Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
I just got off the phone with a property owner who’s thinking about switching from her current property manager to my company. The main issue she’s facing with her current manager is that he isn’t getting along with the tenants. There’s a lot of conflict, and it seems the tenants are unhappy with how things are being handled. But what really stood out during our conversation -and what prompted this podcast episode – is her concern about the legal standing of her current property manager.
She mentioned that her current manager isn’t a licensed Philadelphia real estate agent, and he doesn’t even live in Philadelphia – he’s based in New Jersey. That raises a significant issue when it comes to Philadelphia rental licensing laws, which require someone with a Philadelphia address to be designated as the contact person on a rental license. This doesn’t have to be a paid position – it could be a neighbor or a family member – but someone must be listed locally in case something serious happens at the property.
Now, while I’m not an attorney and I can’t give legal advice, I am a licensed Philadelphia real estate broker, which means I’m authorized to engage in property management in Pennsylvania. From my understanding of the law, engaging in property management activities without being properly licensed is a major violation. The example I gave her was simple: it’s like me trying to run a medical office or giving legal advice without the appropriate licenses. You just can’t do that, and the penalties can be severe.
This property owner is understandably worried about potential liability on her end. From what I can see, the bigger legal risk lies with the unlicensed property manager, not necessarily with the property owner herself – as long as she wasn’t knowingly complicit. If you’re a landlord and someone is managing your property without a license, and you don’t have written communication confirming their lack of licensing, I doubt the state would come down hard on you. But if you’ve got texts or emails showing you knew they weren’t licensed and still continued using them, then yes, you could be in murky territory.
In worst-case scenarios, I imagine the state might seize any funds that the unlicensed manager is holding – security deposits, rent payments, etc. – to sort things out. But I’d assume they’d release those funds to the rightful owner eventually. Again, this is all speculation based on my experience – I’m not an attorney – so anyone in this position should absolutely consult legal counsel.
My bigger point here is that many landlords use contractors or friends to manage their properties without fully realizing that those individuals are supposed to be licensed. It’s not just about legal compliance; hiring a licensed, professional management company gives you peace of mind and minimizes risk.
At the end of the day, I’m just a humble property manager here in Philadelphia, doing my best to help landlords navigate these tricky situations.
As always, happy rental property investing.
