HOA managers require certification, education

Editor's note: This is the first in a three-part column addressing the management of HOAs and what new laws could help protect homeowners.

Q: With all of the recent news pertaining to the federal investigation of homeowners associations, how does one become a manager of an association? What are the requirements? What is the difference between a community manager, a provisional one and a supervisory one? Are there any requirements for a homeowner who wants to be a director on an association board? Finally, what proposed laws would you recommend that address the underlying issues of this recent HOA sting?

A: Wow! I can see where the answers to your questions will take more than one article. This column, one of three, will address these important issues.

The primary difference between being a community manager, provisional manager and supervising manager pertains to their levels of education and experience.

Community manager needs certificate, Extensive education and training

In order to manage a homeowners association, an individual must obtain a CAM (community associate managers) certificate from the Nevada Real Estate Division, according to Nevada Administrative Code 116 A.110.

This process involves completing an application that includes fingerprinting by law enforcement agencies. Those fingerprints are delivered to the Central Repository for Nevada Records of Criminal History. The candidate also needs to submit a 2-inch-by-2-inch photograph taken within two years and submit a Social Security number. He or she also must complete a statement listing any criminal conventions or court pleas concerning forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, possessing any controlled substance for the purpose of sale or any crime involving moral turpitude.

As you can see, the initial process attempts to prevent applicants with a criminal history from becoming a community manager.

The applicant must submit documentation of employment history for the past 10 years and letters of recommendation and affidavits of employment from association communities or employers in other related fields.

There also is a fee for the certificate. One will not be issued to a person younger than 17.

The division can ask the applicant to submit other pertinent information. It processes the application within 60 days, but can extend the investigation time to another 60 days.

In addition, the applicant must possess the education and experience required by NAC 116 A.120 and NAC 116 A.155. The applicant must have successfully completed at least 60 hours of courses, of which 20 hours must be related to federal, state and local laws that are applicable to the management of homeowners associations. At least two hours are to be related to Americans with Disabilities, Fair Housing and Fair Debt Collection Practices acts. Not less than 18 education hours are to be dedicated to Nevada Revised Statutes 116.

In addition, it is required that applicants complete at least 40 hours in classes covering the legal basics of HOAs and their governing documents, the management of facilities, accounting, contract and the bidding process, parliamentary procedures, management of human resources, inspection and planning for property maintenance, risk management, insurance needs, governmental regulations such as zoning and planning and the Nevada Fair Housing laws.

Other subjects include NRS 118 A, pertaining to the landlord/tenant act of the state, real estate disclosure laws, construction defects, alternative dispute resolution process, corporation law, health and safety and business ethics.

The applicant must provide evidence that he or she has been engaged in the management of associations or has held a management position in a related area for at least 12 months, or at least two of the four years before the date of the application.

The division may ask of the applicant to provide other education and experience the division may deem to be equivalent to these requirements.

The applicant must pass an examination with a minimum passing score of 75 percent, and pay the examination fee.

NAC 116 A.130 and NAC 116 A.135 pertain to the denial of an application and the appeal process for the denial of an application.

Once a certificate is awarded to an applicant, there is a continuing education requirement that must be completed biennially. The certificate holder must complete 18 hours, of which three hours must pertain to NRS 116 and NAC 116 A.

Provisional community manager is similar to an apprentice

There is another certificate, the provisional community manager per NAC 116 A.155. This is similar to an apprentice position. The applicant must complete the same education requirements and pass the test as if he or she was applying for the community manager certificate. The applicant does not have the actual HOA managerial experience. State law allows an applicant to obtain that experience prior to becoming a community manager.

The provisional community manager must be associated with a supervising community manager for a minimum of two years. Within two years after the issuance of this certificate, the applicant must obtain 3,120 hours of active experience in the financial and physical management of an association.

Upon obtaining the two years of active experience in Nevada, a provisional community manager is entitled to act as a community manager if he or she submits to the division a completed and signed statement by the supervising community manager verifying experience. The applicant must also produce a certificate for the 18 hours of continuing education and pay the fee.

Supervising community manager Ranks highest in hoa qualifications

To become a supervising community manager, the manager must first be a community manager. Again, there is an application to be submitted to the Nevada Real Estate Division.

The community manager must have been actively engaged in the full-time management of an association in Nevada, another state or the District of Columbia for at least four years, with at least two of the four years of experience being obtained in Nevada. The applicant must be in good standing with the division, any state or the District of Columbia where she or he is licensed or certified.

The supervising community manager is responsible for the supervision of one or more provisional community managers or community managers. This position also is responsible for determining the competency of these managers and teaching the fundamentals of management and ethics of the profession.

In addition, the supervising community manager is to establish reasonable procedures and safeguards for the filing, storage, handling and maintenance of important documents.

Association Management company owners should be certified

You may have noticed in describing these various certificates, and in particular that of the supervising community manager, there is no specific licensing law for the management company that manages HOAs.

This is a fatal flaw. The law basically delegates the full responsibility of the management and overseeing of the operations to a supervising community manager, who could be an employee of a community management company. The owner of the community management company currently needs no certificate.

For licensed real estate companies, there is a broker of record who represents the company. For companies that wish that manage income-producing properties, in addition to having a broker of record, the real estate company must also have a designated licensee who represents the company. These designated licensees allow the division to control the real estate company.

If there were to be any proposed changes in the licensing laws for community management, there should be one where there is a supervising community manager who is specifically designated to represent the management company in a similar fashion as already established in the law pertaining to property management.

The next article will address the requirements for becoming a member of a board of directors.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759, or she can be reached by email at support@hlrealty.com. Holland is also available to speak at your organization or company.