Requires residential real property managers to be licensed by secretary of state

Summary of provisions

The bill adds a new article 12-D to the real property law.

Section 1: Defines "certification," "property manager," and "residential realty management" for purposes of the section.

Section 2: States that no property manager of cooperatives or condominiums, or entities employing such property manager shall perform residential realty management unless such property manager or entity has filed a registration statement with the Secretary of State; and those performing property management duties for the property manager have been certified by an approved certifying organization.

Section 3: Sets forth the information that must be contained in the "property manager registration statement."

Section 4: States that the registration statement must be filed every two years with the Secretary of State. This section also authorizes the Secretary of State to collect a $50 fee for each filing.

Section 5: States that the Secretary of State must be notified of any change of information, including but not limited to: changes in employment, retirement, resignation or termination, within 45-days.

Section 6: Authorizes the Secretary of State to issue a certification to those applicants who have completed the necessary requirements.

Section 7: Requires the Secretary of State to establish procedures for approving or disapproving applications from organizations to act as approved certifying organizations, and for periodically reviewing the certification programs of approved organizations.

Section 8: Allows for the suspension and revocation of certification if, after notice and hearing, the Secretary determines the property manager is in violation of provisions of the article or the law.

Section 9: States that this section shall not apply to any property manager, or entity employing a property manager, if all the condominiums or cooperative units for which such property manager or entity performs services comprising less than twenty-five residential units.

Section 10: Provides for graduated civil penalties.

Section 11: Mandates the segregation of funds for each managed unit. A violation of this provision would constitute a misdemeanor punishable by a fine not to exceed five thousand dollars.

Section 12: Mandates the turning over of all property records within ten days upon cessation of performing realty management, except funds and records requiring bank reconciliation which allows for 45 days.

Section 13: States that the Attorney General shall have the power to enforce the provisions of the article.

Justification

Currently, there is no legal requirement that property managers have training or experience in property management. In the past, unscrupulous or untrained property managers have bilked cooperative shareholders of millions of dollars in elaborate schemes of fraud. This bill would require property managers to disclose whether the individual or his or her principals have been convicted of crimes involving fraudulent practices or crimes arising out of their duties as a property manager. Such disclosure will enhance the ability of cooperatives and condominium boards to determine the integrity of property managers which they may employ.

This bill would also establish a procedure to ensure that those performing property management duties possess the skills and training essential to satisfactorily perform their duties. It would require the certifying organization to annually review the credentials of all certified individuals to determine that those holding a certification continue to meet the standards established by the organization.

Legislative history

2010: S.5301/A.7388A

Fiscal impact on the state

The Secretary of State shall collect a $50 fee with each registration.

Effective date

This act shall take effect on the ninetieth day after it shall have become a law, except that any rules and regulations necessary for the timely implementation of this act on its effective date shall be promulgated on or before such date; provided, however, that subdivision 2 of section 448 of the real property law, as added by section one of this act, shall take effect January 1, 2012.