Legally Speaking, What is Considered Property Management?

Question

What services could a person provide that would not be considered acting as a property manager? I was trying to think of property services for landlords that would not require a person to be a licensed realtor.

Adam Giles · Answer

I manage my own units and am also studying for my broker license for this very reason. Although the license may prove useful, I can say with certainty that the strong majority of what I am studying has no applicable value to property management. If the purpose is to ensure those in the business of PM are consistently qualified, there should be a separate and distinct PM license.

Wade Sikkink · Answer

I get the idea that as a steward of other peoples money you probably should have some sort of certification to make sure you are on the up and up.  However, a real estate brokers license isn't very applicable.  Maybe a stand alone property management certification that's based on experience in property management rather than real estate sales.

Adam Giles · Answer

I understand, and agree with, the premise of what you are saying, but the broker license honestly overlaps only slightly with what property managers do on a day to day basis. I think the majority of property managers would be fine with a license requirement if it did not include studying and paying for a majority of knowledge that does not apply to what they do.  Also, I do not 100% agree that personal property managers only answer to themselves should they do something stupid. Personal property managers can still treat tenants unethically. They hold funds that belong to tenants. They are still responsible for understanding and following fair housing laws etc. When the day comes that I look for a manager for my portfolio, I would much rather have a personal property manager with years of experience in my area, than a broker who deals mostly with real estate sales. Unfortunately my state doesn't give me that option.

Anthony Gayden · Answer

Thanks everyone for the replies. I believe that there is a market out there for landlords who want to retain financial control and decision making for their properties, but need someone to do the dirty work.

Brian Egr · Answer

The short answer is the statute was written that way because of a strong real estate lobby.  It’s statute 76-14 if you’re looking for some dry reading.

JD Martin · Answer

I don't think you would be on any odd legal footing with any of that. Everything you mention is something that any owner can contract out for themselves to lots of firms that are not property management firms. You can hire companies to check references, provide rent portals & drop-off points, etc. and none of them are considered property management.

I believe you cross the line when you make financial & governing decisions on behalf of the owner and/or tenant. Those decisions might include: negotiating the terms of a lease; holding money in escrow; charging tenants late fees; performing evictions; contracting for services on behalf of the owner; ETC. If you are only acting at the owner's direction - showing a house the owner has determined is vacant, for example, or coordinating/performing services at the owner's direction that does not largely require independent decision-making - I think you would be in the clear.

JD Martin · Answer

Depends on your state, but a primary factor is your ability to select tenants, negotiate lease terms, hold and exchange funds, charge fees. If you don't do those things, you are probably in the clear. If you can make decisions - especially financial - for the property independent of the owner, you are for sure a property manager. No one would consider the handyman doing regular maintenance or an acquaintance showing properties a manager.

Legally Speaking, What is Considered Property Management?

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