A licensed real estate agent in Florida, whether a Sales Associate or a Broker, is legally permitted to perform property management services. This activity is considered a regulated real estate service and falls under the governance of the Florida Real Estate Commission (FREC) and Chapter 475 of the Florida Statutes. While the license authorizes property management for others, it imposes strict requirements, including mandatory broker supervision and stringent rules for handling client funds. Understanding these regulatory limits is necessary for any agent choosing to expand their practice beyond traditional sales and into the rental market.
The Legal Definition of Property Management in Florida
Property management is broadly defined by the activities performed on behalf of a property owner for compensation, which constitutes a licensed real estate service under Florida law. These activities cover the entire lifecycle of a tenancy. They include the initial advertising of a rental property, the procurement of potential tenants, and negotiating the terms of a lease agreement. The definition extends to the subsequent control and operation of the real estate, including collecting rent payments, managing maintenance, and overseeing the financial aspects of the property. Any person who performs these functions for another person, expecting compensation, must be licensed.
Licensing Requirements for Property Managers
Property management is not a separate license class in Florida, but rather a function of an existing real estate license. A person must hold either a Real Estate Sales Associate license or a Real Estate Broker license to legally engage in property management for others for a fee. A licensed Broker is authorized to establish and operate an independent brokerage, which can offer property management services directly to the public. A Sales Associate, however, must always work under the direct supervision and control of a licensed Broker. The Sales Associate cannot legally operate an independent property management company or directly contract with clients for these services.
The Broker assumes regulatory responsibility for all real estate activities conducted by the Sales Associates affiliated with their firm, ensuring compliance with Chapter 475. This oversight ensures that all client interactions, contracts, and financial dealings are handled correctly. This structure means that a Sales Associate’s authority to manage property is entirely dependent on their sponsoring Broker’s active license.
How Real Estate Sales Associates Must Operate
A Real Estate Sales Associate is strictly prohibited from accepting property management contracts in their own name. All management agreements must be executed between the property owner and the Sales Associate’s registered Real Estate Broker. This rule establishes a clear line of legal accountability, placing the Broker as the principal party to the contract.
The Sales Associate is similarly forbidden from receiving compensation directly from a property owner for their management efforts. All management fees, leasing commissions, and performance bonuses must be paid to the Brokerage firm. The Broker then compensates the Sales Associate according to their internal employment agreement.
This mandatory flow of contracts and compensation prevents Sales Associates from attempting to manage properties independently. Even if the Sales Associate is managing a single property for a friend or relative, any compensation requires the transaction to be processed through their supervising Broker.
Handling Client Funds: Escrow and Trust Accounts
Managing client funds, which includes security deposits and advance rents, is the most highly regulated aspect of property management. These funds are considered client trust funds and must be deposited into a separate escrow account maintained by the licensed Broker. This account must be held in a Florida-based commercial bank, credit union, or savings association.
The law requires that any funds received by the Sales Associate must be delivered to the Broker by the end of the next business day. The Broker must then deposit these funds into the escrow account “immediately,” defined by rule as no later than the end of the third business day after the Sales Associate received the funds.
Commingling, the illegal practice of mixing client funds with the Broker’s personal or business operating funds, is strictly prohibited. A Broker is permitted to maintain a maximum of $5,000 of their own money in a property management escrow account to cover bank charges. If an interest-bearing account is used, a separate written agreement must specify who is entitled to receive the interest earned.
Exemptions to Florida Real Estate Licensing
Florida Statutes provide several specific exemptions where a real estate license is not required to perform property management functions. A property owner is always permitted to manage their own real estate, regardless of the number of properties they own. This self-management right extends to the owner’s personal employees, provided they are salaried and do not receive compensation based on a commission or transactional basis.
This salaried-employee exemption allows an owner to hire staff to perform management duties without requiring a real estate license, as long as the employee’s pay is fixed. Another significant exemption applies to licensed Community Association Managers (CAMs). CAMs are authorized to manage the common elements and finances of condominiums and homeowners’ associations, but not individual rental units within those properties.
Key Regulatory Differences Between Sales and Management
While both sales and management are regulated under Chapter 475, property managers must also adhere to the Florida Residential Landlord and Tenant Act (Chapter 83). This introduces a distinct set of legal duties that are not part of a traditional sales transaction. The manager must have specialized knowledge of the rules governing security deposit claims, maintenance obligations, and tenant rights.
Chapter 83 dictates specific procedures for security deposit disposition, including the requirement to notify a tenant within 30 days if the landlord intends to make a claim on the deposit. Furthermore, managers must follow strict guidelines for landlord access to a dwelling, which generally requires providing at least 12 hours’ notice before entry.
The formal eviction process is also governed by this law, requiring managers to pursue legal action through the courts rather than attempting illegal self-help evictions.