Whether you’re a big or small asset landlord, chances are you’ve considered hiring a property manager. While property managers can be tremendously helpful and ease your workload, they can also be a detriment if they aren’t chosen wisely.
The California Department of Consumer Affair’s Bureau of Real Estate (CalBRE) has a guide with tips to help consumers/landlords make informed decisions about hiring property managers. Having knowledge and foresight about the process can go a long way to prevent problems and protect you from unscrupulous and unethical business transactions should they arise.
The most important thing consumers/landlords should do prior to hiring a property manager is make sure that they are properly licensed. A property manager’s license must be valid and active to collect rent and manage your property. You can check the license status of California property managers on the CalBRE website here.
According to Business and Professions Code (10131), a real estate license is required for any person who, for compensation or in expectation of any compensation–regardless of the form or time of payment–negotiates to do one or more of the following acts for another or others:
- Leases or offers to lease or rent places for rent, or solicits listings of places for rent.
- Solicits for prospective tenants, or negotiates the sale, purchase or exchanges of leases on real property or on a business opportunity.
- Collects rents from real property, or improvements or from business opportunities.
There are exceptions. For example, if you are managing your own property, then a license is not required. (Bus. & Prof. C. § 10131.01). A property manager who also lives on-site at an apartment building does not need a license to engage in leasing or collecting rents. Employees of an on-site manager don’t need a license either. In addition, apartment managers, those managing transient occupancies such as hotels, motels, auto or trailer parks, are not required to be licensed if the stays are less than 30 days.
Brokers are subject to license suspension/revocation if they fail to uphold laws relating to the management of property, as well as other real estate laws.
Remember, most property managers adhere to real estate laws and regulations. However, if they don’t and you suspect fraudulent activity, you may be able to file a claim with the CalBRE against the property manager providing they are licensed by the agency.
This is also why the CalBRE recommends consumers/landlords do a thorough background check on potential property manager hires. Don’t be afraid to ask questions such as how long they’ve been in business. You should also request to see professional affiliations and certifications with property management organizations and call them for verification.