How to Cancel a Property Management Contract in Texas

Hiring a property manager was supposed to make your life easier.

But what happens when it does the opposite?

If you are reading this, you are likely dealing with the frustration of a partnership gone wrong. Maybe your tenants are bypassing the manager to call you about ignored repairs. Perhaps communication has gone cold, or you are seeing “misc” fees eating into your monthly statements.

Whatever the reason, the reality is the same: You aren’t alone, and you definitely aren’t stuck.

While Texas landlords have every right to cancel a management agreement, doing so requires precision. You cannot simply send an email and walk away. To protect your rental income and avoid liability, you must navigate specific Texas Property Code requirements regarding tenant notice, trust fund accounting, and security deposit transfers.

At 1836 Property Management, we have spent over 20 years simplifying this transition for hundreds of Austin-area landlords.

This step-by-step guide walks you through the entire lifecycle of terminating a Texas property management agreement. We will cover how to audit your contract, the critical role of TREC compliance in protecting your funds, and exactly how to handle the “handover” so your tenants—and your money—don’t get lost in the shuffle.

Quick Summary

Before you terminate a property management agreement in Texas, run through this at-a-glance checklist to avoid the most common (and most expensive) mistakes:

• Read the termination + auto-renewal clause to confirm the notice period, delivery method, and any renewal deadlines you must hit.
• Decide “without cause” vs “for cause” based on your goals, timeline, and what your contract requires (including any notice-and-cure steps).
• Send written notice and a written demand for trust funds/records so your termination is clear and your money, ledgers, and files are formally requested.
• Plan tenant notice + the rent payment switch (where rent goes, where legal notices go, and who handles maintenance after the cutover date).
• Get a security deposit ledger + final accounting so deposits, reserves, open invoices, and owner payouts are reconciled cleanly.

If the manager is licensed, TREC trust rules may apply, which makes your written demand and documentation even more important.

If you want help handling this cleanly from start to finish, 1836 Property Management can take care of it for you.

Texas-Specific Compliance

Canceling a property management contract isn’t just a “send an email and move on” situation—especially in Texas. Two things make a Texas termination different from a generic how-to guide:

1) Many Texas property managers operate under Texas Real Estate Commission (TREC) licensing rules.

If your manager is a licensed broker (or works under one), there are stricter expectations around how they handle and account for “trust money” like rent receipts, security deposits, and owner reserves. That means your transition should include a clear written demand for records and funds, plus a clean handoff process—because this is where disputes often start.

2) Texas landlord-tenant statutes create notice/disclosure and security-deposit obligations that you (as the owner/landlord) ultimately remain responsible for.

Even if a property management company handled tenant communication and deposit accounting day-to-day, Texas law generally treats those duties as the landlord’s responsibility. If tenants aren’t properly notified about where to pay rent or where to send notices after the switch—or if deposit records aren’t transferred correctly—the fallout typically lands on you, not the outgoing manager.

In short: the “termination letter” is only one piece. In Texas, the real goal is ending the relationship and protecting your money, your records, and your compliance obligations in the same move.

Use the TREC License Holder Search to confirm whether your property manager is licensed under TREC. 

Most important TREC laws to consider when canceling a property management contract in Texas

If your property manager is a TREC-licensed broker (or works under one), these are the key rules that come into play during termination. These laws mostly apply to the property manager—not you as the owner—but they’re still worth knowing because they set clear expectations for how your money, records, and final accounting should be handled during the handoff. 

1. Trust money handling (rent, security deposits, reserves, unearned fees)

• Law: 22 TAC § 535.146 (Trust Accounts)
• What it covers: what counts as trust money, how it must be held (no commingling), how it must be deposited/disbursed, and required documentation.

2. Written demand → “no later than 30 days” for paying out trust money

• Law: 22 TAC § 535.146
• Rule: after a written demand for trust money, the broker must pay the entitled party within a “reasonable time,” defined as no later than the 30th day after demand.
• What to demand (in writing):
  • owner reserve funds / unapplied rents
  • security deposit balances + tenant-by-tenant deposit ledger
  • final reconciliation + accounting exports/backups

3. Monthly accounting + transaction-level trust records (when there’s activity)

• Law: 22 TAC § 535.146
• What it requires (in practice): documentary records of deposits/withdrawals and regular accounting when there’s activity—so you can reconcile funds and transfer management without gaps.

4. Record retention (4 years) for trust account records and contract/transaction files

• Law: 22 TAC § 535.146 (trust account records) and 22 TAC § 535.2 (broker responsibility / record retention requirements for transaction files, including property management contracts and related records)
• Rule: brokers must retain required records for at least 4 years after the relevant closing/termination timeframe.

