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lwpat
lwpat, Attorney
Category: Real Estate Law
Satisfied Customers: 25384
Experience:  Practicing attorney with expertise in easements
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Upon receiving my Property Management commission, I noticed

Customer Question

Upon receiving my Property Management commission, I noticed my check had deductions for losses accrued on rental properties. i.e. taxes, repairs, fee's...etc.
Is that legal? If so, can I claim those deductions on my tax returns even if it's not my house?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  lwpat replied 1 year ago.
Thanks for using JA. I will do my best to answer your questions. DON’T FORGET the your deposit is not used to compensate me until you rate my service.

Your commission is based on your employment contract so if there are deductions allowed under your contract, then they are legal. You would pay taxes on your net pay after those deductions rather than the gross amount. You can't take them again as that would be taking the deductions twice. Does that make sense and answer your question
Customer: replied 1 year ago.

The deductions were related to property taxes, property repairs from tenants who damaged the property, HOA fees. I dont have a contract. There were 18 properties that I managed and was billed for.


Sorry, your response did not address my question.

Expert:  lwpat replied 1 year ago.
I don't understand your question, can you explain it in more detail. Who do you work for and who pays you commissions. What is the agreement and who do you have it with if you don't have any contract. Normally a property manager has a contract with someone, usually an HOA to manage the property. The method in which you get paid is set out in the contract. How are your commissions determined.
Customer: replied 1 year ago.

I'm employed by a company who acquires/forecloses on properties through delinquent taxes.


Initially, our goal was to obtain the property and then flip it. However, during the expansion of our business, we found that property owners were interested in leasing the home back from us. At which point I was handed the property management torch. With no written agreement, other than a verbal agreement that I would make 5% on collected income, I proceeded. Once before I've been paid in full my 5% commission... with NO said deductions. But NOW, I'm being billed for them.


How is it possible that I have to pay for the owner's overhead charges with NO agreement in place? Is that legal?

Expert:  lwpat replied 1 year ago.
I don't mind continuing but since you have rated me with bad service before I have had a chance to continue, I would appreciate you changing the rating. Thanks
lwpat, Attorney
Category: Real Estate Law
Satisfied Customers: 25384
Experience: Practicing attorney with expertise in easements
lwpat and 9 other Real Estate Law Specialists are ready to help you
Expert:  lwpat replied 1 year ago.
I also need to know if you have a real estate license. In order to remove the bad report simply click on good on one of the answers. thanks
Expert:  lwpat replied 1 year ago.
The reason I asked if you had a real estate license is that is required in Arizona to be a property manager.

Must an Arizona property management company have a real estate broker's license?

YES. Key components of property management are considered a real estate activity under existing Arizona real estate licensing laws. A broker's license is required for any person or company who, for compensation, engages in the lease or rental of real estate in Arizona, who offers or lists real estate for rent or lease, who collects rent for the use of real estate or who negotiates the rental or leasing of Arizona real estate. A salesperson working under a broker may engage in such activities.

Arizona is one of the few states having a section in its real estate statute specifically devoted to property management requirements. Arizona law requires that property management agreements contain specific provisions, that all property management accounts are designated as trust accounts, and that records be kept in a certain manner. http://www.allpropertymanagement.com/propertylaw/property-management-law-in-arizona.html

That means that you cannot legally bring suit if you are required to be licensed and you are not.

You would pay taxes only on the amount you are actually paid after the deductions so you cannot take them again.

It appears that they (whoever they are) have changed the rules on you. I would suggest that you sit down and discuss your compensation. If you are licensed, then you could sue them for what they did not pay since they have initially paid you on gross income rather than net income. Most property managers are paid on a percentage of the gross income rather than the net after the deductions. Does that help. Please continue if you need more assistance.

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