Q: Do property managers need a real estate license?

In California, what recourse do I have if a property manager does not have a real estate license? This person handles all aspects of the rental properties including collecting rents and executing leases. He is paid for his services.

California

is one of the majority of states that requires a real estate license to manage property, and executing leases is certainly one of the activities that requires a license.

There is an exception to the rule that allows unlicensed individuals to do certain things provided they act under the supervision of an appropriately licensed individual. You don’t mention if that could be the case. This document explains the limitations of unlicensed assistants who work for licensed brokers. If an unlicensed individual strays from these guidelines, he or she could be guilty of practicing real estate without a license.

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You have two recourses, potentially – If you suffered damages as a result of the unlicensed activity you may be able to sue for damages. Alternatively or concurrently, you could report the individual for conducting unlicensed real estate activity, which is unlawful in the State of California.

You could put this individual out of business for a time. California may serve them with a Desist and Refrain order prohibiting them from conducting real estate activity until they get the license. They could also be assessed a nasty fine.

If the individual was working under the supervision of a licensed broker, however, you may actually have more success collecting any significant damages. This is because licensed brokers typically carry errors and omissions insurance, which helps protect both the broker and the consumer by ensuring that there is enough cash available to compensate consumers if the broker is found to have messed up (or settle out of court to avoid a trial).

If there’s no professional liability insurance in place, such as errors and omissions coverage, you might get a judgment but you may have a hard time actually recovering anything.

If you want to report the individual for unlicensed real estate activity, click here. If you want to go the lawsuit route, we’d have to refer you to a

California

licensed attorney as your prospects for success would be highly dependent on particulars.

Author Bio
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.