The state of New Jersey licenses or certifies practitioners of a wide range of  professions, from doctors and plumbers to beauticians and irrigation  contractors. Is the management of community associations a profession that  requires licensure?  

 According to the New Jersey task force charged with consideration of this  question, the answer is a resounding “yes.” Consider the profile of a typical mid-size New Jersey community association:  1,000 total residents in 500 townhouse-style units, 200 community parking  spaces, and major amenities that include a pool, a tennis court, a tot lot and  one clubhouse. Add to this the six special committees working under a  five-member volunteer board of directors, all of whom look directly to one  community manager for answers.  

 Responsibility—with a Capital “R”  

 The range of responsibilities shouldered by any proficient community manager on  any average day is mind-boggling. The community manager is the face of the  community, serving as liaison between the board and residents and also as the  contact for all third-party vendors, from state agencies to private contractors  and professionals. Fielding complaints, preparing letters, updating websites is  all in a day’s work. Indeed, just managing resident relations alone is practically a  full-time job.  

 Then, of course, there are the issues: the paint contractor who did not finish  the work on building B, the unavailable parking space for a disabled resident  and the drainage problems on the northeast side. Add to this the surprises: a  fire in one unit, frozen pipes and a flood in another and the overall clubhouse  renovation that is under-funded and half-done. All of it is the manager’s problem.  

 And even this does not tell the whole story. Community associations are  corporations, managing millions of dollars, creating budgets, taking out loans,  procuring and maintaining insurance coverage, and even investing resident  monies. The same manager who so expertly serves as “field engineer” is also expected to be, in many respects, the community’s CFO.  

 Unique Professionals

 “Community managers are unique professionals, different from realtors or brokers” say Andrew Fortin, vice president of Government and Public Affairs at the  Community Associations Institute (CAI). “Managers play a catalytic role in insuring healthy governance, provided they  have the right skill set.”  

 CAI maintains national standard certifications and designations for managers and  is the impetus behind the “grassroots” state-by-state drive to regulate the overall management industry. To date,  community association licensing or certification laws have been adopted in  Alaska, California, Connecticut, the District of Columbia, Florida, Georgia,  Nevada and Virginia. Manager licensing legislation has been proposed in  Colorado, Illinois, North Carolina, and South Carolina. Washington, Oregon and  New Jersey are in advanced discussions to draft legislation. Mary Faith  Radcliffe, a principal with RCP Management in Princeton, New Jersey, chairs the  New Jersey task force studying this legislation.  

 “New Jersey’s task force recommended licensure over certification because licensure carries  more weight with the general public,” says Radcliffe. “Licensure will elevate managers in this profession and will assist clientele in  knowing which managers subscribe to professional standards and ethics.”  

 According to CAI, community associations nationwide collectively manage funds in  operating budgets estimated at $41 billion dollars, with $35 billion more in  reserves and an estimated aggregate home value of $4 trillion and comprising 20  percent of the overall housing stock in America.  

 Why License?

 “It’s surprising we have not been regulated yet,” says Fortin. Some critics of the initiatives for management licensing are wary  of exactly that—inviting “governmental regulation” where there currently is none. CAI’s position is that oversight is responsible and necessary, and better if the  regulation is thoughtfully self-crafted rather than enacted quickly in  emotional response to a high-profile embezzlement case. As Fortin commented, “Do we want the regulation to reflect the knowledge and goals of the people in  the industry or people outside of the industry?”  

 A review of manager licensing laws either pending or adopted include common  features:  

 Defines Community Manager: Generally, anyone who engages in any of the following for compensation is  considered a community association manager: (a) carries out resolutions and  decisions of the governing board; (b) collects or disburses the association’s funds; (c) prepares budgets, financial statements or other financial reports  for a community association; (d) arranges, provides notice of, conducts or  coordinates meetings of a community association or its governing body or (e)  negotiates contracts or arranges for services or the purchase of property or  goods on behalf of the association.  

 Carves out Exemptions: Each of these laws typically has exceptions from the requirement to be  licensed, such as those who provide only ministerial or secretarial services,  or those who may assist a licensed manager in one or more of the foregoing  functions. Real estate brokers are exempted so long as they limit services to  conveyance or rental of real property. Also exempt are certified accountants  acting solely in capacity of accountants as well attorneys performing legal  functions. Court appointed receivers or trustees are also exempt from the  license requirement.  

 Requires Fidelity Insurance: The fidelity insurance must usually be in an amount of not less than $100,000,  be issued by a valid insurance company and be issued to the community  association with management as additional insured;  

 Mandates Continuing Education: At a minimum, the requisite education means successful completion of CAI  designations and certifications and a continuing obligation, which varies by  state, to complete a certain number of course credits within a specified period  of time;  

 Establishes an Oversight Board: These boards usually include a majority of professional managers, an attorney  and a local citizen or two. The boards generally have the power to determine  qualifications and fitness of applicants for licensure, establish educational  and ethical standards, adopt, amend and appeal rules and standards, conduct  investigations and issue, renew, deny, suspend and revoke licenses.  

 Requires Payment of Fees: The fees are for licenses, courses and examination, ranging from $25 to  $150.00 for each for the purposes of funding each state’s implementation of the licensing.  

 Different Approaches

 While most statutes or pending bills contain provisions similar to those  outlined above, there are some critical differences between the states. For  example, Colorado, recognizing the shortage of funds most states face, seeks to  privatize the process by having the National Board of Certification for  Community Association Managers, or NBC-CAM, provide the oversight—not a department of the state as in most other jurisdictions. This delegation  may prove effective for keeping community management regulation in the hands of  the professional community rather than the government.  

 Another distinction between the states relates to whom the obligation for  licensure extends, whether the individual manager as in Nevada or both the  employer management firm and the individual manager as in Florida and Virginia.  Most states, including New Jersey, do not seem to favor licensure of the  management companies in addition to individuals. The rationale in favor of  entity licensing is that licensed management companies could hire unlicensed  individuals to work essentially as managers and circumvent the main thrust of  the law, which is to provide to clients managers who are educated, competent  and accountable to the profession.  

 Even though legislative action committees and task forces across the country  continue to study these details, institutionalizing licensure requirements has  not been the tough sell it once was with industry professionals. Serious  professionals, including community managers themselves, are acknowledging that  with this significant scope of management responsibilities naturally comes a  degree of risk. Reputable management firms also recognize that the unprepared  and ill-trained manager not only harms the community that he or she manages,  but brings disrepute to the entire profession.  

 Most compelling is the argument that for any one community that suffers poor  management, whether willful or negligent, the potential for harm can be  staggering for the hundreds of community residents who have vested their trust  and finances with the association. Despite the considerable skills that a  manager must exhibit to be successful, there are virtually no barriers in New  Jersey to entering an occupation in community management. Where attorneys,  accountants, engineers and others have long been subject to licensing  requirements, it only makes sense that the professional manager should also be  held to high standards of accountability. In short, management licensing is  simply good public policy.  

 J. David Ramsey is an attorney partner in the real estate department and the  chair of the community associations practice group, and Jennifer Loheac, an  associate in the real estate department, at the Woodbridge-based law firm of  Greenbaum Rowe Smith & Davis LLP.