Do you need a Real Estate license to manage vacation rentals??

22 Replies

Hello! I own a real estate development and vacation rental business in STL , MO, and I know Missouri requires you to obtain a RE license when launching a property management company, but does anyone know of a way around that for "Vacation Rental Management" or do the same rules apply??? I currently own and manage 6 of my own in STL and plan to expand into "Host management" for other owners/host that I network with in and outside of STL. I've ran my company for 8 years without a license finding, funding, flipping, or renting my own, so i'd prefer not to, but if I need to it's not the end of the world.. Thanks!

Hi Alex,  The Missouri brokers or managers would be in a better position to answer your question but my guess is the moment you start managing for other folks you are going to run afoul of Missouri's requirements.  The goal is to protect consumers and the licensing laws provide some measure of oversight.  

My tenants are the only folks who care about how I manage my properties in my portfolio.  However, when my brokerage is managing for my clients, I have a separate set of obligations.  

My guess is you will need a license.  Best, Teresa

@Alex Zemianek

Your state is quite a mess when it comes to STR laws. Kansas City has some of the most citywide restrictive laws only allowing owners to rent for 30 days or more citywide. Many cities and counties throughout Missouri do not have regulations that directly address short-term property rentals. Some permit short-term property rentals, while others prohibit such activity. Interestingly, there is not a particular region or type of city that is more likely to be friendly to short-term property rentals. Airbnb and other online home-sharing platforms are collaborating with state and local governments to assist in the development of host-friendly rules and regulations.

The St. Louis region, with its many municipalities, continues to lack uniform regulations regarding short-term rental properties. Therefore, hosts should always check local ordinances for guidance, particularly as such ordinances are updated.

For example, the City of Crestwood, a municipality within St. Louis County, is currently reviewing an ordinance that would prohibit short-term property rentals because, according to the Crestwood City Administrator, the City wants “stable residents living in the community, adding to the quality of life here, walking on the streets, obviously there’s a safety concern there, there’s a property value concern.” Other municipalities, such as Hazelwood and Ellisville are also in the process of considering restrictions on short-term property rentals.

At this point you do not need to be licensed but this is subject to change relatively soon.

@Alex Zemianek I would recommend calling other vacation rental property management companies in your state and asking if their employees are licensed real estate brokers.  In Colorado, you do not need a license, but in PA you do, so it does vary by state.  I've found that talking to your local real estate board doesn't help since most people are unfamiliar with what exactly your role is as a short term rental property manager.  It sounds like you might want to get your license anyway, but I found out in Colorado by calling my competition and talking to  a real estate attorney.  Hope this helps!

Cheers,

Tyler

What do your state RE statutes say?

In FL, NO LICENSE needed to manage vacation rentals BUT there is a fine line. Cross over that and then license required. It has to do with how long they stay as to whether it qualifies as a vacation rental and is exempt. Seasonal rentals require a license.

Hey everyone! Thanks so much for the input. There's nothing that states that I do or don't, so it's still a gray area here. I can't call other vacation rental management companies because there aren't any to my knowledge which is why I started managing my own 4 years ago and it quickly turned into a scalable business. I met with a broker today that wants me to manage hers, so I decided to just get it to be proactive in case it poses an issue in the future. Thanks again!

Plus... we do plan on offering support across the country, so I might as well not limit myself due to a simple license.

@Tyler Work I am not 100% certain on this but I do know that to manage property in Colorado you do need a license. I would say if you asked a property management company if their employees are licensed they would say "no" and here is why. The "typical" property management company has one person in the company who is licensed and they are the owner. They have a staff of unlicensed assistants and handymen that do the work of the company. So the answer to your question is no employees are licensed but they are operating 100% in accordance with the law. If they performed the same service but the owner wasn't licensed the real estate commission would put them out of business as soon as they became aware of their practice. There are ways to run a property management business that technically means you don't need a license but IMO it's only a matter of time before you would get in trouble.

Perhaps @James Carlson can speak to vacation rental property management license requirements specifically.

@Alex Zemianek I wish I had a good answer for you there in Missouri. I don't know the manual there. 

As @Bill S. said, you need a broker's license if you're managing long-term rentals, defined as 30 days or more. HOWEVER! @Tyler Work  knows his stuff. (He better since he's running that business ;)) In Colorado you do NOT need a license to manage short-term rentals on sites like Airbnb or VRBO. There is an oblique reference to this in the  Colorado Real Estate Commission Position 19 .

This exception is made explicit in the Colorado Real Estate Manual, Chapter 20, page 30. (For some stupid reason, the Div. of Real Estate has only chapters 1-13 online. Luckily, I keep my hard copy with me at all times.) The passage reads: "Management of short-term rentals does not currently require licensure as a real estate broker." They make this distinction because they do not consider short-term rentals a "lease."

Now, if you're a short-term rental manager in, say, Denver and a licensed broker, then your activities are under the jurisdiction of the RE commission. (That means you have to maintain a trust account and properly account for deposits and other client monies you handle.)

