consumables and servicing operational systems.

Major repairs may include:

- structural work;
- roof replacement;
- plumbing replacement;
- electrical upgrades;
- pool reconstruction;
- major appliance replacement;
- renovation.

The agreement should define which costs the manager may approve independently.

A practical structure may use:

- a low threshold for routine expenses;
- a higher threshold requiring written owner approval;
- a separate emergency exception where delay could cause injury or greater property damage.

The manager should provide supporting invoices and evidence of completed work.

### Contractor Appointment

Where the manager appoints contractors, the agreement should state whether competitive quotations are required.

For significant work, the owner may require:

- two or three quotations;
- written scope of work;
- contractor credentials;
- estimated completion date;
- warranty terms;
- owner approval.

The agreement should also address conflicts of interest.

The manager should disclose whether:

- the contractor is related to the manager;
- the manager receives a referral fee;
- a procurement mark-up is charged;
- the contractor is an affiliated company.

Undisclosed contractor commissions can increase operating costs and create mistrust.

### Procurement and Inventory

The manager may purchase:

- cleaning supplies;
- guest amenities;
- linen;
- kitchen equipment;
- furniture;
- replacement parts;
- maintenance materials.

The agreement should define:

- permitted purchasing limits;
- approved suppliers;
- procurement mark-ups;
- inventory records;
- ownership of purchased items;
- approval requirements.

The manager should not be able to make unlimited purchases and deduct the cost from rental income without documentation.

### Financial Administration

The manager’s financial responsibilities may include:

- issuing invoices;
- collecting guest payments;
- paying suppliers;
- preparing payroll data;
- paying utilities;
- maintaining expense records;
- preparing monthly statements;
- holding operational reserves.

The agreement should state whether the manager is authorised to:

- operate a bank account;
- receive funds into its own account;
- deduct fees before transferring income;
- retain cash;
- approve payments;
- sign payment instructions.

Financial authority should be limited and auditable.

The manager should not mix owner funds with unrelated business funds unless the agreement clearly establishes a controlled client-money structure.

### Regulatory and Licensing Coordination

The manager may assist with licences, registrations, taxes or inspections.

However, the agreement should distinguish between:

- administrative support;
- professional advice;
- formal representation;
- responsibility for obtaining licences;
- responsibility for maintaining compliance.

A manager should not promise that the property is legally compliant unless the agreement identifies which licences and requirements the manager has verified.

The owner should also understand that different activities may fall under different business classifications.

Accommodation management by a third party, direct accommodation operation and residential property management are not necessarily the same activity.

The operating company’s actual services should therefore be reviewed against its current KBLI classification, OSS records and business licences.

### Insurance and Incident Management

The agreement should define the manager’s responsibilities when an incident occurs.

This may include:

- guest injury;
- fire;
- theft;
- property damage;
- flooding;
- utility failure;
- staff injury;
- security incidents;
- neighbour complaints.

The manager should be required to:

- notify the owner promptly;
- take reasonable emergency action;
- preserve evidence;
- prepare an incident report;
- cooperate with insurers;
- avoid admissions of liability without authority.

The agreement should also identify who arranges and pays for insurance.

### Owner Responsibilities

A balanced agreement should also define what the owner must provide.

Owner responsibilities may include:

- making the property available;
- maintaining structural integrity;
- funding approved expenses;
- maintaining insurance;
- providing accurate ownership and licensing documents;
- approving major expenditure;
- paying agreed management fees;
- responding to urgent approval requests.

The manager should not be responsible for delays caused by the owner’s failure to provide funds, instructions or necessary documents.

### Performance Standards

Services should be linked to measurable standards where possible.

These may include:

- response times for guest enquiries;
- maximum time to report damage;
- reporting deadlines;
- inspection frequency;
- minimum cleaning standards;
- maintenance response times;
- owner approval procedures;
- financial reconciliation deadlines.

The agreement may also include key performance indicators, but these should be realistic.

Possible indicators include:

- occupancy;
- average daily rate;
- guest-review scores;
- maintenance response time;
- reporting accuracy;
- budget compliance.

Commercial performance should not be guaranteed where it depends on market demand, seasonality, competition or circumstances outside the manager’s control.

### Excluded Services

The agreement should state which services are not included.

Possible exclusions may include:

- structural engineering;
- legal advice;
- tax advice;
- major renovation;
- licence applications;
- litigation;
- insurance claims;
- property development;
- sale of the property.

Excluded services may require a separate agreement and separate fee.

A clear scope of services protects both parties.

It helps the owner understand what is being purchased and gives the manager a defined operational mandate.

The strongest agreement does not use the broadest possible description of management.

It creates a precise allocation of services, authority, standards, exclusions and approval requirements.

The financial provisions of a property management agreement should explain how the manager is paid, how rental income is collected and which expenses may be deducted before funds are transferred to the owner.

These provisions should reflect the actual commercial arrangement.

A management relationship may involve:

- a fixed monthly management fee;
- a percentage of gross rental revenue;
- a percentage of net operating income;
- a combination of fixed and percentage-based fees;
- separate commissions for bookings or additional services;
- performance-based compensation;
- reimbursement of approved operating expenses.

The agreement should not rely on broad expressions such as “standard management fee” or “net profit” without explaining how the relevant amount is calculated.

Unclear financial provisions may make it difficult for the owner to determine whether deductions are permitted, whether reported income is complete and whether the manager has received additional benefits from contractors or suppliers.

### The Fee Calculation Should Be Defined Precisely

Where the manager receives a percentage-based fee, the agreement should define the calculation base.

For example, a fee calculated on gross rental revenue may produce a different result depending on whether gross revenue includes:

- taxes collected from guests;
- booking-platform commissions;
- payment-processing charges;
- cleaning fees;
- security deposits;
- cancellation payments;
- late check-out charges;
- additional guest services;
- refunds;
- promotional discounts.

If the management fee is calculated on net operating income, the agreement should identify which expenses may be deducted before the fee is calculated.

The agreement should also state:

- the applicable percentage or fixed amount;
- the calculation period;
- the payment date;
- the required supporting statement;
- whether taxes are included or added;
- whether the fee applies to cancelled bookings;
- whether the fee continues during temporary closure;
- how corrections or disputed calculations are handled.

A percentage should never be separated from a clear definition of the revenue or income to which it applies.

### Rental Income Collection Requires Clear Controls

The agreement should identify every authorised channel through which property income may be received.

These channels may include:

- the owner’s bank account;
- the manager’s designated operating account;
- an account belonging to an operating company;
- booking-platform payment systems;
- payment processors;
- credit-card terminals;
- cash payments at the property.

The owner should understand who controls each account and who can access the corresponding statements, transaction records and passwords.

Where the manager collects income on behalf of the owner, the agreement should specify:

- how the funds must be recorded;
- whether they must be held separately from the manager’s own money;
- when they must be transferred to the owner;
- which deductions may be made before transfer;
- whether the manager may retain an operating reserve;
- which documents must accompany each transfer;
- how foreign-currency payments are converted;
- how cash receipts are documented.

The financial structure should allow the owner to compare confirmed reservations with guest payments, platform statements, bank deposits and management reports.

The agreement should also address direct bookings.

Direct reservations may create additional risks where payments are received outside established booking platforms. The manager should be required to record the guest, booking dates, agreed rate, payment method, discounts, deposits, refunds and outstanding balance.

### Expenses Should Be Categorised

Not every operating expense should be treated in the same way.

The agreement may distinguish between:

- routine recurring expenses;
- variable guest-related expenses;
- maintenance costs;
- staff expenses;
- emergency expenditure;
- capital improvements;
- owner-specific expenses.

Routine expenditure may include cleaning supplies, pool chemicals, internet, utilities and regularly scheduled property services.

Larger or non-routine costs may include equipment replacement, structural repairs, major contractor work, renovations or purchases that materially change the property.

The agreement should explain which categories the manager may approve independently and which require the owner’s prior written consent.

### Financial Approval Thresholds Should Be Clear

An approval threshold establishes the maximum amount the manager may spend without obtaining additional owner consent.

The agreement should state whether the threshold applies:

- to each individual purchase;
- to each repair;
- to a group of related purchases;
- per month;
- per incident;
- per contractor;
- to the total cost of a project.

Without this clarification, a single project could be divided into several smaller invoices to avoid the approval requirement.

The agreement may also establish different thresholds for different categories of expenditure.

For example, routine operating purchases may have one limit, maintenance work another and emergency repairs a separate limit.

The manager should not assume that a general operating budget authorises every expense within that budget. The agreement should explain how the approved budget interacts with individual approval thresholds.

### Emergency Expenses Require a Separate Procedure

A manager may need to act quickly where delay could result in:

- injury to a guest or member of staff;
- further property damage;
- loss of water or electricity;
- security risks;
- interruption of an occupied booking;
- failure of essential equipment.

