Real Estate Law Updates: New Resident Manager Laws

Real estate law update from J. Scott Souders, P.C., Attorney at Law:

1. New Resident Manager Laws Start July 1, 2014.

gavel_300Commencing July 1, 2014, the hourly rate you must pay to resident managers increases to $9.00 per hour. In addition, the maximum rent that you can charge the manager who is required to live at the property will be approximately $515.00 a month if they are a single manager and approximately $755.00 per month if it is a couple.

Reduced rent for a manager’s unit cannot be applied as an offset against wages otherwise owed to the manager unless the owner signs a written contract with the manager authorizing the rental reduction credit to be applied against the minimum wages otherwise due. In furtherance thereon, the maximum offset against that hourly wage can be no more than approximately $515.00 per month for a single manager or $755.00 for a couple who are employed.

Remember that resident managers are usually construed to be employees. Therefore, you must have workers compensation insurance as well as deduct for payroll taxes.

Comment: Many owners of apartment buildings are not in compliance with the resident manager laws. In my mind, it is very important to become compliant as there are far too many lawyers out there looking to put the hurt on unsuspecting owners by filing wage and hour lawsuits. Many of these lawsuits on behalf of these managers claw back for years asking for penalties, attorneys fees, and other violations of the labor laws. Sometimes hundreds of thousands of dollars are involved if these resident managers are given free rent and not paid the hourly wage. These damages, plus having to pay attorneys fees for both your attorney and the manager’s attorneys, can be a very expensive lesson.

Scott Souders is a real estate attorney who has practiced real estate law in excess of 37 years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.