From Credit Checks To Evictions - Your FAQs Answered

Question: What is the Definition of Property Management?
Answer: Property Management is not a defined term within the Code of Virginia, nor is there a standard definition within the industry. Typically, a property manager is responsible for securing tenants, collecting rents and maintaining a leased property. Maintenance may include preventive or corrective maintenance, cleaning and repairs.

Question: Is Property Management a Licensed Activity in Virginia? 
Answer: It depends. If the service being provided is an activity that requires a real estate license, then it is a licensed activity. If the activity does not require a real estate license, then it is not a licensed activity. See examples below.

Question: What constitutes Licensed Activities?
Answer: Licensed Activities include the following property leasing activities:
• Advertising or showing a property for rent
• Answering questions about rental listings
• Processing a lease application 
• Discussing, explaining, interpreting or negotiating lease terms or preparing a lease
• Negotiating or agreeing to any commission, commission split or referral fee 
• Holding security deposits or prepaid rent on behalf of an owner.

Question: What constitutes Unlicensed Activities?
Answer: Unlicensed Activities include the following property related services:
• Performing clerical duties, including taking calls from tenants or scheduling appointments
• Performing property inspections or having keys made
• Engaging contractors on behalf of a property owner to make repairs, or perform cleaning or yard maintenance
• Placing signs on properties 
• Recording and depositing security deposits and advance rents

Question: Can a real estate salesperson or associate broker act independently of his or her broker to collect rents on behalf of a property owner?
Answer: Yes, but only if the rent is made payable to the landlord and given directly to the landlord or deposited directly to the property owner’s bank account. 

Question: Can a salesperson or associate broker hold rent in escrow on behalf of the property owner?
Answer: The salesperson or associate broker may not act independently of the broker. All rent must be deposited into the broker’s escrow account. 

Question: Can a real estate salesperson who performs property management set up a separate LLC to accept, hold and disburse rents and security deposits on behalf of property owners?
Answer:  No. Such activities cannot be done independently of a broker. Setting up a separate LLC, or any other type of entity, does not exempt the licensee or the broker from following Virginia real estate laws and regulations.

Question: Are there persons who can provide property leasing without a real estate license?
Answer: Yes, but it is limited to owners of real estate and their employees.

Question: What if the property is the licensee’s own personal investment property?
Answer: The broker is still responsible for depositing all security deposits and pre-paid rents into the brokerage’s escrow account.

Question: When must a salesperson or associate broker submit rental application deposits?
Answer: Rental application deposits shall be deposited by the end of the fifth business banking day following approval of the rental application by the landlord unless all principals to the lease have agreed otherwise in writing. This means that salespersons or associate brokers must deliver deposits to their broker in sufficient time for them to meet these deadlines. 

Question: When does a salesperson or associate broker have to deposit Prepaid Rent?
Answer: Prepaid rents and funds paid to a licensee must also be deposited in escrow within five business banking days of receipt unless an alternative is agreed to by the parties in writing.

Sarah Louppe Petcher is General Counsel for NVAR.