Nope – We’re not your “Property Manager”
By Kati Segar
It is long past time for every Community Association Manager to rethink using the title of “Property Manager” and referring to the profession as “Property Management.” Managing a community association is more involved than “Property Management” and there are differences in the roles.
A “Property Manager” is primarily engaged in renting or leasing real estate and collecting “rent.” Property Managers are licensed in South Carolina through the Department of Labor, Licensing and Regulation, under the jurisdiction of the Real Estate Commission. Their duties are defined below in South Carolina statutes:
SECTION 40-57-20. Valid licensure requirement for real estate brokers, salesmen and property managers. It is unlawful for an individual to act as a real estate broker, real estate salesman, or real estate property manager or to advertise as such without a valid license issued by the department.
SECTION 40-57-30. Definitions.
(11) “Property manager” means an individual who for a fee, salary, commission, or other valuable consideration or who with the intent or expectation of receiving compensation:
(a) negotiates or attempts to negotiate the rental or leasing of real estate or improvements thereon;
(b) lists or offers to list and provide services in connection with the leasing or rental of real estate or improvements thereon;
(c) advertises or otherwise holds himself out to the public as being engaged in any of the foregoing activities.
(12) “Property manager-in-charge” means the property manager who is designated as having the responsibility over the actions of associated property managers and also the responsibility and control over and liability for real estate trust accounts.
SECTION 40-57-100. Educational requirements conditional to application for licensure.
(A) As a condition for and before applying to take a license examination, an applicant for a salesman, broker, or property manager license shall provide proof of having met these educational requirements within the last five years:
(3) For a property manager’s license, completion of thirty hours of classroom instruction in property management principles and practices or evidence submitted to the department of a Juris Doctor, Bachelor of Laws degree, or a baccalaureate degree with a major in real estate from an accredited college or university.
Property Managers are not licensed to perform duties that have to do with Community Association Management or governance. While some may perform certain Community Association Manager duties, those responsibilities are not within the licensure provisions and therefore no claim against their activities as such will be considered.
Currently in South Carolina, Community Association Managers are not required to be licensed unless their responsibilities include leasing and rental activity. This despite their involvement in aspects of the community and owners association (usually as a corporate entity), including commonly held amenities or infrastructure. This article does not debate or discuss the merits and detractions of licensing Community Association Managers; this article’s purpose is to discuss the roles of the two professions.
Property management and community association management are both respectable and important professions but greatly differ in the scope of knowledge and capability.
The Property Manager Role
Typically, Property Managers oversee the day-to-day rental or leasing functions; collecting rents and drawing commissions by showing property. They may also oversee the physical assets of the property, such as recreation centers, gyms and swimming pools. They may perform these services for individual unit owners or for an entity that manages multi-housing properties (apartments that are not owned fee simple). If different owners own units and a manager is responsible for common areas, that aspect of their job is really community management, not property management. Many would argue that the property manager does not possess the proper training or unique talents to do both, and in some cases, may result in a conflict of interest. This overlap is experienced more in associations that allow individuals to lease or rent their units for vacation use by others.
The Community Association Manager
The Community Association Manager’s job is to manage the operations of a nonprofit corporation, which may or may not own or be responsible for real property (commonly-held property). The stakeholders or members of the corporation are the owner members. The members elect Boards of Directors to govern the community on behalf of all members.
Community Association Managers must deal directly with the members of the association and residents within the community to promote a spirit of harmony and cooperation. They have to be aware of state and federal statutes and make sure the governing documents and actions of the Board are not contradictory. Community Managers must know the different options in filing tax returns and adopting appropriate resolutions to minimize the corporation’s task burden. They are the ones called upon to enforce restrictive covenants against the members of associations. These managers are charged with preparing for, coordinating and attending meetings of the membership, the board, and various committees and with being prepared to answer questions of the participants. They review the financial performance of the corporation and give advice about improving income and reducing expenses. Community managers monitor the investment policies of the association and work to make sure that profits are maximized while risk is minimized. They seek insurance proposals and file claims and help out those members who have suffered some insurable loss. They help create newsletters and websites and look for sponsors or advertisers to help fund our community’s communications. The Community Managers are who most members call to answer any question about their home and their neighborhood. Community managers are the ones responsible for the overall success of the community—including the landscape, the roads, the roofs, the swimming pool and the rest of the physical plant.
The community association manager does not need to be a CPA or an attorney or a landscape architect, nor a collection agency or insurance agent, and they are not to make unilateral decisions on community matters (that is the job of the Board of Directors), but they do need to have superb communication skills and a general knowledge base in all of these areas, if for no other reason than to effectively communicate with experts in those fields. Sure property management is part of the job, but only part of the overall management and governance of the association and its owner-members.
Who Cares?
By continuing to call yourselves property managers (unless you are), homeowners and board members are lacking the unique identification that sets forth the multitude of distinctive skills, knowledge and capabilities required to fulfill their needs. To be in the Community Association Management business requires a lot of hard work, effort and pride on the part of the manager. It is important that CAI members set themselves apart from others by using the title of “Community Association Manager.”
What the Future Holds
Property Manager or Community Association Manager may be a very important distinction in the near future for another reason. Numerous states have adopted mandatory licensing procedures and educational requirements for those who manage community associations that differ from those of Property Managers. Ignorance of those laws and crossing over of duties without proper licensing authority can result in stiff sanctions against the offender. Using the title “Community Association Manager” now will define the roles and responsibilities of managers for those needing the services and prepare everyone in the industry for legislative mandates that may come about.
By Kati Segar, Executive Director, SC-Chapter CAI
kati@cai-sc.net