18VAC48-50 Common Interest Community Manager Regulations

REGULATIONS

Vol. 25 Iss. 21 - June 22, 2009

TITLE 18. PROFESSIONAL AND OCCUPATIONAL LICENSING

COMMON INTEREST COMMUNITY BOARD

Chapter 50

Proposed Regulation

Title of Regulation: 18VAC48-50. Common Interest Community Manager Regulations (adding 18VAC48-50-10 through 18VAC48-50-290).

Statutory Authority: § 54.1-2349 of the Code of Virginia.

Public Hearing Information:

August 3, 2009 - 10 a.m. - Department of Professional and Occupational Regulation, 9960 Mayland Drive, 2nd Floor, Board Room 1, Richmond, VA

Public Comments: Public comments may be submitted until 5 p.m. on August 21, 2009.

Agency Contact: Trisha Henshaw, Executive Director, Common Interest Community Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone [phone], FAX [phone], or email [e-mail].

Basis: Section 54.1-2349 states in part that the board shall have the power and duty to promulgate regulations to carry out the requirements of Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia. In addition, § 54.1-2349 A 2 states that the board shall establish criteria for the licensing of common interest community managers and § 54.1-2349 A 6 states that the board shall establish standards of conduct for common interest community managers. Section 54.1-201 (5) states in part that regulatory boards shall promulgate regulations in accordance with the Administrative Process Act necessary to assure continued competence, to prevent deceptive or misleading practices by practitioners and to effectively administer the regulatory system administered by the regulatory board. The regulation is mandatory to implement Chapters 851 and 871 of the Acts of the 2008 General Assembly.

Purpose: The new regulation establishes qualifications and standards of practice and conduct for common interest community managers. The new regulation is necessary to implement Chapters 851 and 871 of the Acts of the 2008 General Assembly, which were the result of HB 516 and SB 301. The goal of the regulation is to establish qualifications and standards of practice and conduct for common interest community managers in accordance with HB 516 and SB 301. The General Assembly determined that regulatory oversight of common interest community managers is essential to protect the health, safety, and welfare of the citizens of Virginia. Minimum qualifications for common interest community managers, annual assessment filing requirements, provisional licensure, and the standards of conduct and practice are the general items that will be addressed in the regulations.

Substance: The regulation clarifies requirements found in Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia. The regulation is new in its entirety; therefore, there are no changes to previously existing sections. The regulation defines terms used throughout the regulations; states the application procedures; provides qualifications for licensure of common interest community managers, including bond and insurance requirements, past conviction and financial information submission requirements, and experiential and professional qualifications; lists all fees, including initial application fees, renewal fees, and reinstatement fees; includes annual assessment requirements; establishes standards and requirements for renewal and/or reinstatement of license, including requirement for reinstatement, status of license during reinstatement periods, and the board's discretion regarding denial of licenses; outlines grounds for disciplinary action, license maintenance requirements, client account maintenance and management requirements, requirements for changing a business entity, and notification of the board of adverse actions and prohibited acts; establishes a code of conduct and internal accounting controls in accordance with § 54.1-2346 E of the Code of Virginia; and provides requirements to be approved as a training provider, program curriculum, recordkeeping provisions, reporting, provisions for withdrawal of approval, and examination provisions.

Issues: The primary advantage to the public is that common interest community managers will be regulated to ensure that the health, safety, and welfare of the public, particularly those residing in common interest communities, is protected. The only foreseeable disadvantage is that the increased costs from managers and associations will likely be passed along to association members (i.e., homeowners, unit owners, etc.). The primary advantage to the Commonwealth is that the regulation of common interest community managers reflects the importance that Virginia places on ensuring that those providing management services to associations and their members have met specific minimum requirements for licensure and must maintain certain standards of practice and conduct in order to provide those services.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to § 54.1-2348, the Common Interest Community Board (Board) proposes to promulgate regulations to govern the licensure of common interest community managers. With this regulatory action, the Board proposes to set:

• licensure requirements,

• licensure fees,

• renewal and reinstatement requirements,

• standards of conduct and

• criteria for Board approved training programs and testing.

These proposed regulations will replace emergency regulations that will expire November 12, 2009.

Result of Analysis. There is insufficient information to decide if benefits outweigh costs for these proposed regulations.

