In September of 1997, a man who had been managing a condominium complex for years appeared before the New Hampshire Real Estate Commission to explain why he had been practicing the business of real estate without a license. After a very short discussion, the Commission members unanimously ordered him to cease all of his managerial activities, and to quickly arrange for a licensed person to take over the management of the complex.

This is only one recent chapter in a long-running saga of unlicensed property management in New Hampshire. Hopefully, this article may help to clarify the confusion (usually among unlicensed people) regarding whether a license is necessary to legally manage real estate.

Generally, anyone who solicits tenants, negotiates leases or collects rents on someone else’s property and receives a fee for their services must possess a real estate license, see, RSA 331-A:2 III, and RSA 331-A:3. There is an exemption from the licensing requirement, however, for persons who lease or manage their own property and for the "regular employees" of such persons. (RSA 331-A:4).

That doesn’t mean that every person, firm, or corporation that is "hired" by the owner to lease or manage the owner’s property is exempt. It is necessary to look at the substance of the property management relationship created in each situation to properly understand whether a manager is truly an employee who fills the requirements of the exemption; or is working as an "independent contractor", who must be licensed.

As a general rule, an independent contractor is an entity that agrees to perform services for a fee according to its own methods and without subjection to the supervision and control of the other contracting party. Conversely, an employee is a person who is subject to the direct supervision and control of his/her employer as to both results and the means by which those results are achieved.

This distinction between "regular employee" and "independent contractor" illustrates what the commission believes to be the policy expressed by the exemption set forth in RSA 331-A:4. A property owner who receives property management services from an employee, a person he may hire, fire, supervise and control, does not need the protection of the licensing laws as much as a property owner who contracts with a person, firm or corporation to achieve a certain result but who has no direct say in the methods by which that result is achieved.

When an owner hires an independent contractor to manage his/her property, the owner has the right to assume that the person or entity (s)he has engaged possesses some minimum qualifications to competently perform the services offered. The licensing law is intended to ensure that those offering services such as property management to the public possess those qualifications.