M100 Practice Test Questions with Verified
Correct Answers
Community Association
a legal entity in which the owners enjoy the PROTECTION, ENHANCEMENT,
MAINTENANCE and PRESERVATION of their homes and property.
3 Defining Characteristics of a Community Association
1. Membership in the community is MANDATORY and automatic for all owners.
2. Certain association governing documents bind the owners and the association to each other
through mandated actions.
3. Mandatory lien-based assessments (maintenance fees) are levied on each owner in order to
operate and maintain the community association.
Lien
a legal claim by one party (community association) on the property of another (delinquent
owner) to obtain the payment of a debt or the satisfaction of an obligation.
>Placing a lien on an owner's property protects the community association's interest. It
encourages payment of the debt.
Purpose of a Community Association
to provide for the COMMUNITY, BUSINESS, and GOVERNANCE aspects of the
association.
>This is achieved by administering, maintaining and enhancing a residential real estate
development, and through the establishment of a system of property rights, binding covenants
and restrictions, and rules and regulations.
3 Basic Types of Community Associations
,1. Planned Community - An owner owns his lot/unit and the community owns common areas.
2. Condominium - Individual owns his living unit and owns an undivided interest in the
common elements.
3. Cooperative or Stock Cooperative - Individual owns stock or membership in the
cooperative and owns a proprietary lease or occupancy agreement for his living unit.
>A proprietary lease or occupancy agreement defines the member or stockholder's rights and
obligations in relation to the living unit. For most cooperatives, the community association
owns all of the real estate as a not-for profit corporation.
3 Types of Residential Community Associations that can exist by themselves or can be
grouped in CLUSTERS called:
1. Master or Umbrella Associations - consists of more than one residential community
associations.
2. Mixed-Use Development - consists of a mixture of residential and commercial and/or
industrial uses grouped together. Their marketing slogan is often "live, work, play."
3. "55 and Older" Communities - must have one person who is 55 years of age or older living
in at least 80% of its occupied units.
Sources of Legal Obligations of a Community Association
-Federal, state and local statutes, regulations, and case law (court decisions).
-Legal documents unique to the community association that bind the association and its
owners.
-Lender requirements - for example, requirements set by secondary mortgage institutions
(FHA, Fannie Mac, Freddie Mae, etc.)
-Standards set by professional bodies - for example, auditing standards set by the American
Institute of Certified Public Accountants.
,Additional Legal Obligations of Community Associations
-Equal Employment Opportunity Commission (EEOC) - protects against discrimination.
-Fair Debt Collection Practices Act (FDCPA) - protects debtors from unscrupulous debt
collectors and to impose a consistent and fair method to collect debts.
-Fair Labor and Standards Act (FSLA) - dictates standards for the basic minimum wage and
overtime pay.
-Family and Medical Leave Act (FMLA) - requires employers of 50 or more employees to
provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth or
adoption of a child or serious illness.
-Federal Insurance Contributions Act (FICA) - requires employers and employees to make
matching contributions to social security.
-Occupational Safety and Health Act (OSHA) - prevents injuries.
-Soldiers' and Sailors' Civil Relief Act of 1940 - delays civil court actions.
Additional legal Obligations of Community Associations cont.
-US Bankruptcy Code - helps honest people and business find a way to pay their debt or get a
fresh start.
-Federal Communications Commission (FCC) - overrides a community association deed
restriction that bans satellite dishes and antennae from property that is exclusively used,
controlled or owned by the resident.
-Fair Housing Act - prohibits discrimination in the sale, rental, financing insuring and other
housing related services.
3 Types of State Statutes
1. General State Statutes - applies to community associations, as well as to other types of
organizations (Regular, corporate or not-for-profit).
, 2. Specific State Statutes - applies only to one or more types of community associations. The
specific state statutes take precedence.
3. Uniform State Statutes - the national conference of commissioners on uniform state laws
has attempted to standardize specific state statutes like: Uniform Condominium Act, Uniform
Planned Communities Act, Model Real Estate Cooperative Act, Uniform Common Interest
Act.
Governing Documents
to provide for the legal structure and operation of the community.
>Define the rights and obligations of both the community association and its owners.
>Create a binding relationship between each owner and the community association.
>Establish the mechanism for governing and funding the community association's operations
including the establishment of the automatic lien.
>Set forth rules and restrictions for the: protection of both owners and the community,
enhancement of property values and promotion of harmonious living.
General Hierarchy of Authority for Governing Documents
-Recorded map, plat, or plan (to show precise location of units, lots, and/or common area.
-Declaration, CC&R's, Master Deed
-Proprietary lease or occupancy agreement
-Articles of Incorporation (if incorporated)
-By-Laws
-Board Resolutions (cannot conflict with documents above it in the hierarchy.
