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Property management is the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its useful life and condition. This is much akin to the role of management in any business.
Property management is also the management of personal property, equipment, tooling and physical capital assets that are acquired and used to build, repair and maintain end item deliverables. Property management involves the processes, systems and manpower required to manage the life cycle of all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization and disposition.
Duties of property management generally will include a minimum of these basic primary tasks;:
There are many facets to this profession, including managing the accounts and finances of the real estate properties, and participating in or initiating litigation with tenants, contractors and insurance agencies. Litigation is at times considered a separate function, set aside for trained attorneys. Although a person will be responsible for this in his/her job description, there may be an attorney working under a property manager. Special attention is given to landlord/tenant law and most commonly evictions, non-payment, harassment, reduction of pre-arranged services, and public nuisance are legal subjects that gain the most amount of attention from property managers. Therefore, it is a necessity that a property manager be current with applicable municipal, county, state and Federal Fair Housing laws and practices.
Every state of Australia has different licensing and compliance requirements. Generally, to be able to provide property management services, a real estate licence is required. State of Victoria Australia information
In Canada, the laws governing property management and landlord/tenant relations are generally speaking a Provincial responsibility. Each Province and Territory makes its own laws on these matters. In most cases any person or company can offer property management services, and there are licensing requirements. Other than specific laws in each Province and Territory governing these matters, they are governed by English Common Law, except in the Province of Quebec where the Civil Code is used in place of English Common Law. In some cities, the Provincial Legislation is supplemented by City by-laws.
British Columbia - licensing of property managers is regulated by the provincial government and licensing by the BC Real Estate Council (BCREC).
Ontario - no licensing is required to operate, however ACMO - the Association of Condo Managers of Ontario is a self-governing body for certification and designation of its members who run buildings with more than 600 units. (RECO) the real estate council of Ontario, regulates licensed realtors in Ontario.
Saskatchewan and Alberta both require property managers to hold a real estate license.
Residential property managers in New Zealand currently come in two types. Those that are licensed and those that are unlicensed. The New Zealand Government reviewed whether all forms of property management need any legislation.Following completion of the review, the Associate Minister of Justice, Hon Nathan Guy, announced on 2 July 2009 that no new occupational regulation would be imposed on property managers. A copy of the Minister's announcement is available at: www.beehive.govt.nz.
New Zealand licensed property managers offer a full and complete service with qualified professionals who collect rent through an audited trust account to protect both investment property owners and tenants. Also licensed property managers adhere to the Real Estate Institute of New Zealand property management code of practice which outlines industry best practices for dealing with the public. Unlicensed property managers do not require any registration, minimum knowledge or skill, or adhere to any code of practice to offer a property management service.
Consequently, the services offered in New Zealand are varied where both licensed and unlicensed property managers have a mixed track record in delivery services to this industry.
The Unit Titles Act 2010 sets out the law for the ownership and management of unit title developments, where multiple owners each hold a unit title. The Act covers the set-up of such developments, body corporate governance, the rights and obligations of the body corporate and unit owners, disclosure between buyers and sellers, dispute resolution etc. The Unit Titles Regulations 2011 provide operational guidelines. The body corporate is responsible for financial and administrative functions relating to the common property and the development. All unit owners are members of the body corporate. A body corporate can delegate some of its powers and duties to a body corporate committee and a professional body corporate manager may be contracted to provide services.
The Residential Tenancies Act 1986 sets out the rights and responsibilities of residential landlords and tenants, including the requirement to have a written tenancy agreement and the need to lodge tenancy bonds (if one is required) with the Ministry of Business, Innovation and Employment. Commercial leases are covered by the Property Law Act 1952.
In the Republic of Ireland, there is no legal obligation to form a property management company. However, management companies are generally formed to manage multi-unit developments, and must then follow the general rules of company law in terms of ownership and administration.
Since July 2012, it has become mandatory for all property service providers, including property management companies, to be registered and fully licenced by the Property Services Regulatory Authority of Ireland.
The National Consumer Agency (NCA) has campaigned in this area, and in September 2008 it launched a website explaining consumer rights. The NCA does not have a legislative or regulatory function in the area, unless a consumer complaint is in relation to a breach of consumer law.
Most states require property management companies to be licensed real estate brokers if they are collecting rent, listing properties for rent or helping negotiate leases and doing inspections. A property manager may be a licensed real estate salesperson but generally they must be working under a licensed real estate broker. Most states have a public license check system on-line for anyone holding a real estate salesperson or real estate broker's license. A few states, such as Idaho, Maine, and Vermont do not require property managers to have real estate licenses. Other states, such as Montana, Oregon, and South Carolina, allow property managers to work under a property management license rather than a broker's license. Washington State requires property managers to have a State Real Estate License if they do not own the property. Owners who manage their own property are not required to have a real estate license in many states; however, they must at least have a business license to rent out their own home. Owners who do not live near the rental property may be required, by local government, to hire the services of a property management company.
