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The Property Management Webinar Series Presents

The TAR Property Management Agreement

Instructed by

Abby Lee, Associate Counsel

May 21, 2014

Outline

I. Introduction

II. License Requirement

III. The Agreement

IV. Questions

Introduction

The Texas Association of REALTORS® Residential Leasing and Property Management Agreement (TAR form 2201) is available for member’s use and is accessible one of two ways: 1)ZipForms

2)www.TexasRealEstate.com (the ‘Blank Form Downloads’ page)

License Requirement

Remember, the Texas Real Estate Commission (TREC) requires a person to be licensed, if that person, on behalf of another:

•Leases, •Offers to lease, •Negotiates or attempts to negotiate the lease of real estate, •Lists or offers to list real estate for lease, •Aids or attempts to aid in locating or obtaining real estate for lease, •Procures or assists in procuring a prospect to effect the lease of real estate,•Procures or assists in procuring property to effect the lease of real estate, or•Controls the acceptance or deposit of rent from a resident of a single-family residential real property unit.

AND does so in exchange for, or with expectation of receiving, a commission or other valuable consideration.

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The Agreement

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Frequently Asked Question

I’m the property manager, but I’m not a broker. Should I fill in my name as broker

in paragraph 1 of the agreement?

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Frequently Asked Question

No. If you are an agent and not the broker, you should not include your name and information in paragraph 1 of the agreement. You may, however, be entitled to sign the agreement on behalf of the broker if authorized by your broker to do so.

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Frequently Asked Question

I’m the property manager, but the owner of the property doesn’t want to put his

information in paragraph 1 of the TAR Residential Lease. Can I use my name

instead?

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Frequently Asked Question

No. Unless you actually are the owner of the property, you should not insert your name in paragraph 1 as the owner. The Texas Property Code defines “landlord” as the owner, lessor, or sublessor of a dwelling, but does not include a manager or agent of the landlord unless the manager or agent purports to be the owner, lessor, or sublessor in an oral or written lease. Throughout the Property Code, the “landlord” has many obligations and failure to comply with those obligations could lead to liability. Therefore, if you insert your name in paragraph 1 of the TAR Residential Lease, you could open yourself up to liability.

Additionally, Texas Property Code §92.201 requires that a landlord disclose to a tenant the name and either a street or post office box address of the holder of record title (owner). Disclosure can be made by including the information in a copy of the tenant's lease or in written rules given to the tenant before the tenant requests the information.

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The Agreement

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Frequently Asked Question

An owner I’m working with has several properties she wants me to manage. Do I need to fill out a property management

agreement for each one?

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Frequently Asked Question

No. As Paragraph 2 of the TAR Residential Leasing and Property Management Agreement states, you can attach the TAR Multiple Property Addendum (TAR form 2204) instead of executing multiple agreements with the same owner for different properties.

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The Agreement

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Frequently Asked Question

A friend of mine is working with a different property manager and is using the TAR

Residential Leasing and Property Management Agreement. He is unhappy

and wants to terminate. Can he terminate?

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Frequently Asked Question

First, you must take care to avoid interfering with an exclusive agency relationship, as that could have legal and ethical repercussions. However, in general, to terminate the agreement, the broker and owner may mutually agree to terminate. Alternatively, the owner may unilaterally terminate the agreement before its expiration, but risks being sued by the broker for breach of contract. The only other option is for the owner to provide notice of termination upon the expiration date at least 30 days before the expiration date.

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Frequently Asked Question

The owner of a property I manage has died. Am I still the property manager for the

property?

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Frequently Asked Question

No. However, according to Paragraph 22.C of the Residential Leasing and Property Management Agreement states that “Owner’s obligation to pay Broker an earned fee is binding upon Owner and Owner’s heirs, administrators, executors, successors, and permitted assignees.”

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Frequently Asked Question

The owner wants me to handle the eviction suit of a tenant who has violated the lease

by keeping an unauthorized pet on the property without permission. Can I do so?

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Frequently Asked Question

No. The Texas Property Code § 24.011 states that “in eviction suits in justice court for nonpayment of rent or holding over beyond a rental term, the parties may represent themselves or be represented by their authorized agents, who need not be attorneys.” The Property Code, however, does not authorize nonlawyer representation for issues other than nonpayment of rent or holding over, except in default judgment situations.