Estimated Economic Impact. Until legislation mandated it in 2008, common interest community (CIC) managers were not required to be licensed. The Board has already promulgated emergency regulations to license managers and has, as directed by legislation, issued provisional licenses to all eligible CIC managers. According to Chapter 851 of the 2008 Act of the Assembly, "any person, partnership, corporation, or other entity offering management services to a common interest community on or before December 31, 2008, who makes application for licensure prior to January 1, 2009" is eligible to receive a provisional license which will expire on June 30, 2011. Thereafter, these entities will be subject to the renewal ($100 application fee) and/or reinstatement ($300 application fee) mandates in these proposed regulations. Entities who do not meet the criteria for provisional licensure will be licensed under the provisions for initial licensure ($100 application fee + $25 recovery fund fee).

In order to qualify for initial licensure as a CIC manager, a firm (as defined in the proposed regulations) must:

1. disclose all pertinent identifying information (names under which the firm conducts business, mailing address, physical address, etc.),

2. disclose any felony convictions or pleas of nolo contendere as well as any misdemeanor convictions within the three years immediately preceding application for licensure for the firm, its responsible person and any principals of the firm,

3. submit evidence of a blanket fidelity bond or employee dishonesty insurance policy (in the amounts mandated under § 54.1-2346 (D) of the Code of Virginia),

4. adhere to the standards of conduct in these proposed regulations,

5. be in good standing with any Virginia or other state regulatory entity by which the firm has ever been licensed, certified or registered,

6. designate on individual who will be the "responsible person" for the firm who will be responsible for the firm's compliance with applicable laws and regulations and who will receive any correspondences from the Board, and

7. either hold active certification as an Accredited Association Management Company (AAMC) through the Community Associations Institute (CAI) or meet alternate Board approved criteria.

In order to obtain AAMC certification, a firm must have 1) at least three employees, 2) at least three years of experience providing management services, 3) a senior manager with certification as a Professional Community Association Manager (PCAM) and 4) have a staff of which at least 50% of employees hold some sort of professional manager certification as a Certified Manager of Community Associations (CMCA), a Association Management Specialist (AMS) or a PCAM. In order to gain certification as a CMCA, an individual has to complete approximately 16 hours of training (cost between $345 and $495¹ and pass a test ($300 fee) given through the National Board of Certification for Community Association Managers (NBCCAM). Individuals with CMCA certification can also gain AMS certification by taking an additional training course (cost approximately $400) and pay an application fee of $250. Individuals applying for AMS certification must have at least two years of managerial experience. Individuals who have AMS certification can gain PCAM certification by completing five additional training sessions costing roughly $400 each (a total of approximately $2,000) and paying a $295 application fee. Individuals applying for PCAM certification must have at least five years of management experience. AMS and PCAM certified individuals must reapply for certification every three years and PCAM certified individuals must pay an annual maintenance fee of $175.

The Board has an approved alternate path to licensure in these proposed regulations that requires approximately the same training as do the CAI certifications. Firms may be licensed if there is at least one supervisory employee or company officer with five years of experience in providing management services and that employee has completed an approved comprehensive training program which includes at least 80 contact hours of instruction. Additionally, at least 50% of employees with principal responsibility for management services must either:

1. hold PCAM certification and certify that they have provided managerial services in the 12 months immediately preceding application for licensure,

2. hold CMCA certification and certify that they have provided managerial services for at least two years, twelve months of which was provided in the year immediately preceding application for licensure,

3. hold AMS certification and certify that they have provided managerial services for at least two years, twelve months of which was provided in the year immediately preceding application for licensure, or

4. complete a Board approved introductory training course (16 hours), pass a Board approved certifying exam and have provided managerial services for at least two years, twelve months of which was provided in the year immediately preceding application for licensure.

The Board has not yet approved any training programs so the cost of training for individuals who choose this alternate route to licensure is not known. If Board approved training proves to be more costly than CAI training, it will likely not be greatly utilized. The fee for initial training program approval is $100 and the fee for a training provider to add a program is $50.

In addition to all other fees, CIC managers must submit a statutorily required annual assessment of not more than $1,000. The Department of Professional and Occupational Regulation (DPOR) reports that the average assessment charge thus far is about $95.

