Draft Regulations for Manager Licensing in Virginia Have Been Issued (7/09)
In 2008, Virginia implemented a statutory based manager certification, management company licensing program. As part of that program, the Common Interest Community Board (CICB) was charged with drafting regulations to clarify and assist with implementation of the new law. On June 22, 2009 the CICB published proposed regulations to provide additional clarification to the state’s licensure requirements. Once finalized, these regulations will become part of the permanent regulatory requirements governing licensing, replacing the initial set of emergency regulations. CAI, on behalf of its members, will submit comments on these regulations. Interested members are encouraged to review the proposed regulations and to submit any comments to CAI.
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Virginia's Common Interest Community Board (CICB) has released the application for provisional licenses for common-interest community management firms operating in the state. Firms falling under Virginia's manager licensing law must complete and return the now available CIC Manager Provisional App (application) to the CICB no later than December 31, 2008. CAI's guidance and resources, including a Virginia Manager Licensing FAQ, are posted. 11/08
Virginia's Common Interest Community Board appointees have been named, and the Board's first meeting is scheduled for September 4, 2008. Read more... 8/08
Virginia's professional community association managers licensing bill, HB 516 (Chapter 851), was approved by Governor Kaine on 4/23/08, and is effective July 1, 2008.
VIRGINIA LICENSING FAQ
November 13, 2008
What does the Virginia licensing law require?
The Virginia manager licensing law was passed by the Virginia legislature and enacted into law on July 1, 2008. The law requires that any person or entity engaged in community management services in Virginia to acquire a license and for certain managers within those companies to be certified.
Who is required to hold a license under Virginia law?
Under the Virginia Code, any company engaged in common interest community management services must be licensed to do Virginia. A company or firm is defined as any sole proprietorship, association, partnership, corporation, Limited Liability Company, limited liability partnership or any other form of business organization recognized under the laws of Virginia.
Who is not covered by the license law?
Any person performing community management services as an unpaid volunteer, employee of a licensed manager, a direct employee of an association, a receiver or trustee in a bankruptcy proceeding, an attorney or accountant providing professional services related to their field, timeshare agents/exchange companies. The complete list of exemptions may be found under section 54.1-2347 of the Act.
What does Virginia consider management services for the purposes of licensing?
According to the law, "management services" means any of the following activities:
- Acting with the authority of an association in its business, legal, financial, or other transactions with association members and non members.
- Executing the resolutions and decisions of an association or with the authority of the association, enforcing the rights of the association secured by statute, contract, covenant, rule or bylaw.
- Collecting, disbursing, or otherwise exercising domain or control of money or other property belonging to an association.
- Preparing budgets, financial statements, or other financial reports for an association.
- Arranging, conducting or coordinating meetings of an association or the governing body of an association.
- Negotiating contracts or otherwise coordinating or arranging for services or the purchase of property and goods for or on behalf of an association
OR
- Offering or soliciting to perform any of the aforesaid acts or serves on behalf of an association.
What is required of my company at this time?
Community management firms must make application for a provisional license no later than December 31, 2008. Provisional licenses will be valid until June 30, 2011.
Section 543.1-2346 F the statute requires that community management firms "make an application" for a provisional license prior to January 1, 2008. As it is unclear what the clause "make an application" means in this context, CAI advises applicants to assume that the CICB will require provisional license applications to be received in their office no later than December 31, 2008.
What information is required on the provisional licensing application?
The provisional licensing CIC Manager Provisional App (application) requires detailed information and disclosures by companies. These disclosures include:
- Business name and trade/fictitious name
- Company address and contact information
- Evidence of blanket fidelity bond or employee dishonesty insurance
- Information on a designated responsible person
- A list of the firm's principals
- Disclosure of licenses in other states and jurisdictions
- Disclosure of any felony, misdemeanor or disciplinary actions against the firm, principals or responsible person.
- Disclosure of any outstanding past due debts, defaults, bonds, tax obligations, or pending or past bankruptcies.
- Payment of a $250 application fee
- A $25 payment to the recovery fund
- Payment of an annual assessment fee of 0.02% of manager's gross receipts or $1,000 whichever is less.
What additional requirements may impact my provisional license application?
Corporate filings:
All corporations and limited liability companies (including out of state firms) that conduct business in Virginia must register with the Virginia State Corporation Commission prior to applying for license.
For non-corporate business entities that are trading under a fictitious name, a copy of a certificate filed with the clerk of the court in the jurisdiction where business is being conducted is required as an attachment to the provisional license application.
Fidelity bonding or employee dishonesty insurance
As part of the provisional licensing application, companies must submit evidence of either a blanket fidelity bond or an employee dishonesty insurance policy.
