More than a score of Arizona property-management companies have fallen under the Real Estate Commissioner’s scrutiny in recent years—many fined, sanctioned, or stripped of their licenses. It’s a sobering reminder that property management is among the riskiest corners of real estate, especially when handled casually by sales agents.
At 1912 Realty, we do not allow property management under our brokerage umbrella. However, Arizona agents who personally own investment property may manage those rentals for themselves. The danger begins when agents blur the line between their personal activities and their brokerage identity.
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Why Separation Matters
If a tenant drops off a rent check at your brokerage office, confusion is inevitable. From the public’s perspective, the broker does everything the agent does—so that simple check drop can make your brokerage appear to be managing property without a trust account or Commissioner notification. That’s a violation.
You’re an independent contractor, yes—but you practice under the authority of your Designated Broker. The public rarely sees that nuance. That’s why maintaining a clean division between your personal business and your brokerage business is essential for compliance and credibility.
Referrals, Representation & Misunderstanding
Consider referrals: most agents assume a referral is between two agents. It isn’t. By law, all compensation flows through the Broker—because the agent is the Broker’s agent. The same principle applies to personal property management: if your rental activity even appears to involve your brokerage, you’ve invited risk—from ethics complaints to full-blown ADRE investigations.
Common Pitfalls When Self-Managing
- Poor communication: Tenants often believe an “agent-landlord” represents them. If you own the property, confusion deepens. Misunderstandings about agency and rights are the seeds of lawsuits.
- Conflict of interest: We avoid representing a buyer on a property we own; apply the same caution when renting to tenants directly.
- Money mishandling: Co-mingled funds, security-deposit misuse, undisclosed fees, and weak accounting remain top causes of discipline. Keep every dollar separate.
- Discrimination (conscious or not): Housing decisions must be evidence-based and fair; assumptions—positive or negative—invite violations.
- Weak screening & oversight: “Helping someone out” without due diligence often ends badly for everyone.
Protect Yourself & Your License
- Keep it completely separate: no office involvement, no rent checks at the office, no brokerage branding in ads.
- Disclose agency early & clearly to tenants; provide the Arizona Residential Landlord-Tenant Act at the first meeting.
- Open a dedicated account for rents and deposits (trust or separate operating, per counsel/CPA).
- Document everything and maintain professional distance.
Bottom line: Property management can be profitable—but it’s a legal minefield if you mix it with your sales business. Protect your license, your broker, and your reputation.