Managing a Rental for Brother in Law

General Landlording & Rental Properties
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Managing a Rental for Brother in Law

Martine Ayers
Realtor · Portland, OR · Member since 2017 · 6 posts · 1 vote

Hi everyone,

A couple of questions for you guys... but here's some background first. My husband and I bought our first property ( a duplex about an hour away but still in Oregon) last September. I am acting as the Owner and Property manager for the duplex. I was able to get new tenants in, settled and paying their rent on time (night and day difference from the inherited tenants!). My brother-in-law just bought a bigger house and is having me manage the old one (30 minutes away but in Washington). 

Ok. Here's the questions:

I am ready to sign a lease but realize all our paperwork says "landlord". Can I sign these and have it legally binding to the tenant or do I need to have John (the owner, my BIL) sign them? I would prefer to do it but also don't want to make a mess of things. 

We would like to use the same lease that we used for the duplex in Oregon but there are a few things that we need to add since it is in the state of Washington (ie mold education materials and a receipt for their deposit). Can I just add these on as addendums for now until I draw up a lease that I can edit or should I go with RHA's WA State Lease Agreement (right now we buy the form from oregonrentalhousing.com.

Many thanks,

Martine Ayers

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Marcia Maynard
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
9y

@Martine Ayers Although most jurisdictions allow a person to manage the properties they own without a license, when one manages a property for others, it requires more licensing and considerations.  If you're not properly licensed/trained as a property manager or real estate broker, then you can't assume all of the responsibilities of managing your brother-in-laws property. Also, when crossing the river into another state, you need to be knowledgable of the differences in the landlord-tenant laws.

We own and manage our own rental properties. But when a friend asked me to manage their house as a rental when they left the country for a couple of years, I had to look into the legalities of what I could do and what I couldn't do.

Some jurisdictions require a person who does property management for others to be properly licensed, bonded and insured. Some jurisdictions require less. In any case, you would do well to think this through and make sure you have appropriate documentation in place to act on the behalf of the other homeowner. As well as to protect yourself.

What we ultimately did in our situation was to write a contract between the homeowner and I whereby the homeowner functioned as the landlord and made the decisions, with me working in an advisory capacity. I was the "boots on the ground", but the rental contract was between the homeowner and the tenant. If something came up, I would assist in getting the work done for the homeowner and the tenant, but I did not function in the full capacity of a property manager. I merely charged a "trip charge" for anytime I had to go to the property to inspect the property or assist with anything. Other than that, I gladly shared my knowledge with the homeowner for free.... just as I do here on BP. :-)

Take a look at this link to a similar discussion from less than a week ago.

https://www.biggerpockets.com/forums/52/topics/446...

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  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    @Martine Ayers Although most jurisdictions allow a person to manage the properties they own without a license, when one manages a property for others, it requires more licensing and considerations.  If you're not properly licensed/trained as a property manager or real estate broker, then you can't assume all of the responsibilities of managing your brother-in-laws property. Also, when crossing the river into another state, you need to be knowledgable of the differences in the landlord-tenant laws.

    We own and manage our own rental properties. But when a friend asked me to manage their house as a rental when they left the country for a couple of years, I had to look into the legalities of what I could do and what I couldn't do.

    Some jurisdictions require a person who does property management for others to be properly licensed, bonded and insured. Some jurisdictions require less. In any case, you would do well to think this through and make sure you have appropriate documentation in place to act on the behalf of the other homeowner. As well as to protect yourself.

    What we ultimately did in our situation was to write a contract between the homeowner and I whereby the homeowner functioned as the landlord and made the decisions, with me working in an advisory capacity. I was the "boots on the ground", but the rental contract was between the homeowner and the tenant. If something came up, I would assist in getting the work done for the homeowner and the tenant, but I did not function in the full capacity of a property manager. I merely charged a "trip charge" for anytime I had to go to the property to inspect the property or assist with anything. Other than that, I gladly shared my knowledge with the homeowner for free.... just as I do here on BP. :-)

    Take a look at this link to a similar discussion from less than a week ago.

    https://www.biggerpockets.com/forums/52/topics/446...

    3Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @Martine Ayers You probably are breaking the law acting as a Realtor/Broker/Property Manager. Not sure about the laws in your area, but must states require a license to do what you are explaining. Please check out your laws to make sure that your protect yourself, and the tenants well being.

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  • Martine Ayers
    OP
    Realtor · Portland, OR · Member since 2017 · 6 posts · 1 vote
    9y

    Is this what I would be considered?

    OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®

    Property management assistants

    Unlicensed assistants who provide property management brokerage services for the owner, designated broker, or managing broker may perform the following tasks and duties:

    Unlicensed assistants may…

    • Deliver lease applications, leases, or any amendments.
    • Receive lease applications, leases, amendments, security deposits, rental payments, or any related payment for delivery to, and made payable to, the owner or real estate firm.
    • Show rental units.
    • Execute leases or rental agreements, rental payments, or any related payment for delivery to, and made payable to, the owner or real estate firm.
    • Act as a scrivener, completing blanks on preprinted and preapproved rental agreements with the exact language provided by the property owner, designated broker, or managing broker. The unlicensed assistant may exercise no discretion over the language used to complete the blanks on a rental agreement, but may only write words dictated by the property owner, designated broker, or managing broker.
    • Provide information about rental units, leases, lease applications, security deposits, and rental amounts to prospective tenants.
    • Assist in property management functions by carrying out administrative, clerical, financial, or maintenance tasks.

    Unlicensed assistants may NOT…

    • Advertise that they are engaged in the property management business.
    • Hold trust funds.
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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    @Martine Ayers  BRAVO - - that last item is the killer, aka deposits.

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  • Martine Ayers
    OP
    Realtor · Portland, OR · Member since 2017 · 6 posts · 1 vote
    9y

    Thank you! My Brother-In-Law wants to be as hands off as possible. If it were up to him he would just get a check from me every month minus 10% for my work (i'm not charging a finding fee) and any expenses or repairs that had to be done to the rental that month. To do this, could I open up a joint checking account (and savings for the deposit) at my/ his bank and then deposit the rent checks on his behalf? This would allow me to know when the rent is collected (and whether any notices need to be mailed) and also keep his address private from the tenants (the checks would be mailed to our PO Box)....this would be so much easier if we lived in the same town...let alone state!:)

    Is there a different way of doing it? I was hoping to sign the lease on the 30th so I can't just run out and get a licence...

    So much to learn and such little time. Thank you for helping me out everyone!

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    @Martine Ayers , have your brother in law sign the documents you want to have signed on the 30th, and start getting your license. Please note that every state requires you to hang you license under a more experienced broker (who will oversee your activities and make sure you stay within the law) for 2-3 years before you can strike out on your own.

    Make sure you choose an agency that allows Property Management.

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