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Condo talk: Community association managers must be licensed

The Community Association Manager Licensing and Disciplinary Act requires managers of community associations to be licensed. The law is intended to ensure those who say they possess professional qualifications to provide community association management services are, in fact, qualified professionals, and to provide for high standards of professional conduct by licensed managers.

On Oct. 1, it will become unlawful to manage a community association in Illinois without a license issued by the Department of Financial and Professional Regulation. There is an exception for the management of a community association of 10 or fewer units.

A community association manager is an individual who, for compensation, administers the financial, administrative, maintenance or other duties for a community association. These services include collecting, controlling or disbursing funds of the association or having authority do so; preparing budgets or other financial documents for the association; assisting in the conduct of association meetings; and administering association contracts.

This does not include support staff, such as bookkeepers, administrative assistants, secretaries, property inspectors, or customer service representatives, who do not have to be licensed.

There are several qualifications for licensure. Among them:

Ÿ The applicant must be at least 21 years old.

Ÿ Twenty classroom hours in community association management is required, unless the person has a real estate broker or salesperson license.

Ÿ The candidate must pass one of the following exams: National Board of Certification for Community Association Managers (NBC-CAM), Certified Manager of Community Associations (CMCA) examination, or Institute of Real Estate Management (IREM) Common Interest Developments: managing Condominium Association Properties (CID201).

The candidate must not have committed any violations of the licensing law, and must have good moral character.

Ÿ Convictions for crimes, other than felonies, will be taken into consideration but are not a ban; however, one cannot have any conviction for a felony.

There is a grandfather clause, important to current property managers, that provides for the initial education requirement and test to be waived if the manager has practiced as a community association manager for five of the last 10 years, or achieved a specified designation from Community Associations Institute or the Institute of Real Estate Management. However, this grandfather method of licensure is only available through March 31, so managers who qualify need to submit their applications soon!

Licenses will have to be renewed periodically. The first renewal period for licensure will be Aug. 31, 2013. After that, licenses will expire Aug. 31 of odd-numbered years. The law states regulations may be adopted to address continuing education requirements. The regulations to date have not covered this seemingly important topic, so hopefully that will be the focus of some attention.

The licensing act imposes many financial requirements on community association managers (or the management company for whom they work). The manager may not have access to and disburse association funds unless several conditions are met: fidelity insurance must be in place to insure against loss or theft of funds, and the insurance must be in an amount no less than the amount of all monies under the control of the manager. Unless a different agreement is entered, the association pays the cost of this fidelity insurance. A manager must maintain separate, segregated accounts for each community association. However, funds of associations can be co-mingled with each other, with the consent of the associations, if the manager separately accounts for the funds of each association. In no event can funds of any association be co-mingled with the manager’s personal funds.

The law has some teeth and creates a statewide disciplinary board that consists of seven members, five of whom are property managers. This board can discipline a manager for a number of reasons; there are 27 reasons in the law (e.g., commingling of funds, theft, gross negligence, kickbacks). Discipline includes refusal to issue or renew a license, or suspension or revocation of a license, and may include a fine not to exceed $10,000. Complaints are made to the Illinois Department of Financial and Professional Regulation.

Because of the economic slowdown in the real estate industry, many qualified individuals are entering the community association property management business in Illinois. However, there are a number of upstarts from whom the public will be better protected now that manager licensing is required.

For more information, visit www.idfpr.com/profs/info/cam.asp.

Ÿ David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.

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