The agreement should define what constitutes an emergency and what the manager may do when the owner cannot be contacted.

Emergency authority should not become unlimited spending authority.

The agreement should specify:

- the emergency expenditure limit;
- the method and frequency of attempted owner contact;
- the evidence required to justify the expense;
- the deadline for notifying the owner;
- the documents that must be provided afterward;
- whether several quotations are required where circumstances permit.

### Additional Fees and Mark-Ups Should Be Disclosed

The headline management fee may represent only part of the manager’s total compensation.

A manager may also receive:

- booking commissions;
- marketing fees;
- procurement mark-ups;
- maintenance coordination fees;
- staff administration charges;
- accounting fees;
- emergency call-out fees;
- contractor commissions;
- supplier rebates;
- platform management fees.

The agreement should disclose which additional payments are permitted and how they are calculated.

If the manager adds a mark-up to goods or services, the agreement should state whether the owner receives the original supplier invoice and whether the mark-up is shown separately.

The agreement should also address conflicts of interest.

The owner should know if the manager, its directors, employees or related parties have a financial interest in a contractor or supplier used for the property.

### Operating Reserves Should Have Defined Rules

Some management arrangements allow the manager to retain part of the property income as an operating reserve.

The reserve may be used to pay routine expenses without requiring the owner to transfer funds for every transaction.

Where a reserve is used, the agreement should define:

- the required reserve amount;
- the account in which it is held;
- the permitted uses;
- the minimum balance;
- the procedure for replenishment;
- the reporting requirements;
- the treatment of unused funds;
- the return of the balance after termination.

The reserve remains part of the financial relationship and should not be treated as money that the manager may use without documentation.

### Financial Reporting Should Support Every Calculation

The manager should provide regular financial statements in an agreed format.

A management report may include:

- confirmed bookings;
- occupancy;
- gross rental revenue;
- refunds and cancellations;
- platform commissions;
- management fees;
- operating expenses;
- maintenance costs;
- staff costs;
- taxes or charges;
- reserve movements;
- amounts transferred to the owner;
- outstanding balances.

Each material deduction should be supported by appropriate records.

These may include:

- invoices;
- receipts;
- contractor quotations;
- bank statements;
- payment confirmations;
- booking-platform statements;
- payroll records;
- tax payment records.

The reporting period and delivery deadline should be stated in the agreement.

The owner should also have a defined right to request supporting records and raise questions about unexplained transactions.

Financial control should not depend entirely on trust or informal communication.

A properly drafted property management agreement creates a system through which revenue can be traced, expenses can be verified and the manager’s compensation can be calculated consistently.

For a Bali villa owner, especially one managing the property remotely, these controls are essential for understanding the property’s actual financial performance and protecting the owner’s income.

A property owner should receive sufficient information to understand how the property is performing and how the manager is using the owner’s money, accounts and operational resources.

Informal updates through messaging applications may be useful for daily communication, but they do not replace structured reporting.

A property management agreement should establish:

- which reports must be prepared;
- how often they must be delivered;
- which records must support them;
- which systems the owner may access;
- how discrepancies are investigated;
- how long records must be retained;
- what information must be transferred after termination.

The reporting system should reflect the property’s actual operating model.

A villa used only occasionally by its owner may require relatively simple expense and maintenance reporting.

A commercially operated villa with frequent bookings, employees, contractors, multiple payment channels and booking platforms requires a more detailed reporting framework.

### Reporting Frequency and Format Should Be Agreed

The agreement should state when each report must be delivered.

Different reports may require different schedules.

For example:

- booking information may be available continuously;
- occupancy and revenue summaries may be provided monthly;
- expense reports may follow the accounting period;
- maintenance reports may be provided after each material incident;
- licence and compliance updates may be provided when action is required;
- annual summaries may consolidate the property’s overall performance.

The parties should also agree on the reporting format.

Reports may be delivered through:

- spreadsheets;
- accounting software;
- property management systems;
- booking-platform dashboards;
- cloud storage;
- written management reports;
- a combination of several systems.

The selected format should allow the owner to compare information between reporting periods.

A report that changes structure every month may make it difficult to identify trends, unexplained expenses or missing information.

### Booking Reports Should Match Actual Reservations

A booking report should provide more than a general occupancy percentage.

Depending on the operating model, it may identify:

- guest name or booking reference;
- booking channel;
- arrival and departure dates;
- nightly rate;
- applicable discount;
- cleaning or service charges;
- taxes collected;
- booking-platform commission;
- payment status;
- cancellation or refund;
- net amount received.

The agreement should explain how direct bookings are recorded.

Direct bookings should not remain outside the main reporting system merely because they were arranged through personal contacts, messaging applications or repeat guests.

The owner should be able to compare the booking report with:

- the property calendar;
- platform reservation records;
- guest invoices;
- payment confirmations;
- bank deposits;
- cash records.

This comparison helps identify whether every occupied night and every guest payment has been recorded.

### Financial Statements Should Be Reconciled

A monthly financial report should show the relationship between revenue received, expenses paid, manager compensation and funds transferred to the owner.

The report may include:

- opening balance;
- gross rental revenue;
- other guest income;
- refunds;
- platform commissions;
- payment-processing fees;
- management fees;
- operating expenses;
- staff expenses;
- maintenance costs;
- taxes and service charges;
- reserve movements;
- owner transfers;
- closing balance.

The figures should reconcile with the relevant bank accounts, payment systems and booking platforms.

If the manager controls several properties, the agreement should require records that clearly separate the owner’s property from other properties under management.

Property income and expenses should be identifiable without requiring the owner to reconstruct transactions from a combined account.

Any unexplained difference between reported revenue, bank deposits and booking records should be investigated and corrected.

### Supporting Documents Should Be Available

A financial report is more reliable when its entries can be verified against supporting documents.

The agreement should require the manager to retain and provide access to documents such as:

- supplier invoices;
- receipts;
- contractor quotations;
- purchase orders;
- payment confirmations;
- bank statements;
- booking-platform statements;
- staff payment records;
- maintenance records;
- tax payment documents;
- licence-related records.

The agreement may establish different documentation requirements for different types of expenditure.

For example, a minor routine purchase may require a receipt, while a major repair may require:

- prior written approval;
- several quotations;
- a contractor invoice;
- proof of payment;
- photographs of the completed work;
- warranty information.

Where an original document is unavailable, the agreement should specify what alternative evidence is acceptable and how the missing document must be reported.

### The Owner Should Retain Access to Key Systems

Operational transparency depends not only on receiving reports but also on access to the systems that generate the information.

The agreement should identify who owns and controls:

- booking-platform accounts;
- property management software;
- channel-manager accounts;
- payment-processor accounts;
- business email addresses;
- social media accounts used for the property;
- cloud-storage folders;
- accounting records;
- property telephone numbers;
- guest databases;
- digital access credentials.

Where possible, important accounts should be created in a structure that allows the owner to retain visibility and recover control if the management relationship ends.

The manager should not be the only person with access to essential booking, financial or operational systems unless the agreement provides a reliable recovery and handover process.

The agreement should also address:

- administrator rights;
- password management;
- two-factor authentication;
- authorised users;
- access changes;
- account security incidents;
- removal of former staff or contractors.

Access rights should be proportionate. The owner may require visibility and control without interfering in every routine operational task.

### Maintenance and Incident Records Should Be Preserved

Financial statements do not provide a complete picture of the property’s condition.

The manager should also maintain operational records covering:

- inspections;
- reported defects;
- repair requests;
- contractor attendance;
- equipment replacement;
- warranties;
- guest damage;
- security incidents;
- insurance-related events;
- emergency action.

A maintenance log can help the owner understand whether repairs are isolated incidents or recurring problems.

It may also help establish:

- when a defect was first identified;
- who was notified;
- which action was approved;
- which contractor performed the work;
- how much the repair cost;
- whether the problem was resolved;
- whether warranty protection remains available.

Incident records should be sufficiently detailed to support decisions relating to guests, contractors, insurance or further risk prevention.

### Questions and Discrepancies Need a Resolution Process

The agreement should establish how the owner may raise questions about a report or transaction.

The process may specify:

- the period for reviewing each report;
- the method for submitting a question;
- the manager’s response deadline;
- the documents that must be provided;
- the procedure for correcting errors;
- the treatment of disputed amounts;
- escalation where the issue remains unresolved.

Failure to question a report immediately should not automatically convert an unsupported transaction into an authorised expense unless the agreement clearly establishes that consequence.

At the same time, the owner should review reports within a reasonable period and identify concerns promptly.

A structured review process helps prevent small accounting or operational discrepancies from accumulating over many months.

### Record Retention and Handover Should Be Defined

The agreement should state which records must be preserved during the management relationship and transferred when it ends.

