Who Needs a License to Manage Rentals in California

In California, anyone who, for compensation or the expectation of it, leases or rents property for another person, solicits tenants or listings of rentals, or collects rent on someone else's real property is acting as a real estate broker under Business and Professions Code § 10131(b). Managing another owner's rental for pay therefore generally requires a license from the Department of Real Estate (DRE): a broker license, or a salesperson license working under a broker. Hiring a licensed manager also changes how some other laws apply to the owner, including federal fair housing exemptions and tax withholding for owners who live outside California.

This is general information, not legal advice. Laws change; confirm the current text and your situation with a California attorney.

At a glance

What the law says

Section 10131 defines a real estate broker as a person who, "for a compensation or in expectation of a compensation," does certain acts "for another or others." Subdivision (b) covers rentals. It includes anyone who "leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants," or who "collects rents from real property."

Read plainly, that covers the core of what a property manager does for an owner:

• advertising a vacancy and showing it to prospective tenants;
• signing or negotiating leases on the owner's behalf;
• looking for new owners to manage for (soliciting listings);
• collecting the monthly rent.

Two parts of the definition do the work. The first is "for another or others": the activity is on someone else's property. The second is compensation: the person is paid, or expects to be. When both are present, the definition is met, and the person generally needs a DRE license, either as a broker or as a salesperson working under a licensed broker, unless an exemption applies.

This page does not cover any exemptions from the licensing requirement, and none should be assumed. If you think one applies to you or to someone you plan to hire, confirm it with the DRE or a California attorney first.

Who it applies to

Absent an exemption (not covered on this page), the definition can reach:

• Property management companies that lease, rent or collect rent for owners.
• Individuals paid to find tenants or collect rent for a friend, relative or investor.
• Leasing agents who place tenants for a fee.

It does not change who may own a rental. The licensing question is about the person acting for the owner, not the owner.

How using a licensed manager affects other rules

Several laws treat an owner differently, or add duties for the agent, once a broker or manager is involved.

Federal fair housing exemption

The Fair Housing Act exempts a single-family house rented by a private owner of no more than three such houses, but only if it is rented without the use of any real estate broker, agent or salesperson, or any person in the business of renting dwellings (42 U.S.C. § 3603(b)(1)). Once you rent through a manager, that exemption is gone. California's own fair housing law, Gov. Code § 12955, applies to the owner of any housing accommodation in any case. See fair housing and source of income.

Lead-based paint disclosure

For housing built before 1978, the federal lease disclosure must include an agent statement where an agent is involved, and both the lessor and the agent must keep the signed disclosure for at least three years from the start of the lease (40 CFR § 745.113).

Rental ads with altered images (from January 1, 2027)

AB 2025 adds Civil Code § 1940.11. Anyone using a digitally altered image in a rental ad (AI-generated, or edited to add, remove or change fixtures, furniture, flooring, paint, landscaping, views and similar features) must place a reasonably conspicuous disclosure on or next to the image and include the unaltered original, or a link, URL or QR code to it. Ordinary lighting, white balance, cropping and exposure edits are excluded. For a real estate licensee, a violation is also a violation of the licensing law (B&P § 10140.8, as amended).

Pricing tools

Since January 1, 2026, according to the bill's official digest, AB 325 makes it unlawful under the Cartwright Act to use or distribute a "common pricing algorithm" as part of a conspiracy to restrain trade, or to coerce another person to adopt its recommended price or terms (B&P §§ 16729, 16756.1). This matters to anyone, owner or manager, who sets rents with an algorithmic pricing tool.

Withholding for owners who live outside California

FTB Publication 1017 (revised February 2026) says rent paid to a nonresident owner is subject to 7% withholding when it is paid in the course of the payer's business. Tenants who pay a nonresident owner directly are not required to withhold, "but payments from property management companies are subject to withholding." Withholding is optional on the first $1,500 paid in a calendar year, and a California property manager may deduct its management fee before computing the 7%. An owner can avoid or reduce withholding with a certified Form 590, an FTB waiver, or an approved reduced-withholding amount. Ask a tax professional how this applies to you.

Notices go to the agent too

Several tenant notices may be delivered to the landlord's agent instead of the owner. A military tenant may send a lease-termination notice to the lessor or the lessor's agent (50 U.S.C. § 3955(c)), and a tenant's repair notice under Civil Code § 1942 may go to the landlord or the agent. A three-day notice to pay rent must give the name, telephone number and address of the person to whom rent is paid (CCP § 1161(2)), which is often the manager.

