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Rent Collection & Real Estate Brokers

By Ashoka Lion Subscribe to RSS | April 6th 2012 | Views:

State Bill 747 (SB747) was passed in the Texas congress with changes effective September 1, 2011. Several of these changes deal specifically with the duties of a real estate brokerage. The bill now defines the Texas state law as requiring a license for anyone who controls the receipt and deposit of rent from single-family residential or properties under four units. If you, as landlord, hire a property manager or real estate agency to control and maintain your properties, the agency must employ a broker that is licensed by the Texas Real Estate Commission.

Finding a Broker:

For potential or current Texas real estate investors who rely on a licensed real estate brokerage company to collect rent then this bill is already in accordance with your business. However, if you employ a property manager who is not a employee to collect rent from your tenants without a license you may want to look into hiring a property management company with a licensed real estate broker. For many investors a property management company can be a wonderful stress reliever as the company will not only collect monthly rent, but also provide a wide range of services ranging from everyday menial to annual maintenance.

If you are concerned about finding a legitimate broker you can contact the Texas Real Estate Commission (TREC). This is the state’s official real estate committee that keeps a database of updated laws, licensing requirements and list active brokerage companies in the state of Texas. The broker you choose will be largely responsible for your principle earnings (rent) and you want to make sure it is a broker/company that you trust. The SB 747 defines a broker as anyone who is licensed by Texas and performs the following duties for the landlord:

1. A person who, in exchange for a commission, etc. performs for another person the following acts:

a) Sells, exchanges, purchases or leases real estate

b) Offers to sell, exchange, purchase or lease real estate

c) Maintains rent collection

2. Defined as a person who

a) Is employed by or for an owner of real estate to sell any portion of the real estate

b) Contracts to collect a fee under a contract that requires the person primarily to promote the sale of real estate

To put in layman’s terms, if a person (property manager, etc.) is providing you real estate brokerage services (collecting rent, leasing property, etc.) then that person must have a license issued by the state of Texas. If you hire an entire company to manage and collect rents and deposits, then it is your duty, as a landlord, to ensure that the business is legitimately registered as a broker and designates a licensed officer to perform these acts for you. In many markets such as Houston and Dallas, there are many property management firms out there, so please do the due diligence to insure that you are not dealing with unlicensed individuals.

Licensed Brokerages are subject to oversight and requirements to obtain their licenses, and this provides the owners of property in Texas comfort that their rentals have regulation. Additionally, this also means that real estate agents cannot manage property without it being involved through the brokerage. If your agent is not managing the property with the money being subject to the supervision of the broker, then the real estate agent is also in violation of this provision.

Ashoka Lion - About Author:
Jay Raman is the managing director of Ashoka Lion, a Houston and Dallas area property management firm. Ashoka Lion is a full licensed real estate brokerage in the Houston and Dallas Markets, and you can verify Ashoka Lion’s license with the Texas Real Estate Commission.

Jay and his team have been in the rental property management business for the past 6 years, and manage over a hundred fifty residential (single family home) properties in the Houston area, and they have recently entered the Dallas rental property market in 2011. Additionally, Jay is the President of the Houston Chapter of the National Association of Residential Property Managers ( a organization dedicated to the management of residential property). To get more great articles or ideas, you can also visit Ashoka Lion’s Facebook page or Twitter Account. For more information, please visit:

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