Condo Media - November 2017 - 52

The Region

RHODE ISLAND

A License to Manage?

Breaking Down Brokers, Salespersons, and Contractors
[by Mary-Joy Howes, Esq.]

Many property managers in Rhode
Island have received inquiries from
the Rhode Island Department of
Business Regulation regarding
whether or not they are appropriately licensed. Although there is no
licensing requirement for property
managers in Rhode Island, there are
situations where a property manager
has taken on responsibilities of a profession that does require licensing.
Specifically, this question arises as to
whether a property manager is engaging
in the activities of a real estate broker,
salesperson, or a contractor.
REAL ESTATE BROKERS
AND SALESPERSONS
Rhode Island General Laws, Section
5-20.5, et seq. governs real estate brokers and salespersons. A real estate broker is defined at Section 5-20.5-1(4) as:
n "(i) ... all persons, partnerships, associations, and corporations, foreign and
domestic, who:
* (A) For a fee, commission, or other
valuable consideration, or who with
the intention or expectation of
receiving or collecting a fee, commission, or other valuable consideration,
lists, sells, purchases, exchanges,
rents, leases, appraises residential
property containing four (4) or fewer
units, or auctions any real estate,
or the improvements on real estate
including options or who negotiates
or attempts to negotiate any such
activity;
* (B) Advertises or holds himself or
herself, itself, or themselves out as
engaged in those activities;
* (C) Directs or assists in the procuring of a purchaser or prospect calculated or intended to result in a real
estate transaction.

52

CONDOMEDIA

n (ii) Also includes any person, partnership, association, or corporation employed by or on behalf of the owner or
owners of lots, or other parcels of real
estate, at a stated salary, or upon a fee,
commission or otherwise, to sell that
real estate, or any parts, in lots or other
parcels, and who sells, exchanges or
leases, or offers or attempts or agrees to
negotiate the sale, exchange or lease of
any such lot or parcel of real estate..."
A "Real estate salesperson" is defined
at Section 5-20.5-1(5) as "any person
employed or engaged as an independent
contractor by or on behalf of a licensed
real estate broker to do or deal in any
activity as included or comprehended by
the definitions of a real estate broker in
subdivision (4) of this section, for compensation or otherwise."
There is, however, an exception to the
above definition at Section 5-20.5-2(a)
(1), which states "real estate broker" and
"real estate salesperson" shall not include
"Any person, partnership, association, or
corporation, who, as a bona fide owner,
lessee, or lessor, performs any of the
previously stated acts as to property
owned, or leased by them, or to their
regular employees, where those acts
are performed in the regular course of,
or as an incident to the management
of the property and the investment in
the property..." (emphasis added).
Therefore, when an association's property manager is engaging in activities in
the regular course of, and as incident to,
management of the condominium property, as an employee/agent of the association, this would trigger the exception. For
example, activities such as the collecting
of association assessments, enforcing
the association's rules and regulations
regarding leasing, facilitating access to

units on behalf of the association, and
assisting in the preparation of resale
certificates for the association, would all
fall under this exception.
A management company, however,
that is involved in any way with collecting rents, listing units for sale, selling
units, and/or the showing of units would
be wise to investigate whether or not
a license is required. It is likely that if
they are engaging in such activities, that
a license is required, and the exception
will not apply.
CONTRACTORS
A contractor is defined at Section 5-651(3)(i) of the Rhode Island General
Laws as:
n "a person who, in the pursuit of an independent business, undertakes or offers
to undertake or submits a bid, or for
compensation and with or without the
intent to sell the structure arranges to
construct, alter, repair, improve, move
over public highways, roads or streets or
demolish a structure or to perform any
work in connection with the construction, alteration, repair, improvement,
moving over public highways, roads or
streets or demolition of a structure, and
the appurtenances thereto. For the purposes of this chapter, "appurtenances"
includes the installation, alteration or
repair of wells connected to a structure
consistent with chapter 46-13.2. "Contractor" includes, but is not limited
to, any person who purchases or owns
property and constructs or for compensation arranges for the construction of
one or more structures."
Many property managers will organize capital improvement projects for
the associations they manage. Management agreements generally allow the
Condo Media - November 2017

Table of Contents for the Digital Edition of Condo Media - November 2017