Laws that name the agent directly

Some rules apply to "the landlord or their agent" or to "every landlord or agent." The screening fee cap of $30 per applicant may be adjusted annually for CPI "by the landlord or their agent" (Civil Code § 1950.6(b)). From April 1, 2027, SB 1296 requires every landlord or agent to have a written pet policy and to provide it with listings and applications (Civil Code § 1942.7.5).

What owners should do

1. Confirm the license. Ask any manager or leasing agent for their DRE license number and the name of the responsible broker, and confirm it with the Department of Real Estate before signing.
2. Get the arrangement in writing. Spell out who advertises, screens, signs leases, collects rent, holds the deposit and serves notices.
3. Keep the federal exemption out of your planning. If a manager rents your home, plan on full federal and state fair housing compliance.
4. Keep lead disclosure records. For pre-1978 homes, make sure both you and the agent keep the signed disclosure for at least three years.
5. If you live outside California, expect 7% withholding on rent paid through a manager unless you have a Form 590, a waiver or an approved reduction, and talk to a tax professional.
6. Review listing photos. From January 1, 2027, any altered image in a rental ad needs the disclosure and the original.

What tenants should know

• A person paid to rent out a unit or collect rent for an owner generally needs a DRE license. You can ask for the license number.
• Your notices, including repair requests and military lease-termination notices, can go to the manager as the landlord's agent.
• A pay-rent notice must tell you who to pay, with a name, phone number and address.
• From January 1, 2027, a rental ad that uses an altered photo must say so and show or link the original.

Step-by-step guides

For the practical side of this rule, see these guides in the California Rental Handbook:

• Signing a California Lease: Copies, E-Signatures and Who Signs

Local rules

Some California cities add local rules on top of state law. Coronado has no local rent-control or just-cause ordinance as of October 2026 (based on a review of its code's contents); see the Coronado Rental Guide and what a Coronado property manager does. Other San Diego County cities may differ; check your city's municipal code.

Recent and upcoming changes

• January 1, 2026: AB 325 (common pricing algorithms) takes effect.
• January 1, 2027: AB 2025 (altered images in rental ads) takes effect.
• April 1, 2027: SB 1296 (written pet policy with every listing and application) becomes operative.

See the full tracker in California landlord law changes for 2026 and 2027.

Frequently asked questions

Do I need a license to manage my own rental property?

The definition in § 10131(b) is written around acts done "for another or others" for compensation; on its face it does not describe an owner renting out their own property, but confirm your own situation with the DRE or an attorney. This page does not cover exemptions for anyone else, such as employees or relatives; confirm those with the DRE or an attorney.

Can a friend collect rent for me if I pay them?

Collecting rents from real property for another person, for compensation or in expectation of compensation, is one of the acts listed in § 10131(b). Someone doing that for pay meets the statutory definition of a real estate broker, which generally means a DRE license is required. This page does not cover exemptions; confirm with the DRE or an attorney before relying on one.

Is a salesperson license enough to manage rentals?

Yes, if the salesperson is acting under a licensed broker. Managing another owner's rental for pay requires a DRE broker license, or a salesperson license used under a broker.

Does hiring a property manager change my fair housing obligations?

Yes, at the federal level. The Fair Housing Act's exemption for an owner of no more than three single-family houses applies only when no broker, agent or rental business is used. California's fair housing law applies to the owner either way.

Do property managers have to withhold tax on my rent?

If you are a nonresident owner, FTB Publication 1017 says payments from property management companies are subject to 7% withholding, with withholding optional on the first $1,500 in a calendar year and the manager's fee deductible before computing it. A certified Form 590, an FTB waiver or an approved reduction can avoid or reduce it.

McKee Properties (CA DRE #00907967), established in San Diego in 1982, manages rentals from its Coronado office; contact us with questions about your property.

Sources

• Bus. & Prof. Code § 10131 (opens in a new tab)
• 42 U.S.C. § 3603 (opens in a new tab)
• 40 CFR part 745, subpart F (opens in a new tab)
• AB 2025 (2026), altered images in rental ads (opens in a new tab)
• AB 325 (2025), common pricing algorithms (opens in a new tab)
• FTB Publication 1017 (opens in a new tab)
• 50 U.S.C. § 3955 (opens in a new tab)
• Civil Code § 1942 (opens in a new tab)
• Code of Civil Procedure § 1161 (opens in a new tab)
• Civil Code § 1950.6 (opens in a new tab)
• SB 1296 (2026), pet policies (opens in a new tab)

Verified October 19, 2026.