Question: Do I need a real estate license to manage an apartment complex in California?
Answer: If you’re the owner, you do not need to be licensed by the California Department of Real Estate (DRE) to manage your own real estate. However, if you’re not the owner, there are a few rules to be aware of. [Calif. Business and Professions Code §10131(b)]
The owner of income-producing real estate does not need to be licensed with the DRE to operate as a principal. Here’s what an owner can do without a license:
- locate and qualify tenants;
- prepare and sign occupancy agreements;
- deliver possession;
- contract for property maintenance;
- collect rent;
- pay expenses and mortgages;
- serve any notices; and
- file any unlawful detainer (UD) actions to evict tenants. [Bus & P C §10131.01(a)(1)]
In addition, officers/partners of corporations, limited liability companies (LLCs) and partnerships do not need a DRE license to manage real estate owned or leased by the entity they represent. The only caveat is that they may not be payed contingency fees or bonuses for these activities. [Bus & P C §10133(a)(1)]
Non-owners – licensed vs. unlicensed activity
Contrary to popular belief, property managers are not required to be a Certified Property Manager (CPM) to manage real estate. The CPM designation is a non-government designation bestowed by a private non-regulatory organization.
This, as well as other third-party property management designations like the Certified Apartment Manager (CAM), Accredited Resident Manager (ARM), Registered in Apartment Management (RAM) and Certified Apartment Supervisor (CAPS) designations, is not legally required to be employed by a property owner or broker.
You need to hold a DRE broker license or be a DRE-licensed agent employed by a licensed broker if, for a fee, you perform any of the following on behalf of another:
- list real estate for rent or lease;
- market the real estate to locate prospective tenants;
- represent prospective tenants in the rental or lease of real estate;
- locate property to rent or lease;
- sell, buy or exchange existing leasehold interests in real estate;
- manage income-producing properties;
- collect rent from tenants;
- engage in landlord-related solicitations;
- enter into property management or leasing agent agreements with the landlord; or
- negotiate rental or lease agreements. [Bus & P C §10131]
An unlicensed individual working under the supervision of a licensed broker is restricted to the following activities:
- showing rental units and facilities to prospective tenants;
- informing prospective tenants 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)]
A resident manager, an individual who manages an apartment complex and lives on the premises as part of their employment, does not need a license. This is true so long as the individual is not managing a separate apartment complex, which would require a license. [Bus & P C §§10131(b), 10131.01(a)(1)]
Where can I find out more managing real estate property in California?
These rules may change in the future, so it’s important for property managers to stay on top of pending legislation. For instance, California’s Assembly is currently examining AB 2618, a bill requiring landlords and property managers to take a course and pass a certificate program administered by the DRE, to be renewed every two years.
Are you a California agent or broker interested in managing real estate property? Sign up for first tuesday’s 45-hour Landlords, Tenants and Property Management continuing education course to stay informed on the latest regulations.
Ready to become an agent or broker? Sign up for first tuesday’s licensing courses, including Real Estate Property Management.
Own a property and need to brush up on landlord/tenant law? Order a copy of the book from the first tuesday Realtipedia.