In California, third-party apartment property managers must be licensed with the California Department of Real Estate as a Real Estate Broker. A broker's license is required for any person or company that, for compensation, leases or rents or offers to lease or rent, or places for rent, or solicits listing of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities. Businesses and Professions Code, Chapter 3, Article 1, Sec. 10131(b).
No specific regulatory or licensing body exists at this time (November 2012). However, under Financial business law, Any business offering Property Management as a chargeable, fee earning act of commerce may only do so if such services are listed in their Company Acts of Constitutions, i.e., legally pre-declared list of business activities. Under Romanian law, no business can derive income from any such service that is not declared in this way and should be demonstrable upon request by the client of legal entities.
In the United Kingdom there is no statutory regulation concerning property management companies. Companies which manage rented residential property are often members of the Association of Residential Letting Agents. Companies or individual landlords who accept tenancy deposits for "assured shorthold tenancies" (the usual form of residential tenancy) are required by statute to be members of a Tenancy Deposit Scheme.
Companies which manage apartment buildings are often members of the Association of Residential Managing Agents (ARMA). ARMA is a trade association for firms that manage private residential leasehold blocks of flats in England & Wales. ARMA promotes high standards of leasehold management by providing advice, training and guidance to its member firms of managing agents. ARMA also produces guidance materials for leaseholders and Residents Management Companies. With over 280 firms in membership, ARMA also campaigns for improvements in the legislation governing the leasehold sector.
In India, there is no statutory regulation of property management companies, real estate agents or developers. In 2013, a Real Estate Regulation and Development Bill was passed by the Union Cabinet, but has yet to take effect. The bill seeks to set up 3 regulatory bodies in the country.
Building Owners and Managers Association (BOMA International) offers industry-standard designations that certify the training to property managers:
National Apartment Association (NAA) has the following designations:
National Association of Residential Property Managers (NARPM) offers designations to certify ethical and professional standards of conduct for property managers:
State-specific designations include the following:
The Community Associations Institute also has designations in the United States for residential property managers who manage planned communities such as Condominiums, Home Owners Associations and Cooperatives. National designations include:
In the UK:
Property management software continues to grow in popularity and importance. As it decreases in price, smaller companies and amateur property managers are able to function using some of the same best practices and efficiency as larger companies. Online asset management software (OPMS, or online property management software) has been a major cause of the price declines. In addition to the core property management software options, there is a quickly growing number of closely related software products being introduced to the industry. Like the online property management software, most of these products are also online software, also known as software as a service (SaaS). This approach to software typically makes the barriers to entry far lower than the traditional box software alternatives. Many of these options are available for a demo period at no cost. While there is often a set up or licensing fee required at the time of implementation, the product cost is paid as a monthly fee and service contract often offer flexible terms. Like other non-product oriented services, the SaaS product will have a non-performance clause allowing the customer to discontinue service if the terms of the contract are not met by the provider.
Another benefit to these types of products/services is that upgrades are performed on the server-side by the software vendor and therefore require far less, or even no change management at all. While the software seller may choose to increase monthly costs at the renewal stage of the contract, there is no direct Upgrade cost as found in box software products. Many software services will also perform intermediate releases that have no noticeable change in product features, but they may repair many bugs and have iterative augmentations that have a positive effect for the user without having to install patches on their PC.
One of the most important roles in property management is the tenant screening process. The implications of carrying out this duty too lightly will cost money and possible damage to property.
This is the most common model, and is used by property management companies in the residential space that manage multi-home units and single family homes. The property owner in this case signs a property management agreement with the company, giving the latter the right to let it out to new tenants and collect rent. The owners don't usually even know who the tenants are. The property management company usually keeps 10-15% of the rent amount, and shares the rest with the property owner.
This is the most common revenue model used by companies when monitoring empty homes or empty land sites. The work here involves monitoring the property and ensuring that it is safe and secure, and reporting back to the owner. As there is no income from these properties, a fixed monthly fee is usually charged to the owner.
This model is also used in the residential space, but mostly for small units in high demand locations. Here, the company signs a rental agreement with the owner and pays them a fixed rent. As per the agreement, the company is given the right to sublet the property for a higher rent. The company's income is the difference between the two rents. As is evident, in this case, the company minimizes the rent paid to the owner, which is usually lower than market rates.
This model applies to the service apartment space and other commercial establishments, such as retail or business centers that generate revenue. In this case, the property manager signs an agreement with the property owner, with the right to convert the property into a revenue generating business such as a business center, service apartment, etc. Instead of paying rent to the owner, the management company shares a percentage of revenue. There are also hybrid structures here, where a combination of a fixed rent and a share of revenue is shared with the property owner.