Manager Licensing

It’s happened! Colorado House Bill 13-1277 was signed into law by the Governor on 5/28/13. The Bill is lengthy and full of regulatory linguistics, but essentially, it requires any person engaged in common interest community management in Colorado, for compensation, shall be licensed by the Department of Regulatory Agencies (DORA). This includes community association managers (CAM’s), the management company CEO, and any executive who directly supervises a CAM.

All licensees will be required to hold a recognized credential, such as the CMCA, AMS or PCAM designations from the Community Associations Institute, then obtain, and maintain, appropriate licensing with DORA. The DORA licensing will involve submitting fingerprints to the Colorado Bureau of Investigation (CBI), a criminal background check, successful completion of a course together with an exam on HOA specific Colorado laws and HOA administration, prerequisites for insurance, and, of course, substantial licensing fees. All direct and indirect costs DORA incurs administering this regulatory process shall be offset by the manager licensing fees. In addition to the expected costs of the course and exam, the estimated fees are $330 for initial licensing, $170 for renewals (every 3 years), and $39.50 for the CBI background checks. By comparison, a real estate broker currently pays $480 for an initial license application and $138 for a 3-year renewal.

The licensing program would be administered by the Colorado Division or Real Estate (under DORA), which would be able to use all the powers and duties similar to those currently governing the licensing and supervision of real estate brokers. While adminsitrative and regulatory specifics of the Bill are yet to be clarfied, many HOA management companies, and managers, in Colorado concurrently operate real estate entities and are, therefore, already held to high standards of accountability, professionalism and ethics. The government appears to duplicate these standards by additional licensing, additional continuing education, and additional fees.

One may ask is regulation all that necessary? According to the HOA Information Officer, it is. But are managers being blamed for inappropriate governance by the HOA itself? We all know a “rotten apple” exists in every barrel. But is the rotten apple necessarily the manager, or perhaps the HOA leader, or maybe a dissatisfied homeowner? The HOA Information Officer has filed 2 annual reports since the inception of the Center. In 2011, the total number of complaints reported represented only 0.06% of the total number of Units within all the HOAs registered. In 2012, this rose to 0.07%. In both years, the complaints lodged against managers were a miniscule 0.02% of the total number of Units under registration.

Reading between the lines, over 99% of the registered owners had no complaint against their managers, or, the 2 out of every 10,000 that did could not discern an action of the manager from an action of the board. In 2011, the HOA Information Officer wrote that “the statistical evidence on whether the complaint against a manager or HOA board is difficult to compile”. Furthermore “it was very surprising that many homeowners were unable to distinguish (an action) between their board and their manager”. This latter phrase was reiterated in the 2012 report. Also, in his 2011 report, the HOA Information Officer stated “it is important to note that many of the complaint types involving managers also occur in associations without managers”. The reality is that it is almost impossible to distinguish actions of a manager from actions or directives from the Board. By contract, the Board delegates its duties to a manager, but cannot delegate its responsibilities. If a manager is not up to par, the Board should hold him accountable.

Should we really be asking, what regulatory process should a Board be held to? Should the HOA, itself, pay for manager licensing. The HOA is, of course, the ultimate benefitting party. Should HOA Registration fees be increased to offset some of the costs of manager licensing?

All said, due to the nature of the tasks a manager performs, the funds often under his control, the fiduciary capacity as an intermediary between the Board and owners, we, as managers, must demonstrate high standards of professionalism, be fully accountable for our actions, and be comfortably familiar with applicable laws and governing policies and procedures. The proof of this is in experience, education, credentialing, and … now, licensing.

Original Post: May 29, 2013