CMCA M100 EXAM COMPREHENSIVE TEST
PAPER QUESTIONS AND SOLUTIONS
◉ Waiver of the transfer of recovery rights.
Answer: A common insurance contract endorsement designed to
minimize a community association's property exposure to loss, the
waiver of the transfer of recovery rights prohibits the insurer from
attempting to seek restitution from a third party who causes any
kind of loss to the insured. This type of arrangement is allowable
under certain circumstances where the insured could be held liable
for a claim that is paid. In other words, a waiver of the transfer of
recovery rights is the endorsement that deletes the right of the
association to seek reimbursement for a covered loss from the
owner who caused the damage. Also commonly known as a "waiver
of subrogation."
◉ Waiver provision.
Answer: Contract provision that states that a waiver (permission) by
one party of any breach of contract (failure to fulfill a provision) by
the other party shall not act as a general waiver of future breaches.
In other words, each party says to the other, "If we let you slide on
any contract requirement at any time, it doesn't mean we're letting
you slide on any other requirements, or even on that one a second
time— unless we decide to let you do it again."
,◉ Work order/response form.
Answer: A form for assigning maintenance work to be done. With
some planning, it can be used— • To document owner and tenant
requests • To assign maintenance tasks to both maintenance staff
and contractors • As a response form to be returned to an owner or
tenant, indicating that work was completed or confirming that it was
assigned • As a basis for allocating charges, when appropriate A
work order/response form has several benefits. It— • Identifies
whether the need is an emergency or not • Requires attention •
Allows follow-up to evaluate satisfaction • Provides a means of
monitoring costs • Provides a history of the repairs that have been
made • Documents any problems with contractors reported by
owners or tenants • Indicates if the work is a recurring problem
necessitating further evaluation Most software programs have work
order/response forms as part of their system.
◉ Treasury bonds.
Answer: Investment option that matures in more than 10 years.
Treasury bonds are issued in denominations from $1,000 to
$100,000. They are also interest-bearing with interest paid every six
months. When the bond matures, the buyer receives the full face
value. Treasury bonds are among the safest investment options for
community associations because payment is guaranteed by the
government.
◉ Treasury notes.
,Answer: Investment option that matures in one to 10 years.
Treasury notes are issued in denominations from $1,000 to
$100,000. They are also interest-bearing with interest paid every six
months. When the note matures, the buyer receives the full face
value. Treasury notes are among the safest investment options for
community associations because payment is guaranteed by the
government.
◉ Turnover.
Answer: That date upon which homeowners gain control of their
association from the developer. Typically, turnover occurs at an
annual or special meeting of the homeowners.
◉ U. S. Bankruptcy Code.
Answer: The purpose of bankruptcy laws is to help honest people
and businesses find a way to pay their debt or get a fresh start.
Bankruptcy laws help people who can no longer pay their creditors
start anew—by liquidating assets to pay their debts or by creating a
repayment plan. Among many other corrections and revisions, and
with the strong lobbying efforts of CAI staff and volunteers, the
Bankruptcy Prevention and Consumer Protection Act passed in 2005
contained a small provision benefitting community associations. It
clarified that associations have the authority to collect assessments
that come due after the date the homeowner filed for bankruptcy.
◉ Umbrella association.
, Answer: Governance structure where there is more than one
residential community association grouped together. Often there is a
hierarchy with independent subassociations under an umbrella
association Also known as a Master Association. Words Definition
◉ Veterans Administration (VA).
Answer: One of four entities—including Fannie Mae, Freddie Mac,
FHA and VA—that have an impact on community association
insurance obligations. Federallyestablished secondary mortgage
institution that sets requirements that community associations have
to meet if owners are to participate in their financing or repurchase
programs. Federal agency regulates and influences such items as the
amount of insurance a community association must carry,
procedures for financial operations, procedures an association must
follow to dissolve, and requirements for the upkeep of property.
◉ Volunteer or self-management.
Answer: The community association is managed by volunteer
members of the board itself or by committees under the direction of
the board. While there are no out-ofpocket management fees,
continuity can be difficult because of volunteer turnover and
inconsistent service. Professionalism depends on the skills and
experience of those who volunteer. Other management options
include hiring an associationemployed manager or management
company.