The handover may include:

- current and future booking records;
- guest deposits;
- financial statements;
- outstanding invoices;
- bank and payment records;
- supplier information;
- staff records;
- maintenance history;
- warranties;
- licences and operational documents;
- incident records;
- account credentials;
- property files and inventories.

The agreement should define the format and deadline for the handover.

Digital records should be delivered in a usable format rather than as inaccessible screenshots or incomplete exports.

The manager should not retain exclusive control over information required for the continued operation of the property.

A well-designed reporting and record-access system gives the owner more than periodic information.

It creates an auditable operational history of the property.

For a Bali villa owner who relies on a manager to control bookings, expenses, contractors and day-to-day operations, this transparency is essential for informed decision-making and effective oversight.

Maintenance responsibilities are one of the most important operational components of a property management agreement.

A Bali villa may require continuous attention to:

- buildings and structural elements;
- electrical and plumbing systems;
- air-conditioning;
- water pumps and tanks;
- pool equipment;
- gardens and landscaping;
- appliances;
- furniture;
- internet and security systems;
- guest facilities;
- access areas;
- drainage and waste systems.

The agreement should identify which maintenance activities form part of the manager’s ordinary services and which require separate owner approval or additional payment.

A broad obligation to “maintain the property” may not explain whether the manager must perform the work directly, arrange third-party contractors, supervise repairs or only notify the owner when a problem arises.

The division of responsibility should reflect the property’s condition, operating model, staff structure and level of guest use.

### Routine Maintenance Should Be Scheduled

Routine maintenance helps prevent small defects from developing into expensive repairs or interruptions to guest operations.

The agreement should identify recurring tasks such as:

- property inspections;
- pool servicing;
- garden care;
- air-conditioning maintenance;
- pest control;
- equipment testing;
- plumbing checks;
- electrical inspections;
- cleaning of water systems;
- appliance servicing;
- roof and drainage inspections;
- inventory checks.

The agreement may include a maintenance schedule as an annex.

The schedule should state:

- the activity;
- the responsible person;
- the required frequency;
- the reporting method;
- the expected cost;
- whether owner approval is required.

The manager should not be expected to guarantee that equipment will never fail. However, the agreement can require reasonable inspection, timely reporting and coordination of necessary preventive work.

Where a maintenance task is excluded from the management fee, that exclusion should be disclosed clearly.

### Repairs Should Be Classified

The agreement should distinguish between different categories of repairs.

These may include:

- minor routine repairs;
- urgent operational repairs;
- emergency repairs;
- major repairs;
- structural work;
- capital improvements;
- replacement of equipment or furniture.

Each category may require a different approval process.

A minor repair may fall within the manager’s ordinary authority.

A major repair or capital improvement may require:

- a written description of the problem;
- photographs or inspection records;
- one or more contractor quotations;
- the owner’s written approval;
- an agreed budget;
- confirmation of the expected completion date.

The agreement should explain whether the manager may divide a larger project into separate repair orders. A financial approval threshold should not be avoided by splitting related work into several smaller invoices.

The agreement should also distinguish between restoring the property to its existing condition and improving or redesigning it.

The manager should not assume authority to undertake renovations or material alterations merely because maintenance coordination forms part of the services.

### Emergency Repairs Require Defined Authority

An emergency may require immediate action before the owner can provide instructions.

Examples may include:

- major water leakage;
- electrical danger;
- fire or smoke damage;
- security failure;
- loss of essential utilities;
- equipment failure affecting an occupied booking;
- storm or weather damage;
- a condition creating an immediate risk to guests, staff or the property.

The agreement should define the circumstances in which the manager may authorise emergency work.

It should also establish:

- the maximum emergency expenditure;
- the procedure for attempting to contact the owner;
- the action permitted when the owner cannot be reached;
- the evidence required after the event;
- the deadline for reporting the repair;
- the treatment of costs exceeding the approved limit.

Emergency authority should be limited to action that is reasonably necessary to protect people, prevent further damage or restore an essential service.

It should not become a general exception to the owner’s approval rights.

### Contractors Should Be Selected Transparently

A property manager may use external contractors for maintenance and repairs.

The agreement should explain how contractors are identified, appointed and supervised.

The manager may be required to consider:

- relevant experience;
- availability;
- proposed price;
- scope of work;
- material specifications;
- completion schedule;
- warranty;
- licences or qualifications where relevant;
- insurance where appropriate;
- previous performance.

For higher-value work, the agreement may require several quotations unless the work is urgent or only one suitable provider is reasonably available.

The lowest quotation may not always represent the best option. The manager should be able to explain why a contractor was selected when price, quality, availability or warranty terms differ.

The owner should receive sufficient information to make an informed approval decision.

### Conflicts of Interest Should Be Disclosed

A manager may have an existing relationship with a contractor, supplier or maintenance company.

The agreement should require disclosure where:

- the contractor is related to the manager;
- the manager or its personnel have a financial interest in the contractor;
- the manager receives a commission or referral payment;
- the supplier provides rebates or other benefits;
- the manager applies a mark-up to the contractor’s price.

The owner should understand the total economic arrangement before approving the work.

Where a mark-up or coordination fee is permitted, the agreement should define:

- the applicable rate or amount;
- the calculation basis;
- whether it is shown separately;
- whether the original contractor invoice is provided;
- whether additional commissions may also be received.

Transparency does not necessarily prevent the manager from using a related or preferred contractor. It allows the owner to evaluate the proposed arrangement with full knowledge of the manager’s interest.

### The Scope of Work Should Be Documented

Before material work begins, the scope should be defined clearly.

A contractor proposal may identify:

- the problem to be addressed;
- the proposed solution;
- labour;
- materials;
- quantities;
- price;
- taxes;
- payment schedule;
- start date;
- completion date;
- exclusions;
- warranty terms.

Vague instructions may lead to disputes over whether the contractor completed the agreed work or whether additional charges are justified.

Changes to the scope should also be documented.

If unexpected conditions are discovered during the repair, the manager should explain:

- what was discovered;
- why the original scope is insufficient;
- what additional work is recommended;
- the additional cost;
- the effect on the completion schedule.

Except in a genuine emergency, material changes should not proceed without the required approval.

### Completion and Payment Should Be Verified

The agreement should define the manager’s responsibilities before a contractor is paid.

These may include:

- confirming that the work was completed;
- inspecting the result;
- checking the contractor’s invoice;
- comparing the invoice with the approved quotation;
- recording any defects;
- collecting warranties;
- obtaining photographs;
- confirming delivery of materials or equipment.

For larger projects, payment may be divided into stages.

The agreement should explain whether deposits, progress payments and final payments require separate owner approval.

Final payment should not automatically confirm that the work is free from defects. The manager should preserve any available warranty rights and report problems discovered after completion.

### Maintenance Records Should Be Preserved

The manager should maintain an organised history of inspections, repairs and equipment replacement.

Records may include:

- inspection reports;
- maintenance schedules;
- photographs;
- contractor quotations;
- owner approvals;
- invoices;
- proof of payment;
- completion reports;
- warranty documents;
- equipment manuals;
- incident reports;
- correspondence with contractors.

These records help the owner understand the condition of the property and identify recurring problems.

They are also important when:

- changing property managers;
- submitting an insurance-related claim;
- reviewing repeated equipment failures;
- planning future expenditure;
- verifying contractor warranties;
- preparing the property for sale or lease.

Maintenance information should form part of the final handover when the management relationship ends.

A well-drafted property management agreement does not merely require the manager to “take care of” the property.

It creates a practical system for inspections, repair approvals, emergency action, contractor selection, cost control, completion checks and record retention.

For a Bali villa owner, this system helps protect the physical condition of the property while ensuring that maintenance decisions and expenditure remain transparent.

A property management agreement should explain how property staff are appointed, supervised and paid, and which party is responsible for employment and operational compliance.

A manager may coordinate the daily work of:

- cleaners;
- gardeners;
- pool attendants;
- maintenance personnel;
- security staff;
- reception personnel;
- guest-service teams;
- drivers;
- bookkeepers;
- external contractors.

However, operational supervision does not automatically determine who is the legal employer.

The employer may be:

- the property owner;
- the operating company;
- the property management company;
- a staffing or outsourcing provider;
- another entity involved in the operating structure.

The agreement should reflect the actual relationship rather than using labels that do not match how staff are recruited, directed and paid.

This distinction may affect employment documentation, payroll, social-security administration, termination procedures and responsibility for workplace obligations.

### The Employer Should Be Identified Clearly

The property management agreement should state which party employs each category of staff.

It should not leave the owner to assume that the manager becomes the employer merely because the manager prepares schedules or supervises daily work.

The agreement should identify:

- who recruits staff;
- who signs employment documentation;
- who determines remuneration;
- who pays salaries and allowances;
- who approves leave;
- who evaluates performance;
- who issues warnings;
- who may terminate the relationship;
- who maintains employment records;
- who is responsible for applicable employment obligations.

