Property management: A legal overview
By Margy Grant
March 20, 2017 – As the market continues to show amazing growth and real estate values increase, most Realtors® feel very confident about the future, and they're actively expanding and growing their businesses.
For some Realtors, expansion means moving into the property-management side of the business. Each Florida real estate brokerage adopts a business model, and some include a property management component while some do not. However, even Realtors working in a non-property-management brokerage need to understand the property management concept because the Florida Real Estate Commission (FREC) – the state entity that regulates real estate licensees and protects the public – regularly hears cases and disciplines real estate licensees concerning property management practices.
Even without a clear legal definition in Florida for property management, landlords still contract Realtors to advertise their properties, solicit tenants and place them – actions that the state defines within the law as real estate activities.
If a landlord wants a Realtor to provide property manager services during the lease period, the Realtor must adhere to the law. FREC is handling more complaints in which a real estate licensee is conducting property management and not accounting for the funds.
FREC, for example, has disciplined real estate licensees who accept rent, hold security deposits, advance money for repairs and collect a management fee without running their activities through the brokerage company. In some cases, the broker may not even be aware that an associate is working in property management. But FREC extends liability to both the agent and the broker.
For this reason, brokers must consistently monitor their affiliated licensees' activities. They should confirm with their affiliated agents that they understand the broker's business model and whether property management is allowed.
Florida Realtors offers support to property managers through our tools and services:
Margy Grant is General Counsel of Florida Realtors
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