Michelle Green
Michelle Green has worked in the homeowners association management business 15 years. She manages the Flying Horse Homeowners Association as an employee of Hammersmith Management.
It’s more than just a job overseeing enforcement of covenants, collecting dues and hiring maintenance and landscaping crews.
Green has devoted many personal hours and money to taking classes and getting certified, by an industry peer review group, in various aspects of the business.
She’s proven her proficiency at record-keeping, handling financial statements, perusing insurance policies, navigating government regulations of HOAs and more.
In fact, this week she’s mailing in her final exam for grading as she tries to earn certification as a Professional Community Association Manager, or PCAM, from the Community Associations Institute, a nationwide umbrella group for managers like her. Green is a member of the Southern Colorado Chapter of CAI.
Achieving PCAM status is the pinnacle of HOA management.
So it bothers her that a lot of people out there seem to wake up one morning and decide they are HOA managers and start trying to run large associations.
“Anybody can hang a shingle on the door and call themselves a management company with no previous experience,” Green said. “They’ve got the checkbooks for the associations. They are doing the financials. They should be monitored so associations don’t lose money or get embezzled.”
In fact, HOA fraud is problem. I’ve written about several HOAs victimized by crooks posing as managers.
But a more common problem is simple mismanagement by rookies which leads to huge legal and financial disputes within an HOA.
Complaints against HOAs are so widespread the Colorado General Assembly created the HOA Information and Resource Center to get a handle on the nature and seriousness of the problems. See previous blogs about the HOA office.
Aaron Acker, HOA Information Officer, spoke to a group of property managers on Feb. 15, 2011, in Colorado Springs.
After nearly a year of taking calls, Aaron Acker, the state HOA information officer, is preparing a report to be delivered to lawmakers during their 2012 legislative session.
Leaders of the CAI’s Rocky Mountain chapter fear the report to be a less-than-glowing assessment of HOAs. They expect shock and outrage. To minimize the anticipated fallout, they have made a preemptive strike.
Last week, the Colorado chapter of the CAI asked the state Department of Regulatory Agencies, or DORA, to initiate an investigation of HOA managers to determine if it’s time for them to join manicurists, barbers and boxers among the dozens of professions licensed and regulated by the state. Check out the list of all the professions licensed by the state!
Green is all for licensing and regulation.
“It would be beneficial for HOAs and their boards if managers were monitored and licensed,” she said. “Managers are handling thousands of dollars, if not millions. Nail technicians and hair stylists all have licensure. Why should someone managing your homeowners association be any different?”
Good question.
I also spoke to Chris Pacetti, a Denver-area manager who is also chairman of the Rocky Mountain CAI’s manager licensing committee. He says the group asked for the investigation by DORA in advance of Acker’s report.
Pacetti said licensing is not new. Nine states and Washington D.C. have enacted manager licensing or certification standards and seven more states are debating the idea.
His group envisions a two-prong test for managers.
One would test an applicant’s skills and knowledge in managing homeowners associations. The other would test for knowledge of Colorado law regarding HOAs.
They would be similar, Pacetti said, to the tests given for basic certification in the industry.
For example, to reach the first rung on the property manager certification ladder, Green took a two-day course followed by a 100-question multiple-choice test.
Then came the CMCA or Certified Manager of Community Associations exam and another 100 questions. After she logged five years in the industry and passed those two tests, she took the AMS to earn accreditation as an Association Management Specialist.
Now she’s seeking the PMAC.
Green and Pacetti think it’s reasonable to expect every property manager to have a basic education and command of issues before taking the reins of a homeowners association.
But it’s not guaranteed that DORA will agree when it concludes its Sunrise study, likely in 120 days or so.
Attorney Jerry Orten tells me the Legislature studied the issue in 1990 and concluded that new rules were needed to bond managers and protect HOA finances by mandating separate accounts for finances and strict accounting to HOAs of their finances. But lawmakers did not order licensing.
Orten believes licensing would elevate the overall level of servivce to homeowners, resulting in fewer complaints to the new HOA information office.
To recommend licensing managers, DORA must decide the request satisfies three key criteria:
In other words, DORA must find that licensing is needed to protect the health safety and welfare of homeowner, that there is a public need and similar benefit is not available by other means.
Of course, if DORA declines to initiate licensing, individual lawmakers can bypass the agency and simply introduce a bill requiring it.
Stay tuned, HOA fans!
===========================================================
Where HOA membership/dues are mandatory, leaders should be regulated, and held to a prescribed code of conduct.
There is a chasm of comparison between cosmeticians and HOA managers. Cosmeticians of all stripes deal in chemicals that could physically harm a client. HOA managers are in more of a social/financial position, emphasis on the social. If you think HOAs are a good idea, then licensing and regulation would be appropriate. But if you are against HOAs, then attempts to regulate HOA managers only gives governmental legitimacy to a culture that should be eradicated.
It also should be pointed out that CAM-licensed managers rarely are the source of HOA problems. More often, difficulties arising within HOAs are because of inept, self-centered and power-hungry board members.
