This article examines the various requirements to become a property manager in California.
Property manager is a useful title an agent can add to their portfolio. One of the few recession-proof jobs in real estate, property managers are always in demand to manage the operations of rental units.
What does it take to be a property manager in California?
Before an individual can become a property manager, there are numerous state laws with which they need to become familiar. An employee hired to assist a broker in the rental and leasing of residential units may be either:
- licensed; or
Unlicensed property managers
Administrative and non-discretionary duties performed by an employee of a broker who manages hotels or apartment complexes are exempt from real estate licensing requirements while the employee is under a broker’s supervision and control. [Calif. Business and Professions Code §10131.01(a)]
Unlicensed employees may perform tenant-related functions in apartment and vacation rentals, including:
- showing rental units and facilities to prospective tenants;
- providing prospective tenants with information about rent rates and rental and lease agreement provisions;
- providing prospective tenants with rental application forms and answering questions regarding their completion;
- accepting tenant screening fees;
- accepting signed lease and rental agreements from tenants; and
- accepting rents and security deposits. [Bus & P C §10131.01(a)(1)]
Further, an owner of income-producing real estate does not need a real estate broker license to operate as a principal. The owner-operator is not acting on behalf of someone else as an agent when managing their own property. [Bus & P C §10131]
The management of apartment buildings has special licensing rules distinguishing resident managers from nonresident property managers. Apartment complexes with 16 or more units are required to have a resident manager. [25 Calif. Code of Regulations §42]
A resident manager is employed by either the landlord, property management company or the broker who manages the apartment building or complex. The resident manager lives on the premises as a requirement of their employment. A resident manager and their employees do not need a real estate license to manage the apartment complex. [Bus & P C §10131.01(a)]
While there are many activities an unlicensed property manager may perform, many landlords and hiring brokers prefer their property managers to be licensed. When their property manager is licensed, the employer does not need to concern themselves with dividing duties into licensed and unlicensed activities.
When a license is needed to manage property
On the other hand, an individual or corporation needs to hold a broker license if they perform or offer to perform any of the following services on behalf of another in exchange for a fee:
- listing real estate for rent or lease;
- marketing the property to locate prospective tenants;
- listing prospective tenants for the rental or lease of real estate;
- locating property to rent or lease;
- selling, buying or exchanging existing leasehold interests in real estate;
- managing income-producing properties; or
- collecting rents from tenants of real estate. [Bus & P C §10131(b)]
An individual employed by a broker to perform any of the above services needs to be licensed by the California Department of Real Estate (DRE), either as a broker or sales agent employed and supervised by a broker.
Further, some of these duties may be divided and allocated between a property manager and a leasing agent. The listing of property for rental or lease and the locating of prospective tenants may be reserved solely for a leasing agent, while a property manager may oversee more of the day-to-day operations of the rental. [See RPI Form 110 and 113]
Some duties that do require a license and that may be performed by a property manager include collecting rents and managing the operations of income-producing properties. Therefore, a property manager who holds a DRE license is better positioned to fulfill the duties of both a regular manager as well as a leasing agent.
Editor’s note — At the time of this writing, California’s Assembly is considering a bill which would require all landlords and property managers to take a course and pass a certificate program, to be renewed every two years. Stay tuned for developments.
Property manager knowledge base
There is currently no property manager certificate or designation required in California to perform property management activities requiring a license. But there are specific areas of real estate law property managers need to learn in order to succeed and stay on the right side of the law. Areas property managers need to be familiar with include:
- fair housing laws;
- tenant screening; and
- rental agreements.
Screening tenants is important to avoid the loss of property and rents. Missed rent payments and damage to property are the two main issues to avoid by screening for responsible, qualified tenants.
But when screening tenants to ensure timely payment and responsible occupancy of the property, it’s important to avoid violating fair housing law.
For example, in California it is unlawful for landlords to discriminate based on:
- genetic information;
- national origin;
- marital status;
- medical condition;
- sex (including gender and gender identity);
- pregnancy; or
- sexual orientation. [Calif. Civil Code §51(e)]
Editor’s note — An exception to the age rule exists for senior-only housing. A project qualifies as senior housing if it is occupied solely by those who are 62 years of age and older. [24 Code of Federal Regulations §100.303]
Therefore, a landlord may not use discriminatory criteria to:
- disqualify potential tenants;
- refuse to rent a dwelling;
- impose different rent charges; or
- evict tenants or their guests. [Calif. Government Code §12955]
Further, a landlord is prohibited from causing a tenant to vacate their rental property by threatening to disclose their (or someone associated with the tenant’s) immigration or citizenship status. [CC §1940.2]
Read more about fair housing laws here.
Agents interested in becoming a professional property manager, consider first tuesday’s 45-hour continuing education course for licensed real estate agents, Landlords, Tenants and Property Management.