The Obvious Benefits
A licensed property manager has a moral, legal, and fiduciary responsibility to protect your interests as your agent. They are your expert on the ground in the local market and your connection to your tenants and your property. And let me be clear, the key point here is that your property manager be licensed to practice real estate in the state they are doing business.
The Not So Obvious
Being licensed is not a bonus or a ‘nice’ thing to have, it is the law. Only a licensed real estate broker can offer property management services for another. A real estate agent working for a real estate broker can also act as a property manager.
State licensing laws help ensure that your property manager is not only qualified to manage your assets, but up to date on all of the laws and regulations that affect housing, including Fair Housing laws. (For a summary of licensing laws by state, visit the Institute of Real Estate Management (IREM) website at www.IREM.com.)
Here is an excerpt from the IREM Property Management Licensing Report published in August of 2013:
“Most states regulate property management by including management functions such as leasing, offers to lease, negotiating leases, renting, collecting rent, etc., as covered real estate activities. In many cases, property managers who do not engage in leasing or renting activities are exempt from licensure. The typical definition of broker also specifies that these activities are being done for another individual for a fee, commission or other valuable consideration. Individuals managing their own properties are generally exempt from licensing requirements.”
From the Ohio Association of Realtors (OAR) Leasing and Property Management – White Paper, July 2007 and revised in March 2014:
“Ohio Revised Code Section 4735.01(A) provides a list of activities that if performed for another for a fee requires a real estate license. This list includes anyone who “operates, manages, or rents, or offers or attempts to operate, manage, or rent other than as a custodian, caretaker, or janitor, any building or portions of buildings to the public as tenants.” Also included on the list of activities that require a license are any attempts to lease property, any acts directed at procuring tenants for a property, the negotiation of leases, or advertising or holding oneself out as in the business of leasing property. Under Ohio law, performing any of these acts without a license constitutes a first degree misdemeanor and subjects the offender to a civil penalty of up to one thousand dollars per violation. Each day a violation occurs or continues is a separate violation.”
The penalties for the unlicensed practice of real estate in Florida:
The crime of Unlicensed Practice of Real Estate is classified as a Third Degree Felony and assigned a Level 1 offense severity ranking under Florida’s Criminal Punishment Code.
If convicted of Unlicensed Practice of Real Estate in Florida, a judge can impose any combination of the following penalties:
- Up to five (5) years in prison.
- Up to five (5) years of probation.
- Up to $5,000 in fines.
I hate to be a buzz kill – but now you know.
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For more information about The ROOST Landlord Advantage™ property management system, visit us at www.ManageWithROOST.com.