In its purest sense, the requirement that HOA managers be licensed is a good idea. One that I am not necessarily against. As a Colorado Registered Investment Advisor I am required to comply with a whole host of state and federal regulations. However, so are all of those stock brokers and advisors who were involved with insider trading. Merely requiring one to have a license to drive does not mean that they will not drive while intoxicated, or that a real estate license means that one will be a better agent. It merely means that they have studied for an exam, passed the exam, and are now licensed.
To me, the issue is who will monitor and conduct the policing? Much of the blame for the stock market bubble is being placed upon the Securities and Exchange Commission (SEC). We all know how that has worked out. There is indeed enough blame to go around. A portion of the comments above have validity. HOA managers are often times only as good as the Board of Directors they serve with.
If there were one area in which I believe that the Colorado Common Interest Ownership Act could be improved would be to place civil penalties for non-compliance. A couple of years ago I testified at trial in a case wherein the question arose – Does your HOA have a Mediation Policy? The property manager and their legal counsel went to great lengths to dance around the answer. The answer was “NO”.
Yet, under the Governance Guidelines of the Colorado Common Interest Ownership Act (CCIOA) HOA’s are required to have one. The statute says “SHALL” not “MAY.” And the consequences for not having one? Nothing. Maybe if the HOA did have a valid Mediation Policy, the estimated $15,000.00 (or more) in legal fees over a $136.00 dumpster bill could have been avoided.
So maybe the issue isn’t to add more laws, but to enforce the ones we have and improve them where needed? As to the comment above about having a Code of Conduct, how about full disclosure of business relationships between contractors and management companies? There is a great deal of “Shall” and “Shall Nots” directed toward homeowner association Board Members, what about a Code of Conduct for management companies themselves? A little bit of “Full Disclosure” goes a long way.
In November, 2011, the Colorado Legislative-Action Committee (CLAC) of the Community Associations Institute (CAI) submitted a Sunrise Review application to the Colorado Department of Regulatory Agencies (DORA) requesting a determination as to whether community-association managers should be licensed in our state. The action taken by CLAC was unilateral, done without seeking the input of the general membership, and completely caught the local chapter off guard. Community managers and homeowners were far from unanimous in their support for this type of regulation.
Following a thorough, five-month study and investigation into this issue, and after receiving input from many affected parties, Brian Tobias and the rest of the staff at DORA accurately concluded that an alternative to manager licensing would be more appropriate and effective in the goal of protecting the public. That alternative is regulation of management companies. This conclusion was spot-on, and accurately identified and addressed each of the issues that had been raised by CLAC. In fact, most people outside of CLAC were impressed with DORA’s ability to identify all the problems and devise a solution to minimize them. It is important to note that DORA recommended this regulation instead of manager licensing. DORA felt that manager licensing would not accomplish its goals, but regulation of management companies would.
CLAC had frequently and consistently stated that it would not pursue manager licensing if DORA did not recommend it. Now, however, CLAC disingenuously states that it does not agree with DORA’s findings and will instead pursue manager licensing at a later date, presumably in 2013. Many have called upon CLAC to accept DORA’s report and actively pursue its recommendation of regulation of management companies. This may consist of either licensing or accreditation.
“It is logical to conclude that the best course of action is to regulate management companies” (DORA). In its Sunrise Review, DORA noted that harm can be, and often is, inflicted by management company employees who are not community managers. Therefore, it is reasonable to explore, as an alternative to licensing community managers, regulating management companies. Regulation of management companies would impose greater accountability for back-office functions, such as accounting, banking and reporting. Additionally, any regulation could require management companies to ensure that the property managers they employ are properly trained and that they appropriately advise their boards. All of the types of harm identified by CLAC could be addressed by imposing responsibility on management companies for the people they employ.
“The affirmative obligation to employ qualified people, including, but not limited to community managers, should rest with the management company” (DORA). Management companies are ultimately responsible to their clients for the acts and omissions of all of their employees, including, but not limited to, community managers. Regulation of management companies will provide a clear line of accountability, both to those with whom the management companies contract, and with the regulating entity.
CLAC raises a false concern that regulation of management companies would not apply to individual, independent managers (of which there are few in Colorado), who are not employees of management companies. However, this concern is groundless, as independent mangers could easily be treated a “company” of one for the purposes of any legislation that would create regulation. In fact, the cost to the management company should be based upon the size of the company (i.e., either the number of associations it manages or the number of people it employs). This seems simple enough.
Regardless of what the legislature ultimately decides to do, and in addition to any type of regulation, what is sorely needed is an administrative-hearing process—a type of “HOA court,” if you will—in which problems could be addressed and resolved expeditiously and inexpensively, without the need for hiring attorneys and going to court. Complaints could be brought by any aggrieved party to an HOA dispute, and an independent solution could be reached. If either party is dissatisfied with the outcome, that party would still retain its rights to pursue litigation. However, once the proposed solution has been accepted by the parties, it would be binding upon them. This seems like a reasonable manner in which to resolve disputes within their communities. This is, in the end, what aggrieved homeowners really desire: a chance to have their say, to have someone hear their complaints, and to reach an independent resolution to problems or disputes. Such a process for resolution would break ground and place Colorado squarely in the forefront in the HOA industry. However, it has not occurred to CLAC to recommend or support this type of resolution. We are left to wonder why this is so.