June 2025
Do you have a Delegation of Authority in place? If not, it's time to consider when one is required and how it fits into your company's structure.
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Delegation of Authority works in tandem with your
company's written policies. Before issuing any delegation, you must have comprehensive written policies in place. If you own or manage a property management company, you're required to develop, maintain, and follow written policies for all licensed and unlicensed employees, including 1099 staff.
At minimum, your policies must outline the duties, responsibilities, supervision, and authority to:
- Negotiate tenant rental or lease agreements
- Verify applicant or tenant references, including credit checks
- Perform physical maintenance on properties
- Manage tenant relations
- Collect rent and other tenant payments
- Supervise managed property premises
- Discuss financial matters related to management with property owners
In addition to written policies, a Delegation of Authority is specifically required when the property manager permits any employee or staff (licensed or unlicensed) to do any of the following:
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Negotiate and Sign Property Management Agreements
Only licensed individuals can enter into a property management agreement. A principal broker may delegate this responsibility to a licensed broker or licensed property manager under their supervision but never to an unlicensed person.
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Review and Approve Monthly Reconciliations
Monthly reconciliations may be prepared by a variety of staff members. However, the person who reviews and approves the reconciliation and supporting records must be formally delegated that responsibility in writing. If you hire a bookkeeper to complete, review, and approve your monthly reconciliations, a delegation of authority is still required.
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Receive and Disburse Client Funds
If an individual is responsible for receiving or disbursing funds — whether those funds are tenant rent payments, security deposits, management fees or owner distributions — a written delegation of authority is required. This includes initiating payments through your accounting software, processing ACH transfers, issuing checks, or receiving electronic payments. Even though physical handling of cash and checks is less common today, the requirement still applies to anyone with access to financial transactions. Without a signed delegation in place, no staff member, regardless of their role, may manage these financial tasks on behalf of the company.
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Review, Approve, and Accept Tenant Rental and Lease Agreements
Your company policies may permit various staff members to negotiate and sign tenant lease agreements. Agency rules require the property manager to review, approve, and accept these agreements. However, under a delegation of authority, this responsibility may be delegated to either licensed or unlicensed staff.
Requirements for a valid delegation:
- Must be in writing
- Signed and dated by both the property manager and the individual receiving the authority
- Stored with your company's written policies
While specific responsibilities may be delegated, the property manager remains fully responsible for all company transactions and financial matters. If a delegated staff member mismanages or steals client funds, the licensed property manager is still accountable.