Property Management in California: What Owners Should Know
By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.
In California, anyone who leases rentals, finds tenants or collects rent for another owner in exchange for pay generally needs a real estate broker license under Business and Professions Code §10131(b). Resident managers of apartment buildings are a key exception. A licensed manager must keep your rent and tenants’ deposits in a trust account and give you regular accounting. Hiring a manager doesn’t take the owner’s name off the habitability statute. It means someone else does the work under a written agreement you should read closely.
Diamond Real Estate Group manages some rentals directly and refers other owners to partner managers. This guide covers the statewide rules. For Sonoma County specifics, including local ordinances and typical fee structures, see our Sonoma County property management guide.
What a property manager does
A full-service manager typically handles:
- Leasing: pricing, advertising, showings, applications and screening, lease preparation and move-in.
- Money: collecting rent and deposits, paying approved bills, holding reserves, and monthly owner statements.
- Maintenance: routine repairs, vendor coordination, emergency response and turnover work.
- Compliance: required notices, deposit accounting, rent-cap and just-cause rules, local registrations and inspections.
- Problems: late rent, lease violations, notices to quit, and coordination with an attorney if an eviction is needed.
Some owners hire only part of this: leasing-only service, or bookkeeping while they handle repairs. Whatever the scope, it should be in writing.
Who needs a license
Section 10131(b) defines a broker to include anyone who, for others and for compensation, leases or rents property, offers to do so, solicits tenants, negotiates leases, or collects rents. In practice, that covers a third-party management company.
The main exemptions are in B&P Code §10131.01 and §10133:
| Who | License needed? | Source |
|---|---|---|
| Third-party manager leasing or collecting rent for an owner, for pay | Yes, broker license (or salesperson working under a broker) | B&P §10131(b) |
| Resident manager of an apartment building, complex or court, and that manager’s employees | No | B&P §10131.01(a)(1) |
| Unlicensed employees of a broker-run management firm who show units, hand out and collect applications, accept deposits and rent, quote rates from the employer’s schedule, and accept signed leases | No, if supervised by the broker and the broker complies with §10163 | B&P §10131.01(a)(3), (b), (c) |
| Officer of a corporation or general partner managing the entity’s own property, without special compensation | No | B&P §10133(a)(1) |
| Person holding a properly executed power of attorney from the owner | No, for that property | B&P §10133(a)(2) |
| Attorney providing legal services; receiver or court-appointed person | No | B&P §10133(a)(3)–(4) |
The exemptions can’t be used to evade the license law (§10133(b)). An unlicensed "manager" who collects rent for several unrelated owners is a red flag.
Check before you sign. The Department of Real Estate’s Quick Guide for Landlords Hiring a Property Manager recommends confirming the license status reads "Licensed," that any salesperson is working under a broker, and whether there is past discipline. Use the DRE’s public license lookup on dre.ca.gov.
Trust accounts: where your money sits
Rent, security deposits and reserves that a broker handles for you are trust funds. Under B&P Code §10145, as the DRE explained in its November 14, 2025 update on trust fund signatories:
- Funds stay in the trust account until paid out under the instructions of the person entitled to them.
- The broker (or, for a corporate broker, the designated officer) signs withdrawals. With written authorization, a licensed salesperson under the broker, another broker under written agreement, or an unlicensed employee can also sign. For an unlicensed employee, the broker must carry fidelity bond or insurance coverage at least equal to the most trust money that employee can reach.
- Adding signers doesn’t reduce the broker’s responsibility for the funds.
- An owner and the broker can’t both be signers on a general trust account the broker uses for client funds.
Ask how your money will be held: a pooled trust account or a separate one for your property, which bank, and when owner draws are paid. The DRE guide also suggests asking what insurance or bond the company carries and whether your own policy covers fraud by a manager.
The management agreement: terms to review
The DRE guide recommends reading the agreement closely, making sure fees and markups are spelled out, confirming how repairs are approved and paid for, requiring monthly accounting, and setting a clear termination date. Here is a checklist built from that guidance and the statutes above:
| Term | What to look for |
|---|---|
| Scope of services | Leasing, rent collection, maintenance, evictions, local registrations: which are included and which cost extra |
| Fees | Monthly fee, leasing fee, renewal fee, maintenance markups, setup and termination fees, all in writing |
| Repair authority | A dollar limit above which the manager must get your approval, and an emergency exception |
| Vendor relationships | Disclosure if the manager owns or profits from repair or maintenance companies it uses (the DRE guide flags this) |
| Trust funds | Which account, reserve amount, when you’re paid, who holds deposits |
| Reporting | Monthly statements with invoices; year-end tax summary |
| Tenant screening | Written, consistent criteria that follow fair housing law |
| Insurance and bond | Manager’s coverage; you as additional insured where appropriate |
| Term and termination | Notice period, fees to cancel, and handover of files, keys and deposits |
| Legal compliance | Who prepares notices and tracks rent caps, just cause and local rules |
Keep signed copies of both the management agreement and every lease, as the DRE recommends.