The bond or insurance policy must provide coverage in the amount of either $2 million or the aggregate amount of the operating and reserve balances of all associations under the control of the community manager during the prior fiscal year. Firms may choose the lesser of these two options.
When is the application for provisional licenses due?
Section 543.1-2346 F the statute requires that community management firms "make an application" for a provisional license prior to January 1, 2008. As it is unclear what the clause "make an application" means in this context, CAI advises applicants to assume that the CICB will require provisional license applications to be received in its office no later than December 31, 2008.
CAI has sent the CICB a letter of inquiry asking for clarification on this matter.
When can I expect a confirmation or follow up on my application?
Applicants will be notified within 30 days if the Board deems the application is incomplete. Firms will have 12 months to correct any deficiencies in the application.
What happens if I do not obtain a provisional license?
If a community management firm does not apply for a provisional license by January 1, 2009, it will not be able to legally manage community associations in Virginia and will be required to comply with the full licensing requirements.
The full licensing requirements, which become effective January 1, 2009. The requirements include:
- Companies must hold an active Accredited Association Management Company (AAMC) credential from Community Associations Institute (CAI).
- Applicants unable to meet the requirements of an AAMC may be licensed by the CICB provided they submit proof that at least one full-time employee or officer involved in all aspects of services offered by the firm and a majority of persons in a supervisory capacity meets one of the following:
- Holds an active Professional Community Association Manager (PCAM) designation plus proof of active community management in the past 12 months.
- Is a Certified Manager of Community Associations (CMCA) from the National Board of Certification for Community Association Managers (NBC-CAM) plus proof of five (5) years community management experience, 12 months of which must immediately precede the application filing.
- Is a designated Association Management Specialist (AMS) and provides proof of five (5) years of community management service 12 months of which must immediately precede the application.
- Has completed a training program and certifying examination approved by the CICB.
How long is my provisional license good for?
Provisional licenses will expire June 30, 2011.
What will be the requirements for my company after my provisional license expires in 2011?
When a covered firm's provisional license expires in 2011, it will be required to be in full compliance with licensing requirements. This will require that:
- Companies must hold an active Accredited Association Management Company (AAMC) credential from Community Associations Institute (CAI).
- Applicants unable to meet the requirements of an AAMC may be licensed by the CICB provided they submit proof that
- At least one full-time employee or officer involved in all aspects of services offered by the firm and a majority of persons in a supervisory capacity meets one of the following:
- Holds an active Professional Community Association Manager (PCAM) designation plus proof of active community management in the past 12 months.
- Is a Certified Manager of Community Associations (CMCA) from the National Board of Certification for Community Managers (NBC-CAM) plus proof of five (5) years community management experience 12 months of which must immediately precede the application.
- Is a designated Association Management Specialist (AMS) and provides proof of five (5) years of community management service 12 months of which must immediately precede the application.
- Has completed a training program and certifying examination approved by the Common Interest Community Board.
- Companies must carry a blanket fidelity bond or an employee dishonesty insurance policy. Bond insurance policy must provide coverage in the amount of either $2 million or the aggregate amount of the operating and reserve balances of all associations under the control of the common interest community manager during the prior fiscal year. Firms may choose the lesser of these two options.
Who is required to have a certification under the act?
In addition to requiring a company to hold a license, the law also requires that certain managers within the firm carry a certification. Section 54.1-2349(A)(3) requires that the CICB ensure certification of "managers who have principle responsibility for management services provided to a common interest community or who have supervisory responsibility for employees who participate directly in the provision of management services to a common interest community."
Such certification can include:
- A Certified Manager of Community Associations (CMCA) issued by the National Board of Certification for Community Association Managers (NBC-CAM).
- An Association Management Specialist (AMS) designation issued by the Community Associations Institute (CAI).
- A Professional Community Association Manager (PCAM) designation issued by the Community Associations Institute (CAI).
- The successful completion of another CICB approved training program and certifying examination
OR
- Successful completion of a Virginia testing program.
Critical Dates:
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November 13, 2008 |
Provisional license applications released |
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December 2, 2008 |
Meeting of the CICB in Richmond. Public comments being accepted regarding emergency (temporary regulations) |
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December 31, 2008 |
Provisional applications must be received by the CICB |
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January 1, 2009 |
Full licensing requirements effective for those without provisional licenses |
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February 1, 2009 |
CICB deadline for notifying provisional licensing applicants of deficiencies in applications |
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June 30, 2011 |
Provisional licenses expire |
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Where can I find additional information on the Virginia law and compliance?
CAI and NBC-CAM Resources to Help with This New Law
CAI and NBC-CAM are preparing grandfather programs and discount programs for educational courses, designation, and certification fees to make it easy and less expensive for CAI members and CMCAs to obtain their Virginia license.
