CMCA - M100 Exam Questions With 100% Correct
Answers
.55 and older community - ANSWER-Must have one person who is 55 years of age or older living in at least 80%
of its occupied units. The community must be designated "55 and older" to qualify as this type of housing that
legally prohibits children and limits occupancy to a certain age span. The designation process involves
submitting applications and obtaining approval before any enforcement of the ages of residents commences.
Approval from the Department of Housing and Urban Development (HUD) must be received before
construction begins.
.Abstention - ANSWER-Is to not cast a vote. Board members should abstain from voting only for clearly stated
reasons such as a conflict of interest or ignorance of the matter at hand.
.Acceleration - ANSWER-The collection of all assessments due through the end of the fiscal year. Acceleration is
a technique used to collect assessments from habitually delinquent owners.
.Accrual basis of accounting - ANSWER-Records revenue when it is earned and expenses when they are
incurred. It provides an accurate picture of the association's financial condition. GAAP (Generally Accepted
Accounting Principles) requires the use of accrual accounting.
.Action item list - ANSWER-A list of actions to be taken before the next board of directors meeting as a result of
decisions made at the current one or between meetings. An action item list contains the decisions to be
implemented together with the names of those assigned implementation responsibility. Excel, Google Docs and
Microsoft Outlook Tasks may be useful programs for helping you compile your action item list.
.Actual cash value (ACV) - ANSWER-ACV is the depreciated value of an item, commonly used in property
insurance coverage.
.Ad hoc committees - ANSWER-This committee's purpose is to deal with a one-time issue and make
recommendations to the board within a specific time frame. The board should use a resolution to establish an
ad hoc committee and clearly state the charge and expected outcome to the committee. Ad hoc committees
may be formed to review parking regulations, develop investment guidelines, or to renovate a lobby, for
,example.
.Advertising injury - ANSWER-Advertising injury provisions in commercial general liability insurance
(CGL)include language providing coverage to the community association with respect to damages resulting in
"misappropriation of advertising ideas or style of doing business" or "infringement of copyright, slogan, or
title." Community associations with newsletters, directories, and websites that contain advertising and use
online, magazine or newspaper articles without reprint permission have this exposure.
.Agenda - ANSWER-An agenda is more than an announcement of the order of business for a meeting. It is a
meeting management tool. Meeting agendas follow a standard format, largely based on parliamentary
procedure
.Aggregate amount - ANSWER-The total amount that the insurer will pay out under an insurance policy. This is
a common feature of liability insurance policy.
.Agreed amount endorsement - ANSWER-Provides for an agreed upon limit of property insurance. An "agreed
amount" endorsement can also suspend the coinsurance clause. Coinsurance is a standard element in most
property policies that obligates the insured to maintain a certain amount of property insurance on the entire
property or per structure, based on a stated percentage, usually 80% - 90%. If the insured does not maintain
this percentage, the insured will not be reimbursed for the full loss of the property.
.Alternative dispute resolution (ADR) - ANSWER-An effective way to resolve alleged violations. It involves
submitting the alleged violation to a disinterested third party who helps the parties reach an amicable solution.
This person is not a judge or an expert in community association law, but can assist in the resolution of the
alleged violation.
.Appeal - ANSWER-An appeal is a request for a review of a case by a higher authority—if permitted by the
governing documents, resolution or state statute. For example— if the hearing panel is a committee, the board
of directors acts as the higher authority. If the board of directors is the hearing panel, the alleged rule violator
must appeal to an authority outside the community association—for example, alternative dispute resolution.
.Arbitration - ANSWER-A process in which a third party—called the arbitrator—renders a decision as to the
respective liabilities of all parties. The object is not to reach a settlement; instead the arbitrator ultimately
makes a ruling. It is an adversarial process that results in the same "win-lose" or "lose-lose" that you would see
,in litigation. Arbitration can be binding or non-binding. A binding arbitration typically cannot be appealed. Once
the decision is rendered, unless you can prove fraud, the decision will be forever binding. A non-binding
arbitration is advisory in nature. The decision that the arbitrator makes does not have to be followed. In that
respect, it is like getting an opinion of your case from a neutral party, which could result in a fair settlement
figure.