◉ Ad hoc committees.
PAPER QUESTIONS AND SOLUTIONS
◉ Waiver of the transfer of recovery rights.
Answer: A common insurance contract endorsement designed to
minimize a community association's property exposure to loss, the
waiver of the transfer of recovery rights prohibits the insurer from
attempting to seek restitution from a third party who causes any
kind of loss to the insured. This type of arrangement is allowable
under certain circumstances where the insured could be held liable
for a claim that is paid. In other words, a waiver of the transfer of
recovery rights is the endorsement that deletes the right of the
association to seek reimbursement for a covered loss from the
owner who caused the damage. Also commonly known as a "waiver
of subrogation."
◉ Waiver provision.
Answer: Contract provision that states that a waiver (permission) by
one party of any breach of contract (failure to fulfill a provision) by
the other party shall not act as a general waiver of future breaches.
In other words, each party says to the other, "If we let you slide on
any contract requirement at any time, it doesn't mean we're letting
you slide on any other requirements, or even on that one a second
time— unless we decide to let you do it again."
,◉ Work order/response form.
Answer: A form for assigning maintenance work to be done. With
some planning, it can be used— • To document owner and tenant
requests • To assign maintenance tasks to both maintenance staff
and contractors • As a response form to be returned to an owner or
tenant, indicating that work was completed or confirming that it was
assigned • As a basis for allocating charges, when appropriate A
work order/response form has several benefits. It— • Identifies
whether the need is an emergency or not • Requires attention •
Allows follow-up to evaluate satisfaction • Provides a means of
monitoring costs • Provides a history of the repairs that have been
made • Documents any problems with contractors reported by
owners or tenants • Indicates if the work is a recurring problem
necessitating further evaluation Most software programs have work
order/response forms as part of their system.
◉ Treasury bonds.
Answer: Investment option that matures in more than 10 years.
Treasury bonds are issued in denominations from $1,000 to
$100,000. They are also interest-bearing with interest paid every six
months. When the bond matures, the buyer receives the full face
value. Treasury bonds are among the safest investment options for
community associations because payment is guaranteed by the
government.
◉ Treasury notes.
,Answer: Investment option that matures in one to 10 years.
Treasury notes are issued in denominations from $1,000 to
$100,000. They are also interest-bearing with interest paid every six
months. When the note matures, the buyer receives the full face
value. Treasury notes are among the safest investment options for
community associations because payment is guaranteed by the
government.
◉ Turnover.
Answer: That date upon which homeowners gain control of their
association from the developer. Typically, turnover occurs at an
annual or special meeting of the homeowners.
◉ U. S. Bankruptcy Code.
Answer: The purpose of bankruptcy laws is to help honest people
and businesses find a way to pay their debt or get a fresh start.
Bankruptcy laws help people who can no longer pay their creditors
start anew—by liquidating assets to pay their debts or by creating a
repayment plan. Among many other corrections and revisions, and
with the strong lobbying efforts of CAI staff and volunteers, the
Bankruptcy Prevention and Consumer Protection Act passed in 2005
contained a small provision benefitting community associations. It
clarified that associations have the authority to collect assessments
that come due after the date the homeowner filed for bankruptcy.
◉ Umbrella association.
, Answer: Governance structure where there is more than one
residential community association grouped together. Often there is a
hierarchy with independent subassociations under an umbrella
association Also known as a Master Association. Words Definition
◉ Veterans Administration (VA).
Answer: One of four entities—including Fannie Mae, Freddie Mac,
FHA and VA—that have an impact on community association
insurance obligations. Federallyestablished secondary mortgage
institution that sets requirements that community associations have
to meet if owners are to participate in their financing or repurchase
programs. Federal agency regulates and influences such items as the
amount of insurance a community association must carry,
procedures for financial operations, procedures an association must
follow to dissolve, and requirements for the upkeep of property.
◉ Volunteer or self-management.
Answer: The community association is managed by volunteer
members of the board itself or by committees under the direction of
the board. While there are no out-ofpocket management fees,
continuity can be difficult because of volunteer turnover and
inconsistent service. Professionalism depends on the skills and
experience of those who volunteer. Other management options
include hiring an associationemployed manager or management
company.
◉ Ad hoc committees.
