When are verbal agreements allowed in property management?

Verbal agreements are allowed in property management, particularly in transactional brokerage situations, because they can serve as informal understandings or agreements between parties during negotiations. In these contexts, while written agreements are highly encouraged for clarity and enforceability, a verbal agreement can still create a binding obligation as long as it complies with the basics of contract law, such as mutual consent and a clear intention to create legal relations.

In property management, transactional brokerage often involves facilitating deals between buyers and sellers or landlords and tenants. During initial discussions and negotiations, parties might agree on certain terms verbally before formalizing those terms in writing. For example, a broker might convey an agreement verbally to move forward with the drafting of a lease or sale contract based on what was discussed, knowing that formal documentation will follow.

Written agreements are highly recommended for leasing arrangements, tenant agreements, and financial settlements to avoid disputes and clarify the terms and conditions, which may lead to complications if only verbal agreements were relied upon. Nevertheless, the initial verbal discussions can pave the way for formal agreements in these cases, but they are generally not considered advisable to rely on exclusively in property management practice due to the potential for misunderstandings or lack of enforceability.