Licensing Property Managers Will This be The Year?

Licensing Property Managers

Over the past decade, numerous pieces of legislation have been introduced at the state and city levels calling for the licensing of property managers in New York State. None have been passed, but a new bill, S279 sponsored by New York State Senator Carl Kruger, (D-Brooklyn) is now in the judiciary committee. Kruger spoke at a meeting of the New York Association of Realty Managers (NYARM) early this year, asserting that 2001 was the year this legislation could finally prevail and “put the indicia of professionalism on this industry.” The bill stipulates that residential property managers bring to the job a standardized level of education and knowledge, as well as practical, applied experience. Donna Klein, the executive director of NYARM, describes how the bill would raise the level of respect for property management, as well as the quality of service: “The people that populate this industry are professionals. They deal with licensed people on a daily basis—electricians, plumbers, elevator contractors, waterproofers, people that are in their professions are licensed by the state of New York. Not only does this prove their competence to the public, but because they are licensed, they are held to a higher standard than those that would populate an industry with lesser quality. We want the same respect that all these other professionals get within this industry. We know you can’t legislate morality, but when you’re held to a certain standard, and your license is involved if you break that standard or break the law, it sometimes makes someone stop and think.”

Marc Broxmeyer, a principal of The Bellmarc Companies, a full-service real estate firm based in Manhattan, says, “The Department of State has done a really good job of licensing sales people, and I think that does set a benchmark on standards. They also have the ability to do background checks on people, which provides a kind of weeding-out process of people coming into the industry.”

Blocked by Partisan Politics

For now, the bill still has to get out of committee. The general industry consensus seems to be that the bill has stalled in committee because it’s a Democrat-sponsored bill in a Republican-majority Senate. To circumvent the situation, Senator Kruger has offered to remove his name and allow the bill to be sponsored by a Republican. Legislative aide Patty Pirog reports that so far there have been no takers, although she’s hoping that will change.

When asked if there was anything other than partisan politics holding up the bill, P. Leonard Jones, president of NYARM, replied, “That’s a good question. I don’t believe there’s anything beyond that.” He says that while some management companies do feel that licensing would add expense to their management contracts with housing companies, and others feel secure in what they’re doing and don’t think they need to do any more, many management companies do support the bill.
Greg Carlson, executive director of the Federation of New York Housing Cooperatives, who is also a NYARM board member, president of the Registered in Apartment Management (RAM) board, and the chairman of the Registered Cooperative Manager (RCA) program, supports licensing legislation because, he says, “I get a lot of calls from board members who complain about either their managing agent and/or their management company and they say, ‘Where can I complain?’ And there’s nowhere to complain unless the agent is doing something criminal. But in the case of negligence, or where they’re just doing a sloppy managing agent’s job or some questionable things, there’s only one place to address this. That’s if that particular management company has a broker’s license; then you can go to the Department of State licensing department and make a complaint against the broker’s license.” However, although property managers are required to have a brokerage license under Article 12, the law dealing with the licensing of real estate brokers and salespeople, Carlson says, “I would guesstimate that half of [agents] don’t even have [a broker’s license], so there’s nowhere for a board to go to unless there’s something they can take to either the attorney general or the district attorney.”
Carlson continues, “I happen to think this will benefit the industry as a whole. I’m very much into having property managers elevate themselves to a professional level, and licensing would be one way to do so.”
Toward this end, and to help get the bill out of committee, during his address to NYARM, Senator Kruger encouraged all management companies to write to Senator James Lack, the Judiciary Committee Chair, and to Senator Joseph Bruno, the Senate Majority Leader, requesting that bill S279 be released. Aides in the offices of both Lack and Bruno, however, indicated that incoming mail on the issue has been sparse. Politicians and real estate groups working to get the bill passed all agree on one thing: if partisan politicking is the main stumbling block for this legislation, it is imperative that private citizens unhappy with the current lack of standards within the management industry write or call their legislators and put pressure on them to move the bill along, regardless of political affiliation.

Redundant Licensing?

According to Marolyn Davenport, senior vice president in charge of regulatory affairs for the Real Estate Board of New York (REBNY), her group generally opposes the licensing of property managers because managers are already required to have a brokerage license. “The way the law reads is the reason it’s not 100 percent clear; it reads that you must have a license to collect rent. It was written for the days when there were actual rent collectors who went door to door, but when you manage either a rental building or a cooperative where there’s a proprietary lease, you are in fact collecting rent,” she explains. “Licensed brokers have taken substantial courses which include the law of agency, fiduciary responsibility and a property management segment, which is a substantial segment. Beyond that, we really think it is terrific if people want to take courses in the various accreditation programs that enhance their skills and knowledge, but we don’t think there should be a requirement,” Davenport says.

Broxmeyer says that a lot of property managers are not involved in collecting rent and have therefore not gotten licenses. “They’re just managing, taking care of the day-to-day maintenance problems that come up and overseeing the finances,” he explains, “but they’re not actually collecting rent. In most co-ops, the shareholders send the rent directly to the bank. There’s no guy going around collecting rent.”
Rent-collection arguments aside, however, Jones argues that a broker’s license is not sufficient for property management. “There isn’t a lot in common with selling property and then managing it thereafter. They are distinct industries. To get a broker’s license, you certainly know the four corners of a contract for sale, and a lot of other things leading up to the point of closing, but property managers are in it for the long haul and have to know building systems, how they work and how to repair them. They have to know the financial management of the property on a long term basis, the local laws in terms of violations of the property, and many certainly have to have people skills. A salesperson is dealing with a buyer and a seller mainly; to deal with tenants, whether they’re residential or commercial, takes a little different approach. I think that at the end of the day, when you think about it, a broker’s license does not qualify somebody to manage property,” says Jones.

The Value of Accreditation

Although licensing has so far not been required for property managers in New York, there are a number of accreditation programs. These include certifications from NYARM, RAM, RCA, the Institute of Real Estate Managers (IREM), New York City Technical College, the Community Association Institute (CAI), the National Association of Housing Cooperatives (NAHC), and the National Apartment Association (NAA), along with Baruch and Newman Colleges and the New York University Real Estate Institute. Among the different programs, Jones says that there is no standard approach. “Some of the agencies are heavy on the financial side, others are more into theory. NYARM has designed its courses to deal with the practical side of building management—when you leave a class, you can apply what you’ve learned in that class the very next day. If we could get together and come up with a standard educational program for property managers, I think everybody in the industry would benefit.” It is widely agreed that such training is valuable. Should licensing become required, managers with accreditation will have already met most of the qualifications for licensing, although Pirog says there will be a few additional stipulations.

A number of larger firms have their own training programs. Bellmarc, for instance, educates its managers on issues ranging from building finance and mechanics to budgeting. Rapport-building skills to improve communication with boards, as well as a code of ethics for managers, also figure into their course work.

Passing the Bill

As for the desirability of Bill S279, Broxmeyer says he believes that there aren’t enough problems occurring at this point to necessitate a lot of policing. Rather, he feels it’s more about setting the standards of people coming into the industry that’s at issue. “If anything, it brings the industry up,” he explains. “Not just anybody can walk in and manage a building, deal with people’s money and finances. They do have to have certain qualifications.” Jones feels that interest in the bill is increasing, and that there are now more politicians behind it than ever before. “If it doesn’t pass in this session or this year,” he says, “it will two years from now.”

Ms. Goodman is a freelance writer living in Westchester.

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