Absentee Owner
A property owner who does not reside on the property and who often relies on a property manager to manage the investment.
An absentee owner is someone who owns a business, property, or other assets but is not actively involved in its day-to-day operations or management.
Absentee owners may delegate the responsibility of running the business or managing the property to others, such as managers, employees, or hired professionals. This arrangement allows the owner to have a passive or hands-off role in the business or asset.
Absentee ownership is common in various industries, including real estate, franchising, and small businesses. For example, a person may own rental properties but hire a property management company to handle tenant issues, maintenance, and rent collection.
In the context of a franchise, the franchisee (business owner) may be an absentee owner if they hire a manager to run the day-to-day operations of the franchise location.
The key distinction is that absentee owners primarily focus on the financial aspects of ownership, such as making investment decisions, monitoring performance, and collecting profits, without being actively involved in the daily operations.
Federal tax laws deal with the ownership of depreciable real property when the owner is absent most of the year but occupies the property on vacations or at other times for part of the year.
These changes are aimed at reducing the tax depreciation advantages when an absentee owner uses the property as a second home. Consult experienced counsel for specific details. (See real property securities registration, vacation home.)
Many states now require the sellers of property to give the buyer a property condition report. This presents a problem for absentee owners. As an alternative, the absentee owner may want to give the buyer a report from a professional property inspector. In some states, the absentee owner is exempt from having to provide the report.
