Sister managing my properties?

Question

Jim Cummings · Answer

@Gabriel Benavidez. Here is what google found on Texas Licensure for Property Managers:

Must Texas property management companies have a real estate broker's license?

YES. Key components of property management (leasing and renting) are considered real estate activities under existing Texas real estate licensing laws. If a property manager is going to lease (or list for lease) real estate, or negotiate or attempt to negotiate for the lease of real estate, or aid in locating real estate for lease, control the acceptance or deposit of rent from a resident of a single family residential property unit, or if he or she holds herself out as engaging in any of those activities, he or she will need a broker's license. A salesperson working under a broker may engage in such activities.

Are there any exceptions to the requirement that a Texas property manager have a real estate broker's license?

YES. For example, salaried employees of property owners need not have a real estate license for managing or leasing property owner by his or her employer.

For more information about these and other Texas property management requirements and exceptions, please contact the Texas Real Estate Commission.

You might treat your Sister as a "Salaried Employee" doing work for you as the Owner.

However, even if She is a relative, if She handles negotiation for the lease, or anything else that looks like Brokerage activity, (possibly even showing places to rent) She will be engaging in activities for which a License most likely would be required. NOT LEGAL ADVICE.

Frank Chin · Answer

To add to what I mentioned previously, and the comments above, there are several other approaches to this, aside from your sister becoming a real estate professional, and meet it's requirements, or having you employ her, and as a salaried employee, requires you to carry unemployment insurance, workman's comp, filing state, federal with holding tax etc.

There are several other simpler ways:

1. Give her a POA (Power of attorney). I seen this done in many area of real estate, even including executing deeds. I seen it often in the case of the elderly, where they have their children or relatives handle things. Have an attorney do it,  especially if you want to limit it to just the management of one or several properties.

2. Give her a master lease where she can then sublease to subtenants, collect rents, interview and select tenants for you. Unlike the POA, you cannot revoke it as easily. She as acting as a de facto  landlord.

3. Add her to the deed with a minor percentage, such as 5%. This way she is a part owner, and need no real estate license.

Among these alternatives, the POA is the simplest, followed by a master lease. With part ownership, you'll have estate issues. When I had my sister manage my condo, the last thing she wanted to do is get a real estate license, especially when she is doing well in an IT career, and had two kids to raise as a single mom. I had to handle payroll for a business I own and the last thing I want to do is handle the more payroll paperwork where she only gets paid $50.00/month. In fact, my doing a $50.00 payroll is more work monthly than for her managing a condo.

Frank Chin · Answer

It depends on the laws of your state.

I took the real estate courses for licensing and in my state, you are should be licensed to collect rent for others. But the requirement turns out as you are under the supervision of a licensed broker in the beginning, the broker is bonded an insured. But the main thing is a licensed property manager can have rents, security deposits paid to him, he deducts his fee, and remits the remainder to the owner. However, if you simply have the rent checks made payable to the landlord, then bill him for services, it would be a good workaround.

I had my sister manage an out of state condo for me, and she lives at another condo in the complex. In the beginning I had the rent checks made payable to me, and she deposits it for me, thus no need for a license. Later, I put her on the deed which makes the point moot, since she's no longer collecting rents for others. She deposits it to a local bank where we set up a joint account, so she deposits the check payable to me, then issues herself a check for her monthly services. It worked great.

My CPA had the same issue. My CPA does accounting for real estate investors, and collects some rent checks from his client's tenants, and brings it to the bank, and wondered if he needs licensing. He checked around and was told he's simply bringing checks issued to his clients to the bank, and there's no need to get a license for being an errand boy. Both my sister and the CPA relay tenant complaints and call repair people, interview tenants, but you don't need a license to do that either. If my sister or CPA had tenants make checks payable to them, they need a license, besides being bonded and insured.

Rebecca Moran · Answer

@Gabriel Benavidez I know this post is several years old, but I was wondering if you were able to find a successful workaround for your sister to manage your property? My sister and BIL would like me to manage their property so we are in a similar boat!

Basit Siddiqi · Answer

@Gabriel BenavidezAs Frank mentioned - Each state's laws are different so you definitely want to check with your state's laws.There are exception in certain states that one can manage properties for only one person and not have to be licensed in that state. Something you want to look into if Texas allows this.

Sister managing my properties?

Most Popular Reply

Must Texas property management companies have a real estate broker's license?

Are there any exceptions to the requirement that a Texas property manager have a real estate broker's license?