CIC managers that are subject to these proposed regulations will incur the fees listed above as well as opportunity costs for time spent meeting new licensure requirements (time spent in training rather than working or engaging in some other activity, time spent studying for and taking exams, etc). In total, costs for licensure have the potential to be substantial and will likely serve as a barrier to entry for potential new management firms. These costs must be weighed against possible decreases in losses that common interest communities might suffer on account of dishonest or incompetent management. Any benefit from requiring licensure is likely at least partially duplicative of, and mitigated by, the benefits of requiring fidelity bonds or insurance. There is insufficient information to accurately gauge whether the benefits of requiring licensure in this instance outweigh its costs.

Businesses and Entities Affected. The DPOR reports that there are currently approximately 200 licensed common interest community managers and approximately 4,000 registered CIC associations. Most, if not all, of these entities meet the definition of small businesses.

Localities Particularly Affected. No locality will be particularly affected by this proposed regulatory action.

Projected Impact on Employment. The number of individuals employed as CIC managers may decrease on account of these proposed regulations. Employment in Board approved CIC training programs will likely increase. There is insufficient information to gauge what the effect on total employment in the Commonwealth will be.

Effects on the Use and Value of Private Property. This regulatory action will likely have no effect on the use or value of private property in the Commonwealth.

Small Businesses: Costs and Other Effects. Small businesses in the Commonwealth will likely incur fees associated with licensure and training as well as opportunity costs for time spent meeting the training requirements of these proposed regulations.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The statute that mandates licensure for CIC managers seems to allow the Board an option to create a path to licensure that would only require passing a (now non-existent) examination. If the Board is able to create an acceptable exam that could serve as an alternate path to licensure, the costs for regulated entities might be decreased.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

_________________________________

¹ All fees assume that individuals do not have CAI membership. Fees are lower for members.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis. Concur with the approval.

Summary:

This is a new regulation that establishes the licensure requirements for common interest community managers, as well as the standards of practice and conduct for common interest community managers and requirements for training programs. The regulation will ultimately replace emergency regulations that were implemented as a result of the enactment of Chapters 851 and 871 of the Acts of the 2008 General Assembly, which were the result of HB 516 and SB 301. These Acts required regulations to be effective within 280 days of enactment, thus the implementation of emergency regulations on November 13, 2008.

CHAPTER 50
COMMON INTEREST COMMUNITY MANAGER REGULATIONS

Part I
General

18VAC48-50-10. Definitions.

Section 54.1-2345 of the Code of Virginia provides definitions of the following terms and phrases as used in this chapter:

"Association"

"Board"

"Common interest community"

"Common interest community manager"

"Declaration"

"Governing board"

"Lot"

"Management services"

The following words, terms, and phrases when used in this chapter shall have the following meaning unless the context clearly indicates otherwise.

"Address of record" means the mailing address designated by the regulant to receive notices and correspondence from the board. Notice mailed to the address of record by certified mail, return receipt requested, shall be deemed valid notice.

"Applicant" means a common interest community manager that has submitted an application for licensure.

"Application" means a completed, board-prescribed form submitted with the appropriate fee and other required documentation.

"Contact hour" means 50 minutes of instruction.

"Department" means the Virginia Department of Professional and Occupational Regulation.

"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 and properly registered, as may be required, with the Virginia State Corporation Commission.

"Full-time employee" means an employee who spends a minimum of 30 hours a week carrying out the work of the licensed common interest community manager.

"Gross receipts" means all revenue derived from providing management services to common interest communities in the Commonwealth of Virginia, excluding pass-through expenses or reimbursement of expenditures by the regulant on behalf of an association.

"Regulant" means a common interest community manager as defined in § 54.1-2345 of the Code of Virginia who holds a license issued by the board.

"Reinstatement" means the process and requirements through which an expired license can be made valid without the regulant having to apply as a new applicant.

"Renewal" means the process and requirements for periodically approving the continuance of a license for another period of time.

"Responsible person" means the employee, officer, manager, owner, or principal of the firm who shall be designated by each firm to ensure compliance with Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia, and all regulations of the board, and to receive communications and notices from the board that may affect the firm. In the case of a sole proprietorship, the sole proprietor shall have the responsibilities of the responsible person.

"Sole proprietor" means any individual, not a corporation or other registered business entity, who is trading under his own name, or under an assumed or fictitious name pursuant to the provisions of §§ 59.1-69 through 59.1-76 of the Code of Virginia.

Part II
Entry

18VAC48-50-20. Application procedures.

All applicants seeking licensure shall submit an application with the appropriate fee specified in 18VAC48-50-60. Application shall be made on forms provided by the department.