5. Fiduciary / ethics duties (client interests first)

• Law: 22 TAC § 531.1 (Canons of Professional Ethics and Conduct)
• What it governs: a license holder’s duty to act with fidelity and integrity—relevant when they’re handling your money/records and cooperating with a transition.

If this sounds like a lot, you’re not alone—but don’t stress. Most of these requirements are on the property manager/broker to follow. As the owner, your job is mainly to send the right notice, request the right documents and funds in writing, and communicate clearly with tenants during the transition. Below, we’ll walk you through the exact steps in the right order so you can cancel your Texas property management agreement smoothly and move on with confidence.

How to cancel a property management contract 

Step 1 — Review Your Texas Property Management Agreement

Before you send any notice, open your signed management agreement and find the sections that control how you’re allowed to end the relationship. In Texas, the difference between a clean break and a messy one is often just a few lines of contract language.

Find the termination clause (and the effective date math)

Start with the paragraph labeled “Term,” “Termination,” “Cancellation,” or “Ending the Agreement.” Your goal is to calculate an effective termination date that matches the contract.

• Notice period (30/60/90 days): Many Texas agreements require 30–90 days written notice. Don’t guess—use the exact number in your contract.
• Required delivery method and address for notices: Some agreements say notice must be mailed to a specific address, sent to a specific email, delivered through an owner portal, or addressed to the broker of record. If you send it the “wrong way,” the clock may not start.
• End-of-month language and “receipt” vs “sent” timing: Watch for phrases like “effective at the end of the month,” “notice must be received by…,” or “notice is deemed given upon receipt.” Those details change your deadline. For example, “30 days’ notice” can become longer than 30 days if termination only takes effect at month-end.

Watch for automatic renewal (“evergreen”) language

Next, search for “automatic renewal,” “renewal term,” “evergreen,” “rollover,” or “extends automatically.” This section tells you whether the contract renews unless you cancel within a specific window.

• What to look for: Language like “renews for an additional 12 months unless either party gives written notice at least 60 days before the end of the term.”
• Common mistake: missing the non-renewal window: Owners often give notice “whenever,” only to learn they missed the deadline and the agreement renewed for another term. If you’re close to renewal, your strategy may be to non-renew rather than “terminate early,” depending on fees.

Fees: early termination vs liquidated damages

If you’re ending the agreement before the term is up, fees may apply. Contracts often use these terms differently:

• Early termination fee: Think of this as a stated price for ending the contract early (a contractual exit fee).
• Liquidated damages: A pre-agreed amount meant to estimate the management company’s damages if the agreement ends early (commonly tied to remaining months or a set amount).

Not all property management contracts include these terms—but if yours does, you’ll want to understand them so you can evaluate whether they’re enforceable and how they affect your termination timeline, fees, and handoff.

What to check:

• Fee amount and formula: flat fee vs. “X months of management fees” vs. percentage.
• When it’s triggered: only if you terminate early? also if you sell? also if you hire another manager?
• Prorations: are fees prorated through the effective date, or do they charge a full month?
• Extra add-ons: watch for “marketing fees,” “leasing fees,” “renewal fees,” or “administrative closeout fees,” especially if a tenant was placed recently.

Step 2 — Choose Your Exit Path: Without Cause vs For Cause

Once you understand your agreement, decide which termination route you’re taking. This choice affects your timeline, your tone, your documentation needs, and whether fees are likely.

Terminating “without cause”

Terminating a property manager “without cause” makes sense when: 

• You want a smooth switch with minimal conflict.
• The manager isn’t “bad enough” to fight, you’re just changing strategy (pricing, responsiveness, different service level).
• Speed and simplicity matter more than arguing over performance.

Typical trade-off:

You’ll almost always need to follow the contract’s notice period and may owe an early termination fee if you’re ending the agreement mid-term. This is the cleanest path legally and operationally, even if it costs a bit.

Terminating “for cause” (Texas best practices)

Terminating a property manager “for cause” makes sense when: 

• Serious issues occurred, like mishandled funds, missing reporting, failure to maintain the property, repeated lease compliance problems, or clear contract breaches.
• You believe termination “for cause” may help you avoid certain fees (depending on contract language).
• You need leverage to get records, funds, and cooperation.

“Notice and cure” requirements (if in contract):
Many agreements require you to (1) provide written notice of the breach and (2) allow a set number of days to “cure” it before you can terminate for cause. If you skip that step, you may accidentally convert a “for cause” termination into a “without cause” termination with fees attached.

Documentation checklist (build your file before you send the notice):

• Statements/ledgers: owner statements, tenant ledgers, deposit records, reserve balances
• Maintenance logs: work orders, vendor invoices, approval requests, timelines
• Photos/videos: condition issues, incomplete repairs, property damage, inspection photos
• Tenant complaints: written complaints, texts/emails, screenshots from portals
• Emails/messages: communication delays, disputed charges, unanswered requests, policy confirmations

The goal isn’t to write a novel—it’s to have enough factual backup that your notice is credible, specific, and difficult to ignore.