Indonesia’s Government Regulation No. 35 of 2021 addresses fixed-term employment arrangements, outsourcing, working time and termination procedures. The property’s staffing structure should therefore be reviewed against the current employment framework rather than treated only as an operational arrangement.

If the owner is expected to remain the employer, the management agreement should explain the limits of the manager’s authority to act on the owner’s behalf.

If the manager or another company employs the staff, the agreement should define how staffing costs are charged to the property and what documentation the owner may review.

### Recruitment Authority Should Have Limits

The agreement should specify whether the manager may recruit additional staff without prior owner approval.

Recruitment decisions may affect:

- monthly operating costs;
- payroll obligations;
- accommodation or meal allowances;
- uniforms and equipment;
- training expenses;
- scheduling;
- termination exposure;
- the long-term operating model.

The agreement may require written approval before:

- creating a new position;
- increasing the number of staff;
- changing salary levels;
- appointing senior personnel;
- engaging a staffing agency;
- replacing an employee with a contractor;
- offering significant benefits or incentives.

The owner should also understand whether the manager may appoint relatives, related parties or personnel connected to its own business.

Potential conflicts of interest should be disclosed.

### Employment Terms Should Be Documented

Staff should not be managed only through informal verbal arrangements.

Depending on the relationship, relevant documentation may include:

- employment agreements;
- job descriptions;
- workplace policies;
- schedules;
- attendance records;
- salary records;
- leave records;
- warning letters;
- performance reviews;
- termination documents;
- confidentiality obligations;
- property-access rules.

The manager should not be authorised to make employment commitments that exceed the authority granted under the property management agreement.

For example, the agreement may restrict the manager from promising:

- indefinite employment;
- substantial salary increases;
- bonuses outside the approved budget;
- accommodation;
- severance arrangements;
- long-term benefits;
- authority to represent the property owner.

The manager should report any material change in employment terms before it is implemented.

### Payroll and Staff Costs Require Transparency

The agreement should explain how staff costs are calculated, approved and reported.

Staff-related expenditure may include:

- salaries;
- overtime;
- allowances;
- bonuses;
- holiday-related payments;
- social-security contributions;
- uniforms;
- meals;
- transport;
- training;
- recruitment fees;
- termination-related payments.

The owner should receive a regular staff-cost summary supported by appropriate payroll and payment records.

The agreement should state:

- who prepares payroll;
- who approves it;
- which account makes the payments;
- whether the manager may handle cash salary payments;
- how attendance and overtime are verified;
- how salary advances or staff loans are treated;
- how changes in compensation are approved.

Where the manager charges a staff-administration fee, that fee should be disclosed separately from the underlying employment cost.

The owner should be able to distinguish between money paid to staff and compensation retained by the manager.

### Staff Supervision Should Follow Defined Procedures

The manager may be responsible for organising daily work, monitoring service quality and responding to performance concerns.

The agreement should describe the manager’s supervisory responsibilities.

These may include:

- preparing schedules;
- assigning duties;
- monitoring attendance;
- checking service standards;
- arranging training;
- documenting performance issues;
- handling guest complaints involving staff;
- reporting serious incidents;
- recommending disciplinary action;
- coordinating replacement personnel.

The manager should also understand which decisions require owner or employer approval.

A manager may be authorised to address routine performance issues but not to terminate employment independently.

Serious matters should be documented and escalated through an agreed process.

### Outsourced Personnel Should Not Be Ignored

Some services may be performed by external companies or independent contractors rather than direct property staff.

These may include:

- security;
- pest control;
- gardening;
- pool maintenance;
- accounting;
- transportation;
- specialised repairs;
- temporary hospitality personnel.

The management agreement should identify whether the manager may appoint these providers and on what terms.

It should address:

- contractor selection;
- service scope;
- price;
- supervision;
- invoicing;
- insurance where appropriate;
- access to the property;
- confidentiality;
- responsibility for damage;
- replacement of unsuitable personnel;
- conflicts of interest.

Calling a person an independent contractor does not by itself resolve the legal nature of the working relationship. The actual arrangement and applicable Indonesian requirements should be reviewed where the classification is material.

### Operational Licences Should Be Allocated to the Correct Party

A property manager is not automatically the holder of every licence or registration required for the property’s commercial operation.

The agreement should identify:

- which entity operates the accommodation business;
- which entity holds the relevant business registration;
- which activities fall within the approved business classification;
- who maintains required operational documents;
- who monitors renewal or reporting requirements;
- who communicates with relevant authorities;
- who pays related government charges or professional costs.

Indonesia uses the electronic Online Single Submission system for business licensing. However, the requirements applicable to a particular property depend on the operating entity, business activity, risk classification, location and actual services provided.

The agreement should not state broadly that the manager is “responsible for all licences” without identifying the specific obligations involved.

The manager may be responsible for coordinating documentation while the licence itself remains in the name of the owner, operating company or another authorised entity.

### Compliance Responsibilities Should Be Specific

Operational compliance may involve several different areas.

Depending on the property and business model, these may include:

- business licensing;
- accommodation-related requirements;
- building and use documentation;
- employment administration;
- social-security administration;
- tax and local-charge records;
- guest-registration procedures;
- safety procedures;
- insurance records;
- waste and environmental requirements;
- data and account security;
- incident reporting.

The agreement should distinguish between:

- obligations the manager performs directly;
- obligations the manager monitors;
- obligations requiring owner action;
- obligations assigned to an operating company;
- matters handled by external advisers.

The manager should not be expected to provide legal, tax or licensing services unless those services are expressly included and the manager is appropriately authorised and qualified to provide them.

Where external professionals are required, the agreement should explain who appoints them, who approves their fees and who remains responsible for final decisions.

### Compliance Records Should Be Accessible

The owner should have access to documents showing how staffing and operational obligations are being managed.

Relevant records may include:

- employment documents;
- payroll summaries;
- payment records;
- staff schedules;
- attendance records;
- training records;
- contractor agreements;
- business registrations;
- licences;
- official correspondence;
- payment confirmations;
- inspection records;
- incident reports;
- renewal calendars.

The agreement should establish a system for notifying the owner before an important document expires or action becomes due.

The manager should not retain exclusive control over records required for the continued operation of the property.

These documents should also form part of the final handover when the management relationship ends.

A properly drafted property management agreement creates a clear division between operational supervision, employment responsibility and regulatory compliance.

For a Bali villa owner, this distinction helps prevent assumptions about who employs the staff, who may make staffing decisions and which party is responsible for maintaining the property’s operating framework.

A property management agreement should explain how operational risks are allocated between the property owner and the manager.

The agreement should not assume that every problem at the property is automatically the manager’s responsibility.

Some risks may arise from:

- the physical condition of the property;
- structural defects;
- guest behaviour;
- staff conduct;
- contractor performance;
- equipment failure;
- booking errors;
- payment disputes;
- data-security incidents;
- regulatory non-compliance;
- events outside either party’s control.

The agreement should identify which party controls each area of risk and which party is best placed to prevent, manage or insure against it.

Liability provisions should be consistent with the manager’s actual authority.

A manager should not generally accept responsibility for a matter that the manager cannot control. At the same time, the manager should remain accountable for authorised actions, failures to follow agreed procedures and misuse of the owner’s money, property or information.

### The Manager’s Standard of Performance Should Be Defined

The agreement should describe the level of care expected from the manager.

It may require the manager to:

- perform the agreed services with reasonable care;
- follow approved operating procedures;
- act within the authority granted;
- comply with financial approval limits;
- maintain accurate records;
- supervise staff and contractors appropriately;
- notify the owner of material problems;
- take proportionate action in emergencies;
- protect confidential information;
- avoid undisclosed conflicts of interest.

The agreement should not rely only on broad promises to manage the property “professionally” or “to the highest standard.”

Those expressions may create expectations without explaining the specific conduct required.

Performance obligations should be linked to measurable procedures, reporting requirements and approval rules.

### Owner Responsibilities Should Also Be Identified

Risk allocation should not focus only on the manager.

The owner may remain responsible for:

- the structural condition of the property;
- major capital repairs;
- adequate operating funds;
- accurate ownership and property information;
- decisions requiring owner approval;
- insurance arrangements;
- legal or professional advice;
- matters outside the manager’s authority;
- compliance obligations assigned to the owner or operating entity.

The agreement should address what happens if the owner delays an important decision or fails to provide necessary funds.

For example, the manager may notify the owner that:

- electrical equipment is unsafe;
- a roof requires urgent repair;
- a licence-related document is missing;
- insurance has expired;
- a contractor requires advance payment;
- an essential appliance should be replaced.

If the owner does not respond, the agreement should explain whether the manager may act, suspend an affected service, limit guest use or take another protective measure.

The manager should not be liable for the consequences of an owner decision that the manager properly documented and was not authorised to override.