By submitting the application to the department, the applicant certifies that the applicant has read and understands the applicable statutes and the board's regulations.

The receipt of an application and the deposit of fees by the board does not indicate approval by the board.

The board may make further inquiries and investigations with respect to the applicant's qualifications to confirm or amplify information supplied. All applications shall be completed in accordance with the instructions contained herein and on the application. Applications will not be considered complete until all required documents are received by the board.

A firm will be notified within 30 days of the board's receipt of an initial application if the application is incomplete. Firms that fail to complete the process within 12 months of receipt of the application in the board's office must submit a new application and fee.

18VAC48-50-30. Qualifications for licensure.

A. Firms that provide common interest community management services shall submit an application on a form prescribed by the board and shall meet the requirements set forth in § 54.1-2346 of the Code of Virginia, as well as the additional qualifications of this section.

B. Any firm offering management services as defined in § 54.1-2345 of the Code of Virginia shall hold a license as a common interest community manager. All names under which the common interest community manager conducts business shall be disclosed on the application. The name under which the firm conducts business and holds itself out to the public (i.e., the trade or fictitious name) shall also be disclosed on the application. Firms shall be organized as business entities under the laws of the Commonwealth of Virginia or otherwise authorized to transact business in Virginia. Firms shall register any trade or fictitious names with the State Corporation Commission or the clerk of court in the county or jurisdiction where the business is to be conducted in accordance with §§ 59.1-69 through 59.1-76 of the Code of Virginia before submitting an application to the board.

C. The applicant shall disclose the firm's mailing address, the firm's physical address, and the address of the office from which the firm provides management services to Virginia common interest communities. A post office box is only acceptable as a mailing address when a physical address is also provided.

D. In accordance with § 54.1-204 of the Code of Virginia, each applicant shall disclose the following information about the firm, the responsible person, and any of the principals of the firm:

1. All felony convictions.

2. All misdemeanor convictions, in any jurisdiction, within three years of the date of application.

3. Any plea of nolo contendere or finding of guilt regardless of adjudication or deferred adjudication shall be considered a conviction for the purposes of this section. The record of conviction certified or authenticated in such form as to be admissible in evidence under the laws of the jurisdiction where convicted shall be admissible as prima facie evidence of such guilt.

E. 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 the date of expiration of the license.

F. The applicant shall be in compliance with the standards of conduct and practice set forth in Part V (18VAC48-50-140 et. seq.) of this chapter at the time of application, while the application is under review by the board, and at all times when the license is in effect.

G. The applicant, the responsible person, and any principals of the firm shall be in good standing in Virginia and in every jurisdiction and with every board or administrative body where licensed, certified, or registered and the board, in its discretion, may deny licensure to any applicant who has been subject to, or whose principals have been subject to, or any firm in which the applicant's principals hold a 10% or greater interest have been subject to, any form of adverse disciplinary action, including but not limited to, reprimand, revocation, suspension or denial, imposition of a monetary penalty, required to complete remedial education, or any other corrective action, in any jurisdiction or by any board or administrative body or surrendered a license, certificate, or registration in connection with any disciplinary action in any jurisdiction prior to applying for licensure in Virginia.

H. The applicant shall provide all relevant information about the firm, the responsible person, and any of the principals of the firm for the seven years prior to application on any outstanding judgments, past-due tax assessments, defaults on bonds, or pending or past bankruptcies, and specifically shall provide all relevant financial information related to providing management services as defined in § 54.1-2345 of the Code of Virginia. The applicant shall further disclose whether or not one or more of the principals who individually or collectively own more than a 50% equity interest in the firm are or were equity owners holding, individually or collectively, a 10% or greater interest in any other entity licensed by any agency of the Commonwealth of Virginia that was the subject of any adverse disciplinary action, including revocation of a license, within the seven-year period immediately preceding the date of application.

I. Applicants for licensure shall hold an active designation as an Accredited Association Management Company by the Community Associations Institute.

