Legal question // Ohio Property Managment
Hello everybody.
I am looking to invest in the Ohio market. Single Families.
A person I know there is willing to manage the properties we buy. She manages a 100 unit building, so she is pretty familiar with everything.
BUT, she is not a licensed Property Manager, what I think could mean for us some troubles in the future, if she has to show in court representing us, etc...On the other hand, if I was managing myself, I don't need a license, and she could be like our representative, empowered, and maybe she don't need a license...?
Does anyone has an idea how we can do this in a proper way?
Most Popular Reply
First, the obligatory disclaimer: I am not an attorney and you should seek proper legal counsel for your area.
Okay, so what would I do?
Step 1: consider why does the state say you need a license professional? There are many possible reasons, but one that comes to mind is you don't want someone representing you breaking the law, because ultimately you are the "deep pockets" property owner who will get sued and end up paying if you lose and a money judgment is obtained against you. If you have a licensed property manager, at least you could claim that you acted according to sound business and legal principles and should therefore be somewhat or totally shielded from liability, or insist that the other person's liability insurance pay for it. If you hire your Aunt Betty, odds are the judge will throw the book at you if Betty violates Federal Fair Housing, refuses to allow ESAs, etc. It's like doing your own electrical work on a house without pulling a permit. Sure, you can get it done cheaper, but you take the risk & liability if you screw something up. Consider carefully whom you will have representing you. Your investment and possibly all of you assets are on the line if said person acts illegally or imprudently.
Step 2: if you choose to proceed, there are ways around the law that I think should work. Again, see the disclaimer. Here are two ideas:
1) Give her partial ownership interest in the property. It should work the same as co-owning any property in a normal partnership scenario, although you might have to draw up formal partnership documents in case it ever were to get challenged. It could be a trifle, maybe 1%. Then create an option contract to buy out her entire interest for $100 any time between tomorrow and X-years from now.
2) Lease the property to her then allow her to sub-lease. Aka "Master leasing".
To be abundantly clear, I have never tried either of these, nor have I run them past legal counsel. They may be total hogwash. I came up with them when trying to find ways I could extend my management talent to other people without actually buying more property myself or getting a real estate Broker's license. These are intended to stoke your creative juices, nothing more.