From Credit Checks to Evictions - Your FAQs Answered

Question: Are there special licensing requirements to be a property manager?
Answer: No. Virginia does not require a license to manage property. However, any actions taken as manager that are considered ‘licensed activities’ will require a real estate license. Maintenance and inspections, for example, are not licensed activities, but advertising a property for lease or processing applications are.

Question: Can an unlicensed property manager collect pre-paid rent?
Answer: property manager doesn’t need to be licensed to collect rent as long as the rent is paid directly to the landlord or is deposited into the property owner’s account. If the lease provides that rent is to be pre-paid and thus held in escrow, then the property manager must be a real estate licensee and the rent must be deposited into the broker’s escrow account.

Question: I want to evict a tenant for unpaid rent/ lease violations. How do I start the process?
Answer: Visit http://www.fairfaxcounty.gov/sheriff/eviction.htm for an outline of the eviction process. In summary, you must provide notice to the tenant, and then serve the tenant with summons for unlawful detainer. This will trigger a court date for both parties to appear. If the tenant fails to show, or the court rules in favor of the landlord, the landlord can request a Writ for Possession from the clerk of the court. The Writ will be sent to the sheriff to execute an eviction.

Question: When does a landlord need a registered agent?
Answer: The VRLTA requires that a nonresident landlord have a registered agent who maintains a business office in Virginia for the purpose of service of process. If the owner has fewer than three properties and does not fall under the VRLTA, there is no residency requirement. This is true even if the landlord is in a foreign country for an extended period of time. 

Question: When does the VRLTA apply to a property owner?
Answer: If a property owner owns three or more rental properties, the VRLTA is automatically triggered. It does not matter how the properties are held; even if the owner is a corporate entity, the VLRTA applies. If two or more owners join together, as in marriage or firm merger, the title of the properties will determine if VRLTA applies. If a husband and a wife each own two properties under their own names, then the VRLTA doesn’t apply. However, if either of them owns one of the four properties jointly with the other in addition to their own two properties, then the VRLTA will apply.

VRLTA will apply regardless where the three rental properties are located. If you have one in Virginia Beach and two in Richmond, VRLTA is still triggered.

Question: What are the rules for running credit checks on tenants?
Answer: Property managers should get signed consent from applicants before running credit checks, as required by the Fair Credit Reporting Act. If you reject an applicant based on what is in their credit report, you need to file an adverse action report and provide notice to the applicant. Visit https://www.ftc.gov/tips-advice/business-center/guidance/using-consumer-reports-what-landlords-need-know for more information about the process. A firm cannot share a tenant’s credit information with a landlord unless the tenant consents in writing first.

Question: What are the rules for escrow of security deposits or prepaid rent?
Answer: Security deposits are limited to two months’ rent. If a landlord requires prepaid rent, it must go into escrow, and can only be when the rent payment is due.

Virginia doesn’t require the property manager to hold security deposits for landlords if the landlord would prefer to deposit the funds in his or her own account. If the property manager is holding a deposit, it must be deposited within five business banking days of receipt, and must be kept in escrow for the duration of the lease term unless otherwise agreed in writing. 

If, during the lease term or at the end of the lease term, the landlord needs to repair damage to the property outside of normal wear and tear, funds may be disbursed from the deposit to do so. Receipts for any work done should be retained and copies provided to the tenant. Within 45 days of the lease ending and tenant vacating the property, any remaining funds from the security deposit must be returned to the tenant. 
Collin Shannon is a former law clerk for NVAR.