Recorded Map, Plat, or Plan
a map or plat or plan that is recorded in the county or parish (or similar jurisdiction)
recorder's office before any lots or units shown on it are sold. The purpose is to show the
Correct Answers
Community Association
a legal entity in which the owners enjoy the PROTECTION, ENHANCEMENT,
MAINTENANCE and PRESERVATION of their homes and property.
3 Defining Characteristics of a Community Association
1. Membership in the community is MANDATORY and automatic for all owners.
2. Certain association governing documents bind the owners and the association to each other
through mandated actions.
3. Mandatory lien-based assessments (maintenance fees) are levied on each owner in order to
operate and maintain the community association.
Lien
a legal claim by one party (community association) on the property of another (delinquent
owner) to obtain the payment of a debt or the satisfaction of an obligation.
>Placing a lien on an owner's property protects the community association's interest. It
encourages payment of the debt.
Purpose of a Community Association
to provide for the COMMUNITY, BUSINESS, and GOVERNANCE aspects of the
association.
>This is achieved by administering, maintaining and enhancing a residential real estate
development, and through the establishment of a system of property rights, binding covenants
and restrictions, and rules and regulations.
3 Basic Types of Community Associations
,1. Planned Community - An owner owns his lot/unit and the community owns common areas.
2. Condominium - Individual owns his living unit and owns an undivided interest in the
common elements.
3. Cooperative or Stock Cooperative - Individual owns stock or membership in the
cooperative and owns a proprietary lease or occupancy agreement for his living unit.
>A proprietary lease or occupancy agreement defines the member or stockholder's rights and
obligations in relation to the living unit. For most cooperatives, the community association
owns all of the real estate as a not-for profit corporation.
3 Types of Residential Community Associations that can exist by themselves or can be
grouped in CLUSTERS called:
1. Master or Umbrella Associations - consists of more than one residential community
associations.
2. Mixed-Use Development - consists of a mixture of residential and commercial and/or
industrial uses grouped together. Their marketing slogan is often "live, work, play."
3. "55 and Older" Communities - must have one person who is 55 years of age or older living
in at least 80% of its occupied units.
Sources of Legal Obligations of a Community Association
-Federal, state and local statutes, regulations, and case law (court decisions).
-Legal documents unique to the community association that bind the association and its
owners.
-Lender requirements - for example, requirements set by secondary mortgage institutions
(FHA, Fannie Mac, Freddie Mae, etc.)
-Standards set by professional bodies - for example, auditing standards set by the American
Institute of Certified Public Accountants.
,Additional Legal Obligations of Community Associations
-Equal Employment Opportunity Commission (EEOC) - protects against discrimination.
-Fair Debt Collection Practices Act (FDCPA) - protects debtors from unscrupulous debt
collectors and to impose a consistent and fair method to collect debts.
-Fair Labor and Standards Act (FSLA) - dictates standards for the basic minimum wage and
overtime pay.
-Family and Medical Leave Act (FMLA) - requires employers of 50 or more employees to
provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth or
adoption of a child or serious illness.
-Federal Insurance Contributions Act (FICA) - requires employers and employees to make
matching contributions to social security.
-Occupational Safety and Health Act (OSHA) - prevents injuries.
-Soldiers' and Sailors' Civil Relief Act of 1940 - delays civil court actions.
Additional legal Obligations of Community Associations cont.
-US Bankruptcy Code - helps honest people and business find a way to pay their debt or get a
fresh start.
-Federal Communications Commission (FCC) - overrides a community association deed
restriction that bans satellite dishes and antennae from property that is exclusively used,
controlled or owned by the resident.
-Fair Housing Act - prohibits discrimination in the sale, rental, financing insuring and other
housing related services.
3 Types of State Statutes
1. General State Statutes - applies to community associations, as well as to other types of
organizations (Regular, corporate or not-for-profit).
, 2. Specific State Statutes - applies only to one or more types of community associations. The
specific state statutes take precedence.
3. Uniform State Statutes - the national conference of commissioners on uniform state laws
has attempted to standardize specific state statutes like: Uniform Condominium Act, Uniform
Planned Communities Act, Model Real Estate Cooperative Act, Uniform Common Interest
Act.
Governing Documents
to provide for the legal structure and operation of the community.
>Define the rights and obligations of both the community association and its owners.
>Create a binding relationship between each owner and the community association.
>Establish the mechanism for governing and funding the community association's operations
including the establishment of the automatic lien.
>Set forth rules and restrictions for the: protection of both owners and the community,
enhancement of property values and promotion of harmonious living.
General Hierarchy of Authority for Governing Documents
-Recorded map, plat, or plan (to show precise location of units, lots, and/or common area.
-Declaration, CC&R's, Master Deed
-Proprietary lease or occupancy agreement
-Articles of Incorporation (if incorporated)
-By-Laws
-Board Resolutions (cannot conflict with documents above it in the hierarchy.
Recorded Map, Plat, or Plan
a map or plat or plan that is recorded in the county or parish (or similar jurisdiction)
recorder's office before any lots or units shown on it are sold. The purpose is to show the
