Licensing HOA Property Managers

Licensing HOA Property Managers Our Response to AB 555

Authored By Assembly Member Dutra
Coauthored by Senator Correa

We commend Assembly Member Dutra and Senator Correa for introducing Assembly Bill 555 to the California State Legislature. It is inconceivable that individuals who are managers of Common Interest Developments are presently permitted to work, without a license of any kind, in an industry that, by it’s very nature, requires extraordinary regulation, poses tremendous potential to many of the problems plaguing California and has become an integral part of California’s Real Estate industry and California’s economy.

In 1997, in a letter to Mr. Jim Antt, Jr. Real Estate Commissioner, I requested that the State of California Department of Real Estate extent the licensing requirements to include community association property managers. On May 12, 2001, I wrote a letter to Commissioner Paula Reddish Zinnemann, Real Estate Commissioner and again “urgently requesting the California Department of Real Estate to extend their licensing requirements to include condominium association property managers.”

An Assembly Bill is now before the Senate, we commend Assembly Member Dutra and Senator Correa for introducing Assembly Bill 555, Section 11513 of the bill, however, is of great concern and I strongly recommend it be removed. The purpose of this bill as stated in section 11501 is “to institute consistent minimum standards of education, experience, competence, fair and ethical behavior for individuals who are managers of common interest developments . . . ” Section 11501 and section 11513, therefore, are conflicting. Section 11513 exempts “any individual who has received the “Certified Community Association Manager” (CCAM) designation.” This would imply that the CCAM designation is equivalent to the California State License and this simply is not the case. Therefore, the minimum standards of education, experience and competence etc. are also not equal. All real estate sales persons, for example, must be associated with a broker. The CCAM designations have no equivalent requirement nor are the education requirements equivalent. The same thought applies to Community Association Institute based in Alexandria, Virginia.

Therefore, section 11513 obviously self-serves the organization that has sponsored it, that is the “California Association of Community Managers.” This section provides all prospective property managers with a shortcut and an alternative to being licensed. But what’s more, the most significant and of the greatest concern is that it completely removes the control, supervision, penalties and state imposed regulations adopted by the state and empowers them with an organization that, by itself, is not regulated. This concept is contrary to every regulatory concept I have ever known. It must not be permitted here. Any and all sections of the bill that would exempt an individual from being correctly licensed directly through and by the State of California must be removed from this bill. It is simply improper to legislate an organization into state law.

Frankly, licensing would not be so critical to this industry if Common Interest Developments were being well managed at this time, but more often they are not. Most homeowners’ associations expect their managers to be educated, experienced, competent and informed. They look to professional management for direction and guidance. Association Boards of Directors, therefore, must be able to trust the information and direction given to them by their managers but in far too many cases it is the proverbial “blind leading the blind.” It is an easy entry industry, no license, no training, no experiences no education. Nothing! And a large turnover of personnel makes things even worse.

The focus here is why property managers should be licensed in the first place. The real reason and purpose for being licensed are to increase the “Value and Enjoyment of Property.” The future of housing in this state and nation is obviously in community style living. Not withstanding the need for traditional single family homes, condominiums and the free standing homes of common interest developments is the residence of the future especially in larger cities and densely populated areas. And what’s more, community living can be the solution to many of the state and nation’s housing and transportation or commuting problems.

Consider this scenario. During the California recession, the value of condominiums declined faster, dropped further and recovered slower than traditional single-family dwellings. This should not be the case. Condominiums and Common Interest Development homes should be on an equivalent par with the values of single-family homes. But they are not. However, when they are, certain deteriorated sections of cities could be dramatically improved by the development of new condominium complexes. For now, when areas become run down owners will convert a home into an apartment or duplex depending on what the city code may permit. But these changes do not and will not make the improvements necessary to turn a significant area around. However, if the value of community style dwellings was reasonably assured as is the case with other single family homes, City Councils would take several blocks of the city at a time and change the zoning to accommodate community housing. Developers would build condominiums in these areas if they were reasonable certain they could make a suitable return on their investment. Potential buyers would not hesitate to buy and live in such a community because they would be reasonably certain that the value of their property would increase in a like manner as that of other residences. And when the property was sold, the owner could be relatively certain they would receive the same selling advantages and return as any other homeowner. Moreover, homebuyers would not be afraid to buy a condominium in the inner cities and in closer proximity to their employment. Thereby, substantially reducing their commute time, which in turn would reduce traffic on city streets and freeways. And when relocating, for example in the event of a change in employment, a condominium owner would find it easier to move from one community to another and from one condominium to another than from one house to another house. This would all be made possible because the value and enjoyment of the property would be equally assured for a condominium as it is for a single-family home.

The management of the condominiums plays a very significant role in the above scenario. It is my belief that when the quality of management increases to a reliable and requisite level, the value and enjoyment of the Common Interest Developments will also increase and the full potential of condominium living can be realized. It is therefore imperative that the managers of the associations are properly educated, trained, experienced and as evidence that they have been, they should be properly licensed.

To exempt anyone from this requirement is to circumvent the whole purpose of this legislation and to destine the industry to repeat its history. So what would be gained? Without proper legal requirements, property managers will simply migrate in the direction that appears to be the easiest, in this case and at this time that will be to the California Association of Community Managers and the Community Association Institute (CAI). Their ranks will grow, this they are counting on, but the industry will suffer. There is certainly a viable place for the California Association of Community Managers and CAI in this industry. But the licensing of property managers is the responsible of the State of California and no one else.

Respectfully Submitted

Richard S. Monson,
President of:
The California Association of
Homeowners Associations, Inc.