Can I manage my friend's home as a rental w/o realtor's licence

25 Replies

My friend just took a job in the Netherlands and is moving to Europe in a month.  He wants me to manage his property for him while he is gone.  I have storage facilities and have had other rentals myself.  I'm wondering if, legally, I can do this for him.  My research says I need to have a realtor's license to do this for him.  Can anyone confirm this or suggest alternatives for me? Me and the house are in MN.  Thanks in advance.

You can check what the rules are with your state for unlicensed assistants. Washington State allows you to do certain specific tasks for a private owner without being licensed. (Literally spells out what you can and can not do) But a lot of tasks may require a real estate license. I would tread carefully! 

In ohio, if you are not a licensed broker you can only manage for someone else if you are not charging for it or if you are a direct w-2 employee of the property owner. you'll need to check your state laws.

@Josh Collins . No need to be licensed in The Netherlands, but be aware of legislation and managers' responsibilities and liabilities and know Landlord-tenants act. Join a professional association. However, managing in the US may require licensing.

@Erik Noordam - Thank you for the response but the house is in Minnesota, USA.  My friend is moving to the Netherlands.  Maybe he'll buy a place there and then move back.  I'd be happy to manage his rental in the Netherlands!  ;0)  Haha.  

A quick google search came up with these exceptions.

https://www.allpropertymanagement.com/propertylaw/property-management-law-in-minnesota.html

@Daniel Kurkowski - Thank you.  I happened across that also.  By that website it looks as if I would need a real estate license however, it is from a property management company, after all.  Trust but verify, as they say!  I was wondering if anyone could verify their info and/or suggest a creative way around this.  I have a sister-in-law who is a real estate agent but I don't think it's super practical to bring her into the mix (it's across the Twin Cities metro for her to get to the property).  I'm trying to get tricky.  Legal, but tricky.  Thanks for the input!

I don’t think you can legally do it for him. However, I have heard of a couple instances where people do management for out of town owners without realtor license. If you had partial ownership, that would make it legal, I think. Perhaps you could buy into the deal.

Without being an employee (W2) of the owner, have an ownership interest, or poses a brokers license you would be managing it illegally in the state of Minnesota. Happy to help further if you PM me.

I don't know the laws in your state but in many, you would need a real estate license. Also, will you be collecting rents? If so, where will they be deposited? Commingling funds is usually a serious offense. Can a "friend" arrange notices/actions? Even if it's legal, is it worth the risk of a friendship or personal liability if something goes south on the property?

As always, don't trust the internet, seek professional advice. Good luck!

The W-2 route, ownership, or license is your only option in MN.  The fines are quite harsh so I would be sure to do it legally.   If your friend is collecting rents online already, you may only be providing on-call handyman services for him while he is gone.

The site that was linked to is a property manager's site, so of course it will generally say you have to have a broker's license to do anything. 

There's a couple of things to this, wherever you are. First off, it's only a problem for you if it generates a complaint to whatever board/committee/agency oversees these things, and that complaint usually rests with an interested party (either the actual property owner or a tenant of the property). Some states probably do some checking when complaints are lodged by a third party, but I suspect most places are simply not staffed hard enough to go digging into third party issues. 

Second, even if a complaint is lodged against you, there's going to have to be some preponderance of evidence to put you in any sort of non-compliance. Generally, the key component of being a "property manager" is having control over tenancy and over finances - meaning you approve or deny tenants, arrange for evictions, hold rent funds, institute late fees, make independent judgments about home additions/repairs, and get paid for doing some/all of the above. No one would accuse Cozy of being a property manager - they're just a collection service that moves rent money from the tenant to the owner. No one would accuse SmartMove of being a property manager - they just collect and provide the information that the owner can then use to make application decisions. So if you use some common sense you shouldn't have a problem. Just because you show a property, collect some applications that get forwarded to the owner, and tell the tenants where to send the rent (the owner's account), that doesn't make you a property manager. If you don't get paid, then you have an even deeper layer of protection.

Third, even if you have a complaint lodged against you, the first order of business is generally going to be a "cease and desist" letter. No one is going to haul you off to jail for showing your friend's house. Property managers might have you believe otherwise, but don't buy into scare tactics.

Bottom line: if I had a friend that was going overseas for a few months and he asked me to look after his house, I would do so, but would do so as a friend and not as a business arrangement. That means I wouldn't be looking to get paid, and I wouldn't do the heavy lifting that would make me a property manager. It doesn't sound to me like you're a professional property manager anyway - you just look after your own units - and unless you think there's a chance your friend might file a complaint against you, I really don't see the harm if it's one unit. Now, if we are talking about a multi-family setup, or a bunch of properties, then you are probably wading into deeper water and should proceed accordingly. Also, if your friend is expecting all of the work of a property manager, then he probably needs to hire a professional. 

@Josh Collins

While the State of MN implies that you need to be a realtor or have a property management company, there are legal means possible on a local level.  The city that licenses the rental may have rules that permit a friend to be the emergency contact.  Seriously, your friend can manage the property himself.  
He can hire a realtor to place tenants and show the place, who will then charge the placement fee (usually one month of rent).  Your friend can have a payment site (PM me for the one I use).  I have a city I invest in where the municipal government knows that I manage them from afar, and the emergency contract they have is one of my contractors, who has agreed to be the emergency contact.