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The Agreement

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Frequently Asked Questions

I was managing a property, and the owner terminated the management agreement by

providing proper notice. A tenant in the property previously notified us that he will

not renew the lease. The lease ends 30 days from today. I have the security deposit in my trust account. What do I do with the

security deposit?

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Frequently Asked Questions

According to Paragraph 4.C of the TAR Residential Leasing and Property Management Agreement, since you are no longer the landlord's agent, you should forward the security deposit to the landlord. You are able to deduct amounts authorized prior to returning the security deposit to the landlord. and remind him he has a duty to account for the deposit when the tenant vacates the property.

You should send TAR form 2210 Notice to Tenant of Change in Management and Accountability for Security Deposits to the tenant advising him that you are no longer the agent for the landlord, that you tendered the security deposit to the landlord and the exact dollar amount, the landlord’s contact information ,and that the landlord is responsible to account to the tenant for the security deposit.

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Frequently Asked Questions

Who is responsible for the return of the security deposit if the property owner

sells the property?

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Frequently Asked Questions

Under the provisions of Section 92.105 of the Texas Property Code, the seller and the buyer may be liable for the security deposit and any refund of the deposit to the tenant upon termination of the rental. The new owner is liable for the return of the security deposit from the date he acquires the property. However, the seller also remains liable for the security deposit he received from the tenant until the buyer delivers to the tenant a signed statement acknowledging that the buyer is the new owner and has received and is now responsible for the tenant's security deposit.

The transfer of the security deposit upon closing is specifically addressed in the One to Four Family Residential Contract (Resale) in Paragraph 9B(5). Most title companies have security-deposit transfer letters that can be signed by the buyer and the seller at closing to inform the tenant of the sale and security deposit transfer. TAR form 2210, Notice to Tenant of Change in Management and Accountability for Security Deposit, could also be used for this purpose with a few obvious changes.

Note: Section 92.105 of the Texas Property Code does not apply to a real estate mortgage lienholder who acquires title by foreclosure.

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The Agreement

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Frequently Asked Question

I am the property manager of a property which the owner now wants to sell. Could the owner list with another broker for sale

of the property during the term of our property management agreement that is

still in effect?

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Frequently Asked Question

Yes. There is nothing in the TAR Residential Leasing and Property Management Agreement that would prohibit the owner from listing the property for sale with another broker after the execution of the property management agreement. However, depending on the circumstances, the broker may still be entitled to some compensation.

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Frequently Asked Questions

Is the broker permitted to keep the interest earned on the security deposits held in a

trust account?

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Frequently Asked Questions

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Yes. Paragraph 11(E) of the Residential Leasing and Property Management Agreement (TAR form 2201) allows the broker to retain any interest or income from an interest-bearing or income producing account.

Note: The broker must remove an interest or income payable from the trust account not later than the 30th day after the interest or income is paid. TREC Rule § 535.146(j).

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List of PM Forms• Residential Leasing and Property Management Agreement (TAR 2201)• Multiple Property Addendum (TAR 2204)• Addendum for Authorization to Act for Owner Before Owners’ Association (TAR

2205)• Owner’s Notice Concerning Condition of Property under Property Management

Agreement (TAR 2206) • Property Manager’s Inventory and Condition Report (TAR 2207)• Notice Terminating Right of Occupancy (TAR 2208)• Late Notice or Notice of Other Breach of Lease (TAR 2209)• Notice to Tenant of Change in Management and Accountability for Security Deposit

(TAR 2210)• Agreement to Pay Past Due Amounts Under Lease (TAR 2213)• Report of Incident Occurring on Property (TAR 2215)• Itemization of Security Deposit (TAR 2216)• Notice of Landlord’s Intent Not to Renew (TAR 2217)• General Information for Tenant of Property Facing Foreclosure (TAR 2220) • Amendment to Residential Leasing and Property Management Agreement (TAR

2221) • Notice of Termination of Residential Leasing and Property Management Agreement

(TAR 2222)

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The TAR Property Management Agreement

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Questions

The TAR Property Management Agreement

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