What form can I use to advertise a home for rent without being a property manager?

QUESTION: I have a listing that has not garnered much interest. My seller really needs some income from this property and has asked me to advertise it for rent. I told her that I am not a property manager, but I would consider changing the listing in the MLS and see if I can find her a good tenant. What form should I use, or does my listing agreement already give me the authority to advertise the home for rent?

ANSWER: You need more than your current listing agreement to properly represent your client. Assuming you used the Exclusive Right to Sell Listing Agreement (Form 101), you do not have the authority to advertise the home for rent without using an addendum or entering into another agency agreement. Which form you need depends on exactly what services you want to provide. If you are simply going to send the tenants’ information to your client or a property manager for your client, you will be able to use Form 106. If you are going to handle trust money or help the client secure a lease, Form 405-T will be the proper agreement.

The Agreement to Procure Tenant (Form 106) is an addendum you can use to modify Form 101. This addendum is only to be used to modify an existing listing agreement and gives you the ability to advertise the home for rent. This form significantly limits your authority once you locate a prospective tenant. Notably, the bold language at the very top of the form reads: “No management services, including but not limited to the conduct of any credit check and/or criminal background check, the preparation of a lease agreement, or the collection or handling of any security deposit and/or rent payments, shall be provided in connection with this Agreement.”

Form 106 provides important limitations on your duties and obligations, especially for someone without significant property management experience. For example, if you find a tenant, enter into a lease agreement on behalf of the landlord, and collect the security deposit, you are required to put this money in a trust account and advise the tenant where the deposit will be held. Failure to follow the relevant Commission rules and the Tenant Security Deposit Act can have substantial consequences for both you and your client. It is best to ensure that you provide only the services that you are contractually asked to provide and simply put your client in touch with the interested tenant applicants.

However, if you are competent to provide additional services, such as securing a lease, doing background checks, and then leaving all the management work for the landlord, you could use the Exclusive Right to Advertise/Lease Agreement (Form 405-T). We have previously discussed Form 405-T in greater detail here. Generally, this form is very similar to Form 106, but Paragraph 5(B) could also be checked to give you authority to also screen applicants and deliver a fully executed lease. This form would also be useful if your listing agreement has expired or you are approached by a former client to advertise a home for lease or locate a suitable tenant.

Release Date: 3/14/2024

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