As an industry, Florida property management has evolved into a specialized profession with enough financial, legal, and consumer risk that a general real estate license is no longer sufficient to operate in the business.
Property managers handle rent, escrow, compliance, tenant rights, owner assets, maintenance and increasingly complex regulation.
It is time for Florida to recognize property management as the specialized profession it has become, and to require specialized licensing to operate as a Property Manager.
Recently, I participated in a series of industry and regulatory discussions where property management violations came up several times. Interestingly, most of the violations were committed by legitimate real estate professionals who did not even know they were breaking the law with their business practices. These were not people who knew the rules and chose not to follow them, but rather people who did not know the rules at all.
Right now, having a real estate license allows someone to engage in property management activities in Florida. Being licensed to practice real estate does not account for the large breadth of specialized knowledge a property manager in Florida needs to have to do their job correctly and stay compliant.
The industry as a whole must have a serious conversation about the distinction between “property management” and “real estate”.
Real Estate and Property Management Are Different
Becoming a licensed real estate agent requires education, commitment and proven expertise. Great agents have trained in how to negotiate for their clients, how to write enforceable contracts, and how to help buyers and sellers through some of the most significant financial decisions of their lives.
Property managers are responsible for rent collection, escrow and trust accounting, security deposits, lease enforcement, required notices, maintenance, vendor management, fair housing compliance, disclosures, owner accounting, recordkeeping and staying up to date on ever-evolving landlord-tenant regulations. Most of what I just named is not taught in real estate agent training, and obtaining a license to practice real estate does not equate to competency in property management, and there are major financial and legal consequences if you get it wrong.
Professional property-management companies differentiate themselves by their level of understanding about all these activities and keeping their customers compliant and profitable with their real estate investments. A residential real estate agent who occasionally agrees to manage a rental is unlikely to have the skills or knowledge to guide a customer in the same way.
“I'm Just Helping My Client”
Imagine you have represented a client through multiple real estate transactions. They trust you and believe that you're good at what you do. One day, they decide they aren't ready to sell a house they had planned to. They ask you: “Can you just find us a tenant and manage it for a year?” You want to help your client, so you say yes, because it feels like a natural extension of the relationship.
You find them a tenant, and the tenant starts paying rent electronically. The money comes to you and you forward it right on to the owner. Would you know you were violating Florida laws about brokerage, escrow, accounting and recordkeeping requirements when collecting rent payments? Unfortunately, your ignorance doesn't eliminate your obligations in this scenario, and it could land you in hot water.
When you never had the education about property management and were told you could practice with your current real estate license, how can you be expected to follow the law?
Who Gets Hurt?
The first person exposed in the above scenario is the property owner. An owner hears “licensed real estate professional” and reasonably assumes the person who has agreed to manage their property has been trained to do it. That assumption is wrong, and it results in the owner being exposed to improperly handled funds and other compliance violations.
The owner almost never realizes the gap between “real estate” and “property management” until they’re losing money they can’t collect or getting a slap on the wrist for non-compliance.
Tenants also rely on property managers to administer leases and security deposits, provide maintenance services, and comply with housing regulations. It’s implied. The tenant would not know if the personal administering their lease is a property management professional or unqualified.
The agent is at risk, also. If they accept responsibilities they aren’t prepared to perform legally, they can risk their own license, and most are not even aware of it.
Finally, there is the broker, who the agent works under. They likely don’t even know one of their agents is doing property management on the side.
Since every party involved is at risk, that makes this an industry problem, and our local industry leaders need to deal with it because avoidable violations consume regulatory resources and erode consumer confidence in the professionals who do this work correctly every day.
Property Management Licensing
Property management is too specialized and too regulated to continue treating it as just another activity beneath the broad umbrella of “real estate”. That would be like every contractor being able to call themselves a gas plumber. That’s not allowed, because the risk is too high.
Florida must begin a serious discussion about requiring additional education, certification, endorsement and/or licensure for professionals who engage in property management as a service.
I don’t know exactly what that might look like, and we need to come together to figure it out. Perhaps it's a separate license. Perhaps it's an endorsement or designation attached to an existing real estate license. Either way, it definitely involves mandatory education and continuing education specific to property management (topics like trust and escrow accounting, rental leases, security deposit handling, landlord-tenant law, fair housing law, required disclosures, maintenance obligations, recordkeeping, fiduciary responsibilities and regulatory compliance.)
This would establish the necessary baseline of competency before someone assumes responsibility for other people's homes, assets and money.
I own a property-management company, so I understand the obvious criticism: Of course I want to make it harder for real estate agents to compete with businesses like mine. But this isn't about protecting my business from competition. It's about protecting my entire industry, and the people it serves, from preventable harm.
