Property manager licensing still a very important issue.

A year ago almost to the day on Jan. 24, 2001, the guest speaker at NYARM's first meeting of the New Year was state Sen. Carl Kruger (D-Brooklyn). His topic was "Bill S279," the legislation he had introduced earlier that month that mandated the licensing of property managers in New York.

His message was well-received and the response from the more than 100 members attending the meeting at Tavern on the Green was demonstrably enthusiastic.

It had been written as an act to amend the Real Property Law in relation to the licensing of realty managers and residential realty managers. The bill's Justification reads, "Residential realty management deserves the high level of professional recognition it commands. Therefore, licensing is essential and would be comprised of both classroom and on-the-job training. The intent is to bring supervisory managers to a certain level of competence and experience. Education would touch upon all aspects of housing: the physical plant (including electrical and thermal installations), administration and the importance of labor union relations."

Modeled after the Halperin Bill of the late 1980's, which had substantial input from NYARM, we were optimistic that Kruger's bill would pass, as he indicated 2001 would be the "threshold year." But it wasn't. The bill was referred to Judiciary in January 2001, where it has been, ostensibly, in limbo for the past year. But it did succeed in establishing important criteria for residential property managers by defining educational and testing criteria, as well as honing in on who would be responsible for receiving a license and who could be exempt.

The licensing of property managers is similar in concept to that of licensing real estate sales agents and brokers, in that it determines the number of hours required for study, the curriculum, qualifications testing and continuing education standards. The difference is that the subject matter is germane to the profession of property management, as opposed to existing courses for brokers, which deal with leasing, buying and selling property and only touch upon management within its curriculum.

As a result of all the publicity the topic has received over the past few years, however, we are finally seeing more and more positive reactions regarding licensure. In an article published in the January 2002 issue of Habitat Magazine, a publication for co-op and condo owners, the response from the residential management community regarding this issue was overwhelmingly favorable, which is unprecedented. And perhaps of even greater importance, a poll of apartment owners indicated that more than 90 percent were in favor of licensing. The response doesn't get any stronger.

Although the traditional arguments against licensing are weak, me groups against the legislation are powerful. Their primary position is that licensing for managers is redundant due to the existing licensing requirements for brokers. But the required courses barely touch upon the duties of property managers, only those pertinent to apartment sales and closings. Courses addressing the financial profiles of a property, local law compliance and physical plant are not taught in any of the schools hosting brokers' and sales agents' programs.

Another group against the legislation are owners who manage their own properties. Their concerns about licensing are understandable, because of the potential cost of the classes and licenses. But Senator Kruger's bill renders most owner/managers exempt from licensing requirements, so very few circumstances will ever make it an issue for them.

The final argument we hear often is more of a scare tactic for private owners than anything else, because it claims that licensed property managers will demand higher salaries. But if we stop to review industry pay scales, we see, historically, professional salaries are commensurate with individual backgrounds and market rates that fluctuate depending upon the national and local economies -- regardless of education. So, in effect, it's a baseless argument.

With licensing comes written standards, hence a punitive option for those who breach them. Should an individual or group of individuals disturb or break the guidelines established by the legislation, the Secretary of State would able to lift the individual's license. There could be several penalties, if need be, and there would even be a prescription for civil adjudication.

Licensing gives our profession accountability and removes the taint of possible corruption. Although the vast majority of property managers are hardworking and honest professionals, our reputation as an industry has been repeatedly marred. From the perspective of our clients, licensing assures them that their managers are trained and knowledgeable about a wide range of subjects pertaining to their properties. It gives them a central reference for background checks, too.

Licensing is also a win-win situation for property managers because with an educational foundation comes an extra measure of competency, along with enhanced credibility. Considering that almost every other professional performing work in a building - from the superintendent to the plumber - holds licenses, it is amazing that there are no professional or educational criteria existing for the person in charge.

With luck, Senator Kruger's bill will eventually pass and we urge all members of the real estate community to participate in a letter writing campaign to their State Senator or Assemblyperson. NYARM has a form letter that may be filled out and personalized that is available for downloading from our website at www.nyarm.org.