Mountain Law: Colorado winding down regulation of Community Association Managers (column)
August 21, 2018
Community Association Managers are professional managers of homeowners associations. Once upon a time, CAMs were unregulated in Colorado. Then, in 2012, the state commissioned a study of how to address perceived issues involving HOAs. The study concluded that regulating CAMs would be a good step toward improving accountability in this area. The Legislature then passed a law in 2015 under which CAMs came to be regulated under the department of regulatory agencies along with many other professions. I wrote about this topic in a column titled "HOA managers will soon be regulated for first time" and in other columns since.
Under the CAM law, applicants for a CAM license were required to submit to criminal background checks, obtain certification from an approved trade organization, comply with other educational requirements, have a high school diploma or equivalent, pass an examination and pay a fee. Licensees were also required to maintain insurance for their activities and comply with other regulations promulgated by DORA. In turn, DORA had the power to investigate complaints and discipline licensees as needed.
The CAM law was subject to a "sunset review process," which means it included an automatic repeal date — in this case, July 1. DORA was required to study the performance of the law and submit a report a certain amount of time before the repeal date. The idea was that the Legislature would then review the report and decide whether to pass legislation extending the law and otherwise tinkering with it.
According to this process, DORA submitted its sunset report in October 2017 in which it concluded by making a number of recommendations for changes to the law, one of which was to extend it for another five years (until 2023). A group of state representatives then introduced a bipartisan bill in January 2018 adopting most of the recommendations from the sunset report including, of course, the continuance of the CAM program itself. The bill passed the House, but then died in the finance committee in the Senate. This was a surprise to observers, many of whom expected the bill to sail through the Legislature. The Legislature never revived the bill, so the CAM program is no more.
So what now? DORA has announced that there will be a "wind-up" procedure under which the law will continue for one year from its repeal date, meaning July 1, 2019. During this time, the law will continue to be treated as being in effect. This means that CAMs must still be licensed and comply with all other facets of the program. All CAM licenses will expire effective July 1, 2019. There are many uncertainties around the process, such as what will happen to investigations or discipline of CAMs after the law winds down.
The CAM program wasn't around very long, so it's difficult to say whether it was a success or failure. It seems that most local CAMs took it in stride and jumped through the hoops necessary to obtain licensure. Most of the grumbling I heard by CAMs had to do with the cost of the requisite insurance, although this was often passed along to HOAs. It seemed that HOA boards appreciated the modicum of comfort provided by managers being licensed. However, the CAM program did not seem to result in greater compliance by HOAs with legal requirements or otherwise reduce friction between homeowners and HOAs.
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With the repeal of the CAM law, HOAs should review their management contracts and operating procedures to ensure that they provide adequate protection against matters that were previously addressed by the CAM program (such as insurance requirements). With the CAM experiment ending, it will be interesting to see if the Legislature takes new steps to address HOA issues.
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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