Colorado HOA managers struggling to become licensed

See this article on the home page.

There are over 2 million homeowners in HOAs in Colorado in about 12,000 HOAs. Meanwhile only 336 people have taking the Colorado licening tests; and one in four has failed to pass which leaves about 252 managers eligible to be licensed. This could present a major problem for those HOAs who's manager is not licensed by 7/1/15. The state appears to be addressing this problem in 3 ways: (1) by extending the deadline to 12/31/15 by creating a "provisional license"; (2) by setting up a one year "apprenticeship program"; and (3) by "dumming down" the two licensing tests.

The article states there are 100 questions and 75 must be answered correctly. When I took the 2 tests on 2/14/15 it was required to get atleast 80% correct on each of the two tests! I had no problem passing both tests in 1/3 of the alloted time. My wife who owns our management company, DARCO, got atleast 95% correct on each test. Based on our personal experiences taking the two tests many managers may need to be "weeded out". Removing poor managers was one of the stated objectives for requiring licensure.

Unfortunately, I do not believe passing these two test proves that one will be a good community association manager(CAM). There are many aspects of being a good CAM which can not be tested with a mulitple choice exam. Just like getting good grades and advanced degrees does not qualify one to perform well in their chosen profession.

Your thoughts on this would be appreciated.

It sounds like the test is not really designed to determine who would be a good CAM, but rather to determine a grasp of basic facts. A written test for a drivers license in many states is required even though the written test doesn't actually predict whether someone will be a good driver. You still want the applicant to demonstrate a degree of competence in the basics. Anyone who can't pass a multiple-choice test of basic material is exactly who the test was designed to weed out.

John, the preparers of the two tests were trying to provide reasonable question which would fairly determine the knowledge of persons who want to be licensed. One of the two tests is specific to Colorado and IMO is mainly on CCIOA and the Non-Profit Act. The other test is referred to as a "General" test. This test does have a few questions on Federal laws, such as the Fair Housing Act, the FCC OTARD rule of 1996, and others Federal laws which are applicable to all states. However, there are also questions on maintenance, risk management, accounting, budgeting, and other activities which a manager does on a daily basis. I think it is misleading to state 70% of the questions were on Federal issues when they could have stated General issues rather than Federal issues; since the questions are applicable to all states.

The licensing requirement is good though there is room for improvement. In our high-rise, we have a management company and an on-site manger. The on-site manager we had last year quit his job of 9 years with us rather than take the test. The next one took it, passed and moved to CA. The one we have now is going to take it and is taking classes weekly. Personally, I think this is good. It will add a level of professionalism that was lacking. Its refreshing to hear the guy we have now point out where we have been ignoring the law either intentionally or out of ignorance. In the winter months, since I am retired, I have served as an aide at the General Assembly. The leadership of both parties in CO are really not interested in HOA matters so I am glad we at least got this legislation. That lack of interest is changing though with the new group which took office last year.

Just took the 24 hour class, and the test last week. I thought the test was reasonably difficult and covered the important stuff.
I'm still hustling trying to get it all done in the next three weeks. Just sent my fingerprint card to CBI and have my applications in for E&O and fidelity insurance.

This all took me by surprise, I only became aware of it a couple months ago when one of my board members mentioned that another HOA he is involved with was working on compliance.

I'm not sure how DORA went about notifying all the managers in the state, but they never let me know.

In day to day chat, I've come across a couple mangers in my area that are completely unaware still, and have no intention of becoming licensed. I don't know how CCIOA plans to enforce the rule for those that operate w/o a license.

Many vendors whom we hire are not required to be licensed. The licensing of CAMs (Community Association Managers) is required in Colorado as of 7/1/15 and will have some bumps to iron out for awhile. IMO the required certification and 2 state tests do not, and can not, cover most of the daily operational expertise needed and will not make someone a good CAM. But it definitely educates CAMs on Colorado and federal statutes related to association management. Meanwhile, CAM licensure creates "red tape" and greater expenses for an HOA which utilizes professional management.

Excellent analogy~

Colorado had a requirement for a dishonesty bond that covered me as well as the board of directors.
The E&O is a new requirement and is a coverage I did not have, I own a small construction company and had general liability only.

I manage one 44 unit hoa and had to form a separate business entity to do my management under.
Insurers were not willing to give E and O coverage to a construction company.

The insurance costs will be something I'm hit with every year, as well as license renewal and refresher course. The yearly costs work out to about 10% of my gross revenue for HOA management and will be passed along to the customer.

WillR2, I think policing can only be achieved by providing sufficient funding. I think such funding was defeated when voted on by the Colorado legislature. Thus when a Board choses to make decisions which violates their association Rules or state laws it is difficult to get any government agency to act. In such cases the members could replace the Board members involved. Unfortunately, there is so much apathy that I have only seen this done one time in the past decade. What our management company has done, on one such occasion, is to terminate our management agreement. Meanwhile, a management company must be careful when giving guidance to a Board. I know of one case where the manager was charged with giving legal advice.

Regarding budgets, generally the Board approves the budget with many associations Covenants requiring a percentage of all members approval when the assessment increase is over 5.0%. I have not found it reasonable, from an operations standpoint, to have the association members involved in budget preparation beyond those who are knowledgeable and those members could volunteer to be on a finance committee.

Is there anything in the test concerning saving money?

The reason I ask is that the test has a cost, which gets passed on to the association, so are there savings for a typical association?

Examples might include obtaining bids, avoiding lawsuits, preventive maintenance, etc.