J. In lieu of the provisions of subsection I of this section, an applicant may be licensed provided the applicant certifies to the board that the applicant has (i) at least one supervisory employee or officer with five years of experience in providing management services and who has successfully completed a comprehensive training program as described in 18VAC48-50-250 B, as approved by the board, involved in all aspects of the management services offered and provided by the firm and (ii) at least 50% of persons who have principal responsibility for management services meet one of the following:

1. Hold an active designation as a Professional Community Association Manager and certify having provided management services for a period of 12 months immediately preceding application;

2. Hold an active designation as a Certified Manager of Community Associations by the National Board of Certification for Community Association Managers and certify having two years of experience in providing management services. Of the required two years experience, a minimum of 12 months of experience must have been gained immediately preceding application;

3. Hold an active designation as an Association Management Specialist and certify having two years of experience in providing management services. Of the required two years experience, a minimum of 12 months of experience must have been gained immediately preceding application; or

4. Have completed an introductory training program, as set forth in 18VAC48-50-250 A, and certifying examination approved by the board and certify having two years experience in providing management services. Of the required two years experience, a minimum of 12 months of experience must have been gained immediately preceding application.

K. The firm shall designate a responsible person.

18VAC48-50-40. Application denial.

The board may refuse initial licensure due to an applicant's failure to comply with entry requirements or for any of the reasons for which the board may discipline a regulant. The board, at its discretion, may deny licensure to any applicant in accordance with § 54.1-204 of the Code of Virginia. The denial is considered to be a case decision and is subject to appeal under Chapter 40 (§ 2.2-4000 et seq.) of Title 2.2 of the Code of Virginia.

Part III
Fees

18VAC48-50-50. General fee requirements.

All fees are nonrefundable and shall not be prorated. The date on which the fee is received by the department or its agent will determine whether the fee is on time. Checks or money orders shall be made payable to the Treasurer of Virginia.

18VAC48-50-60. Fee schedule.

Fee Type	Fee Amount		Recovery Fund Fee* (if applicable)	Total Amount Due (excluding annual assessment in 18VAC48-50-80)	When Due
Initial Common Interest Community Manager Application	$100	+	25	$125	With initial application filed on or after January 1, 2009
Common Interest Community Manager Renewal	$100			$100	With renewal application
Common Interest Community Manager Reinstatement (includes a $200 reinstatement fee in addition to the regular $100 renewal fee)	$300			$300	With renewal application
Training Program Provider Initial Application	$100			$100	With application
Training Program Provider Add Program	$50			$50	With application

*In accordance with § 55-530.1 of the Code of Virginia.

18VAC48-50-70. Annual assessment.

In addition to the fees listed in 18VAC48-50-60, each common interest community manager must submit an annual assessment in accordance with § 54.1-2349 A 1 of the Code of Virginia. The annual assessment shall be submitted with the initial application and with each renewal application. When the annual assessment due is less than $1,000, the common interest community manager shall submit documentation of gross receipts for the preceding calendar year with each annual assessment in order to verify the annual assessment amount due. Documentation of gross receipts is not required from common interest community managers that submit the maximum annual assessment amount of $1,000. Acceptable documentation may include, but is not limited to, audits, tax returns, or financial statements.

18VAC48-50-80. Provisional licenses.

Provisional licenses will be subject to the annual assessment for each year that the provisional license is in effect. When the annual assessment due is less than $1,000, the common interest community manager shall submit documentation of gross receipts for the preceding calendar year with each annual assessment in order to verify the annual assessment amount due. Documentation of gross receipts is not required from common interest community managers that submit the maximum annual assessment amount of $1,000. Acceptable documentation may include, but is not limited to, audits, tax returns, or financial statements.

Provisional licensees must submit annual proof of current bond or insurance policy in accordance with 18VAC48-50-30 D, and are also subject to the provisions of 18VAC48-50-150 D. Failure to submit the annual assessment and proof of current bond or insurance policy within 30 days of the request by the board shall result in the automatic suspension of the license.

Part IV
Renewal and Reinstatement

18VAC48-50-90. Renewal required.

A license issued under this chapter shall expire one year from the last day of the month in which it was issued. A fee shall be required for renewal. In accordance with § 54.1-2346 F of the Code of Virginia, provisional licenses shall expire on June 30, 2011, and shall not be renewed.

18VAC48-50-100. Expiration and renewal.

A. Prior to the expiration date shown on the license, licenses shall be renewed upon completion of the renewal application, submittal of proof of current bond or insurance policy as detailed in 18VAC48-50-30 D, and payment of the fees specified in 18VAC48-50-60 and 18VAC48-50-70. The board will mail a renewal notice to the regulant at the last known mailing address of record. Failure to receive this notice shall not relieve the regulant of the obligation to renew. If the regulant fails to receive the renewal notice, a copy of the license may be submitted with the required fees as an application for renewal. By submitting an application for renewal, the regulant is certifying continued compliance with the Standards of Conduct and Practice in Part V (18VAC48-50-140 et seq.) of this chapter.

