M100 COMMUNITY ASSOCIATION MANAGEMENT
UPDATED ACTUAL QUESTIONS WITH CORRECT
ANSWERS
Question 1.
Qualifications sheet
ANSWER
This is a document that asks for certain types of information to determine if the bidder is
technically and financially qualified to handle a job of this scope. The qualifications sheet may
be included in the association's RFP (request for proposal) packet for very large and
complicated jobs. This is also commonly known as a prospective bidder's questionnaire.
Question 2.
Chapter 13 bankruptcy
ANSWER
Chapter 13 is used to reorganize personal or non- corporate debt. A plan is submitted to a
judge for paying off all or some of the debt over a specified period of time while waiving other
debt that may have been incurred prior to filing for bankruptcy. Chapter 13 establishes a
payment plan detailing the amount that must be paid and the time period for repaying it.
Creditors do not have to agree to the plan. As with Chapter 11, a creditor has more of a chance
of eventually being repaid under Chapter 13 than Chapter 7.
Question 3.
Full funding
ANSWER
Setting a reserve funding goal of attaining and maintaining reserves at or near 100% funded.
This is a conservative methodology, characterized by higher (typically) reserve contributions
and higher reserve balances. This funding plan results in the least likelihood of special
assessments and/or bank loans.
,Question 4.
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.
Question 5.
Statute
ANSWER
Statutes are laws written and adopted by legislatures or administrative agencies. There are
three types of state statutes that apply to community associations: 1.General state statutes
2.Specific state statutes 3.Uniform state statutes State statutes of one of several sources of
legal obligations for community associations.
Question 6.
True or false. A board of directors can legally conduct the business of the association without a
quorum.
ANSWER
False
A quorum is the number of members required to be present for the board to legally conduct
the business of the association. In the absence of a quorum, the only formal actions a board
may take are to recess, adjourn, or take measures to obtain a quorum. A community's bylaws
set the quorum for a board meeting.
Question 7.
True or false.
It's generally a good idea to schedule a performance evaluation meeting with an employee in a public
place.
ANSWER
False
Performance evaluation is the process of reviewing a person's work performance to
determine the extent to which his/her established goals and standards have been met.
Managers should arrange for meetings to be private and uninterrupted. Even informal reviews
can make people anxious. The sensitive nature of the issues discussed during a performance
evaluation meeting warrant a private, confidential setting.
,Question 8.
Members' equity
ANSWER
Another term for fund balance; used with the fund method of reporting. On a community
association balance sheet, members' equity equals the difference between the community
association's assets and liabilities. Industry standards suggest a minimum balance of 2-5% of
gross assessments with 10-15% being very good.
Question 9.
Risk control
ANSWER
A way to treat the primary exposures to loss for a community association (property, liability,
income, and personnel). Risk control activities include: 1. Exposure avoidance 2. Loss
prevention and reduction 3. Segregation of exposure 4. Contractual transfers
Question 10.
Complete the following sentence: A __________ state statute is one that applies only to one or more
types of community associations.
a. general
b. complex
c. specific
d. uniform
ANSWER
c. specific
A specific state statute is one that applies only to one or more types of community
associations. For example, most states have a condominium act which provides for the
establishment and operation of condominiums as legal entities. These acts vary in terms of
their complexity—the simplest ones just allow for the creation of condominiums.
, Question 11.
Workers' Compensation Insurance
ANSWER
A common insurance coverage and endorsement for personnel exposures to loss—in this
case, loss of services due to injuries received while working on behalf of the community
association. State statutes determine the classes of employees to be insured and coverage for
loss of services due to employment-related injuries. In most states, workers' compensation
insurance is obtained from commercial insurers. Coverage for associations with no employees
is rated on an "if any employee" basis and usually is a minimum premium. Every community
association should consider obtaining workers' compensation insurance.
Question 12.
Moral principles
ANSWER
Statements defining how values such as respect, honesty, fairness, and responsibility are
applied. Also commonly known as ethical principles.
Question 13.
