Legalities and Analysis of Property Management in Michigan

By: Lance T. Denha, Esq.

It is well settled under Michigan law, anyone who engages in property management must have a real estate broker’s license, unless they are a real estate sales person employed by a real estate broker to engage in property management.

Property Management is typically defined as the process of managing property that is available for lease by maintaining and handling all the day to day activities that are centered around that piece of real estate. Property Management may involve seeking out tenants to occupy space, collecting monthly rental payment, maintaining the property, and upkeep of the grounds. However, it should be noted that if the activities provided do not include leasing or renting services, a license is not required.

Under the laws of Michigan, Property management is considered a real estate activity under the licensing laws. As previously mentioned a license is required for this type of real estate activity. Michigan real estate broker licensing requirements include:

• Trustworthiness: Individuals must provide evidence of good moral character;
• Experience: Minimum of Three years full-time experience in real estate;
• Education: 90 hours of approved broker level education required;
• Exam: Must pass the broker licensing examination.

Although hiring a property management company has many advantages, using one can be expensive. In addition to the expense, real estate owners should consider the following factors to determine if hiring a property management company would be a good decision for your business:

• The multitude and complexity of your units. The more rental properties one owns and the more units they contain, the more beneficial it would be to hire a property management company;
• Proximity of Property. If someone’s property is located far from where they reside or out of state, hiring a property manager can be invaluable in dealing with the many issues that you would not be able to handle from afar.
• Not Interested in Management. If one views rental property ownership strictly as an investment and want little or nothing to do with the day to day management of your properties, consider hiring help to manage your property.
• Not interested in being an Employer. The distinguishing characteristic between property management companies and hiring employees to help with your property, is that property management companies are not considered employees but rather independent contractor, hence the owners no longer have the burden of handling payroll and other factors associated with Employers.

These considerations should always be accounted for during the process of determining whether a Property Management company best suits the needs of owners. Finally, always remember that before hiring a property manager to manage your Michigan rental property, one should always perform a background check to confirm he or she is licensed appropriately.