B. Applicants for renewal shall continue to meet all of the qualifications for licensure set forth in 18VAC48-50-30.

18VAC48-50-110. Reinstatement required.

A. If the requirements for renewal of a license, including receipt of the fees by the board and submittal of proof of current bond or insurance policy as detailed in 18VAC48-50-30 D, are not completed within 30 days of the license expiration date, the regulant shall be required to reinstate the license by meeting all renewal requirements and by paying the reinstatement fee specified in 18VAC48-50-60.

B. A license may be reinstated for up to six months following the expiration date. After six months, the license may not be reinstated under any circumstances and the regulant must meet all current entry requirements and apply as a new applicant.

C. Any regulated activity conducted subsequent to the license expiration date may constitute unlicensed activity and be subject to prosecution under Chapter 1 (§ 54.1-100 et seq.) of Title 54.1 of the Code of Virginia.

18VAC48-50-120. Status of license during the period prior to reinstatement.

A regulant who applies for reinstatement of a license shall be subject to all laws and regulations as if the regulant had been continuously licensed. The regulant shall remain under and be subject to the disciplinary authority of the board during this entire period.

18VAC48-50-130. Board discretion to deny renewal or reinstatement.

The board may deny renewal or reinstatement of a license for the same reasons as it may refuse initial licensure or discipline a current regulant.

The board may deny renewal or reinstatement of a license if the regulant has been subject to a disciplinary proceeding and has not met the terms of an agreement for licensure, has not satisfied all sanctions, or has not fully paid any monetary penalties and costs imposed by the board.

Part V
Standards of Conduct and Practice

18VAC48-50-140. Grounds for disciplinary action.

The board may place a regulant on probation, impose a monetary penalty in accordance with § 54.1-2351 H of the Code of Virginia, or revoke, suspend or refuse to renew any license when the regulant has been found to have violated or cooperated with others in violating any provisions of the regulations of the board or Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia.

18VAC48-50-150. Maintenance of license.

A. No license issued by the board shall be assigned or otherwise transferred.

B. A regulant shall report, in writing, all changes of address to the board within 30 days of the change and shall return the license to the board. In addition to the address of record, a physical address is required for each license. If the regulant holds more than one license, certificate, or registration, the regulant shall inform the board of all licenses, certificates, and registrations affected by the address change.

C. Any change in any of the qualifications for licensure found in 18VAC48-50-30 shall be reported to the board within 30 days of the change.

D. Notwithstanding the provisions of subsection C of this section, a regulant shall report the cancellation, amendment, expiration, or any other change of any bond or insurance policy submitted in accordance with 18VAC48-50-30 D within five days of the change.

18VAC48-50-160. Maintenance and management of accounts.

Regulants shall maintain all funds from associations in accordance with § 54.1-2353 A of the Code of Virginia. Funds that belong to others that are held as a result of the fiduciary relationship shall be labeled as such to clearly distinguish funds that belong to others from those funds of the common interest community manager.

18VAC48-50-170. Change of business entity requires a new license.

A. Licenses are issued to firms as defined in this chapter and are not transferable. Whenever the legal business entity holding the license is dissolved or altered to form a new business entity, the license becomes void and shall be returned to the board within 30 days of the change. Such changes include but are not limited to:

1. Cessation of the business or the voluntary termination of a sole proprietorship or general partnership;

2. Death of a sole proprietor;

3. Formation, reformation, or dissolution of a general partnership, limited partnership, corporation, limited liability company, association, or any other business entity recognized under the laws of the Commonwealth of Virginia; or

4. The suspension or termination of the corporation's existence by the State Corporation Commission.

B. When a new firm is formed, the new firm shall apply for a new license on a form provided by the board before engaging in any activity regulated by Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia or the regulations of the board.

18VAC48-50-180. Notice of adverse action.

A. Regulants shall notify the board of the following actions:

1. Any disciplinary action taken by another jurisdiction, board, or administrative body of competent jurisdiction, including but not limited to any reprimand, license revocation, suspension or denial, monetary penalty, or requirement for remedial education or other corrective action.

