CMCA - M100 STUDY GUIDE
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.
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.
Wrongful acts - Answer -Legal claims can be brought against a community association
based on the manner in which it conducts its business. Examples of "wrongful acts"
include the failure to file taxes, collect assessments, maintain replacement reserves, or
deliver core services to its residents (member/owners and tenants). Directors and
,officers (D&O) liability insurance is designed to pay for damages arising from wrongful
acts that do not lead to property damage, bodily injury, advertising injury, or personal
injury.
Yield - Answer -One of three essential investment objectives for community
associations, yield is the amount of return on an investment. The other two essential
investment objectives are liquidity and safety.
Zero-base budgeting - Answer -A method of budget preparation where all amounts are
set to zero and the budget amount must be justified, instead of assuming the line item is
needed and adjusting the amount for the coming year. The zerobase approach keeps
you from accepting this year's figures at face value. It requires you to analyze the
reasons for the actual amounts spent. The actual dollar figure may be less or more than
the budgeted figure because of circumstances you cannot assume will exist during the
coming year. For example, lawn maintenance costs during a dry season will be low—
but a community cannot assume that the coming year will be just as dry.
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 satisfactio 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.
Warranty - Answer -A promise or guarantee that parts, materials, or labor will last for a
designated period of time. Warranties required should be part of the RFP (request for
proposal) packet when a community association is interested in receiving proposals for
a particular project. In addition, any contract the association signs should state the
agreed upon warranties clearly and in detail. A warranty should state: What is covered
For how long What is not covered What the contractor will do if the work or product
proves defective
Waiver of lien - Answer -Contract provision that gives up the right to make a claim
against the community association for payments not received. A waiver of lien should
be used when a project involves the heavy use of materials or subcontractors—e.g.,
some type of construction project—and the community association wants to avoid the
risk of having to pay for materials or subcontractors if the contractor fails to do so. A
performance bond, payment bond, and waiver of lien all provide for the community
association's financial protection if the contractor should default.
,Waiver of subrogation - Answer -A common insurance contract endorsement designed
to minimize a community association's property exposure to loss, the waiver of
subrogation 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 subrogation 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 the transfer of recovery rights."
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 - 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.
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.
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.
Wrongful acts - Answer -Legal claims can be brought against a community association
based on the manner in which it conducts its business. Examples of "wrongful acts"
include the failure to file taxes, collect assessments, maintain replacement reserves, or
deliver core services to its residents (member/owners and tenants). Directors and
,officers (D&O) liability insurance is designed to pay for damages arising from wrongful
acts that do not lead to property damage, bodily injury, advertising injury, or personal
injury.
Yield - Answer -One of three essential investment objectives for community
associations, yield is the amount of return on an investment. The other two essential
investment objectives are liquidity and safety.
Zero-base budgeting - Answer -A method of budget preparation where all amounts are
set to zero and the budget amount must be justified, instead of assuming the line item is
needed and adjusting the amount for the coming year. The zerobase approach keeps
you from accepting this year's figures at face value. It requires you to analyze the
reasons for the actual amounts spent. The actual dollar figure may be less or more than
the budgeted figure because of circumstances you cannot assume will exist during the
coming year. For example, lawn maintenance costs during a dry season will be low—
but a community cannot assume that the coming year will be just as dry.
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 satisfactio 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.
Warranty - Answer -A promise or guarantee that parts, materials, or labor will last for a
designated period of time. Warranties required should be part of the RFP (request for
proposal) packet when a community association is interested in receiving proposals for
a particular project. In addition, any contract the association signs should state the
agreed upon warranties clearly and in detail. A warranty should state: What is covered
For how long What is not covered What the contractor will do if the work or product
proves defective
Waiver of lien - Answer -Contract provision that gives up the right to make a claim
against the community association for payments not received. A waiver of lien should
be used when a project involves the heavy use of materials or subcontractors—e.g.,
some type of construction project—and the community association wants to avoid the
risk of having to pay for materials or subcontractors if the contractor fails to do so. A
performance bond, payment bond, and waiver of lien all provide for the community
association's financial protection if the contractor should default.
,Waiver of subrogation - Answer -A common insurance contract endorsement designed
to minimize a community association's property exposure to loss, the waiver of
subrogation 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 subrogation 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 the transfer of recovery rights."
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 - 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.
