The Property Manager's Complete Guide to Towing Contracts & Agreements

A towing contract is the foundation of your property's parking enforcement program. Get it right, and you have a reliable partner that keeps your lot organized and your tenants happy. Get it wrong, and you face liability, tenant frustration, and a messy breakup with a towing company. This guide covers every clause, term, and consideration you need to understand.

What a Towing Contract Should Include

A comprehensive private property towing agreement in Arizona should address the following areas. If a towing company presents you with a contract that is missing any of these elements, ask for them to be added before signing.

• Scope of services: Exactly what the towing company will do — signage, patrols, towing, reporting
• Property description: Clear identification of the property, including addresses, lot areas, and boundaries
• Enforcement rules: Which violations trigger warnings vs. immediate towing
• Hours of enforcement: Whether patrols are 24/7 or limited to specific hours
• Response time guarantees: Maximum time from call to arrival
• Insurance requirements: Proof of liability and garage keeper's insurance
• Indemnification clause: Who is responsible for damage claims and disputes
• Termination provisions: How either party can end the agreement

Arizona Legal Requirements in Your Contract

Your towing contract must comply with Arizona law, specifically ARS 28-3511, which governs private property towing. Key legal requirements that should be reflected in the agreement include:

Signage obligations: The contract should specify that the towing company is responsible for installing and maintaining compliant signage at all vehicle entrances to the property. Signs must display the towing company's name, phone number, and storage lot address. They must be clearly visible and readable, including at night.

Vehicle release requirements: Under Arizona law, a towing company must release a vehicle to its owner if the owner arrives before the vehicle leaves the property. The owner may be charged a reasonable drop fee, but the vehicle cannot be taken once the owner is present. Your contract should acknowledge this requirement.

Notification to law enforcement: ARS 28-3511 requires the towing company to notify local law enforcement within two hours of towing a vehicle from private property. The contract should confirm the towing company will handle this notification for every tow.

Cost Structure: What You Should (and Should Not) Pay

In the standard private property towing model, the property owner pays nothing. The towing company recovers costs from the vehicle owners who are towed. If a towing company asks you to pay any of the following, question their business model:

• Monthly retainer or patrol fees
• Signage installation or maintenance fees
• Per-tow charges billed to the property
• Administrative or reporting fees

Contract Duration and Termination

Be cautious about long-term contracts with no exit clause. A reasonable towing agreement should include:

• An initial term of one to two years, renewable annually
• A 30-day written notice provision for either party to terminate
• Immediate termination rights for cause (breach of contract, loss of insurance, etc.)
• A signage removal clause requiring the company to remove all signs upon termination

Liability and Indemnification

This is perhaps the most important section of any towing contract. The agreement should clearly state that the towing company indemnifies the property owner against claims arising from the towing company's actions. This means if a vehicle owner sues because their car was damaged during towing, the towing company's insurance covers it, not yours.

Conversely, you should understand your own obligations. As the property owner, you are typically responsible for ensuring that the parking rules being enforced are legally valid, that proper authorization was given for each tow, and that the signage has been properly maintained.

Reporting and Communication Requirements

A good contract should specify what reporting the towing company will provide and how frequently. At minimum, you should expect:

• Monthly summaries of all enforcement actions (warnings, citations, tows)
• Real-time notification when a vehicle is towed from your property
• A dedicated point of contact for your property
• Annual signage inspection and compliance verification

Common Contract Mistakes to Avoid

Property managers commonly make these mistakes when entering towing agreements:

1. 1
   Not reading the indemnification clause: Some contracts shift liability to the property owner for all towing-related claims. This is unacceptable.
2. 2
   Accepting auto-renewal without notice: Some contracts auto-renew for additional years if you miss a narrow cancellation window.
3. 3
   Not verifying insurance annually: Insurance can lapse. Set a calendar reminder to request updated certificates yearly.
4. 4
   Giving blanket towing authorization: The contract should clearly define which violations authorize towing and which require property manager approval first.