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Legally speaking: What duties can an unlicensed person perform in the area of residential property management

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. This one involves rules pertaining to the duties an unlicensed person can and cannot perform with regard to residential property management…  

Q: My brokerage has recently experienced an increase in the number of properties we manage. As a result, I would like to hire an additional staff person to assist the agents who do our property management. I’m wondering if I can hire someone who isn’t licensed and, if so, what are the duties that person could perform. For example: Can an unlicensed employee show an apartment? Can the receptionist collect rent checks or provide information over the phone regarding rental properties?  

A: Ohio license law contains a rule which answers these questions for residential property management. Ohio Administrative Code Section 1301:5-5-07 provides a list of activities that an unlicensed person can and cannot perform with regard to residential property management. The rule also provides that the unlicensed individual performing the permitted activities listed in this rule must work under the supervision of a broker and his/her compensation must be primarily on a salaried or hourly basis.

Under this rule, the duties an unlicensed employee can perform when working with residential rental property are the following:

  • maintenance
  • clerical or administrative support
  • collect or accept rents and/or security deposits which are made payable to the owner or real estate brokerage
  • exhibit or show residential rental units to prospective tenants
  • furnish published information regarding the property
  • supply applications and leases
  • receive applications and leases for submission to the owner or broker for approval

The rule provides that an unlicensed employee may not perform the following duties:

  • negotiate contracts or leases
  • deviate from the rental price and/or other terms and conditions previously established by the owner or broker when providing information to prospective tenants
  • approve rental applications or leases
  • settle or arrange the terms and conditions of a lease on behalf of the owner or broker
  • offer inducements to prospective tenants unless they are previously advertised or arranged with the owner or broker
  • interpret or provide their opinion concerning the terms or conditions of a lease
  • indicate to the public that he is in a position of authority which has the ultimate managerial responsibility of the rental property

It’s clear that a brokerage employee can perform many clerical and administrative functions without holding a real estate license. They can provide information to prospective tenants, show units and supply and accept tenant applications and leases. However, unlicensed employees cannot act as the property manager or function as a “decision maker.” Instead, performing that role is limited to a real estate licensee.

It is also important to note that the above rule applies only to residential property management. The licensure exemption does not apply to commercial, industrial or retail property management, or in real estate sales of any type.

Brokers engaged in property management must understand what activities their unlicensed employees can perform and provide clear guidance to their employees regarding the duties they are permitted to perform under Ohio law. It is the broker’s responsibility to make sure that their employees do not cross over this line and perform activities limited to only licensed agents.

More information on property management can be found in the OAR Property Management White Paper.

Tags: legal, Legally Speaking