How to Start a Property Management Company

Starting a business can be a rewarding challenge, but when it comes to establishing a property management company that manages and leases properties, the process can seem overwhelming. But fear not! With the right guidance and a clear understanding of the steps involved, you can navigate the licensing process like a pro.

At GSR Law Group, we’re here to simplify this journey for you. Whether you’re aiming to manage, lease, or sell properties in Texas, we break down the key steps you need to follow to become a licensed business entity real estate broker, often referred to as a property management company.

What is a Business Entity Real Estate Broker?

A business entity real estate broker is an organization authorized to act as a real estate broker in Texas. But there’s more to it:

To qualify, you’ll need to meet two crucial requirements:

1. Be authorized to conduct business in Texas.
2. Designate an active, licensed real estate broker to act on behalf of your company.

With these steps checked off, you’ll be ready to dive into the world of real estate management!

Key License Requirements for Texas Real Estate Brokers

Once you’ve set up your business, it’s time to apply for your license through the Texas Real Estate Commission (TREC). Here’s how to get started:

1. Filing Your Application
   Once your application is submitted to TREC, you have one year to fulfill all the licensing requirements. This includes proving your business is authorized to transact in Texas and designating a qualified real estate broker.
2. Designating a Broker
   A business cannot act as a broker without a designated individual broker. This person must be an officer of the company and remain in good standing with the Commission.

How Does a Broker Lose Good Standing?

Even the best brokers need to be aware of factors that can harm their reputation and status. A broker loses their good standing if:

• Their license is revoked or suspended (even temporarily).
• They were the designated broker for a company that had its license revoked or suspended in the past two years.
• They or their company owe past due penalties or obligations to the Commission.

Maintaining good standing is crucial for keeping your business running smoothly, so make sure your broker stays compliant!

Filing Your Application: Two Easy Options

1. Online Application
   The most efficient way to apply is online via the TREC website. Simply create an account, log in, and submit your application and fee. If you’ve previously registered with TREC or TALB, you can log in using your existing account.
2. Mail-In Application
   Prefer the traditional route? Download the application form from the TREC website and submit it by mail, along with the required fee.

Required Documentation: Don’t Forget These!

When submitting your application, you’ll need to provide the following documents:

1. Franchise Tax Account Status
   Proof that your business is authorized to transact in Texas (issued within 21 days of the application date).
2. Proof of Managing Authority
   Show that your designated broker holds a managerial role in your business. Acceptable proof includes:
   • For Corporations: Corporate resolutions, meeting minutes, or articles of incorporation.
   • For LLCs: Operating agreements, company resolutions, or formation certificates.
   • For Partnerships: Partnership agreements signed by all partners.
3. Proof of Ownership or E&O Insurance
   If your designated broker owns 10% or more of the business, you will need to provide proof of ownership (such as stock certificates or IRS forms). If they own less than 10%, your business entity must carry $1 million in Errors & Omissions Insurance.

Wrapping it Up: Take the First Step Toward Real Estate Success

Establishing your business entity real estate broker license may seem like a daunting task, but with the right guidance and attention to detail, the process can be both smooth and rewarding. At GSR Law Group, we’re here to support you every step of the way. Whether you choose to apply online or by mail, we’ve got you covered.

Ready to take the plunge into property management? Contact us today to start your journey toward becoming a fully licensed business entity real estate broker in Texas.

Key Takeaways:

• To become a licensed property management company in Texas, you must be authorized to conduct business and designate a licensed broker.
• Make sure your broker remains in good standing by avoiding license suspensions and keeping up with obligations to the Commission.
• You can file your application online or by mail, but don’t forget to submit all required documents!
• Do not forget that the information is up to date as of September 17, 2024

Useful Links

• https://mylicense.trec.texas.gov/datamart/login.do;jsessionid=hw4JeFvepusdrktH3B4bAX_eVXJQHCswtQEIL-rS.idvoapp1
• https://www.trec.texas.gov/sites/default/files/pdf-forms/BBE-9_1.pdf