We are working with our network of insurance agents to advise them of the new requirements, and will work with them to offer the appropriate coverage to fulfill the bonding requirement of the licensure program.
Other Provisions
The law implementing manager licensing also contains other provisions beyond manager licensing. Some of the key provisions are below.
What does the new law mean for Associations?
- Common interest communities subject to the new law include Property Owners' Associations, Condominium Associations, and Cooperative Associations. If your community has a governing body, collects mandatory assessments, and maintains common areas (such as a lake or playground), it likely falls under the new law.
- In addition to the existing annual report requirement and fee, Associations must pay an annual assessment of 0.02 percent of their annual gross assessment income, plus a one-time $25 assessment to finance the Recovery Fund.
- Property Owners Associations and Condominium Associations must obtain a blanket fidelity bond/employee dishonesty insurance policy (minimum coverage of $10,000; $1 million maximum).
- Associations must provide documents and records to the Ombudsman upon request, in order to assist members with using the complaint process.
- Associations must establish reasonable procedures for resolution of written complaints, including:
- Maintaining records of each complaint for at least one year after acting on complaint;
- Providing complaint forms/written procedures to individuals wishing to file written complaints; and
- Informing Association members of their right to file a Notice of Adverse Decision with the Ombudsman.
What is the Common Interest Community Board and what will it do?
- Common Interest Community (CIC) Board is composed of 11 members appointed by the Governor:
- 3 CIC Managers;
- 1 attorney who represents Associations;
- 1 Certified Public Accountant (CPA) who provides services to Associations;
- 1 timeshare industry representative;
- 2 developers of Associations; and
- 3 citizens (one who serves on Association governing body and two Association residents).
- CIC Board promulgates regulations, in accordance with Administrative Process Act, to:
- Establish fees, procedures and qualifications for licensure;
- Establish educational and training criteria for licensure and certification; and
- Establish standards of conduct for licensees.
- CIC Board may not intervene in the internal activities of Associations, unless necessary to prevent or remedy violations of regulatory requirements or statutes.
- CIC Board is authorized to bring suit and intervene in court actions where it appears an Association or Manager has violated Board regulations or statutes governing common interest communities (Property Owners' Association Act, Condominium Act, Cooperative Act, or Timeshare Act). CIC Board also may issue cease-and-desist orders against Association governing bodies.
- CIC Board may impose a monetary penalty of up to $1,000 per violation against any person or firm—licensed or unlicensed—who violates its statutes or regulations. Before issuing any monetary penalty, the CIC Board must grant the person or firm the opportunity for a hearing pursuant to the Administrative Process Act.
- CIC Board enforces its own statutes and regulations, except in the case of real estate licensees who also are licensed as CIC Managers. The Virginia Real Estate Board will retain enforcement jurisdiction over licensed real estate brokers/salespersons who are simultaneously licensed as CIC Managers.
- CIC Board promotes research on CIC topics and supports seminars and educational programs designed to improve understanding about Associations.
What will the Ombudsman do?
- Assist individuals in understanding and exercising their rights in resolving issues with their Associations.
- Receive complaints—Notices of Adverse Decision—from individuals who allege an Association governing body violated legal requirements (statutes, regulations, or Association governing documents). Notices must be filed within 30 days of the final adverse decision, must be submitted in writing on Board forms, must include supporting documentation, and must include a $25 filing fee (CIC Board may waive for demonstrated hardship).
- Maintain data on inquiries, requests for assistance, complaint notices, and resolution of disputes.
- Issue non-binding explanations of laws and regulations governing Associations. In addition, DPOR Director may determine whether an Association's final adverse decision complies or conflicts with legal requirements—such Director's determination is final but non-binding.
- Offer referrals to alternative dispute resolution services.
What is a Receiver? What is the Recovery Fund?
- CIC Board may petition the court to appoint a receiver if a CIC Manager appears unable to discharge its fiduciary responsibilities to an Association. Court-appointed receiver may take action to protect Association interests, including exercising control of all bank accounts. CIC Board also may petition court for an injunction to prohibit CIC Manager from withdrawing association monies or disposing of association assets.
- The Common Interest Community Management Recovery Fund is a trust fund used to pay court-appointed receivers and to restore Association monies in the event a CIC Manager fails to discharge its fiduciary responsibilities.
- The Recovery Fund is financed by $25 from each licensed CIC Manager upon initial licensure, plus $25 paid once from Associations. The law requires a minimum Fund balance of $150,000 by July 1, 2011. If necessary to meet the minimum balance requirements, the CIC Board may impose special assessments on each Association and licensed CIC Manager.