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Manager Licensing -- A Continuing Debate

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For years now, the Maryland General Assembly has considered many attempts at regulating the community association management industry, generally focusing on licensing. The just completed 2018 Maryland General Assembly session was no different. HB1158 was introduced in an attempt to create a broad state-level regulation of the community association management industry.

The proposed bill would have created a nine-member State Board of Common Ownership Community Managers to administer and oversee the licensing of community association managers. To obtain a license, the community association manager would have had to (1) complete a training program approved by the Board; (2) pass an examination approved by the Board that includes testing of knowledge of state laws and regulations concerning common ownership communities; (3) be actively engaged in providing management services for at least five years as a licensed community association manager before applying for a license; (4) hold an active professional designation as approved by 16 members of the Board; and (5) pay the licensing fee, of course. This bill did not make it out of committee and is NOT law in Maryland.

But, the continued effort in Maryland to regulate community association managers raises strong emotions from all sides of the debate. There are those from a libertarian-esque view who feel that these efforts are just another example of Maryland’s legislative desire to regulate industries and individuals, and to collect those licensing fees. Of course, on the other end of the spectrum is the feeling that community association managers are professionals, are entrusted with potentially millions of dollars of other people’s money and property, and there thus needs to be governmentally-imposed standards and governance to protect the residents of the community associations from the few bad apples. Having followed manager licensing debate in Maryland for a number of years, I wanted to see how Maryland’s efforts aligned with CAI’s policy and other states.

According to CAI National’s website, CAI’s policy related to manager licensing is as follows:

“CAI encourages the national certification of community association managers. In states that propose mandatory regulation of community association managers, CAI will support a regulatory system that incorporates adequate protections for homeowners, mandatory education and testing on fundamental management knowledge, standards of conduct and appropriate insurance requirements. CAI opposes the licensing of community association managers as real estate brokers, agents or property managers.”

Accordingly, all CAI chapters, including WMCCAI, are supposed to follow this policy guidance when addressing proposed legislation to regulate the community association management industry, potentially limiting the various CAI Legislative Action Committees from opposing manager licensing bills.

Though HB1158 did not pass, at least nine states have adopted some form of community association manager licensing, including Alaska, Connecticut, Virginia and Colorado. The following information was provided by CAI.

In Alaska, a person may not collect fees for community association management or practice or negotiate a contract to practice community association management unless licensed as a real estate broker, associate real estate broker, or real estate salesperson in Alaska. Applicants for licensure as a real estate or associate real estate broker must complete 15 hours of Real Estate Commission-approved courses prior to application. Applicants for licensure as a salesperson must complete 40 hours of Commission-approved courses prior to application and must have a real estate license within the past 36 months in order to qualify for licensure as a real estate or associate real estate broker.

In Connecticut, any person who provides management services is required to register with the State Department of Consumer Protection and submit to a state and national criminal background, complete a nationally-recognized course on community association management, and pass the Community Association Managers International Certification Board Certified Manager of Community Associations (CMCA) examination.

In the Commonwealth of Virginia, any common interest community manager engaged in community management services must be licensed to do so in the Commonwealth. A common interest community manager is defined as a person or business entity who, for compensation or valuable consideration, performs certain management services. In addition to the managers, Virginia requires the management firm to be certified by the Commonwealth Common Interest Community Board. Specifically, management firms that hold an active Accredited Association Management Company (AAMC) designation by CAI qualify for certification by the Common Interest Community Board. Firms that do not hold an AAMC designation must designate at least one of four qualifying requirements, including, successful completion of a board-approved introductory training program (CAI's M-100 course) and at least five years of qualifying experience; or knowledge obtained through documented course work (equivalent to a board-approved comprehensive training program) submitted to the Board AND at least ten years of qualifying experience.

Colorado, it seems, is taking a step away from regulating community association managers. In April 2018, the Colorado Senate Finance Committee voted to allow the Community Association Manager Licensure in the state to expire in July 2019. Until then, community association management must be licensed in order to manage a common interest community. To obtain the license, the manager must 1) have a CMCA, AMS or PCAM designation or complete a 24-hour course; 2) pass an examination; and 3) submit to fingerprinting.

It appears that approaches in state legislatures to address manager licensing are as varied as arguments for and against. Regardless of anyone’s particular viewpoint on licensing, what is clear, to at least this author, is that there is an increasing recognition of the importance community association managers. Whether this recognition needs to be evidenced through statutory regulation is debate that will continue.

Jeremy Tucker is a community association attorney at Lerch, Early & Brewer in Bethesda, Maryland who represents community associations and condominiums in a wide range of matters, including general counsel and litigation. Jeremy serves on the board of WMCCAI and is past chair of the Maryland Legislative Committee. For more information on vendor proposals and agreements, contact Jeremy at (301) 657-0157 or jmtucker@lerchearly.com.

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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