Date of Hearing: April 24, 2001
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Lou Correa, Chair
AB 555 (Dutra) - As Amended: April 5, 2001
SUBJECT : Common interest development managers.
SUMMARY : Creates the Common Interest Development Manager
Registration Act (Act). Specifically, this bill :
1)States that the primary purpose of the Act is to recognize
consistent minimum standards for individuals hired for
compensation as managers of common interest developments
(CIDs), including community apartment projects, planned
developments, condominium projects, and stock cooperatives.
2)Creates the private California Common Interest Development
Manager Registration Council (Council) for the purpose of
registering individuals who meet educational and other
required qualifications for becoming a common interest
development manager as set fourth in the bill.
3)Provides that the Council is made up of six managers with
specified experience plus one attorney with experience in
common interest development law.
4)Requires individuals who act as CID managers to register with
the Council.
5)Provides that, in order to register with the Council,
applicants must satisfy specified educational requirements,
including successfully completing 30 hours of instruction
related to the management of common interest developments.
6)Provides that, in order to renew their CDI registrations for
three-year periods, managers must successfully complete 15
semester hours of continuing education pertaining to CIDs.
7)Permits the Council to charge a fee to applicants to cover the
costs of its duties.
8)Provides that a licensed real estate broker may register with
the Council if the broker has taken a minimum of three
semester units of education pertaining to California law that
relates to managing community associations that own, operate
and maintain common interest developments.
9)Requires active CID managers to be covered by fidelity
insurance sufficient to protect the funds of the community
association.
EXISTING LAW :
1)Permits homeowner associations to form nonprofit mutual
benefit corporations by filing articles of incorporation
(Corporations Code Section 7120).
1)Allows boards of directors to delegate the management of the
activities of the corporation to any person or persons,
management company, or committee, while reserving ultimate
corporate powers with the board of directors (Corporations
Code Section 7210).
1)Includes the Davis-Stirling Common Interest Development Act
that governs all aspects of common interest developments
including, but not limited to, their fiduciary and managerial
responsibilities (Civil Code Section 1350 et seq.).
1)Requires prospective managing agents of common interest
developments to provide a written statement to the board of
directors which must contain information about the managing
agent's business, any relevant licenses held, and any other
professional certifications or designations held, including
that of a professional common interest development manager
(Civil Code Section 1363.1 (a))
1)Defines a "managing agent" as a person or entity who, for
compensation or in expectation of compensation, exercises
control over the assets of a common interest development
(Civil Code Section 1363.1(b)).
FISCAL EFFECT : Unknown
COMMENTS :
Background . There are more than 32,000 CIDs in California,
housing approximately six million people. As part of a CID, the
dwelling's owner/occupants have a common ownership in all or
parts of the development. The operation of the overall
development, such as streets, landscaping, utilities,
recreational facilities, and exterior maintenance, is totally
subject to decisions that are made by the development's
homeowners association (HOA). HOAs also are responsible for
assessing, collecting and expending fees to carry out the
operations of the CID. The responsibilities of HOAs are
prescribed in laws such as the Davis-Stirling Act and the
Corporations Code, as well as the CID's governing documents.
In order to perform the tasks necessary to maintain a CID and
fulfill obligations to its homeowner/members, many HOA boards of
directors hire professional managers. Current law does not
require common interest development managers to meet any
training or education requirements. However, there are
organizations that provide voluntary education programs,
including the California Association of Community Managers
(CACM) and the Community Associations Institute (CAI). CACM
awards a Certificate of Community Associations Manager to its
members, while CAI offers the Professional Community Association
Manager credential.
Purpose of the Bill . According to supporters, the bill seeks to
minimize the mistakes and harms which can occur in CIDs by
requiring managers who are hired for compensation to receive
specified training and education. The accomplishment of this
training would be overseen by a private council of management
professionals, so as to minimize government involvement and cost
to the practitioner. The council would be authorized to prepare
an official registry of managers and assign managers who have
completed their education, a unique registration, which would be
required for them to practice. The council could investigate
complaints about violations of the statute and could remove
their registration.
Concerns with the Bill . Concerns about the bill have been
expressed in connection with the fact that the bill does not
require testing in addition to education. As a result, it is
argued that the bill does not ensure competency. Supporters
respond with the fact that testing will involve significant
costs, and while testing may become an important consideration,
the current bill focuses on establishing education standards,
which logically should precede testing. Concerns also have been
expressed regarding whether or not the bill exempts real estate
licensees from needing to take CID education. The bill appears
to require real estate licensees to take a minimum of three
semester units (in addition to their other required education)
to be able to register with the Council.
Appointing Authority for Council Unclear . The bill does not
appear to identify the appointing authority for the seven member
Council. The Committee may wish to ask the author about his
intentions regarding this issue.
Related Legislation . Last year, AB 1893 (Dutra) proposed a
mechanism for the certification of common interest development
managers, but that bill did not pass the Senate. This year, SB
419 (Torlakson) was introduced with a proposal to study issues
related to the regulation of common interest developments, but
that bill has not moved.
Technical Amendment On page 17, line 30, the "(A)" should be
replaced with "(J)" and the "(1)" should be replaced with "(2)."
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Community Managers (CACM) (sponsor)
Numerous community associations.
Opposition
California Business Properties Association (CBPA)
Analysis Prepared by : Jay Greenwood / B. & P. / (916)
319-3301