2. Any voluntary surrendering of a license, certificate, or registration done in connection with a disciplinary action in another jurisdiction.

3. Any conviction, finding of guilt, or plea of guilty, regardless of adjudication or deferred adjudication, of any felony or of any misdemeanor in any jurisdiction. Review of convictions shall be subject to the requirements of § 54.1-204 of the Code of Virginia. Any plea of nolo contendere shall be considered a conviction for the purpose of this section.

B. The notice must be made to the board in writing within 30 days of the action. A copy of the order or other supporting documentation must accompany the notice. The record of conviction, finding, or case decision shall be considered prima facie evidence of a conviction or finding of guilt.

18VAC48-50-190. Prohibited acts.

A. The following acts are prohibited and any violation may result in disciplinary action by the board:

1. Violating, inducing another to violate, or cooperating with others in violating any of the provisions of any of the regulations of the board or Chapter 23.3 (§ 54.1-2345 et seq.) of Title 54.1 of the Code of Virginia, Chapter 4.2 (§ 55-79.39 et seq.) of Title 55 of the Code of Virginia, Chapter 24 (§ 55-424 et seq.) of Title 55 of the Code of Virginia, Chapter 26 (§ 55-508 et seq.) of Title 55 of the Code of Virginia, or Chapter 29 (§ 55-528 et seq.) of Title 55 of the Code of Virginia, or engaging in any acts enumerated in §§ 54.1-102 and 54.1-111 of the Code of Virginia.

2. Allowing the common interest community manager license to be used by another.

3. Obtaining or attempting to obtain a license by false or fraudulent representation, or maintaining, renewing, or reinstating a license by false or fraudulent representation.

4. A regulant having been convicted, found guilty, or disciplined in any jurisdiction of any offense or violation enumerated in 18VAC48-50-180.

5. Failing to inform the board in writing within 30 days that the regulant was convicted, found guilty, or disciplined in any jurisdiction of any offense or violation enumerated in 18VAC48-50-180.

6. Failing to report a change as required by 18VAC48-50-150 or 18VAC48-50-170.

7. The intentional and unjustified failure to comply with the terms of the contract, operating agreement, or governing documents.

8. Engaging in dishonest or fraudulent conduct in providing management services.

9. Failing to satisfy any judgments or restitution orders entered by a court or arbiter of competent jurisdiction.

10. Incompetence in providing management services.

11. Failing to handle association funds in accordance with the provisions of § 54.1-2353 A of the Code of Virginia or 18VAC48-50-160.

12. Failing to account in a timely manner for all money and property received by the regulant in which the association has or may have an interest.

13. Failing to disclose to the association material facts related to the association's property or concerning management services of which the regulant has actual knowledge.

14. Failing to provide complete records related to the association's management services to the association within 30 days of any written request by the association or within 30 days of the termination of the contract unless otherwise agreed to in writing by both the association and the common interest community manager.

15. Failing upon written request of the association to provide books and records such that the association can perform pursuant to §§ 55-510 (Property Owners Association Act), 55-79.74:1 (Condominium Act), and 55-474 (Virginia Real Estate Cooperative Act) of the Code of Virginia.

16. Commingling the funds of any association by a principal, his employees, or his associates with the principal's own funds or those of his firm.

17. Failing to act in providing management services in a manner that safeguards the interests of the public.

18. Failing to make use of a legible, written contract clearly specifying the terms and conditions of the management services to be performed by the common interest community manager. The contract shall include, but not be limited to, the following:

a. Beginning and ending dates of the contract;

b. Cancellation rights of the parties;

c. Record retention and distribution policy;

d. A general description of the records to be kept and the bookkeeping system to be used; and

e. The common interest community manager's license number.

B. Prior to commencement of the terms of the contract or acceptance of payments, the contract shall be signed by the regulant and the client or the client's authorized agent.

18VAC48-50-200. Establishment of code of conduct.

The firm shall establish and distribute to the firm's employees, principals, and agents a written code of conduct to address business practices including the appropriateness of giving and accepting gifts, bonuses, or other remuneration to and from common interest communities or providers of services to common interest communities. In accordance with clause (ii) of § 54.1-2346 E of the Code of Virginia, the code of conduct for officers, directors, and employees shall also address disclosure of relationships with other firms that provide services to common interest communities and that may give rise to a conflict of interest.

