Property management regulation in Florida is crucial for anyone investing in rental properties. While rental properties can be a great investment, they also represent a significant financial commitment. Following these regulations when hiring professionals, especially property managers, is essential to managing your investment effectively. Whether you're selecting lawyers, accountants, or property managers, adhering to these regulations is key.
Hiring a property manager entrusts them with the keys and responsibility for managing one of your biggest assets. So, if you decide to do that, it is imperative you understand how property management companies are regulated and what requirements they must have in place.
Property Management Regulation in Florida: Do Property Managers Need to Be Licensed?
The answer is mostly yes, but a slight no; let us clarify. Property management regulation in Florida mandates that property management companies in Orlando must hold a brokerage license and employ a broker to operate legally. While property managers involved in real estate transactions require a license, many aspects of their job do not.
If a property manager handles leasing activities, it’s considered a real estate transaction, requiring a license. This includes presenting rental properties, negotiating leases, and signing lease agreements on the owner’s behalf. Property Manager’s also do many other things like maintenance coordination, rent collection, bookkeeping, resident relations, owner-client relations, etc. which do not fall under real estate transactions and thus do not need a real estate license.
Florida Statute 475, which oversees the state’s real estate market, requires this provision. To obtain a real estate license, an individual must complete pre-licensing coursework, pass the state test, and meet other eligibility requirements like a background check.
Improper licensing for a property management company or its staff spells trouble for both the company and the owners. Employing an unlicensed property manager for leasing activities can lead to legal consequences for both the owner and manager. These may include fines and potential disciplinary action against the owner's real estate license.
Terminating a Property Management Agreement in Florida
Deciding to terminate a property management agreement in Florida can be challenging for property owners. If you decide to proceed, you must follow specific steps to ensure a smooth transition.
1. Review the Property Management Agreement
Before taking any action, review the agreement you signed with your property management company. This agreement outlines all the terms and conditions governing your relationship with the property manager. Pay special attention to the termination clause, which specifies the notice period, reasons for termination, and any potential fees or penalties for ending the contract early.
2. Document the Reasons for Termination
If property owners decide to terminate their agreement with the property manager due to poor performance or breach of contract, they must document these reasons in detail with proof. Keep detailed records of correspondence, financial transactions, and any other evidence supporting your decision. These records protect you in case of a legal dispute.
3. Provide written notice to the Property Manager
Once the decision to terminate a property management agreement is made, the property manager must provide written notice as described in the agreement. The notice should include the reasons for termination, the effective date, and any other relevant information. Consider sending the notice via certified mail or another method that provides proof of delivery, including dates and times.
4. Manage the change
Switching property management companies isn’t as simple as snapping your fingers. Decide whether to hire a new company or manage things differently.. Either way, gather resident information, finalize accounting, handle any funds or deficits, collect all resident agreements, and organize other necessary documents. Ensure everything is set up to minimize disruption in managing the rental property and resident. Ideally you are hiring another company that can efficiently intake all this information into their new system, onboard you and the property quickly, and just inform the resident in the change of management and how to interact with them as the new company.
5. Select a New Property Manager
Even though this is listed as step 5, it doesn't mean it follows step 4 sequentially. As you consider terminating your property management agreement and switching property management companies, decide on your next steps before finalizing the termination. You should already have a new property manager selected, and ready to go before you terminate the other agreement so they can help you manage the transition and make it much smoother. Waiting to terminate your agreement before finding a new company can lead to chaos and avoidable problems.
We are happy to provide property management services in Orlando, FL, while ensuring compliance with property management regulations in Florida. If you’re considering terminating a property management agreement or switching property management companies, and want to know more about how we can assist, feel free to reach out. We’ll gladly answer any questions you have!
You can also check out our owner FAQ page or our Pricing page for more information!