### Guest-Related Risks Require Clear Procedures

Commercially operated villas may face claims involving:

- personal injury;
- damaged or missing property;
- booking cancellations;
- refunds;
- payment disputes;
- inaccurate advertising;
- service complaints;
- loss of guest belongings;
- privacy concerns;
- security incidents.

The agreement should define the manager’s authority to respond to these matters.

It should state whether the manager may:

- communicate with the guest;
- offer a service recovery measure;
- approve a refund;
- collect evidence;
- arrange urgent assistance;
- notify an insurer;
- appoint a contractor;
- settle a claim.

Financial limits should apply where the manager is permitted to issue refunds or agree to compensation.

The manager should preserve relevant evidence, which may include:

- booking records;
- guest communications;
- photographs;
- staff statements;
- payment records;
- inspection reports;
- incident reports;
- CCTV records where lawfully maintained;
- contractor findings.

Indonesia’s consumer-protection framework may be relevant where accommodation or related services are supplied to guests. The agreement should therefore avoid assuming that internal risk allocation between the owner and manager will eliminate rights or responsibilities that may apply to third parties.

### Contractor Risk Should Follow Control

The agreement should address responsibility for contractors appointed to work at the property.

Important questions include:

- who selected the contractor;
- who approved the scope and price;
- who supervised the work;
- who verified completion;
- who received the warranty;
- whether the contractor was properly qualified where required;
- whether a conflict of interest existed.

A manager should not automatically guarantee every contractor’s work.

However, the manager may remain responsible for failures within the manager’s own role, such as:

- appointing a contractor without required approval;
- failing to disclose a financial interest;
- ignoring an obvious defect;
- paying an invoice without checking completion;
- failing to collect agreed documentation;
- acting outside the approved budget.

The agreement should preserve available rights against the contractor and require the transfer of relevant warranties, invoices and correspondence to the owner.

### Indemnity Clauses Should Be Specific

An indemnity may require one party to compensate the other for particular losses, claims or liabilities.

Indemnity language should identify:

- the event that activates the indemnity;
- the types of loss covered;
- whether third-party claims are included;
- the procedure for notifying the other party;
- who controls the defence or settlement;
- whether prior consent is required;
- which exclusions apply.

A broad clause requiring one party to indemnify the other against “all losses whatsoever” may not reflect the intended commercial arrangement.

The clause should distinguish between losses arising from:

- the manager’s unauthorised conduct;
- the owner’s instructions;
- property defects;
- guest claims;
- staff claims;
- contractor actions;
- regulatory breaches;
- misuse of funds;
- breach of confidentiality;
- data incidents.

The agreement should also consider whether responsibility should be reduced where both parties contributed to the loss.

### Liability Limitations Should Match the Risk

The parties may consider limitations on certain categories of liability.

These may include:

- a financial cap;
- exclusion of indirect or consequential loss;
- exclusion of losses caused by inaccurate owner information;
- exclusion of events outside the manager’s control;
- specific treatment of lost revenue;
- separate rules for third-party claims.

Any limitation should be drafted carefully and reviewed against applicable law.

The agreement should consider whether the limitation applies to:

- negligence;
- wilful misconduct;
- fraud;
- misuse of owner funds;
- confidentiality breaches;
- unauthorised transactions;
- personal injury;
- damage to third-party property;
- regulatory penalties.

The same limitation may not be appropriate for every category of conduct.

A low general liability cap may provide inadequate protection where the manager controls substantial rental income, booking accounts or sensitive information.

### Insurance Responsibilities Should Be Allocated

The agreement should identify which party is responsible for arranging and maintaining relevant insurance.

Depending on the property and operating model, the parties may need to consider coverage relating to:

- buildings;
- contents;
- public liability;
- property operations;
- employees;
- contractors;
- business interruption;
- guest-related incidents;
- vehicles;
- cyber or data risks.

The agreement should not state that a property is “fully insured” without identifying the actual policies and coverage.

It should address:

- policyholder identity;
- insured property and activities;
- coverage limits;
- exclusions;
- deductibles;
- renewal dates;
- premium payment;
- notification requirements;
- claims procedures;
- access to policy documents.

The existence of insurance does not by itself determine contractual liability.

A loss may fall outside the policy, exceed the coverage limit or be excluded because a required procedure was not followed.

The agreement should therefore coordinate insurance obligations with notification, recordkeeping and risk-allocation clauses.

### Insurance Claims Need a Procedure

The manager may be the first person to discover damage or receive notice of an incident.

The agreement should state whether the manager is authorised or required to:

- secure the property;
- arrange emergency action;
- take photographs;
- collect statements;
- preserve damaged items;
- notify the owner;
- notify the insurer or broker;
- obtain repair quotations;
- assist with claim documents.

The manager should not admit liability, promise compensation or settle an insured claim unless authorised.

Late or incomplete reporting may affect the handling of a claim. The agreement should therefore establish clear internal notification deadlines without assuming that those deadlines replace the requirements of the relevant insurance policy.

### Personal Data and Account Security Create Additional Risk

A property manager may process personal information relating to:

- guests;
- property staff;
- contractors;
- owners;
- payment contacts;
- emergency contacts.

The manager may also control booking accounts, email addresses, payment systems and property-access information.

Indonesia’s Personal Data Protection Law regulates the processing and protection of personal data, including responsibilities concerning security and confidentiality.

The agreement should address:

- permitted use of personal information;
- access controls;
- password security;
- authorised personnel;
- information sharing;
- storage and retention;
- incident reporting;
- deletion or transfer after termination.

The manager should promptly notify the appropriate party of unauthorised access, loss of information or compromise of an important operational account.

Liability for a data incident should reflect the roles of the parties, their control over the relevant system and their compliance with agreed security procedures.

### Events Outside the Parties’ Control Should Be Addressed

A property may be affected by events that neither the owner nor manager can reasonably prevent.

These may include:

- natural disasters;
- serious utility failures;
- government restrictions;
- civil disruption;
- widespread platform outages;
- public-health measures;
- other exceptional events.

The agreement should define how such events affect:

- service obligations;
- guest communication;
- cancellations and refunds;
- emergency expenditure;
- property access;
- reporting;
- management fees;
- termination rights.

A force-majeure clause should not automatically excuse every failure connected to a difficult event.

The affected party should normally be expected to notify the other party, explain the impact and take reasonable steps to reduce further loss where possible.

### Incident Reporting Supports Risk Management

The agreement should require written reporting of material incidents.

An incident report may identify:

- the date and time;
- the persons involved;
- what occurred;
- immediate action taken;
- property or equipment affected;
- injuries or complaints;
- witnesses;
- photographs or supporting evidence;
- notifications made;
- recommended follow-up action.

Incident records help the parties evaluate responsibility, insurance coverage, contractor performance and preventive measures.

A property management agreement cannot remove every operational risk.

It can, however, create a structured system for assigning responsibilities, reporting incidents, maintaining insurance, handling claims and determining which party bears the consequences of particular decisions or failures.

For a Bali villa owner, that structure is essential where another party controls daily operations and interacts with guests, staff, contractors and property systems.

A property management agreement should establish a clear process for ending the management relationship and transferring operational control.

Termination may affect much more than the manager’s right to continue providing services.

At the termination date, the manager may control or hold:

- future guest bookings;
- guest deposits;
- rental income;
- operating reserves;
- booking-platform accounts;
- payment systems;
- property email addresses;
- social media accounts;
- keys and access devices;
- staff records;
- contractor information;
- licences and operational documents;
- financial reports;
- maintenance records;
- guest communications;
- passwords and digital credentials.

If the agreement does not establish a structured handover process, the property owner may recover physical possession of the villa but still lack the information and access required to operate it.

The termination provisions should therefore address both the legal end of the agreement and the practical transfer of the property’s complete operating system.

### Ordinary Termination Should Have a Defined Notice Period

The agreement should state whether either party may terminate without proving a breach.

Where ordinary termination is permitted, the agreement should define:

- the required notice period;
- the permitted method of notice;
- the date on which notice becomes effective;
- whether the manager continues full operations during the notice period;
- whether new bookings may be accepted;
- whether expenditure limits change;
- whether transition assistance is required;
- which fees remain payable.

The appropriate notice period may depend on:

- the number of future bookings;
- the size of the property operation;
- the number of staff;
- the complexity of the accounts;
- the manager’s role in licensing or administration;
- the time required to appoint a replacement manager.

A short notice period may allow a faster exit but create operational disruption.

A longer notice period may support an orderly transition but expose the parties to an extended relationship after trust has deteriorated.

The agreement should balance these concerns.

### Breaches Should Have a Correction Procedure

Not every breach should automatically result in immediate termination.

The agreement may require the affected party to provide written notice describing:

- the breach;
- the relevant contractual obligation;
- the action required to correct it;
- the permitted correction period;
- the consequences of failing to correct it.

