CP-27 Commission Position on the Performance of Residential Property Management Functions
Adopted August 1998
Pursuant to C.R.S. 12-61-101(2)(a)&(b), the leasing and subsequent management of real estate for a fee or compensation, is included among the activities for which a license is required. Employing brokers involved in these activities should include provisions for the efficient, orderly conduct of this phase of business in their office policy manual. These activities must be done in the name of the employing broker only. All monies received from these activities shall be turned into the employing broker to be accounted for pursuant to Commission Rule E-l.
The management contract should be in writing and outline the duties and responsibilities of both parties. The contract should, at the very minimum, address the:
- Duration of the contract;
- Identities of the parties;
- Address of the property to be managed;
- Fees for the manager’s services, including disclosure of any mark-ups (Commission Rule E-1 (p)(8));
- Disclosure of broker’s ownership interest in any company which will be providing maintenance or related services;
- Identity of the entity responsible for the holding of the security deposit, and if interest is earned on security deposit escrow accounts, who benefits from such interest;
- Process to be followed in any subsequent transfer of owner’s monies, security deposits, keys and documents (Commission Rule E-l6); and,
- Requirement that the owner receives regular monthly accounting of all funds received and disbursed.
Employing brokers supervising property managers should have an awareness of and comply with the proper procedures involved in C.R.S. 38-12-101, Security Deposits-Wrongful Withholding. (See also the Commission Position on Advance Rentals and Security Deposits (CP-5), Chapter 3)
When ownership of a property changes or if ownership remains the same but transfer of management services occurs, it is recommended that the:
- Outgoing broker should maintain written verification of such change or transfer;
- Outgoing broker shall transfer pertinent documents to incoming broker as soon as practically possible, but in any case, not to exceed ten (10) days as it relates to items “a through e” below and not to exceed sixty (60) days as it relates to item “f’ below.
- Pertinent documents shall include, but are not limited to:
- (a) Copy of existing lease
- (b) Copy of check-in condition report
- (c) Keys
- (d) Outstanding tenant balances
- (e) Tenant(s) security deposit(s)
- (f) Owner’s funds (subject to outstanding obligations)
In those situations wherein there may be the potential for conflict of interest (e.g. managing property for a family member), the broker should disclose that information to all parties, pursuant to Commission Rule E-25.
Employing brokers as well as property managers should be familiar with Chapters 18, 19, and 23 of the Colorado Real Estate Manual.