Pitfalls and legal issues to Avoid! Arizona requires that Property Management companies be licensed Brokers. You can verify licensing by visiting the Arizona Department of real estate website http://services.azre.gov/publicdatabase/.
There are many risks involved when you choose an unlicensed or inexperienced Property Management Company! The successful property manager will plan for problems, keep excellent files and records of every activity, and continually assess these functions to determine if change is necessary.
Administration and risk management are critical components of real estate property management. The record-keeping function must be carefully managed and, the greater the level of detail, the better the likely results.
Marketing & financial functions require records of expenditures and income, as well as tax records, advertising invoices and more,
Tenant management involves records of all their requests, rental payment history and rules violations, and
Property maintenance & repairs require maintenance schedules, repair records for warranty, and employee and subcontractor personnel records.
Risk management is critical. A disaster can threaten the survival of your investments! The records kept are a part of this, as any legal action taken by others can be avoided if there are detailed records that refute their claims. Protect your investment! We strongly recommend the following:
1. Always have a written property management agreement. Even if you’re just helping out a friend and managing the property for free, you’re walking on thin ice if something comes up—like the need to evict the tenant.
2. Using a makeshift lease agreement. These agreements are easy to find on the Internet — maybe too easy. If the agreement isn’t thorough, or if it doesn’t include sections that are required by your state law, you’re leaving yourself exposed.
3. Not depositing the security deposit in a proper trust account. The proper place for the money isn’t with the owner. In some states, the trust account money must be in a separate property management trust account and not in the broker’s general sales trust account.
4. Not having the tenant sign a move-in and move-out form. This form includes a property condition disclosure. Without it, you have little recourse if a unit is damaged beyond the usual wear and tear.
5. Trying to incorporate a lease- purchase arrangement into the lease agreement. There’s nothing wrong with doing this, but it’s complicated, and if it’s not done properly, you could invite trouble. For instance, you could have a difficult time evicting the tenant for nonpayment of rent if the court looks at the arrangement as a purchase agreement.
6. Work with a licensed Property Management Company. Gail Buck Realty is licensed, experienced and respected in the valley! Interested in learning more? Contact us at PM@gailbuckrealty.com
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