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.
Question 14.
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.
UPDATED ACTUAL QUESTIONS WITH CORRECT
ANSWERS
Question 1.
Qualifications sheet
ANSWER
This is a document that asks for certain types of information to determine if the bidder is
technically and financially qualified to handle a job of this scope. The qualifications sheet may
be included in the association's RFP (request for proposal) packet for very large and
complicated jobs. This is also commonly known as a prospective bidder's questionnaire.
Question 2.
Chapter 13 bankruptcy
ANSWER
Chapter 13 is used to reorganize personal or non- corporate debt. A plan is submitted to a
judge for paying off all or some of the debt over a specified period of time while waiving other
debt that may have been incurred prior to filing for bankruptcy. Chapter 13 establishes a
payment plan detailing the amount that must be paid and the time period for repaying it.
Creditors do not have to agree to the plan. As with Chapter 11, a creditor has more of a chance
of eventually being repaid under Chapter 13 than Chapter 7.
Question 3.
Full funding
ANSWER
Setting a reserve funding goal of attaining and maintaining reserves at or near 100% funded.
This is a conservative methodology, characterized by higher (typically) reserve contributions
and higher reserve balances. This funding plan results in the least likelihood of special
assessments and/or bank loans.
,Question 4.
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.
Question 5.
Statute
ANSWER
Statutes are laws written and adopted by legislatures or administrative agencies. There are
three types of state statutes that apply to community associations: 1.General state statutes
2.Specific state statutes 3.Uniform state statutes State statutes of one of several sources of
legal obligations for community associations.
Question 6.
True or false. A board of directors can legally conduct the business of the association without a
quorum.
ANSWER
False
A quorum is the number of members required to be present for the board to legally conduct
the business of the association. In the absence of a quorum, the only formal actions a board
may take are to recess, adjourn, or take measures to obtain a quorum. A community's bylaws
set the quorum for a board meeting.
Question 7.
True or false.
It's generally a good idea to schedule a performance evaluation meeting with an employee in a public
place.
ANSWER
False
Performance evaluation is the process of reviewing a person's work performance to
determine the extent to which his/her established goals and standards have been met.
Managers should arrange for meetings to be private and uninterrupted. Even informal reviews
can make people anxious. The sensitive nature of the issues discussed during a performance
evaluation meeting warrant a private, confidential setting.
,Question 8.
Members' equity
ANSWER
Another term for fund balance; used with the fund method of reporting. On a community
association balance sheet, members' equity equals the difference between the community
association's assets and liabilities. Industry standards suggest a minimum balance of 2-5% of
gross assessments with 10-15% being very good.
Question 9.
Risk control
ANSWER
A way to treat the primary exposures to loss for a community association (property, liability,
income, and personnel). Risk control activities include: 1. Exposure avoidance 2. Loss
prevention and reduction 3. Segregation of exposure 4. Contractual transfers
Question 10.
Complete the following sentence: A __________ state statute is one that applies only to one or more
types of community associations.
a. general
b. complex
c. specific
d. uniform
ANSWER
c. specific
A specific state statute is one that applies only to one or more types of community
associations. For example, most states have a condominium act which provides for the
establishment and operation of condominiums as legal entities. These acts vary in terms of
their complexity—the simplest ones just allow for the creation of condominiums.
, Question 11.
Workers' Compensation Insurance
ANSWER
A common insurance coverage and endorsement for personnel exposures to loss—in this
case, loss of services due to injuries received while working on behalf of the community
association. State statutes determine the classes of employees to be insured and coverage for
loss of services due to employment-related injuries. In most states, workers' compensation
insurance is obtained from commercial insurers. Coverage for associations with no employees
is rated on an "if any employee" basis and usually is a minimum premium. Every community
association should consider obtaining workers' compensation insurance.
Question 12.
Moral principles
ANSWER
Statements defining how values such as respect, honesty, fairness, and responsibility are
applied. Also commonly known as ethical principles.
Question 13.
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.
Question 14.
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.
