What Licenses do the Property Manager and their company need

Question

I am curious what licenses do property managers and their companies need to operate as property management companies in Florida. TY

John Racine · Answer

Huge thank you, Corey, for jumping in with the legal side and for building on my answer with a lot more detail. Hearing it from a Florida attorney is a big help for Anitha and for anyone else reading this later.

John Racine · Answer

Anitha, in Florida, if you're managing rentals for other owners for a fee, you generally need a real estate license and have to work under a licensed broker. The company runs under a broker of record. HOA/condo management is a separate license (CAM). You can verify anyone's license on the DBPR site.

Full disclosure, I co-host for other owners. I'm not a licensed property manager yet, so for now I keep my co-hosting on Airbnb, in the owner's own account. We're in the process of getting our broker license so we can do full property management.

I'm not an attorney, so double-check with the state or a Florida real estate attorney.

Corey R. Parker · Answer

Hi John,

If you're only managing short-term rentals, you may qualify for an exemption from real estate broker licensing requirements. Section 475.011(11), Florida Statutes, provides an exemption from real estate broker licensing for persons who, for compensation, rent or advertise properties licensed under Chapter 509 for transient occupancy.

Corey R. Parker · Answer

Hi Anitha,

As John stated, a property manager in Florida generally must be a licensed real estate broker. Depending on the local jurisdiction, a property management company will likely also need a business tax receipt.

General Rule: Under Chapter 475, Florida Statutes, a "broker" (and therefore operating as a broker) is very broadly defined to include, among other activities, leasing or renting (or offering to lease or rent) real property for another and for compensation. Compensation is broadly defined to include anything of value. Operating as a broker without a license is a third-degree felony. Therefore, leasing or renting properties for someone other than yourself and for compensation generally requires a broker's license or a sales associate's license if you are operating under a broker, subject to applicable statutory exemptions.

Real Estate Company & Qualifying Broker: An entity operating as a property management company must register with the Florida Real Estate Commission (FREC) as a real estate company and designate at least one active Florida-licensed real estate broker as its Qualifying Broker, who must also be registered as an officer, director, member, manager, or partner of the company.

I recommend that property management companies consider appointing more than one active Qualifying Broker, or at least establish a succession plan. Under Rule 61J2-5.018, Florida Administrative Code, if a real estate company's sole active Qualifying Broker dies, resigns, or becomes unexpectedly unable to serve, the company cannot conduct new brokerage business until a replacement is registered. The company has only 14 days to appoint and register a replacement or temporary Qualifying Broker before the caompany’s registration is automatically canceled and its sales associates' and broker associates' licenses become inactive.

Individual Licensing: Not everyone working for a property management company needs a real estate license. The distinction is between activities requiring a license under Chapter 475 and purely administrative functions. Individuals performing regulated activities, such as showing properties to prospective tenants, procuring tenants, negotiating lease terms, or otherwise conducting leasing transactions, must generally hold an active real estate license. Unlicensed individuals may perform administrative duties such as bookkeeping, scheduling appointments, coordinating repairs, receiving and recording rent payments, and typing documents for a licensee's review and approval, but they may not independently show properties, negotiate lease terms, or explain lease provisions to prospective tenants.

Local Business Tax Receipts: Depending on where the business operates, the company may also need a county and/or municipal business tax receipt under Chapter 205, Florida Statutes, and the applicable county or municipal code of ordinances.

Insurance: Whether you're establishing a property management company or evaluating one to hire, I also recommend reviewing its insurance coverage. At a minimum, I would consider the following:

• Professional liability (errors and omissions): Coverage for claims arising from professional errors, omissions, or negligence in performing property management services. If you're hiring a property management company to manage your properties, you should request a certificate of insurance to confirm that it carries this coverage.

Professional liability (errors and omissions): Coverage for claims arising from professional errors, omissions, or negligence in performing property management services. If you're hiring a property management company to manage your properties, you should request a certificate of insurance to confirm that it carries this coverage.

• Commercial general liability: Coverage for certain bodily injury, property damage, and other liability claims arising from business operations (e.g., slip-and-fall incidents).

Commercial general liability: Coverage for certain bodily injury, property damage, and other liability claims arising from business operations (e.g., slip-and-fall incidents).

• Workers' compensation: Required for most businesses with four or more employees, subject to applicable exemptions.

Workers' compensation: Required for most businesses with four or more employees, subject to applicable exemptions.

• Cyber liability: Particularly important given the sensitive personal and financial information property managers collect and the risks associated with electronic payments and funds transfers.

Cyber liability: Particularly important given the sensitive personal and financial information property managers collect and the risks associated with electronic payments and funds transfers.

If you're starting your own property management business, I recommend consulting a licensed commercial insurance broker experienced with real estate brokerage and property management businesses to determine appropriate coverage, limits, and exclusions.

I hope this helps!

Best,

Corey

DISCLAIMER: This post is for general informational purposes only and does not constitute legal advice or create an attorney-client relationship.

What Licenses do the Property Manager and their company need

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