Why Do Property Managers Need to Be Licensed?

Are you thinking about hiring a property manager? If so, you may find yourself wondering, “Why do property managers need to be licensed?” It’s always in a landlord’s best interests to ensure that the property manager they hire is well-qualified for the job. One of the issues to consider is whether the manager has a valid license. In nearly every state, property managers must carry some sort of license, usually a real estate broker license. In fact, there are only a handful of states—Vermont, Idaho, and Maryland—that do not have licensure requirements. There are plenty of reasons why most states do require licensure.

Reasons for Requiring Property Management Licensure

In Arizona, property managers must hold a valid real estate broker license. One of the major reasons for this involves the Arizona Residential Landlord and Tenant Acts. One of these acts pertains to mobile home rentals, while the other covers standard rental housing. These acts, and similar regulations, establish concepts of liability for landlords and tenants. It’s necessary to have a keen understanding of these legal regulations in order to ensure full compliance. The most effective way to ensure that property managers have the necessary legal knowledge is to require that they obtain licensure.

Licensed property managers are equipped to prevent legal liability. For example, they know how to choose tenants in a manner that is not discriminatory. They also understand the specifics of modifying properties to be accessible to individuals with disabilities. Furthermore, licensed property managers understand the importance of keeping certain information confidential. Lastly, requiring licensure for property managers ensures that they have undergone a background check.

Steps to Obtain a Real Estate License

The process of obtaining a real estate broker license in Arizona is quite involved. It requires specialized knowledge and a dedication to the field. First, prospective property managers must register with a state-approved educational program that offers a pre-licensure course. Then, they must obtain a Fingerprint Clearance Card through the Arizona Department of Public Safety. This is the first hurdle in the background check process. Next, aspiring property managers must file a Disciplinary Actions Disclosure Form, which indicates whether the applicants have a criminal history. Lastly, they must file a Disclosure Document Checklist. This form reveals whether applicants have any judgments pending against them in a civil court.

After passing the extensive background check, aspiring property managers must complete the education program. Arizona requires applicants to successfully complete 90 hours of pre-licensure education. At the end of the program, the applicants need to pass a rigorous examination. Next, the applicants must pass a separate, six-hour course. This course covers the intricacies of contract law and contract writing, which is essential information for property managers.

Lastly, applicants must successfully complete another challenging examination. The Arizona Department of Real Estate administers this exam. They use Pearson VUE as their testing provider. Once the prospective property manager has completed all of these requirements, he or she must submit the final application to become a licensed real estate broker to the Arizona Department of Real Estate.

Exceptions to the Real Estate Licensing Requirement

It’s always best to choose a licensed real estate broker as your property manager. In most cases, it’s legally required. However, Arizona regulations do allow for a few exceptions to this rule.

  • Onsite managers: Property managers who only work at one property are labeled “onsite managers.” These individuals usually do not need to be licensed as a real estate broker or salesperson. However, if an onsite manager receives commissions or other special forms of compensation, then the state does require licensure. This is because part or all of that manager’s income is sales-focused.
  • Community association managers: Most of the time, community association managers do not need to hold a real estate license. However, if the community association manager engages in selling or leasing activities on behalf of the property owner, then he or she does need a license.
  • Short-term rental manager: Property managers who only handle short-term rentals do not need a license. A short-term rental is one rented for 31 or fewer days at a time.

Still wondering, “Why do property managers need to be licensed?” Let the expertise and in-depth knowledge of the team at New Concept Property Management demonstrate the answer with our full suite of services and our expert legal guidance. Our property manager holds a real estate license and offers years of experience in the business, so you can rest easy knowing that your property and tenants will be in good hands. Get in touch with our office in Tucson at (520) 305-3950 today with your questions!