Do I have to be licensed to practice property management?

Whether a license is required to do property management depends on what type of property management activities we are talking about. Property management per se is not a licensed activity and no license is required. That statement, however, only applies if property management is limited to duties like handling the calls from tenants or handling repairs. Leasing and showing property are licensed activities when done on behalf of a third party and all licensed activity must be done through a licensed firm.

An agent’s father owns income producing properties that he wants his son to lease and manage. May the son manage the property and be paid directly by his father or must he be paid through his principal broker?

It depends. If the son is employed by his father’s company and is paid as an employee of the company, he need not be paid through his broker, absent an agreement with his broker to the contrary. This is for two reasons: First, a company may handle its own affairs – even acts for which a real estate license would otherwise be required – whether its employees are licensed or not. Second, independent contractor agents may hold other jobs. The son may not, however, be hired as the company’s agent except through his firm, in which case all compensation must come through his broker.

If an owner is otherwise exempt from the provisions of the Virginia Residential Landlord Tenant Act because the number of units owned is below the statutory minimum, does he nonetheless come under the Act by simply listing the property with a Realtor?

No. Unlike the fair housing laws, to which otherwise exempt individuals become subject by the simple act of listing with a real estate agent, VRLTA does not provide that listing with an agent brings the owner under the Act.

If a landlord receives notice of a foreclosure does he have to notify the tenant?

Yes, see the statute below. Please also note the exemption for managing agents that do not receive written notice from the lender.

§ 55-225.10. Notice to tenant in event of foreclosure.

A. The landlord of a dwelling unit subject to this chapter shall give written notice to the tenant or any prospective tenant of such dwelling unit that the landlord has received a notice of a mortgage default, mortgage acceleration, or foreclosure sale relative to the loan on the dwelling unit within five business days after written notice from the lender is received by the landlord. This requirement shall not apply (i) to any managing agent who does not receive a copy of such written notice from the lender or (ii) if the tenant or prospective tenant provides a copy of the written notice from the lender to the landlord or the managing agent.

B. If the landlord fails to provide the notice required by this section, the tenant shall have the right to terminate the rental agreement upon written notice to the landlord at least five business days prior to the effective date of termination. If the tenant terminates the rental agreement, the landlord shall make disposition of the tenant’s security deposit in accordance with law or the provisions of the rental agreement, whichever is applicable.

C. If the dwelling unit is foreclosed upon and there is a tenant lawfully residing in the dwelling unit on the date of foreclosure, the tenant may remain in such dwelling unit as a tenant only pursuant to the Protecting Tenants at Foreclosure Act, P.L. No. 111-22, § 702, 123 Stat. 1632, 1660 (2009), and provided the tenant remains in compliance with all of the terms and conditions of the lease agreement, including payment of rent.

What is the purpose of a Damage Addendum?

Virginia REALTORS® Form 210 – Damage Addendum

The Damage Addendum specifies up-front what the costs of repair will be for routine maintenance items, and therefore what (if any) deductions will be made from the security deposit. It also gives the tenant advance notice of what items the landlord will be checking, and therefore helps to avoid possible misunderstandings or conflicts between landlord and tenant during the move-out process.

Can a landlord refuse to rent to five college students without worrying about discrimination?

Ordinarily, yes. College students are not a protected class. However, be careful that the refusal to rent does not disparately affect a protected class. An example would be an ad refusing to rent to college students in an area adjacent to a Historically Black College and University. The landlord’s intent may not be to exclude African Americans, but his action could have a disparate impact on a protected class.

Everything else being innocent, it’s not a problem to refuse to rent to college students.

Please note that some localities have enhanced protections for minors so you should check with your locality before running this type of ad.

Broker wishes to hire an unlicensed assistant to work in the property management area. What can she do in this regard without a license?

VREB outlines what activities do and don’t require a license in 18 VAC § 135-20-165 (6)-(7):

Does NOT require a license:

  • Perform general clerical duties, including answering the phones, responding by electronic media, and providing information shown on the listing;
  • Submit listings and changes to the MLS;
  • Follow up on loan commitments after contracts have been ratified;
  • Have keys made for listings;
  • Compute commission checks;
  • Place signs on properties;
  • Act as a courier service;
  • Schedule appointments;
  • Record and deposit earnest money, security deposits and advance rents;
  • Prepare contract forms for approval of the licensee and supervising broker;
  • Prepare promotional materials and advertisements for approval of the licensee and supervising broker;
  • Assemble closing documents;
  • Obtain required public information from governmental entities;
  • Monitor license and personnel files;
  • Order routine repairs as directed by licensee;
  • Receive compensation for their work at a predetermined rate that is not contingent upon the occurrence of a real estate transaction and
  • Perform any other activities undertaken in the regular course of business for which a license is not required.

DOES require a license:

  • Show property;
  • Hold an open house;
  • Answer questions on listings, title, financing, contracts, brokerage agreements, legal documents;
  • Discuss, explain, interpret, or negotiate a contract, listing, lease agreement, or property management agreement with anyone outside the firm; and
  • Negotiate or agree to any commission, commission split, management fee, or referral fee.
The landlord wants to pay a "finder's fee" to existing tenants who bring in other renters. Can the landlord directly compensate his tenants in this fashion, even though a real estate firm is managing the property?

Section 54.1-2103(A)(7) of the Code of Virginia gives the answer. This section deals with exemptions from the requirements of licensure, and exempts “Any existing tenant of a residential dwelling unit who refers a prospective tenant to the owner of the unit or to the owner’s duly authorized agent or employee and for the referral receives, or is offered, a referral fee from the owner, agent or employee.”

An experienced property manager wants to join my firm and head a new property management division. I am the broker and do not have any experience with property management – is it safe to allow this new practice?

I would be very cautious in moving forward. The supervising broker is responsible for ensuring that brokerage services are carried out competently and in accordance with the law. If the broker is unfamiliar with the area of practice it will be very difficult for her to ensure compliance with the law.

I recommend that the broker educate herself about property management through training and closely monitor all activities of the property manager. Also, please remember Code of Ethics Article 11:

The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10)