Community manager law amended before it formally takes effect
June 3, 2015
My July 2, 2013, column discussed landmark legislation under which community managers became licensed in Colorado for the first time starting Jan. 1 of this year. While the law is technically already in effect, the administrative rules implementing the law will not take effect until July 1. At the end of this past May, not long before the official implementation of the rules, the legislature passed an amendment to the original law, known as House Bill 15-1343. The amendment prompted the regulatory agency to revise the rules quickly. This article discusses the changes made by the amendment and new rules.
• Changes to definition of what constitutes community management.
The original law indicated that a "community association manager" is a person who performs one or more designated tasks for an HOA. The amendment revises the list of tasks to more narrowly tailor them and indicates that a community association manager is a person who performs even one of the tasks. The changes are subtle and appear primarily designed to ensure that the law is not mistakenly applied where not intended. To the extent that a person is truly involved in community association management, such a person was already covered by the original law and is equally covered by the amendment. In other words, the changes to the definition will have no apparent impact on those whom the law already clearly governed.
• Exemption for executives.
The original law required the chief executive officer and other executives of a business that employs community managers to hold a manager license. The amendment does away with this requirement, meaning that such executives need not be licensed. The practical effect of this change appears to be that a person may own or manage a community management company without holding a manager license — so long as the company has a designated manager (as discussed below).
• Different levels of licensure.
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The amendment introduces two new types of license. One is an "apprentice," meaning a person under the direct control and supervision of a licensed manager who is licensed for the purpose of learning and performing practices that require a full-manager license. An apprentice must submit a complete license application but need not comply with the education and examination requirements.
The other is a "provisional license" given to a person who has not yet passed the required examination. A provisional license expires Dec. 31. This appears to be a short-term fix for persons who may be struggling to pass the examination.
The amendment also formally adopts the concept of a "designated manager," which already existed under the administrative rules. Basically, a designated manager is the person responsible for performing a management company's community management functions. The new rules require every licensed entity to designate a designated manager (who may not hold an apprentice or provisional license). The concept of a designated manager allows businesses to engage in activities besides community management without everyone in the enterprise requiring a license.
• Examination requirements.
The original law required applicants for manager licenses to obtain certain credentials from designated third-party educators and pass an examination (among other requirements). The amendment and new rules provide that the examination consists of a "general portion" and a "Colorado portion." A passing score on the examination is good for only one year. Licensed managers who keep their credentials current need only sit for the Colorado portion of the exam from year to year, while licensed managers who allow their credentials to lapse must also take the general portion from year to year. Licensees will have to decide for themselves if it's less onerous to maintain the credentials or take the full exam.
In sum, the amendment tweaks the original law rather than overhauling it. The full impact of the new licensing regime remains to be seen.
Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado. He may be reached at 970-468-4953 or Noah@TheKlugLawFirm.com.
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