The Real Estate Board’s new regulations went into effect on April 1st of this year. A few significant changes affect those working in the property management field.  

The new regulation, 18VAC135-20-260 (Prohibited Acts), which covers actions prohibited under the regulations, now creates a carve out for situations where licensees manage rental properties they own. The exact section, 18VAC135-20-260.11.g., states that “[a] licensee performing regulated actives outside the licensee’s brokerage firm or sole proprietorship” is prohibited, “except in instances in which the licensee has an ownership interest in a property.”  

This means that if you own or have an ownership interest in a rental property, then you are not required to run the operation of that rental property through your firm.  

Additionally, the regulation for escrow accounts has changed. For lease transactions, the regulation now states, “Any application deposit, security deposit, rent, or other money paid to the licensee acting on behalf of a landlord client in connection with the lease must be deposited in an escrow account . . . .” (18VAC135-20-181.B.2. (emphasis added).)  

This regulation means that you are required to deposit rent and security deposits in your firm’s escrow account only if you are working on behalf a landlord client. If you are managing a rental property you own, then rent and security deposits do not need to be placed in your firm’s escrow account.  

Despite these new regulations, a firm can still create policies that require the management of rental properties owned by its licensees to operate through the firm. Whether a firm adopts such policies is a business decision each firm may make.  

If you have any questions about these new regulations, and how they affect your property management business, you can always contact us on our Legal Hotline.