A correction period may be appropriate for issues such as:

- delayed reporting;
- incomplete documentation;
- minor payment discrepancies;
- failure to provide a routine operational service;
- failure to follow an administrative procedure.

The agreement should also explain what happens if the same breach occurs repeatedly.

A manager should not be able to avoid termination by temporarily correcting the same serious problem each time it is reported.

### Immediate Termination Events Should Be Specific

Some events may justify termination without a lengthy correction period.

Depending on the relationship, these may include:

- fraud or deliberate dishonesty;
- unauthorised use of owner funds;
- refusal to provide account access;
- serious confidentiality or data breach;
- abandonment of the property;
- unlawful activity;
- material conflict of interest that was not disclosed;
- serious safety failure;
- loss of an essential licence or authority;
- insolvency;
- repeated material breach;
- unauthorised transfer of management responsibilities.

Immediate termination clauses should be drafted carefully.

A vague right to terminate for any conduct considered “unacceptable” may create uncertainty.

The agreement should identify the seriousness of the relevant event and the evidence or notice required.

### Existing Guest Bookings Need a Transition Plan

Future bookings may continue beyond the termination date.

The agreement should explain how those bookings will be managed.

Important questions include:

- who communicates with the guests;
- who controls the booking calendar;
- who holds guest deposits;
- who receives outstanding payments;
- who provides check-in and guest services;
- who handles cancellations and refunds;
- who is responsible for platform commissions;
- how guest information is transferred;
- whether the manager receives a fee for post-termination bookings.

The agreement should distinguish between:

- bookings completed before termination;
- bookings accepted before termination but performed afterward;
- bookings accepted during the notice period;
- new bookings after the termination date.

The owner should not discover after termination that future reservations remain accessible only through the former manager’s account.

Guest communication should be coordinated to avoid conflicting instructions, duplicate charges or unnecessary cancellations.

### Financial Reconciliation Should Be Mandatory

The agreement should require a final financial reconciliation.

The reconciliation may include:

- rental income received;
- outstanding guest payments;
- refunds and cancellations;
- management fees;
- supplier invoices;
- staff costs;
- contractor payments;
- taxes and operating charges;
- operating-reserve balances;
- guest security deposits;
- owner transfers;
- disputed amounts.

The agreement should specify:

- the reconciliation period;
- the delivery deadline;
- the required format;
- the supporting documents;
- the date for transferring the final balance;
- the procedure for resolving discrepancies.

The manager should not retain an entire operating balance merely because one transaction remains disputed.

Where appropriate, the undisputed amount should be transferred while the parties address the remaining issue separately.

### Booking and Payment Accounts Should Be Transferred

The agreement should list the digital and financial accounts used to operate the property.

These may include:

- Airbnb or other booking-platform accounts;
- channel-manager accounts;
- property management software;
- payment processors;
- business email;
- cloud-storage accounts;
- social media;
- website administration;
- domain accounts;
- messaging accounts;
- accounting systems;
- digital advertising accounts.

For each account, the agreement should identify:

- the account owner;
- the administrator;
- authorised users;
- the registered email address;
- the registered telephone number;
- the payment destination;
- the handover procedure.

Where an account cannot legally or technically be transferred, the agreement should establish an alternative process.

This may involve:

- exporting booking and guest records;
- changing authorised administrators;
- transferring property listings where permitted;
- changing payment details;
- redirecting communications;
- creating replacement accounts;
- coordinating guest notifications.

The former manager should remove its access after the handover is completed, except where temporary access is expressly required for transition support.

### Keys and Physical Assets Should Be Inventoried

The handover should include all physical items held by the manager.

These may include:

- property keys;
- gate remotes;
- access cards;
- safe keys;
- vehicle keys;
- storage keys;
- staff keys;
- security devices;
- original documents;
- equipment;
- petty cash;
- spare parts;
- property supplies.

The agreement may require a signed handover record confirming:

- the items transferred;
- the quantity;
- the condition;
- the recipient;
- the transfer date;
- any missing item.

Access codes should be changed where necessary.

The owner should consider whether former personnel or contractors retain copies of keys, alarm codes or digital access rights.

### Staff and Contractor Arrangements Need Attention

Termination of the management agreement does not automatically resolve every employment or contractor relationship.

The parties should determine:

- who employs each member of staff;
- whether staff remain at the property;
- who communicates the management change;
- who pays outstanding salaries or allowances;
- who holds employment records;
- whether contractor agreements continue;
- whether notice must be given to suppliers;
- whether the replacement manager assumes any operational relationship.

The outgoing manager should not promise continued employment or terminate staff outside the authority granted under the agreement.

The owner should receive sufficient information to maintain essential services during the transition.

### Records Should Be Delivered in a Usable Format

The manager should transfer the operational history of the property.

The handover may include:

- booking records;
- guest communications;
- financial statements;
- bank and payment records;
- invoices and receipts;
- staff records;
- supplier and contractor details;
- maintenance logs;
- warranties;
- licences;
- tax and compliance records;
- incident reports;
- insurance correspondence;
- property inventories;
- operating procedures.

Digital records should be organised and delivered in a format that the owner or replacement manager can access.

Screenshots may not be sufficient where complete spreadsheets, reports or system exports are available.

The agreement should also address the treatment of duplicate copies after termination.

The former manager may need to retain certain records where required for legitimate legal, accounting or compliance purposes. However, confidential and personal information should not be retained or used without an appropriate basis.

### Transition Assistance Should Be Defined

A complex property operation may require cooperation between the outgoing and incoming managers.

The agreement may require the outgoing manager to:

- attend a handover meeting;
- explain current bookings;
- identify urgent maintenance matters;
- introduce key contractors;
- provide account instructions;
- explain staff schedules;
- assist with guest communications;
- answer reasonable follow-up questions.

The duration and scope of transition assistance should be defined.

The agreement should state whether this assistance is included in the management fee or charged separately.

Transition obligations should not remain unlimited. At the same time, the outgoing manager should not be able to complete the handover by transferring disorganised records without necessary explanation.

### Obligations That Continue After Termination Should Be Listed

Some contractual obligations may need to continue after the management relationship ends.

These may include:

- final payment obligations;
- financial reconciliation;
- confidentiality;
- protection of personal data;
- return of property;
- account transfer;
- cooperation with existing claims;
- dispute-resolution procedures;
- preservation of records;
- restrictions on using property information.

The agreement should identify which obligations survive and for how long.

Termination should end the manager’s authority to make new commitments on behalf of the owner, except where limited transition authority is expressly granted.

A well-drafted termination clause protects the continuity of the property’s operation.

It ensures that the owner receives not only the keys to the villa but also the accounts, records, money, documents and practical information required to continue managing the property.

For a Bali villa owner, planning the handover before the agreement is signed is significantly safer than attempting to negotiate access after the management relationship has already broken down.

A property management agreement may appear straightforward while still leaving important operational and financial risks unresolved.

The agreement may describe general services and state the management fee without explaining how authority, money, records, contractors, staff and accounts will actually be controlled.

For a Bali villa owner, particularly one living outside Indonesia or away from the property, weaknesses in the agreement may remain unnoticed until:

- income is lower than expected;
- expenses increase;
- reports are incomplete;
- a major repair is required;
- a guest makes a claim;
- staff responsibilities become disputed;
- the owner attempts to replace the manager.

The following issues should be reviewed carefully before a property management agreement is signed.

### The Manager’s Authority Is Described Too Broadly

A clause allowing the manager to “operate and manage the property” may be too general.

It may not explain whether the manager can:

- change rental rates;
- offer discounts;
- issue refunds;
- appoint contractors;
- hire staff;
- purchase equipment;
- approve repairs;
- access bank accounts;
- receive guest payments;
- sign documents;
- communicate with authorities;
- settle claims.

The agreement should distinguish between routine operational decisions and matters requiring prior owner approval.

A broad authority clause becomes a significant risk where it is not supported by:

- financial limits;
- approval procedures;
- reporting obligations;
- conflict-of-interest rules;
- emergency restrictions.

The owner should be able to understand the practical consequences of every material authority granted to the manager.

### The Management Fee Does Not Show the Total Cost

A low headline management fee may not reflect the manager’s complete compensation.

Additional income may come from:

- booking commissions;
- procurement mark-ups;
- supplier rebates;
- contractor commissions;
- maintenance coordination fees;
- marketing fees;
- staff administration charges;
- accounting fees;
- emergency call-out fees;
- platform-management charges.

The agreement should disclose every category of fee or benefit that the manager may receive in connection with the property.

The calculation basis should also be precise.

A percentage of “gross revenue” or “net income” cannot be evaluated properly unless the agreement explains:

- which income is included;
- which deductions are permitted;
- how refunds are treated;
- whether taxes and platform fees are included;
- when the calculation is made;
- which report supports the calculation.

