The Community Association Managers Program has begun auditing CAM Entities. To date audits focused on a targeted review of the audited management companies’ compliance with statutes and rules regarding Crime Fidelity and Errors and Omissions insurance coverages, Record Keeping requirements, and Management Agreement requirements. Particularly, the audits focused on the following statutes and rules:
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12-16-1004, C.R.S. Insurance Required
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4 CCR 725-7, Rule D-9) Errors and Omissions (E&O) Insurance Requirement
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4 CCR 725-7, Rule D-10) Crime Fidelity Insurance Requirement
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4 CCR 725-7, Rule F-6) Contracts, Agreements, Authorizations, and Disclosures Must be in Writing
The CAM auditor has noticed some recurring issues that are not in compliance with statute and rule. In general, findings included inadequate crime fidelity insurance coverages, crime fidelity insurance deductibles in excess of the allowable amount, and management agreements lacking the minimum required items. However, the most significant finding identified relates to the non-compliant management agreements. The audits revealed a very small number of management agreements to be in compliance with the CAM Rule. The overall audit findings are summarized as follows: Rule F-6 - Management Agreements Missing Required Items.
Approximately 99% of the management agreements reviewed were not in compliance with the CAM Rule
Rule D-10 - Crime Fidelity Insurance Deductible Greater than Maximum (1% of Policy Amount).
Approximately 20% of the crime fidelity insurance deductibles were not in compliance with the CAM Rule
Rule D-10 - Crime Fidelity Insurance Coverage Less than Minimum (2 Months Assessments + Reserves).
Approximately 10% of the crime fidelity insurance policies were not in compliance with the CAM Rule
You can review all of the Community Association Manager Program Rules online anytime at the Division of Real Estate Website.
Written and Published by: VanEd
