The short version
- Washington requires a license. Under RCW 18.85.011, performing property management services for another for compensation, including leasing, renting, and maintaining property, is real estate brokerage, and RCW 18.85.331 makes it unlawful to act as a broker or firm without a license.
- Money is held in trust. Funds a Washington licensee controls in a real estate transaction are trust funds that must be kept separate, and tenants' security deposits must go into a trust account in a Washington financial institution or licensed escrow agent.
- Deposit mistakes are expensive. Washington landlords must return deposits with an itemized statement within 30 days; missing that makes the landlord liable for the full deposit, and a court can award up to twice the deposit for an intentional refusal.
- Idaho is different. Idaho's real estate license centers on sales, and its deposit law contemplates third-party managers who are not licensees. Idaho real estate licensees must carry errors and omissions insurance.
- Errors and omissions is the core policy. Claims from owners (a missed lease renewal, a bad tenant screening, a deposit dispute) and from tenants (fair housing, habitability) are professional claims general liability does not cover.
Licensing and trust account rules
| Rule | Washington | Idaho |
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| License for managing others' property | Required: property management is real estate brokerage services (RCW 18.85.011, 18.85.331) | Not clearly required for rental management alone; the broker definition centers on sales (Idaho Code 54-2004); confirm with the Idaho Real Estate Commission |
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| Exemptions | Owners managing their own property and their employees; community association managers; owner or broker employees doing limited leasing tasks under direction (RCW 18.85.151) | Owners and their employees, among others (Idaho Code 54-2003) |
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| Trust funds | Funds a licensee controls are trust funds, kept separate in a recognized Washington depository (RCW 18.85.285) | Licensed brokers deposit entrusted money in a trust account by the next banking day (Idaho Code 54-2041, 54-2045) |
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| Security deposits held by a manager | In a trust account in a Washington financial institution or licensed escrow agent (RCW 59.18.270) | Unlicensed third-party managers must keep deposits in a separate account at a federally insured institution (Idaho Code 6-321) |
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| Mandatory E&O insurance | None found for Washington real estate licensees | Required for active real estate licensees: at least $100,000 per occurrence and $300,000 aggregate for individuals, $500,000 and $1 million for firms (Idaho Code 54-2013; IDAPA 24.37.01) |
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Security deposits: the rules that create claims
| Requirement | Washington | Idaho |
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| Written agreement and checklist | No deposit may be collected unless the rental agreement is in writing and a written checklist of the unit's condition is provided; without it, the landlord is liable for the deposit (RCW 59.18.260) | A signed itemized statement is required with any partial refund (Idaho Code 6-321) |
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| Return deadline | Within 30 days after the tenancy ends and the tenant vacates (RCW 59.18.280) | Within 21 days, or up to 30 days if the agreement says so (Idaho Code 6-321) |
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| Penalty | Liability for the full deposit; up to twice the deposit for an intentional refusal, plus attorneys' fees (RCW 59.18.280) | See Idaho Code 6-321 and related sections |
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A deposit dispute that becomes a claim against the owner often becomes a claim against the manager who handled it. That is an errors and omissions claim.
The coverage program for a property manager
| Coverage | What it protects against |
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| Professional liability (errors and omissions) for property managers | Owner claims over leasing, screening, rent collection, deposits, and missed renewals; tenant claims over management decisions |
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| General liability | Injuries at your office and, depending on the policy, while showing or inspecting properties |
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| Crime and fidelity | Employee theft of rents or trust funds; required by some management agreements |
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| Cyber with social engineering | Tenant applications full of personal information, and fake payment instructions for rents, owner draws, and vendor payments |
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| Employment practices liability | Employee claims, and third-party coverage for tenant discrimination or harassment claims where available |
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| Commercial umbrella | Serious injury claims and contract requirements |
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| Hired and non-owned auto | Staff driving their own cars to properties |
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Owners should carry their own property and liability coverage on each building and name the management company as an additional insured. Check every management agreement for this.
Where property managers get caught
| Gap | What happens |
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| E&O that excludes fair housing claims | Discrimination allegations from applicants or tenants are uncovered |
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| No crime coverage on trust funds | An employee who takes rents or deposits leaves the company to repay owners |
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| Wire fraud on owner draws | A fake email changes an owner's bank details; see wire fraud coverage |
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| Not named on owners' policies | A tenant injury suit against the manager has to be defended on the manager's own policy |
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| Deposit checklist missing | In Washington, the landlord is liable for the full deposit, and the owner looks to the manager |
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| Managing without a license in Washington | Licensing violations, and claims your E&O insurer may contest |
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Sources
This page is general information, not legal advice. Rules were checked against the statutes and rules in October 2026; confirm current requirements with the Department of Licensing or the Idaho Real Estate Commission.