What is the Difference Between Leasing and Management?
Ontario real estate brokers need to comprehend what is the difference between leasing and management. Property management involves continuing duties that go well beyond finding a renter. In contrast, leasing services concentrate on finding a tenant.
If agents and brokerages fail to distinguish between the two, they may unintentionally overreach, putting them at risk of legal action.
Bloom Property Management London Ontario explains what is the difference between leasing and management so you can focus on your individualized responsibilities while avoiding legal actions.
Lease-Up Services: Responsibilities with Defined Limits
Once a tenant has been successfully placed in a property, lease-up services end. Typical responsibilities for agents providing leasing services include:
Promoting the property to draw in potential renters.
Introducing prospective renters to the property.
Renter appropriateness is ensured by screening and qualifying applications.
Drafting and carrying out the lease.
Obtaining the security deposit and rent for the first month.
Lease management concludes when the tenant moves in. The property owner or a professional property manager usually handles any additional duties that fall outside the purview of the leasing agent, such as responding to maintenance requests or collecting rent on an ongoing basis.
Agents who take on these extra responsibilities risk inadvertently entering the property management industry, which entails more obligations and legal liabilities.
Property Management: Comprehensive and Ongoing
Tenant placement is just one aspect of property management services. A consistent dedication to the property and tenant relations is required for complete property management, and this includes:
Collecting deposits and rent every month.
Organizing repairs and handling maintenance requests.
Resolving complaints and disputes with tenants.
Carrying out routine property examinations.
Managing tenant move-outs or lease renewals.
Ensuring adherence to the law on tenant rights and housing standards.
After finding a renter, an agent may move into property management, which requires a distinct set of skills and occasionally even different insurance.
Avoid Common Pitfalls of Unintentional Property Management
Many real estate brokers can transition into property management unintentionally. For instance, property management tasks include answering inquiries about rent payments or attending to tenant requests for maintenance.
Unintended liabilities may result from such activities, especially if property management services are not covered by the agent's Errors & Omissions (E&O) insurance.
Verify E&O Insurance and Brokerage Policies
Before fulfilling any responsibility linked to property management, agents should verify their E&O insurance coverage. Not all E&O insurance covers property management. Many brokerages have stringent rules about it. Agents should ensure that:
Property management responsibilities are covered explicitly under their E&O policy.
They know how their brokerage feels about property management responsibilities. Some brokerages may need extra insurance or licenses, or they may prohibit agents from engaging in these activities.
If these standards are not met, the reputation of the agent and brokerage may be at risk. This may lead to legal action, penalties, or infractions of Ontario's real estate legislation.
Key Takeaways
Protecting agents, their licenses, and their brokerages is easier when you understand what is the difference between leasing and management. Essential things to keep in mind are:
Property management is a continuous process. It involves a variety of tenant and property care responsibilities. However, leasing is a one-time service that concludes with tenant placement.
Real estate brokers may inadvertently become property managers by keeping in touch with renters after a lease expires.
Avoiding liability concerns requires checking brokerage policies and confirming E&O insurance.
Referring customers to a registered property manager may be the safest course of action if property management is outside the purview of an agent.
Read about business property lease agreement.
The Bottom Line
Risk management in Ontario's real estate market requires learning what is the difference between leasing and management. Agents should avoid unforeseen legal repercussions and concentrate on providing competent and lawful real estate services by adhering to the specified scope of lease-up services.