A man and woman meeting with their property manager
ComplianceAugust 01, 2022

Property management business licensing in Texas

Property management businesses act as intermediaries between property owners and tenants. They market properties, collect rent, handle maintenance and repairs, address tenant complaints, and carry out evictions.

In addition to making life easier for property owners, property management businesses bring experience and expertise to their client’s real estate investment strategy.

In Texas, property managers must go a step further and comply with Texas Real Estate Commission rules and the Real Estate Licensing Act.

If you operate a property management business in Texas, here’s what you need to know about the state’s licensing and registration requirements.

Are property management companies required to get a business license in Texas?

Property management businesses in Texas may need to obtain a real estate broker license. According to Texas law, the primary business activities of a property management company are considered the same as a real estate business. For instance, if your company lists, rents, negotiates, collects rent, or places a tenant in Texas, your business will need a real estate broker license.

If you operate as an LLC or corporation and function as a real estate broker, the Texas Real Estate Commission requires you to obtain a separate license for your business entity. (It’s not enough to have an individual license and register a separate legal entity with the commission.)

What are the licensing requirements for a property management company in Texas?

Resident and nonresident business entities must meet certain prerequisites before applying for a license.

Resident business entities

  • Resident business entities must be authorized to transact in Texas.

Nonresident business entities

If you are a nonresident business entity (meaning your business entity was created or chartered under the laws of another state), you may apply for a license in Texas if your business meets the following criteria:

  • is licensed as a broker in another state
  • was created or chartered in a state that does not license business entities, and your entity is lawfully engaged in the practice of real estate brokerage in that state

Texas real estate broker licensing requirements

The requirements for an entity to obtain a Texas real estate broker license are as follows:

  • The entity must designate an active Texas real estate broker to act on behalf of your company. The designated broker can be an officer, manager, or partner of the corporation, LLC, or partnership. They must also be individually licensed as an active Texas real estate broker.
  • If the designated broker does not own at least 10% of your business entity, you must maintain E&O (errors and omissions) insurance in the amount of $1 million.
  • Your designated broker must provide a fingerprint submission.
  • You must also submit proof of current Franchise Tax Account Status, also known as “Certificate of Account Status, previously known as “Certificate of Good Standing” (must be issued within 21 days prior to the date of the application). The Comptroller is required by law to forfeit a company's right to transact business in Texas if the company has not filed a franchise tax report or paid a franchise tax required under Chapter 171.
  • You must complete the Texas Application for Broker License and pay applicable registration fees.
  • Foreign business entities must supply proof that the business entity is licensed as a foreign broker — such as a real estate license history from the other state.

Both resident and nonresident entities have one year from the date of the application to meet all license requirements.

How often do you need to renew your license?

In Texas, you must renew your real estate broker license every two years.

Do individual property managers need to be licensed in Texas?

The answer depends on what duties the property manager performs for the property owner. If the property manager gets paid to show or lease the property for the owner, a license is required. A license is also required if the property manager accepts or deposits rent from the tenant of a single-family residential real property unit.

Note: If you operate a property management company and engage in leasing activity, the rental agent employee who solicits a prospect by phone must also be licensed.

CT can help

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of property management business licenses you can free up your staff to focus on high-value business activities while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us or call us at (844) 701-2064.

The CT Corporation staff is comprised of experts, offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.

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