What stays with the owner
Some duties attach to the owner by statute. A manager can carry them out, but you remain the person the law names.
Habitability. Under Civil Code §1941, the lessor of a building meant for people to live in must put it in a condition fit for occupancy and repair problems that make it untenantable, except repairs Civil Code §1929 assigns to the tenant. Section 1941.1 lists what makes a unit untenantable if substantially lacking. The list covers weatherproofing; working plumbing, gas, heating and electrical; hot and cold running water and a legal sewage connection; clean premises free of rodents and vermin; adequate garbage receptacles; and floors, stairs and railings in good repair. For leases entered into, amended or extended on or after January 1, 2026, it also includes a working stove and refrigerator, with some exceptions. Budget for these whether or not you have a manager.
Owner and manager disclosures. Civil Code §1962 requires the lease (or a written statement for oral agreements) to give tenants:
- the name, phone number and street address of the person managing the property;
- the name, phone number and address of the owner or a person authorized to accept legal papers for the owner;
- who receives rent and how it can be paid.
A new owner or manager must comply within 15 days of taking over. When you hire, change or fire a manager, update those notices.
Security deposits. Deposit limits, photos and the 21-day return rule apply whoever holds the money. See our California security deposit rules.
Rent caps and just cause. If your property is covered by AB 1482 or a local ordinance, the owner is responsible for compliance. See AB 1482 for landlords and just-cause eviction.
Local registration programs
Several Bay Area cities require owners to report rental units or pay per-unit fees. A good manager tracks these deadlines. Two examples from official sources:
| City | Requirement | Key detail |
|---|---|---|
| San Francisco | Rent Board Housing Inventory: most residential owners report unit, occupancy and rent information | Due March 1 each year; a current rent increase license is needed before an annual or banked increase takes effect |
| Berkeley | Rent Board registration fees for covered units | FY 2026–27: $397 per fully covered unit, $244 per partially covered unit; due July 2, 2026; 100% penalty if late |
Other cities run their own programs. We summarize them on our pages for Oakland, San Jose, Mountain View and Berkeley, and in our East Bay rent stabilization by city table. Confirm current fees and deadlines with each city before you rely on them.
Self-manage, hire, or sell
Self-managing works for owners who live nearby, have time for calls and turnovers, and keep up with rule changes. Hiring makes sense with distance, several units, rent-controlled buildings or a busy schedule. Some owners decide the property no longer fits. Our guides to selling a rental property and the 1031 exchange cover that path. If you’re buying a building with tenants in place, the lease and deposit handoff is the place to start.
Questions people ask
Does a property manager need a license in California?
Generally yes. Leasing, soliciting tenants or collecting rent for another person for pay requires a broker license under B&P Code §10131(b), or a salesperson license under a broker. Resident apartment managers and certain supervised employees are exempt.
Can my relative manage my rental without a license?
Possibly, if no compensation is involved or an exemption applies, such as a properly executed power of attorney under §10133(a)(2). The exemptions can’t be used to evade the license law, so get advice if money changes hands.
Where should my rent and tenants’ deposits be held?
In the broker’s trust account, until paid out according to your instructions. Ask which bank holds it, whether it is pooled, and how often you’re paid.
If my manager ignores a repair, am I still responsible?
Yes. Civil Code §1941 places habitability duties on the lessor. Your agreement can make the manager responsible to you, but it doesn’t change your duty to the tenant.
What must the lease say about the manager?
Civil Code §1962 requires the manager’s name, phone and address, the owner’s or agent’s address for legal papers, and how rent is paid. Update it within 15 days of a change in manager.
What fees do property managers charge?
Fees vary and are negotiated. Common types include monthly management, leasing, renewal and maintenance markups. Get every fee in writing. Our Sonoma County guide discusses typical structures.
How do I check a manager’s license?
Use the Department of Real Estate’s license lookup. Confirm the status reads "Licensed," that a salesperson works under a broker, and look for any disciplinary history.
Does Diamond manage rentals?
We manage some rentals directly and refer others to partner managers, depending on location and property type. Contact us to talk through your property.
Sources & notes
- Business and Professions Code §10131: broker definition, including (b) leasing and rent collection.
- B&P Code §10131.01 and §10133: exemptions.
- DRE: Quick Guide for Landlords Hiring a Property Manager (form PDE 14-264; no publication date shown).
- DRE Update: Trust Fund Signatories, November 14, 2025: B&P §10145 trust fund handling.
- Civil Code §1941 and §1941.1: habitability.
- Civil Code §1962: owner and manager disclosures.
- San Francisco Rent Board: Housing Inventory.
- Berkeley Rent Board: Registration fees FY 2026–2027.
Statute text was read on the California Public Law mirror (california.public.law) because leginfo did not load during review; the official leginfo text controls. Local fees change each year. Check the current figure with the city.
General information, not legal, tax or lending advice. Updated November 2026. Primary sources are linked in this guide.
Related: Property management in Sonoma County · Concierge services · Security deposit rules · Investor services
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