Commenter:
Community Associations Insitute and NBC-CAM
Comments of the Community Associations Institute and NBC-CAM
18 VAC 48-50-10. Definitions
The emergency regulations define a “Firm” for purposes of the code
“Firm” means a sole proprietorship, association, partnership, corporation, limited liability company, limited liability partnership, or any other form of business organization recognized under the laws of the Commonwealth of Virginia…”
Comment
CAI has received several questions regarding the inclusion of the word “association” in the definition of “Firm”. From the context of enumerated entities, a reader could infer that the association mentioned in the list of entities refers to some form of business association. However, due to the nature of the industry being regulated by this act, and the fact that community association managers are often hired directly by a community association, we feel that more clarity should be provided as to the Board’s intent regarding the use of the word “association” in this context.
Per the terms of the Act in § 54.1-2347 A(2), Professional Community Association Managers who are direct employees of an association are exempt from the licensing requirements. The inclusion of “association” in the definition of firm, without a property modifier, creates confusion and may lead community associations to believe that they are required to hold a license if they directly employ a community association manager.
18VAC48-50-30. Qualifications for Licensure.
Section D: The applicant shall submit evidence of a blanket fidelity bond or employee dishonesty insurance policy in accordance with § 54.1-2346(D) of the Code of Virginia. Proof of current bond or insurance policy must be submitted in order to obtain or renew the license. The bond or insurance policy must be in force no later than the effective date of the license and shall remain in effect through date of expiration of the license.
Comment
The regulation states proof of current bond or insurance must be submitted and must remain in effect through the date of expiration of the license. The application requires proof of the expiration date. The standard blanket fidelity bond or employee dishonesty insurance policy is issued on an annual basis. Insurance companies require renewal annually so they may assess the risk of the firm being insured. It is challenging for a community management firm to obtain multi-year policies due to the required annual risk assessment by the underwriters. Furthermore, most community management firms have had policies in place prior to the implementation of the licensure program. Therefore, the renewal date of the bond policy may not coincide with the expiration of the community manager license.
We recommend proof of insurance be required as part of the application process and interpret the regulations to intend that firms are required to hold an active policy throughout the life of the license. If there is a change to the status, that would be covered by the notice requirement under 18 VAC 48-50-520. Maintenance of license.
18 VAC 48-50-30: Qualifications for Licensure
Section G: Provide all relevant information about the firm, the responsible person, and any of the principles of the firm for the past seven years prior to application on any outstanding, past-due debts and judgments; outstanding tax obligations; defaults on bonds; or pending or past bankruptcies…
Comment
Is it the intent of the Board that a firm and its principle(s) disclose any and all past due debts (phone bills, shipping charges, etc.) that occurred at any time during the past seven years? Or, as is more likely, does the Board intend that firms and principles disclose any outstanding and currently past due debts?
While recognizing the importance of enabling the Department to conduct due diligence related to a firms operations, the broad scope of this request is such that it could conceivably require the disclosure of a past due, personal cell phone bill that has since been rectified. CAI recommends that this request either limit the scope of the data requested by providing a date range (e.g.- any “any outstanding debt more than 90 days past due”) or limit the request to any “currently outstanding or past due debt.” Focusing this request will allow the Board to uncover any patterns of questionable business practices, but would limit the probability of creating a large pool of technically noncompliant firms who were merely 30 days late, six years ago on a vendor bill.
18 VAC 48-50-30. Qualifications for Licensure.
Section I: In lieu of the provisions of subsection H, applicants who are unable to meet the requirements for designation as an Accredited Association Management Company by the Community Associations Institute may be licensed provided the applicant submits proof to the board that the applicant has at least one full-time supervisory employee or officer involved in all aspects of the management services offered and provided by the firm, and a majority of persons in a supervisory capacity meets one of the following:
Comment
The phrase “majority of persons in a supervisory capacity” requires clarification. It could be interpreted that anyone in a supervisory role; including human resources, accounting, marketing, information technology, etc… would be counted as supervisory managers.
We recommend the following:
… a majority of persons in a supervisory capacity of community management services…..
18 VAC 48-50-80 Annual Assessment
Both section §54.1-2349 of the Code of Virginia and section 18 VAC 48-50-80 of the emergency regulations require that the firm submit an annual assessment that is a percentage of the firm’s gross receipts for the preceding year.
Comment
Due to the location of many of Virginia’s population centers, specifically the Tidewater area, the northern communities, and even parts of the Southwest, many firms engaged in the practice of community associations work in multiple jurisdictions.
Is it the intent of the Act and the regulations that firms should be assessed a portion of their gross receipts that they accrue from business outside the jurisdiction of the Virginia?
As the benefits of the regulator regime will flow to the residents and businesses within the Commonwealth, and the board’s jurisdiction does not extend beyond Virginia, it would be equitable to limit to assessment collected under the Act to the gross receipts collected by the firm for community management operations within the Commonwealth only.
