Alert – Be Cautious in Undertaking Property Management Responsibilities

Rentals are becoming a larger part of the residential real estate market. As a result, many agents are moving into managing property. Although it seems like a natural fit for residential real estate agents, it may be much more complicated then it initially appears.

Agents interested in undertaking property management services are encouraged to educate themselves in this area, particularly, with regard to landlord-tenant laws and trust fund regulations. The California Association of Realtors offers courses in property management, which agents interested in this field are encouraged to attend. Agents are also encouraged to study and understand the regulations pertaining to trust fund maintenance.

The California Bureau of Real Estate (“CalBRE”) appears to have increased its audit activity, with a focus on property managers. CalBRE takes trust fund violations very seriously and will prosecute agents for violations, particularly, if there are discrepancies in trust fund accounts or comingling.

Property managers should also review their insurance policies to ensure that they are properly insured for their activities. Insurance should include errors and omissions insurance. (Many standard errors and omissions insurance policies do not include property management activities. However, such insurance is easily available, upon request of the insurance company.) Property managers should further ensure that they have appropriate liability insurance.

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