An owner should not need to infer the real cost from several different clauses or informal explanations.

### Revenue Is Collected Through Accounts Controlled Only by the Manager

The owner should understand where guest payments are received and who controls each account.

A serious warning sign may arise where:

- the manager uses an account not identified in the agreement;
- booking-platform payments go only to the manager;
- the owner cannot view transaction records;
- direct bookings are recorded separately or informally;
- cash receipts are not documented;
- transfers are made without supporting statements;
- the manager controls the only administrator login.

The agreement should allow the owner to reconcile bookings, guest payments, platform statements, bank deposits and management reports.

Where the manager holds property income temporarily, the rules for deductions, reserves and transfers should be clear.

Exclusive manager control over revenue and account information may leave the owner unable to verify the property’s actual performance.

### Expenses Can Be Approved Without Clear Limits

The agreement should not give the manager unlimited authority to spend property income.

Red flags may include:

- no spending threshold;
- no distinction between routine and major expenses;
- no requirement for invoices;
- no quotation procedure;
- no owner approval for capital expenditure;
- no limit on emergency spending;
- no rule against dividing projects into smaller invoices;
- no explanation of mark-ups.

The manager may need practical authority to purchase supplies and arrange minor repairs.

However, that authority should operate within a defined budget and approval system.

Material expenditure should normally be supported by adequate information, such as:

- a description of the problem;
- photographs;
- contractor quotations;
- expected completion time;
- proposed price;
- warranty terms.

### Financial Reporting Is Vague or Optional

The agreement should state which reports the manager must provide and when.

A promise to provide reports “upon request” may be inadequate where the manager controls daily revenue and expenditure.

Warning signs may include:

- no reporting deadline;
- no agreed reporting format;
- no booking report;
- no bank reconciliation;
- no supporting-document requirement;
- no access to platform statements;
- no right to question discrepancies;
- no final reconciliation after termination.

Informal messages and occasional screenshots do not create a reliable financial record.

The owner should receive consistent statements that show:

- revenue;
- deductions;
- expenses;
- manager compensation;
- reserve movements;
- owner transfers;
- outstanding balances.

The agreement should also provide access to supporting invoices, receipts and transaction records.

### The Manager Selects Related Contractors Without Disclosure

A manager may have preferred contractors or suppliers.

That arrangement is not necessarily improper, but the financial relationship should be transparent.

A conflict may arise where:

- the contractor is related to the manager;
- the manager has an ownership interest;
- the manager receives a commission;
- the supplier provides a rebate;
- the manager adds an undisclosed mark-up;
- alternative quotations are not considered;
- the original invoice is withheld.

The agreement should require disclosure of financial interests and additional compensation.

For significant work, the owner should understand:

- who selected the contractor;
- why the contractor was chosen;
- what the work includes;
- how the price was determined;
- who supervises completion;
- what warranty applies.

### Staff Responsibilities Are Not Allocated Clearly

The agreement should identify who employs and pays property staff.

A manager may supervise staff without becoming their legal employer.

Uncertainty may arise where the agreement does not state:

- who signs employment documentation;
- who approves salaries;
- who administers payroll;
- who records attendance;
- who handles performance issues;
- who may terminate employment;
- who maintains employment records;
- who is responsible for applicable employment administration.

The owner should also understand whether staff costs are included in the management fee or charged separately.

A management agreement should not create the impression that all staff-related responsibilities have been transferred when the actual structure does not support that conclusion.

### Licensing Responsibility Is Expressed Too Generally

A clause stating that the manager is responsible for “all permits and licences” may be misleading.

The agreement should identify:

- the operating entity;
- the holder of the relevant business registration;
- the activities being conducted;
- the documents the manager coordinates;
- the obligations requiring owner or company action;
- the professional advisers involved;
- the cost of applications or renewals.

A property manager is not automatically the legal holder of every approval required for the property’s commercial operation.

The manager may assist with administration while the relevant licence or registration remains connected to another person or entity.

The agreement should reflect the actual operating and licensing structure.

### Liability Is Shifted Entirely to One Party

A heavily one-sided liability clause may indicate that the agreement has not been adapted to the real relationship.

The manager may attempt to exclude responsibility for:

- misuse of funds;
- unauthorised expenditure;
- failure to report;
- account-security failures;
- undisclosed conflicts;
- serious operational misconduct.

Alternatively, the manager may be expected to accept liability for:

- structural defects;
- owner decisions;
- insufficient operating funds;
- events outside the manager’s control;
- risks the manager cannot insure or prevent.

Risk should generally follow authority, control and responsibility.

The agreement should distinguish between:

- manager-controlled operational failures;
- owner-controlled property or funding issues;
- contractor actions;
- guest conduct;
- insured events;
- exceptional external events.

### Insurance Is Mentioned Without Identifying the Policy

A clause stating that the property is insured does not explain:

- who holds the policy;
- which property and activities are covered;
- the coverage limit;
- the deductible;
- the exclusions;
- the renewal date;
- the claims procedure.

The owner should verify the actual policy documents rather than relying only on a statement in the management agreement.

The agreement should also explain the manager’s responsibilities when an incident occurs.

These may include notification, evidence preservation, emergency action and cooperation with the claim process.

### The Manager Controls All Accounts and Passwords

Operational dependence can become a major exit risk.

The owner should be cautious where the manager has exclusive control over:

- booking-platform accounts;
- channel-management systems;
- property email;
- payment accounts;
- cloud storage;
- website administration;
- social media;
- guest databases;
- property telephone numbers.

The agreement should establish owner visibility, administrator rights and a practical transfer process.

Where an account cannot be transferred, the agreement should explain how information, bookings and communications will be migrated.

The owner should not have to rebuild the entire property operation after termination.

### The Termination Clause Does Not Include a Handover

A notice period alone is not a complete termination system.

The agreement should address the transfer of:

- future bookings;
- guest deposits;
- operating funds;
- account access;
- passwords;
- keys;
- staff information;
- contractor records;
- licences;
- maintenance history;
- financial documents;
- property inventories.

A weak termination clause may allow the manager to stop providing services without completing the operational handover.

The agreement should establish a deadline, delivery format and final reconciliation process.

### The Agreement Does Not Match the Actual Operating Model

A generic template may use standard wording that does not reflect how the villa is really managed.

For example, the agreement may describe a manager providing limited maintenance services while the actual arrangement involves:

- marketing;
- pricing;
- booking management;
- guest communication;
- income collection;
- payroll;
- procurement;
- licensing coordination;
- financial administration.

The contract should match the real flow of authority, services and money.

A mismatch between the written agreement and daily operations may create uncertainty precisely when the parties need the contract most.

A property management agreement should be reviewed as an operating-control document, not merely as a description of services.

The most important red flags are provisions that prevent the owner from understanding:

- who controls decisions;
- where the money goes;
- how expenses are approved;
- which records are available;
- who is responsible for staff and compliance;
- how the relationship can be ended.

For a Bali villa owner, resolving these questions before signing is significantly easier than attempting to reconstruct the arrangement after a financial or operational dispute has developed.

Before signing a property management agreement, the owner should verify that the document reflects the property’s actual operating model.

The review should not focus only on the management fee or the list of services.

The agreement should explain how the manager will control:

- daily operations;
- guest bookings;
- rental income;
- operating expenses;
- staff;
- contractors;
- maintenance;
- property accounts;
- records;
- licences and compliance matters;
- incidents and claims;
- termination and handover.

A property owner should be able to follow the complete operational process from the moment a booking is accepted until the resulting income, expenses and manager compensation appear in the owner’s financial report.

The agreement should also explain what happens when an urgent repair is required, a guest makes a claim, the manager appoints a contractor or either party decides to end the relationship.

### Verify the Parties and Operating Structure

The agreement should correctly identify every party involved.

The owner should verify:

- the owner’s legal name and details;
- the manager’s legal name and details;
- the operating company, if different;
- the person authorised to sign for each entity;
- the property covered by the agreement;
- the legal or commercial role of each party.

The agreement should not create uncertainty between:

- the property owner;
- the manager;
- the accommodation operator;
- the employer of property staff;
- the holder of business registrations or licences;
- the party receiving guest payments.

If several parties participate in the operation, their responsibilities should be allocated expressly.

The owner should also verify whether the manager may subcontract or transfer any part of the services to another person or company.

### Confirm the Complete Scope of Services

The agreement should identify the services included in the management arrangement.

These may include:

- marketing;
- pricing;
- booking administration;
- guest communication;
- check-in and check-out;
- cleaning;
- maintenance;
- pool and garden care;
- staff supervision;
- procurement;
- contractor coordination;
- financial reporting;
- licence coordination;
- incident management.

The owner should also identify excluded services.

An excluded service may require:

- a separate contractor;
- an additional management fee;
- direct owner involvement;
- external legal, tax or licensing assistance.