18VAC48-50-210. Establishment of internal accounting controls.

The firm shall establish written internal accounting controls to provide adequate checks and balances over the financial activities and to manage the risk of fraud and illegal acts. The internal accounting controls shall be in accordance with generally accepted accounting practices.

18VAC48-50-220. Response to inquiry and provision of records.

A. A regulant must respond within 10 days to the board or any of its agents regarding any complaint filed with the department.

B. Unless otherwise specified by the board, a regulant of the board shall produce to the board or any of its agents within 10 days of the request any document, book, or record concerning any transaction in which the regulant was involved, or for which the regulant is required to maintain records for inspection and copying by the board or its agents. The board may extend such time frame upon a showing of extenuating circumstances prohibiting delivery within such 10-day period.

C. A regulant shall not provide a false, misleading, or incomplete response to the board or any of its agents seeking information in the investigation of a complaint filed with the board.

D. With the exception of the requirements of subsections A and B of this section, a regulant must respond to an inquiry by the board or its agent within 21 days.

Part VI
Training Programs and Examination

18VAC48-50-230. Training programs generally.

All training programs must be approved by the board. Any or all of the training programs can be met using distance or online education technology. Training programs may be approved retroactively; however, no regulant will receive credit for the training program until such approval is granted by the board.

18VAC48-50-240. Approval of common interest community manager training programs.

Each provider of a training program shall submit an application for program approval on a form provided by the board. In addition to the appropriate fee provided in 18VAC48-50-60, the application shall include but is not limited to:

1. The name of the provider;

2. Provider contact person, address, and telephone number;

3. Program contact hours;

4. Schedule of training program, if established, including dates, times, and locations;

5. Instructor information, including name, license numbers, if applicable, and a list of other trade-appropriate designations, as well as a professional resume with a summary of acceptable teaching experience and subject-matter knowledge and qualifications;

6. A summary of qualifications and experience in providing training for common interest communities;

7. Training program and material fees; and

8. Training program syllabus.

18VAC48-50-250. Training program requirements.

A. In order to qualify as an introductory training program under 18VAC48-50-30 J 4, the introductory training program must include a minimum of 16 contact hours and the syllabus shall encompass all of the subject areas set forth in subsection C of this section.

B. In order to qualify as a comprehensive training program under 18VAC48-50-30 J 1, the comprehensive training program must include a minimum of 80 contact hours and the syllabus shall include at least 40 contact hours encompassing all of the subject areas set forth in subsection C of this section and may also include up to 40 contact hours in other subject areas approved by the board.

C. The following subject areas as they relate to common interest communities and associations shall be included in each training program.

1. Governance, legal matters, and communications;

2. Financial matters, including budgets, reserves, investments, and assessments;

3. Contracting;

4. Risk management and insurance;

5. Management ethics for common interest community managers;

6. Facilities maintenance; and

7. Human resources.

D. All training programs are required to have a final, written examination.

18VAC48-50-260. Maintenance of records.

All providers must establish and maintain a record for each student. The record shall include the student's name and address, social security number or control number issued by the Department of Motor Vehicles, the training program name and hours attended, the training program syllabus or outline, the name or names of the instructors, the date of successful completion, and the board's approved training program code. Records shall be available for inspection during normal business hours by authorized representatives of the board. Providers must maintain these records for a minimum of five years.

18VAC48-50-270. Reporting of changes.

Any change in the information provided in 18VAC48-50-240 must be reported to the board within 30 days of the change with the exception of changes in the schedule of training program offerings, which must be reported within 10 days of the change. Failure to report the changes as required may result in the withdrawal of approval of a training program by the board.

18VAC48-50-280. Withdrawal of approval.

The board may withdraw approval of any training program for the following reasons:

1. The training program being offered no longer meets the standards established by the board.

2. The provider, through an agent or otherwise, advertises its services in a fraudulent or deceptive way.

3. The provider, instructor, or designee of the provider falsifies any information relating to the application for approval, training program information, or student records or fails to produce records required by 18VAC48-50-260.

4. A change in the information provided in 18VAC48-50-240, except for subdivision 4 of 18VAC48-50-240.

18VAC48-50-290. Examinations.

All examinations required for licensure shall be approved by the board and provided by the board or a testing service acting on behalf of the board, or another governmental agency or organization.

VA.R. Doc. No. R09-1641; Filed June 2, 2009, 2:10 p.m.