Step 3 — Estimate the “Trust Money” Dollar Amount

What counts as “trust money” in Texas

In simple terms, trust money is money the manager is holding that doesn’t belong to them. That typically includes:

• Rent collected from tenants
• Security deposits
• Owner reserves (maintenance reserves, repair escrows)
• Unearned fees (money collected for something not yet performed)

This matters because “trust money” is the category most likely to create disputes at the end of a relationship—especially if balances are unclear or records are incomplete. Before you send notice, calculate the approximate trust-money balance so you can state that in the letter.

Step 4 — What to demand in writing (your “handover package”)

When you terminate, don’t rely on a casual “please send everything.” Ask for a specific handover package, in writing:

• Tenant roster + rent ledger (who lives where, rent amounts, balances due/credits, payment history)
• Copies of leases/addenda/renewals (including any current notices or pending renewals)
• Security deposit ledger by tenant (exact amount held, deductions history if any, where it’s held)
• Owner ledger + monthly statements (full accounting through the termination effective date)
• Open work orders + vendor list + warranties (what’s pending, who’s responsible, what’s under warranty)
• Keys, access codes, lockbox info (units, gates, mailboxes, garages, utility rooms)
• Portal exports / accounting backups (downloaded statements, CSV exports, invoices, photos, inspection reports)

This checklist protects you from the most common post-termination mess: missing deposit balances, unclear rent application, and “surprise” invoices.

The “written demand” concept and why it helps

A smart Texas move is to include a dated written demand for funds and records at the same time you send your termination notice.

• Outline: Your termination letter sets the end date; your written demand clearly requests the return/transfer of trust funds and delivery of records by a specific deadline.
• Why it helps: Texas rules and industry expectations generally support timely disbursement and clear accounting for trust money. Framing your request as a formal written demand makes the handoff harder to delay and easier to document—without turning the process into a fight.

(Friendly note: This isn’t legal advice—think of it as a practical way to keep the exit organized and verifiable.)

Step 5 — Notify tenants

When management changes, tenants need clear written instructions. At a minimum, your tenant notice should cover:

• Who manages the property now (owner self-managing or new company name)
• Where to send notices (repair requests, legal notices, written communications)
• Where and how to pay rent (new portal, mailing address, in-person options, effective date)

The goal is simple: no confusion, no missed payments, and no lost maintenance requests.

Avoid confusion about “landlord’s agent” for notices/service

Here’s the real risk if you don’t notify tenants properly: tenants may keep sending rent, repair requests, or formal notices to the old management company—because that’s who they’ve been trained to deal with.

That creates delays (and sometimes legal exposure) if important tenant notices don’t reach you or the new manager quickly. A clean tenant notice makes it unmistakable who the authorized contact is after the cutover date.

Don’t let emergency contact coverage lapse

If your manager handled emergency calls, you need continuity on day one.

You can either set up a 24/7 emergency number or have your new management company provide their emergency phone number to the tenants. 

In Texas, emergency-response coverage is one of the fastest ways a transition can go sideways—so treat it as a non-negotiable part of the switch.

Texas Security Deposits During a Management Change

Security deposits are where management transitions most often get messy. The fix is to treat deposits like their own mini-project: ledger, transfer, confirmation, tenant communication—done in writing.

Owner responsibility doesn’t go away

Even if your property manager collected and held the deposits, you’re still the landlord. If deposit records are wrong, missing, or transferred late, tenants typically hold the owner accountable—not the outgoing manager. That’s why your termination process should prioritize deposit documentation early.

Best practice for a clean deposit transfer

To keep deposits from becoming a “he said/she said” problem later, follow these best practices:

• Get a tenant-by-tenant deposit ledger showing the exact amount held for each unit/tenant (including any changes, partial refunds, or deductions already taken).
• Require written transfer confirmation—who transferred what, when, and where it went. If funds are being moved to a new manager, request the receiving account details and a receipt/confirmation.
• Decide who holds deposits after termination:
  • Owner-held: You take custody of deposits (often via your own dedicated account) and provide the new manager the ledger.
  • New manager-held: The deposits move directly to the new management company’s trust account, with documentation.
• Send a tenant notice that clearly states where deposits are held going forward and who to contact for questions (and include the effective date of the change).

If a tenant moves out during the transition

Move-outs that happen during your notice period are where timing matters most. Make sure you and the outgoing manager coordinate:

• Final accounting: Confirm who is responsible for the final statement and how rent/fees will be prorated through the move-out date.
• Deductions: Confirm who is authorizing deductions and what documentation will support them (photos, invoices, condition reports).
• Forwarding address process: Make sure the forwarding address and deposit return timeline doesn’t get lost between companies. Decide in advance who sends the deposit disposition letter and who funds the refund.

