If states do not require a real estate license to regulate condo/HOA property managers, how do these states audit or regulate their condo or HOA property managers?
There are currently just four states that don’t require a license at all to manage property:
However, it’s not exactly like they are all in completely uncharted territory. Lots of other states allow unlicensed people to manage properties in certain limited circumstances – for example, if they are only working on behalf of a single owner, and drawing a salary rather than a commission or incentive-based payment, or if they are on-site managers who live on the property and don’t directly solicit or execute leases.
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In these cases, the responsibility for compliance falls with the managing broker (who is licensed) or the property owner directly.
Furthermore, just because there’s no licensing requirement does mean that the industry is entirely unregulated. Each state still has extensive landlord-tenant laws on the books, and all property managers are expected to adhere to them, and both managers and landlords still face penalties if they break the law, licensed or not.
In areas where the state department of real estate does not directly assert regulatory authority, other state agencies may, including the Departments of Commerce and state housing authorities.
If anyone has an enforcement issue with non-licensed managers in these states, they can still go to the department of real estate and go after the landlord, or they can pursue civil remedies via a straight-ahead lawsuit.
In these four states, then, since there’s no licensing requirement to be a property manager by state law, there’s that much more responsibility on landlords themselves to ensure that their actions and the actions taken by their employees are in compliance with state law.
Additionally, some communities require landlords to obtain a rental permit at the local level in order to rent real estate. For example, the town of Amherst, Massachusetts requires such a permit. If a landlord is a chronic problem, that rental permit can be revoked.
The same goes for condo or HOA managers. In
, all managers are responsible for complying with the Condominium Property Act. In
, they must comply with the Maine Condominium Property Act. In
, it’s the Condominium Ownership Act. And in Massachusetts, it’s the Massachusetts Condominium Act.
Now, choosing a property manager or co-op manager is the responsibility of the board. In the absence of a formal licensing requirement, doing your due diligence on a prospective manager is that much more important, because obviously, since you can’t complain about them to the licensing authority if there’s a problem, any remedies such as a lawsuit might be a lot more expensive and time consuming to pursue.
But there are extremely capable and professional and experienced managers in every state. If you are willing to pay a fair rate for the service, you shouldn’t have a problem finding a good manager willing to take the job.
Writing about personal finance and investments since 1999, Jason Van Steenwyk 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.