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It's common for landlords like you to hire a company or individual with experience in property management to take care of all or some of the day-to-day operation and maintenance tasks associated with your rental property. The tasks performed by the property manager can include:

• Accepting rental applications
• Collecting rent
• Performing maintenance and repairs, or hiring contractors to do the work
• Screening and selecting tenants to fill vacancies
• Keeping business records and preparing financial reports for you, the owner

So, the property manager you need depends on the size of the property and how much you want the person or firm to do. The manager could be an individual who performs limited management services, such as a resident manager of an apartment building. Or, the manager might be an individual or a property management firm that performs, for a fee, all or most of the management responsibilities for properties like multi-building apartment complexes.

Many states have laws that govern things like when a property management professional or firm has to be available for tenants and who can perform certain property management functions, such as collect rent. So, before you hire a property manager, be certain to check the laws in your area.

Some Legal Requirements

In many states, the landlord-tenant laws require that if your property has one or more rental units (like a single family home or a multi-unit apartment building), the tenants must be given the name, telephone number, and usual street address of:

• Any person authorized by you to manage the premises, and
• You, or the person who is authorized to act for and on behalf of you for the purpose of service of process (that is, being notified of legal disputes or actions involving you) and for the purpose of receiving and receipting all notices and demands, such as a tenant's notice of terminating a lease or a demand for a repair
• The person or firm to whom rent payments must be made

Usually, this information is contained in the lease.

In some states, a manager, janitor, housekeeper, or other responsible person must reside on the premises when the building has a certain number of units or apartments, like more than 16, and you, the owner, don't live there. If the building has multiple units but less than 16 units, and you don't live there, a notice stating your name and address or the name and address of the property manager must posted on the premises.

Licenses

In some states, property managers must have a real estate broker's or salesperson's license in order to perform certain activities, such as:

• Leasing or offering to lease the premises
• Negotiating a lease
• Advertising vacancies
• Collecting rent

If a property manager does any activity that requires a license and he or she was not licensed, he or she can't sue you to recover fees or commissions for performing those activities.

Usually, there's an exception to the licensing requirement for a resident manager of an apartment building or apartment complex. Also, an employee of a property management firm and who works under the supervision and control of a broker employed by the firm, can do the following services without a license:

Duties & Liabilities

In many states, a written management agreement between you and a manager creates a principal-agent relationship, where you're the principal and the manager's the agent. In such a relationship, the agent steps into your shoes and conducts business on your behalf. And, the manager owes you certain duties, that is, he or she must do certain things and can't do other things. A manager must:

• Act in good faith toward you. So, he or she can't do or say things intentionally to make tenants leave the premises or to make them reluctant to lease from you
• Avoid conflicts of interest with you. For example, he or she can't take a prospective tenant to an apartment complex that he or she owns or where he or she receives greater commissions or fees
• Keep your money funds, such as rent payments, separate from his or her personal funds or the funds of the management firm

Your duties toward the manager include the duty to act in good faith and to pay him or her for services rendered. But, because the typical relationship is one of principal-agent where the manager acts on your behalf, there's a possibility that you can be liable for the manager's misconduct or wrong-doing. For example, if the manager commits housing discrimination, then refusing a potential tenant's application, then you can be liable in most states for the manager's misconduct and might have to pay the prospective tenant money damages.

Questions for Your Attorney

• I hired a property management company to perform repairs and maintenance, but I don't think they're doing the job right. Can I go into tenants' apartments to check on repairs?
• I can take federal income tax deduction for the amount I pay my property manager, right? Do I get a state tax deduction, too?
• I'm interviewing applicants for a live-in property manager for my multi-building complex. The person I want to hire has a dog, but I have a "no pet" policy. Can I let him have his dog and still enforce the no pet clause on my tenants?
• What are the licensing requirements and wage laws in our area for property managers? Is the manager my employee?

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