Common Mistakes When Canceling a Property Management Contract in Texas

• Missing the auto-renewal date and getting locked into another term
• Using the wrong delivery method/address (notice doesn’t “count,” clock doesn’t start)
• Forgetting a written demand for funds/records (handover drags on)
• Not getting a deposit ledger (deposit disputes pop up later)
• Not notifying tenants about rent, notices, and emergency contact changes
• Not clarifying open invoices and reserve spending during the notice period (surprise bills)

What to Do If Your Manager Won’t Cooperate

If the manager delays, ignores you, or refuses to transfer records/funds, treat it like a structured escalation—calm, documented, and deadline-driven.

Escalation path

1. Written follow-up + deadline
   Re-send your request, reference the termination clause, and give a short deadline (e.g., “by Friday at 5 PM”).
2. Demand letter
   A more formal letter (often from an attorney, but not always) that reiterates obligations, lists what’s missing, and sets a final deadline.
3. Dispute resolution clause
   Check your contract for required mediation or arbitration steps. If it’s mandatory, you’ll want to follow it to preserve your position.
4. TREC complaint (if licensed) — when it’s appropriate
   If the manager is a license holder and the issue involves trust funds, accounting, or refusal to provide records, a TREC complaint can be appropriate—especially when informal efforts have failed.
5. Talk to a Texas real estate attorney (high-stakes situations)
   If security deposits, large reserve balances, suspected misuse of funds, or threatened litigation is involved, get legal help early to avoid compounding risk.

FAQ

How much notice do I have to give to terminate a property manager in Texas?

There isn’t one universal Texas rule for notice—your property management agreement usually controls it. Most contracts require 30, 60, or 90 days written notice, and some only allow termination at month-end or require that notice be received (not just sent) by a certain date. Your safest move is to follow the exact notice method, address, and timing spelled out in the contract.

Can my property manager charge an early termination fee in Texas?

Yes—many Texas management agreements include an early termination fee or liquidated damages clause if you cancel before the contract term ends. The key is to read the fee section closely and confirm:

• the fee amount/formula,
• when it’s triggered (mid-term only vs. any termination),
• whether it’s prorated,
• and whether there are extra add-ons (leasing/marketing/admin fees).

If you believe you’re terminating for cause, check whether the contract waives fees when the manager is in breach—often this depends on following any “notice and cure” requirements.

How do I get my security deposits back when switching managers?

Make security deposits a written, documented handoff—don’t treat them like a casual “we’ll send it over.”

Best practice:

• request a tenant-by-tenant deposit ledger (unit, tenant name, amount held, any adjustments),
• get written confirmation of where deposits are held and when they were transferred,
• decide whether deposits will be held by you (owner) or the new manager after termination,
• and send tenants a notice stating who to contact regarding deposits after the transition.

Do I have to notify tenants when I change property managers in Texas?

You should. Even if your contract doesn’t explicitly require it, tenant notice is the difference between a smooth switch and missed rent/maintenance chaos. Tenants need clear, written instructions for:

• where to pay rent (and when the change takes effect),
• where to send repair requests and formal notices, and
• who to contact for emergencies (24/7).

The goal is to avoid tenants continuing to pay or send notices to the old manager.

What if my Texas property manager refuses to turn over records or funds?

Treat it like a documented escalation:

1. Re-send your request in writing with a clear deadline.
2. Send a formal demand letter referencing the contract and the specific items missing (funds, deposit ledger, leases, statements, keys).
3. Follow any dispute resolution clause (mediation/arbitration) if required.
4. If the manager is licensed, consider filing a complaint with TREC when the issue involves funds, accounting, or refusal to provide records.
5. For large balances, deposits, or suspected misuse of funds, consult a Texas real estate attorney.

How do I check if a property manager is licensed in Texas?

Use the TREC License Holder Search to look up the individual and/or company and confirm licensing status. This is especially helpful when you’re canceling because licensing can affect expectations around trust funds, accounting, and recordkeeping.

Conclusion

Canceling a property management contract in Texas is easiest when you focus on the steps that prevent the biggest disputes:

1. Review your agreement for termination terms, notice method, auto-renewal deadlines, and fees.
2. Choose your exit path (without cause vs. for cause) and follow any notice-and-cure requirements if applicable.
3. Send written notice plus a written demand for trust funds and a complete handover package (ledgers, leases, deposits, keys, records).
4. Secure the security deposit transfer with tenant-by-tenant documentation and written confirmation.
5. Notify tenants immediately with new payment instructions, notice addresses, and emergency contact info.

Need help reviewing your agreement and planning a clean exit? Schedule a free for a contract review/transition consult.