Blog Post

Is Property Management Without a License Illegal in Missouri?

Dec 02, 2020

Owning rental property is a business, and as a result, there are rules and laws that apply. Professional property managers in Missouri have a number of requirements involving fair housing laws, tenant rights, and in some municipalities, occupancy permits. It may come as a surprise that the state requires a real estate broker’s license too.

Does that mean you’re breaking the law if you’re managing rental property without a license? Not necessarily. It’s true that some property management tasks require a real estate broker’s license. But the rule doesn’t apply to everyone and there are a lot of exceptions.

Who Needs a Real Estate Broker’s License—and Who Doesn’t?

In Missouri, anyone performing certain property management services is required to have a real estate broker’s license.

This does not apply, however, to individuals who self-manage their own property. For example, a person with one, two, or even ten houses or apartments can do his or her own management without a real estate broker’s license. Likewise, if the owner forms an LLC for the units and employs someone to handle those management tasks, that person does not need a license since they are working directly for the owner.

There are also some limited property management activities that are exempt from licensing. An owner can contract with an unlicensed individual or company to perform clerical tasks, hand out and collect leases and lease applications, show rental units to prospective renters, and arrange for and schedule maintenance and repairs.

The licensing requirement comes into play for companies or even individuals who are in business to provide more comprehensive services. Duties that include leasing, renting, or listing properties, finding potential renters, and negotiating terms of leases and rental agreements require a license from the Missouri Real Estate Commission. Without proper licensing, companies and property owners may be subject to fines and penalties.

Some property management companies work under the umbrella of a licensed real estate broker. This is the case with Select Leasing & Management and its parent company Berkshire Hathaway HomeServices Select Properties. Select Leasing & Management’s operations are covered by Berkshire Hathaway HomeServices Select Properties’ license, and no additional licensing is necessary.

License Requirements

To obtain a real estate broker’s license, individuals must comply with the following:

Must be at least 18 years old
Provide fingerprints
Have a salesperson license from the state of Missouri for 24 of the preceding 30 months
Complete a 48-hour pre-exam broker course from a real estate school with state accreditation
Complete the Missouri broker exam (both portions)
Apply for the broker’s license within 6 months of completing the broker course

What About Association Managers?

This topic often leads to questions about condo association managers. Are they allowed to do property management without a license? The duties they perform are often limited to common property within the complex rather than the leasing of units. Even if there is some overlap with traditional property management, in Missouri, community managers are not required to have a real estate broker’s license.

Not All States Are the Same

There are many reasons that an owner might hire a property management company rather than self-manage his or her properties. One common reason is that they do not live nearby, or even in the same state. When managing out-of-state properties, it’s important to know the state’s requirements in regards to licensing. The fact that the owner is not a resident of the state is not a valid excuse when it comes to complying with the law.

Let’s look at how Missouri licensing rules differ from its neighbors to the east and west as an example of just how varied licensing rules can be from state to state.

Missouri

Property owners (and their direct employees) may manage without a real estate broker’s license.
A property manager may be responsible for limited tasks without a license.
Property managers must have a real estate broker’s license to rent, list, or procure prospects.
Community association managers do not need a license.

Kansas

Property managers need a real estate broker’s license for commercial property only.
If the property manager has at least 5% ownership in a commercial property, they do not need a license.
Community association managers do not need a license.

Illinois

Property owners (and their direct employees) may manage without a real estate broker’s license.
A property manager may be responsible for limited tasks without a license.
Property managers must have a real estate broker’s license to rent, list, or procure prospects. They may obtain a leasing agent license instead but must be sponsored and employed by a licensed broker.
Onsite managers are exempt from licensing.
Community association managers do not need a license if they are not compensated for the job. If they are paid, they must obtain a community association manager license if the property has more than 10 units.

If You’re Hiring a Property Management Company

Property management companies are a great idea for rental owners who can’t—or don’t want to—handle the day-to-day chores of operating rental property. They can take care of very important tasks like tenant screening and upkeep.

A manager or company with a real estate broker’s license has gone the extra mile to ensure they are operating a professional and compliant business. The same goes for one that has partnered with a licensed real estate company. It can give an owner peace of mind that their interests are protected from fines and penalties that could be imposed by the authorities.

Landlords need to find one that can not only manage the to-do list but complete it in an economical and cost-efficient way. But their search must also cover a company’s compliance with the local laws and regulations. In Missouri, that means a property manager with a real estate broker’s license.