CALIFORNIA ASSOCIATION OF HOMEOWNERS
Licensing California's Condominium Managers
Within the California Community Association Industry there are a great number of issues that need professional attention, leadership and direction. Each Community Association has its own unique problems to be solved. Many matters require the skill and training that is associated with being a licensed professional and having acquired the necessary skills and knowledge to resolve the problems. Licensed professional should acquire this training and these skills during the licensing process.
In many geographic areas in California, community living has developed a negative connotation and suffered a significant decline in property values, a loss in value far greater than that of other residential properties in the same area. Condominiums are also attracting renters in increasing numbers and at a faster rate. These, and many other matters, are of great concerns for the California Association of Homeowners Associations, Inc. It is our objective and intent to help reverse these trends. We have an objective and a plan to accomplish this objective. Licensing California's community managers is a significant priority in our plan.
There are an estimated 50,000 + community associations in California. These associations consist of condominiums, townhomes and single family associations. This is an industry of vast proportions and potential and of great value to the future of California. As homes in the inner cities, built on narrow but deep lots (especially suited for condominium development), grow older and deteriorate the importance of converting these devalued lots to properties of increased future value becomes more and more crucial.
Thousands of condominium units are sold each year. To sell a unit requires a California Real Estate License. However, the State of California requires no license of any kind to manage them. When a condominium unit is sold, the seller and the buyer are represented by licensed real estate agents, professionals in their field. They are supported by brokers, escrow officers, loan offices and others trained and licensed to perform the many specialized functions of selling, buying and transferring title to real property.
No such requirements are imposed upon the condominium manager. Day after day Community Association Managers are commissioned to manage community property. No training, or schooling or experience is a prerequisite. The property manager is often required, and indeed expected, to prepare financial statements using double entry accounting systems and employing generally accepted accounting principles. The condominium manager is required to give expert advice concerning financial matters, annual budget pro forma preparation, reserve analysis interpretation and capital improvement recommendations.
The community manager is expected to protect, preserve and when possible, improve the value of the investment for the unit owner. And because the value of each condominium unit is directly related to the collective condition of all the units comprising the community complex, community managers are expected to have a broad knowledge of landscape maintenance and horticulture. The condominium manager is expected to understand how the irrigation system functions and to make needed repairs or improvements. The appeal of the complex is severely affected by the appearance of the landscape and the landscape is affected by the care that it receives. Therefore, the property manager must have a broad knowledge of plants, shrubs, trees, lawns, weeds and bugs, fertilizers, herbicides, fungicides and how they all relate during different seasons and in varied locations.
The condominium manager is required to have skills in public relations and parliamentary procedure. And since community associations are corporations, the community manager must have a working knowledge of California's Corporations laws, Business and Professions laws, California Civil Codes, the Association's, Covenants, Conditions and Restrictions, Bylaws and Rules and Regulations. The property manager is often called upon to preside over the monthly Board of Directors meeting or the Annual Association Meeting, therefore, a solid knowledge of parliamentary procedure is essential. And when the roof leaks, the property manager is expected to know how it should be fixed and know who should fix it. Real estate agents are not required to possess such a wide range and variety of knowledge. But they are required to have a license, even to rent an apartment.
WHY A REAL ESTATE LICENSE?
A California Real Estate License is urgently needed to strengthen and improve community association management and to provide credibility to the profession. By requiring a real estate license, persons serious about the profession and interested in its future will obtain a license and receive the necessary education and training essential to become a qualified and effective property manager. Today there is "easy" entry into this business. With no license required and management companies not prepared, or able to take the time to train, property managers entering the field are not adequately prepared to assume the vital functions of the property manager. Therefore, property managers come and go very rapidly. Such a rapid turnover is disastrous for this industry. It is easy to understand why. When a property manager attends a meeting of the association or Board of Directors, the manager is expected to possess a certain amount of knowledge and information and experience notwithstanding. When it is discovered by the association or Board that in fact the property manager knows little or no more than they know a hostile environment is created, frustration and anger results. The Board is disappointed and often rude because they are not receiving value for their money nor are they receiving the services they desire and desperately need. The property manager is offended because the association is critical of their performance. The property manager seeks a new field of business and the association receives a new property manager. The cycle starts anew.
FUNCTIONS REQUIRING LICENSE PERFORMED BY PROPERTY MANAGERS
Community Association Managers are often called upon to provide information and render services that require a Real Estate License. For example:
Title Transfers Provide title information to escrow companies transferring property title.
Escrow information Provide title information, financial reports, budget information and discussing matters pertaining to the property affecting the sale such as possible special assessments.
Loan information Provide title and other information for refinancing answer questionnaires from lending institutions that will affect the loan.
Code of Ethics Give direction to Board of Directors regarding fining and assessing units for violation of association's Rules and Regulations.
Trust Accounts Manage association trust funds. While the association must sign the checks, the property manager is often required to transfer funds from one account to another.
Reserve Analysis Prepare and evaluate Reserve Analysis reports.
Sale of Property Property managers are frequently asked information concerning the sale of property and what other units within the complex have sold for.
There are many additional functions presently being performed by property managers that are believed by this organization to require a license.
By requiring property managers to obtain a real estate license and designing the appropriate curriculum to obtain the license, the Department of Real estate will help attract qualified managers that are licensed. The results will be monumental, the industry will be more professional, the property managers more qualified, the Boards of Directors more informed and more effective and the associations professionally managed. Community living becomes more desirable, greater numbers of condominium owners will occupy their units, the number of rental units will decrease and property values will increase. The owners that desire to rent their property will in turn receive a higher rental rate. Is it that easy? Probably not, but this is the right place to start.