The scope should explain whether the manager performs each service directly or only coordinates a third party.

The agreement should not rely on general expressions such as “complete property management” without defining what that service includes.

### Check the Manager’s Authority

The owner should understand which decisions the manager may make independently.

The agreement should address authority relating to:

- rental rates;
- discounts;
- refunds;
- guest compensation;
- staff recruitment;
- salary changes;
- contractor appointments;
- routine purchases;
- repairs;
- emergency expenditure;
- bank and payment accounts;
- booking platforms;
- documents and communications.

Financial approval thresholds should be stated clearly.

The owner should verify whether a threshold applies:

- to each transaction;
- to each incident;
- to each contractor;
- per month;
- to the total cost of a related project.

Emergency authority should be separate from routine spending authority.

The agreement should state what constitutes an emergency, how much the manager may spend and when the owner must be notified.

### Review Every Fee and Financial Benefit

The owner should identify the manager’s complete compensation.

This may include:

- a fixed management fee;
- a percentage of revenue;
- a performance fee;
- booking commissions;
- procurement mark-ups;
- maintenance coordination fees;
- staff administration fees;
- contractor commissions;
- supplier rebates;
- marketing charges;
- accounting fees.

The calculation basis should be defined precisely.

If the manager receives a percentage of gross revenue, the agreement should explain whether the calculation includes or excludes:

- taxes;
- booking-platform commissions;
- cleaning fees;
- security deposits;
- refunds;
- cancelled bookings;
- additional guest services.

If the fee is based on net income, every permitted deduction should be identified.

The owner should also verify whether the manager may receive undisclosed benefits from suppliers, contractors or related companies.

### Trace the Flow of Rental Income

The agreement should identify where guest payments are received.

The owner should verify:

- the authorised bank accounts;
- booking-platform payment accounts;
- payment processors;
- cash-payment procedures;
- direct-booking procedures;
- transfer frequency;
- permitted deductions;
- operating reserves;
- supporting statements.

The owner should know who controls each payment account and whether the owner can access the relevant transaction records.

The agreement should allow the owner to compare:

- booking records;
- guest payments;
- platform statements;
- bank deposits;
- management reports;
- transfers to the owner.

Direct bookings should be included in the same reporting system as platform bookings.

### Examine Expense Approval Procedures

The owner should verify which expenses the manager may approve.

The agreement should distinguish between:

- routine operating expenses;
- guest-related expenses;
- maintenance;
- emergency repairs;
- equipment replacement;
- capital improvements;
- owner-specific expenditure.

Material expenses should normally require appropriate information and approval.

The agreement may require:

- photographs;
- a description of the problem;
- contractor quotations;
- supplier invoices;
- an approved scope of work;
- completion records;
- warranty information.

The owner should also check whether related purchases may be divided into smaller amounts to avoid an approval threshold.

### Confirm Reporting and Record Access

The agreement should state which reports the manager must provide.

These may include:

- booking reports;
- occupancy reports;
- revenue statements;
- expense reports;
- bank reconciliations;
- maintenance logs;
- staff-cost summaries;
- incident reports;
- licence and compliance updates.

The reporting frequency, deadline and format should be defined.

The owner should also have access to supporting documents, including:

- invoices;
- receipts;
- bank statements;
- platform statements;
- contractor quotations;
- proof of payment;
- payroll records;
- maintenance documents.

The owner should verify access to essential digital systems.

These may include booking platforms, property management software, business email, cloud storage and payment accounts.

### Review Staff and Contractor Responsibilities

The agreement should identify who employs property staff and who is authorised to manage them.

The owner should verify:

- recruitment authority;
- salary approval;
- payroll responsibility;
- attendance and overtime records;
- performance supervision;
- termination authority;
- employment-document custody;
- staff-related reporting.

For external contractors, the agreement should address:

- selection;
- quotations;
- approval;
- supervision;
- invoicing;
- warranties;
- conflicts of interest.

The owner should know whether the manager receives any commission, mark-up or other benefit connected with a contractor.

### Verify Licensing and Compliance Responsibilities

The agreement should identify the entity responsible for the property’s commercial operation.

The owner should verify:

- which party holds the relevant business registration;
- which activities are covered;
- who maintains operational documents;
- who monitors renewals or reporting;
- who communicates with authorities;
- who appoints external advisers;
- who pays related costs.

A general statement that the manager handles “all licences and compliance” may not be sufficient.

The agreement should identify specific responsibilities and distinguish administrative coordination from obligations that remain with the owner or operating company.

### Review Liability and Insurance

The agreement should explain how risks are allocated between the owner and manager.

The owner should review:

- the manager’s standard of performance;
- owner responsibilities;
- contractor risk;
- guest claims;
- indemnities;
- liability limitations;
- incident-reporting procedures;
- confidentiality;
- account security;
- personal-data handling.

Insurance provisions should identify:

- the policyholder;
- the insured property and activity;
- coverage limits;
- exclusions;
- deductibles;
- premium responsibility;
- renewal responsibility;
- claim-notification procedures.

The owner should review the actual policy documents rather than relying only on a general statement that insurance exists.

### Test the Termination and Handover Process

The owner should consider what would happen if the relationship ended immediately after signing.

The agreement should provide a clear process for transferring:

- future bookings;
- guest deposits;
- rental income;
- operating reserves;
- booking accounts;
- payment systems;
- passwords;
- business email;
- keys;
- staff information;
- contractor records;
- licences;
- maintenance records;
- financial documents.

The termination clause should address:

- ordinary notice;
- correction of breaches;
- immediate termination events;
- final reconciliation;
- transition assistance;
- post-termination obligations.

The owner should not depend entirely on the manager’s cooperation to recover essential accounts and operating information.

### Check Every Annex and Referenced Document

Important obligations may appear outside the main agreement.

The owner should review all referenced documents, including:

- service schedules;
- fee schedules;
- operating budgets;
- property inventories;
- maintenance plans;
- approval matrices;
- reporting templates;
- account lists;
- insurance documents;
- handover checklists.

The agreement should not refer to an annex that is incomplete, missing or inconsistent with the main text.

Blank financial thresholds or undefined schedules should be completed before signing.

Any oral promise that materially affects the arrangement should be reflected in the written documentation.

A final review should test whether the agreement answers five practical questions:

- What may the manager do?
- How is the manager paid?
- How can the owner verify the money?
- Who bears each operational risk?
- How does the owner recover control when the relationship ends?

If the agreement does not answer these questions clearly, further revision may be required before signing.

For a Bali villa owner, a detailed pre-signing review provides an opportunity to correct the operating structure before authority, accounts, staff and guest relationships have already been transferred to the manager.

The agreement should define the manager’s services, authority, fees, income-collection procedures, expense limits, reporting obligations, maintenance responsibilities, staff and contractor arrangements, liability, insurance and termination process. It should also establish how accounts, records, bookings, funds and keys will be transferred when the relationship ends.

Management fees may be structured as a fixed monthly amount, a percentage of gross rental revenue, a percentage of net operating income or a combination of these methods. The agreement should define the calculation basis and disclose all additional commissions, mark-ups and service charges.

A manager may collect rental income if the agreement grants that authority and establishes clear financial controls. It should identify the authorised accounts, permitted deductions, transfer schedule, operating reserves and records required to reconcile bookings, guest payments and owner transfers.

The agreement should distinguish routine operating expenses from major repairs, equipment replacement and capital improvements. It should establish financial thresholds, documentation requirements and a separate procedure for genuine emergency expenditure.

The agreement should identify who employs property staff and who may recruit, supervise, pay or terminate them. It should also define how external contractors are selected, approved and supervised, including disclosure of commissions, mark-ups and conflicts of interest.

The owner should receive regular booking, occupancy, revenue, expense and maintenance reports in an agreed format. The owner should also have access to supporting invoices, receipts, bank records, platform statements, contractor documents and relevant operational accounts.

Responsibility depends on the property’s operating structure and should be allocated expressly in the agreement. The manager may coordinate documentation or renewals, but the relevant licence or insurance policy may remain connected to the owner, operating company or another authorised entity.

The agreement should require a structured handover of future bookings, guest deposits, operating funds, financial records, platform accounts, passwords, keys, staff information, contractor records and property documents. It should also provide for final financial reconciliation and any necessary transition assistance.

Property management agreements form part of a wider contractual framework governing service providers, commercial operations, property use and risk allocation in Indonesia.

Bali villa owners should also review how the management agreement interacts with booking arrangements, operating companies, lease documents, contractor relationships and other commercial agreements connected with the property.

Explore related insights:

• Service Agreement in Indonesia: Key Clauses Businesses Should Include
• Service Agreement Template Indonesia: What Businesses Should Check Before Using One
• Commercial Agreements for Foreign Investors in Bali
• Property Lease Agreement Bali: Essential Clauses to Include