Is there a risk using an unlicensed property management company to manage a rental property

Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.

Brittany recently reached out with a concerning query regarding the legality of her property management company. She divulged that the company is unlicensed, prompting her to seek advice on the matter. First and foremost, it's imperative to acknowledge that operating a property management company without a license is unequivocally illegal, not only in Pennsylvania but in most, if not all, states.

While I must emphasize that I'm not a legal expert and cannot provide legal counsel, it's crucial for Brittany to seek advice from qualified legal professionals who can offer proper guidance tailored to her situation. From my understanding of the law, both the individual running the unlicensed company and the property owner can face severe repercussions for their involvement.

The risks associated with operating an unlicensed property management company are manifold and extend far beyond mere legal liabilities. The potential for detection is high, with numerous avenues through which the operation could be exposed. Whether it's a disgruntled tenant, a real estate agent seeking commission, or even a rival property management company, there are various parties motivated to report violations.

In my experience, I've encountered individuals who make it their mission to uncover illegal practices within the industry. One such individual in Philadelphia dedicates his time to scrutinizing websites, email signatures, and licenses, with the sole purpose of reporting infractions. While some may view his actions as petty, they underscore the seriousness with which regulatory authorities approach such violations.

Government agencies responsible for overseeing rental properties are vigilant in enforcing compliance with licensing regulations. They meticulously investigate the legality of landlords, property management companies, and rental properties themselves. Should they uncover any violations, they have the authority to take swift and decisive action, which could include freezing accounts, refunding funds to tenants, and imposing hefty fines.

The consequences of operating illegally extend beyond legal penalties to financial and reputational damage. In the event of a regulatory crackdown, property owners risk not only losing control of their assets but also facing significant financial liabilities. Refunding rent payments to tenants for the duration of the illegal operation can result in substantial financial losses.

Given these considerable risks, there's simply no justification for engaging with an unlicensed property management company. While some may be enticed by the allure of lower costs or a purportedly simpler process, the potential consequences far outweigh any perceived benefits. Moreover, reputable property management companies often offer competitive rates, backed by established processes and systems that ensure efficient and effective management.

Grow Property Management wholeheartedly share Brittany's concern regarding her involvement with an unlicensed property management company. The risks are too great, and the likelihood of detection is significant. My advice, echoing that of legal experts, is clear: steer clear of unlicensed operations and prioritize compliance with regulatory requirements. Ultimately, adherence to legal and ethical standards is not only prudent but essential for safeguarding both financial investments and professional reputations in the realm of rental property management.

Safe investing is good investing!