@Bill S. is correct above. In Colorado you MUST have a real estate license to practice property management. The Colorado real estate commission is very active in looking for those individuals and companies practicing property management without a license.

@James Carlson - that is very interesting that you can do short term rentals in Colorado without a license. I just e-mailed a contact I have with the real estate commission to see if they enforce this or not.

@Marc Cunningham Definitely let me know if you hear anything different. I talked to a Marci who oversees property management at the Colorado Division of Real Estate to confirm what I was reading, but as I work more and more on a database of Airbnb laws -- and talk to city departments -- I learn to always ask the same question more than once. You'd be surprised how often you get a different answer. 

@Marc Cunningham I would be very curious to hear what you find out as well.  Airbnb is really pushing their "co-host" feature which allows anyone with an Airbnb login to "help host" someone's listing.  If you actually require a license in CO to manage short term rentals then basically everyone on the Airbnb co-hosting platform is breaking the law.  Airbnb markets it as Jimmy from next door helping out with guest communication, but in reality its a property management feature. 

Co-hosting allows property managers to collect a percentage of revenue along with any cleaning fees, if applicable, directly from Airbnb so there is no need to collect any payments from guests or owners except for incidentals and property maintenance.  

@Tyler Work @James Carlson The below is from Marcia Waters, Division Director of the Colorado Real Estate Commission:

 "One does not need a broker's license to do short term occupancy agreements (short term rentals). I would reference CP-19. While the distinction has long been drawn at the 30 day mark, it is probably best to look how the short term agreement is being used. If it is similar to a hotel reservation where the party only has a license to use it, it would be considered a short term occupancy agreement. If the terms are more reflective of a lease transaction, it would require a broker's license to manage those"


Originally posted by @John Thedford :

What do your state RE statutes say?

In FL, NO LICENSE needed to manage vacation rentals BUT there is a fine line. Cross over that and then license required. It has to do with how long they stay as to whether it qualifies as a vacation rental and is exempt. Seasonal rentals require a license.

John, could you please share your source so that I can study this for myself?

Anyone can "Co-Host" on Airbnb without a license. (VRBO does not offer this). 

If you are touching the money or it's passing through your bank accounts.... you have to have all sorts of permits and licenses as per your state regulations. 

Missouri does not seem to have an exemption to licensing requirements for short term rentals: http://revisor.mo.gov/main/OneSection.aspx?section...

The key is, if you are managing them for other people, for money, then you probably need a license. 

@Jared Higginbotham - One exemption in Florida is codified in FS 475.011 which specifically exempts "Any person, partnership, corporation, or other legal entity which, for another and for compensation or other valuable consideration, rents or advertises for rent, for transient occupancy, any public lodging establishment licensed under chapter 509."

Details at:

http://www.myfloridalicense.com/dbpr/servop/testin...

http://www.myfloridalicense.com/dbpr/hr/forms/docu...

thanks to BROKER @Jeff Copeland for me not having to look this up:) for STATE of FL regs

Originally posted by @Jeff Copeland :

Missouri does not seem to have an exemption to licensing requirements for short term rentals: http://revisor.mo.gov/main/OneSection.aspx?section...

The key is, if you are managing them for other people, for money, then you probably need a license. 

This is probably getting into "consult a lawyer" territory, but I've done some digging in MO's regs off and on for the last year for other VR-related matters and can't find any mentions at all in state statutes identifying what exactly is considered "renting" or "leasing." As far as my attorney has advised me, I'm not "renting" my VRs--I'm offering a "license to occupy the premises," similar to what a hotel does. While a specific time limit is not coded in Missouri law (unlike other states, where tenancy is specifically noted as being a resident for more than 30 days), as long as the guest is on a short stay (less than 30 days), I suspect it could reasonably be argued that a VR guest is not "renting" or "leasing" the property, but unless there's case law somewhere to that effect, it'd just be an argument in front of a judge. :/ But I think it is pretty clear that hotels and motels aren't subject to normal tenancy regulations and eviction law and the like, and so it seems logical that short-term rentals are more similar to a hotel/motel than a long-term rental.

Updated 8 months ago

Clarification: many states differentiate between landlord-tenant relationships and transient occupancy (in a hotel, motel, or other similar lodging). I can't even find a reference to "transient occupancy" anywhere in the Missouri code, but clearly the concept exists somewhere because the state and its counties and cities collect sales tax on short-term transient occupancy. So if the state sees VRs as offering transient occupancy, then it follows that it doesn't see them as offering the property for lease or rent, and as such, the restrictions quoted in the real-estate broker code wouldn't apply, since the property manager is offering the property for transient occupancy and not for lease or rent. At least that's my hope as to how the law reads, but again, it's probably going to take a lawyer to actually confirm that. But more discussion here to flesh this out would be helpful.

Airbnb and Homeaway are both merchant of records, you can go on their website right now and book a property for 30 days or more, they take a fee and then send money to Principal/Host after checkout, yet don't hold any real estate licenses?  How do they get away with it?

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