Last week’s Legal QA was about whether helping a residential tenant secure a lease was considered property management, and whether principal brokers and brokers can represent tenants without holding a property manager’s license. Our answer was incomplete, and a deeper dive into the issue revealed a very strange legal framework around tenant-side representation. For this week’s tip, we decided to do a deep dive on this topic. We have confirmed the below with the Oregon Real Estate Agency.
Is helping a tenant secure a lease considered “property management?”
Yes, if the tenant is seeking properties that are managed by a property manager. Under ORS 696.010(14), “management of rental real estate” includes “…Representing a tenant or prospective tenant when renting or leasing real estate for which a real estate property manager has a property management agreement with the owner of the real estate…”
Can real estate principal brokers and real estate brokers help tenant’s secure leases? Yes. Under ORS 696.010(22) “Real estate property manager” means a real estate licensee who engages in the management of rental real estate and is a licensed real estate property manager, a principal real estate broker or a real estate broker who is associated with and supervised by a principal real estate broker.
Can a licensed real estate property manager help a tenant secure a lease?
Under Oregon law a licensed property manager (a person who holds a property manager’s license, as opposed to a person who holds a principal real state broker’s license and conducts property management) may engage only in the management of rental real estate under a property management agreement with the owner of the rental real estate (696.022(4)(a)). So technically, a licensed property manager cannot represent a tenant in securing a lease unless doing so on behalf of the property owner. On the other hand, real estate principal brokers and real estate brokers working under the supervision of principal brokers can independently represent tenants in securing leases.
Where do I find the duties that are owed to a tenant client when representing the tenant in securing a lease? Nowhere. The closest thing we have is ORS 696.810, the statute that defines a real estate licensee’s duties to the buyer in a transaction, but that statute does not expressly cover tenants. The property management statutes (696.890) do not address duties to tenants, only to owners.
There are clear oddities and gaps in this statutory framework. Why can a PB and a broker supervised by a PB exclusively represent a tenant while an individual with a property manager’s license cannot? Why is the statute silent on duties that real estate licensees owe to tenants when representing them in securing a lease? The answer is probably that tenant-side representation, at least for residential transactions, is not very common and this was an oversight. Perhaps it’s time to update the statutes.