.Architectural guideline - ANSWER-A rule that applies to the appearance or exterior of a lot, home, or unit.
Community associations frequently develop architectural guidelines that address fencing, decks and patios,
landscaping, doors and windows, color of exterior surfaces, and location of improvements upon lots, for
example.
.Articles of incorporation - ANSWER-Document that brings a corporation into existence. The document also
defines its basic purposes and powers and indicates whether stock will be issued. The articles must be filed
with a state in order to incorporate. Among the things it typically must include are the name and address of the
corporation, its general purpose and the number and type of shares of stock to be issued.
.Assessment - ANSWER-The owner's financial obligation to the community association during a given period of
time—usually one year. Also commonly known as a maintenance fee. It covers the owner's share of the
common expense (known as "common expense liabilities" in some states). An annual assessment may be paid
on a monthly, quarterly, or annual basis, or however the governing documents dictate. Most of a community's
revenue will come from owner assessments.
.Assessments receivable insurance - ANSWER-This insurance actually has a certain limited value. It applies to
situations in which a covered loss happens to the property (for example, a fire destroys a unit) and the
community association is unable to collect assessments from the owner. Housing cooperatives can protect
their assessments through "Loss of Rents" coverage, a type of business income.
.Assets - ANSWER-include anything owned that has value. Unlike commercial businesses, however, the actual
land and buildings of the community association are not generally shown as an asset, although the association
may include assets that can be sold without an owner vote. For cash basis reports, cash usually is the only
asset.
.Assignability provision - ANSWER-A contract provision stating that neither party may assign its obligations
under the contract to any other person without the express written consent of the other party. The contract
should specifically state that the contractor cannot use subcontractors without the association's permission.
, .Association-employed manager - ANSWER-An individual who is directly employed by the association to
manage the community's operations. The role of the manager is to: • Provide information, training, and
leadership on community association operations to the board, committees, and the community at large •
Foster a sense of community awareness and spirit within the residents • Develop a body of leadership through
the committee structure • Provide the necessary administrative tools to the board to enable it to make wise,
informed decisions on both short-term and long-term actions and goals.
.Audit - ANSWER-An examination of the accounting records and procedures of an organization by a certified
public accountant (CPA) for the purpose of verifying the accuracy and completeness of financial records. An
annual audit may be required by your community association's governing documents and/or your state's
statutes. External verification of the accuracy and completeness of your community's financial records is a
sound business practice.
.Bad debt write-off - ANSWER-When a community association determines that a debt cannot be collected from
an owner after a reasonable effort has been made, it should write off the debt. A bad debt write-off consists of
recording an uncollectible debt as an expense that the association must absorb. This usually requires a
resolution of the board.
.Balance sheet - ANSWER-A summary (or snapshot) of the financial condition of the community association at a
specific point in time. It provides information as to how things are on a certain date. A balance sheet
summarizes what your community association owns, what your community association owes, and the "net
worth" of the association. It is called a balance sheet because what the community association owns (assets)
and what it owes to others (liabilities and members equity) must balance out. A balance sheet typically is
prepared on a monthly basis to allow the board of directors and manager to carefully monitor the association's
finances.
.Ballot - ANSWER-A written means of voting when secrecy is desired. Ballots may be used for election of new
board members and to approve a special assessment, for example.
.Baseline funding - ANSWER-Establishing a reserve funding goal of keeping the reserve cash balance above zero
(never purposefully running out of money or having special assessments). This is the most aggressive
methodology, characterized by lower (typically) reserve contributions and reserve balances. This funding plan is
also the riskiest, with a greater potential for special assessments and/or bank loans when things do not go
according to plan.
