Q: Can property managers collect finder’s or referral fees?

Ask A Pro Definitive answers to your property management questions

Q: Can property managers collect finder’s or referral fees?

Q: Can property managers collect finder’s or referral fees?

Can a property manager in Massachusetts collect a Finder’s Fee or is that called a leasing fee in that case? And is this different than a referral fee? I live in Massachusetts.

– Referral FeesChicopee, Massachusetts 

answer-icon-masterGot a brokers’ license? The only people who can collect a fee for matching a renter and an apartment are licensed real estate brokers.

If you’re a garden-variety agent, you don’t qualify – at least, not directly. 

Here’s the relevant part of Massachusetts law, and it’s pretty broadly written: 

Want to Find a Local Property Manager?

No person shall engage in the business of finding dwelling accommodations for prospective tenants for a fee unless such person is a licensed broker or salesman as defined in section eighty-seven PP of chapter one hundred and twelve.

There’s a bit of ambiguity in there, but unlicensed people can forget about getting a referral or finders fee from a renter in Massachusetts. We get a little more clarity here: 

(3) Fees For Service. No real estate broker shall charge any fee to a prospective tenant unless a tenancy is created or in those cases where no tenancy in real property is created unless the prospective tenant has agreed in writing to pay such a fee.

Now, in most states, a property manager can take a finders’ fee or referral fee for this kind of activity, no problem. That’s because in most states, you have to have a real estate brokers’ license to manage property for others. But in Massachusetts, no real estate license of any kind is necessary to do so, as long as the manager stays away from renting and leasing activities. 

Note: Massachusetts seems to allow individuals who have inactive licenses to receive referral fees: 

A person licensed by the board and whose license is inactive may not engage in the business of, or act as, a real estate broker or salesman, as defined in section eighty-seven PP, except that he may assist with or direct the procuring of prospects and may receive referral fees for such procurement activities. (p. 7)

So if you want to play in this particular field in Massachusetts as a property manager, you should probably consider getting a real estate brokers license, or hiring someone to hold a brokers’ license on staff. Be sure to update your errors and omissions insurance policy to reflect your new activities if you do. 

Author Bio
Writing about personal finance and investments since 1999, started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.
Author Bio for Jason Van Steenwyk

Can't Find an Answer?

Submit a new question and
get a Professional answer