Your friend could give you a nominal fee for being the emergency contact.  Not that anyone will ever call.  But, truly, your friend can manage this himself.  

Many people may make the argument that it is crazy that you should have to have license to be a property manager or do property management for others.  While this may be up for debate there are still laws and regulations that need to be followed.   If your state requires it then it is simple...Follow the law.   As a property manager you are acting as a fiduciary agent for the owner.   The license shows you have some basic knowledge of what this means and how to account for the money of others.   The owner"s money and the money of the tenant.  Why would a tenant want to provide a hefty security deposit to someone with no license and over site that does not own the home.  

@JD Martin   I am not sure if the advice of.... I know its a law but I am not sure how good they are at enforcing it or if they can really punish you is a great way to look at it.  If the real estate commission has a fine and procedure in place then they can enforce those laws.  

Stop looking for the easy way out.   You want to manage for others.   Get you license.   

I think that most decisions in life and Real estate can be boiled do to do what is right.   

Originally posted by @Tracy Streich :

Many people may make the argument that it is crazy that you should have to have license to be a property manager or do property management for others.  While this may be up for debate there are still laws and regulations that need to be followed.   If your state requires it then it is simple...Follow the law.   As a property manager you are acting as a fiduciary agent for the owner.   The license shows you have some basic knowledge of what this means and how to account for the money of others.   The owner"s money and the money of the tenant.  Why would a tenant want to provide a hefty security deposit to someone with no license and over site that does not own the home.  

@JD Martin   I am not sure if the advice of.... I know its a law but I am not sure how good they are at enforcing it or if they can really punish you is a great way to look at it.  If the real estate commission has a fine and procedure in place then they can enforce those laws.  

Stop looking for the easy way out.   You want to manage for others.   Get you license.   

I think that most decisions in life and Real estate can be boiled do to do what is right.   

 From my read of the post, it sounds to me like the guy does his own management, is going to be out of the country for a while and wants someone on the ground to watch over things while he's gone. I don't think my advice tells him to break the law, just use common sense. If I left the country for a year, I'd ask my mother to watch over the property while I was gone and I wouldn't expect her to go get a license. She could easily forward me applications if it went vacant, I have online bill pay that they'd be paying me directly, and I can pay any repairs that need to be done. She wouldn't be doing "property management" in the legal sense of the word, since she wouldn't be crafting leases, evicting people, making fiduciary decisions about the property. 

I had a teacher in 8th grade tell the class emphatically as he was handing out the mid-term exams to us  "....by the way, you can cheat on this test" and we all perked up and looked at him. He went on to say "...as long as I don't catch you!!"

Enough said.

Originally posted by @Jill F. :

In ohio, if you are not a licensed broker you can only manage for someone else if you are not charging for it or if you are a direct w-2 employee of the property owner. you'll need to check your state laws.

So if I own a property my W-2 employee cannot manage my property?

Originally posted by @Hai Loc :
Originally posted by @Jill F.:

In ohio, if you are not a licensed broker you can only manage for someone else if you are not charging for it or if you are a direct w-2 employee of the property owner. you'll need to check your state laws.

So if I own a property my W-2 employee cannot manage my property?

 In Ohio, if you are a direct W-2 employee of the owner you may manage property for the property owner.

@JD Martin and @Tracy Streich

My friend currently lives in the house.  He took a job in the Netherlands and doesn't want to sell the house because they love it.  They want to make sure that when they come home in 3-4 years that it'll be waiting for them.  It's in a great school district, it's on a lake, in a mature neighborhood, and they've done all updates to make it their forever home.  They know I have experience managing my own properties and preferred to hire someone they knew to oversee their property while they were gone rather than a property management company where they would have to pay lots of fees, be only 1 of many houses under management, and not know whether the management company would do what's in their best interest.  I feel honored that they felt that I would look out for their best interests and therefore was the reason they wanted me to look after it for them.  

With that being said, they also want to be hands off.  They have to pack all of their stuff up into a container, move to Netherlands, find a school for their son, find a short-term rental, start a new job in a new country and culture, find a job for his wife, find and buy a new house in a land they have no idea where they would want to live, and generally figure things out in the next month or two.  Needless to say, they're going to have their hands full and would rather leave the house to someone they trust.  

In the end, I declined to do it (due to the comments and suggestions here) but I really appreciate the creative ideas on here.  The "if it seems illegal, it is" rhetoric is appreciated, but frankly not super helpful.  I clearly wanted to operate within the law, I was hoping that others may have had a similar situation in which they had a realtor handle the lease-up but they figured out the handyman and general tenant management while also collecting a fee.  I also realize that it'd be easy to say, "It's your friend, you shouldn't charge him" but the house is almost an hour away and if I'm going to coordinate lawn care, cleaning, renter turns, and the like, I would like to be compensated to a certain degree.  Not to mention if you do something for free,  it's likely interest will wane for taking utmost care of the property.  It's human nature and frankly, I'm human.  

@Josh Collins I think you made the right choice. 3-4 years is a long time and the scope of what they wanted done is totally acting as a property manager, and no good deed goes unpunished. That the house is an hour away is even more reason to let them leave it to a professional where they can have some form of recompense or redress if things go badly. 

In my humble opinion- @Josh Collins  you definitely made the correct decision!  You can still be a very good friend by checking in on the house whenever you’re in that area, or as an emergency contact for the professional pm... You probably saved your friendship.