M100 Community Association
Management
1. Each of the following are key characteristics of community associations EXCEPT:
a. Mandatory lien-based economic charges or assessments are levied on each owner in order to operate and maintain the
community association.
b. Membership in the community association is mandatory and automatic for all owners.
c. A requirement of community association ownership is serving on the board of directors.
d. Certain documents bind all owners to be governed by the community asso-ciation.: c. A requirement of community
association ownership is serving on the board of directors.
This is one of the three key characteristics common to all community associations. Members of an association are not
legally required to serve on the board of directors; however, the overall success on the community is dependent upon
the members' involvement its affairs.
2. True or False. The primary purpose of a community association is to provide for the governance, business, and communal
aspects of the association.: True
Providing for the governance, business, and communal aspects of the association 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. Each of the following are basic types of residential community associations EXCEPT:
a. Planned community
b. Townhouse
c. Cooperative
d. Condominium: b. Townhouse
While many community associations are indeed townhouse communities, not all such developments are necessarily
associations. A community association is defined in terms of ownership rights—not architectural style.
4. Adoption of the annual budget is an example of which of the following type of resolution?
a. policy resolution
b. administrative resolution
c. special resolution
, M100 Community Association
Management
d. general resolution: d. general resolution
General resolutions involve routine events such as adoption of the annual budget.
5. True or false. The purpose of a community association's governing documents is to provide for the legal structure and
operation of the community.: True
The governing documents define the rights and obligations of both the community association and its owners, create a
binding relationship between each owner and the community association, and establish the mechanisms for governing
and funding the community association's operations.
6. True or false. According to the general hierarchy of authority for governing documents, the bylaws would control in a
conflict with the recorded map, plat, or plan.: False
As a general rule, documents lower in the hierarchy of authority cannot conflict with or change the terms of those above
them. The recorded map, plat, or plan is above the bylaws in the hierarchy, and therefore would prevail in such a
conflict.
7. 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: 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.
8. True or false. A proprietary lease or occupancy agreement in a cooperative defines the member or stockholder's rights
and obligations in relation to the living unit.: True
In a cooperative, the proprietary lease or occupancy agreement serves generally the same purpose as the declaration,
CC&R, or master deed in other community associations. Among other things, the proprietary lease or occupancy
agreement identifies the premises that the stockholder is permitted to occupy exclusively, defines the term of the lease
and the rent that is payable by the stockholder, and establishes the powers and obligations of the cooperative's board
of directors, including assessment rights.
9. Complete the following sentence: The __________ bring the community association into existence, define its basic
purposes and powers, and indicate whether stock will be issued.
, M100 Community Association
Management
a. recorded map, plat, or plan
b. declaration, CC&Rs, or master deed
c. proprietary lease or occupancy agreement
d. articles of incorporation: d. articles of incorporation
A community association's corporate structure is established when a developer sets up the association. The developer
files articles of incorporation—sometimes called a corporate charter—with the appropriate state corporation agency.
10. True or False. The public offering statement is a governing document, as it often distributed along with the governing
documents.: False
The public offering statement is not a governing document; instead, it is simply a disclosure statement that provides
information on the community association to prospective buyers.
11. Each of the following legal sources specify management authority and responsibilities for community associations
EXCEPT:
a. survey data
b. state statutes
c. community association governing documents
d. court decisions: a. survey data
All three types of legal sources—state statutes, governing documents, and court decisions—specify the authority or
power of different parties in a community association and the responsibilities or duties of the different parties.
12. True or false. The basic authority in a community association lies with the developer.: False
The basic authority in a community association lies with the owners. In order for the association to govern effectively the
owners elect a board of directors to act on their behalf. The governing documents delegate most of the association's
decision-making powers to a board.
13. Complete the following sentence: The board of directors in a community association has a _____________ to act in the
best interests and for the benefit of the community as a whole.
a. bond
b. fiduciary duty
, M100 Community Association
Management
c. ballot
d. quorum: b. fiduciary duty
The board's fiduciary duty has two components: (1) Board members are required to avoid conflicts of interest and acting
out of self-interest. (2) They are also required to act as reasonable people in managing the association's affairs.
14. True or false. The "business judgment rule" means that if a board has exercised reasonable business judgment in making a
decision, the court will generally not consider the board negligent in its fiduciary duty.: True
Through judicial decision, a substantial body of law has developed concerning the standards to which directors must
conform while conducting a community association's affairs. Many courts apply the "business judgment rule" to a
board's actions.
15. Which of the following community association committees typically are assigned responsibilities related to elections,
nominations, and architectural standards?
a. standing committees
b. professional committees
c. ad hoc committees
d. mandatory committees: d. mandatory committees
A mandatory committee is one that is required by the governing documents. Mandatory committees typically are
assigned responsibilities related to elections, nominations, and architectural standards.
16. True or false. The role of the professional community association manager is to make all decisions for the association
and to delegate information-gathering and fact-finding support to the board of directors.: False
The professional community association manager is charged with assisting the board of directors' decision making
process by means of providing information-gathering and fact-finding support, implementing the decisions of the board;
and administering the services, programs, and operations of the community association within the policies and
guidelines set by the board.
17. In which of the following forms of community association management is the association managed by the board itself or
by committees under the direction of the board?
a. management company
b. volunteer or self-management
c. association-employed manager
Management
1. Each of the following are key characteristics of community associations EXCEPT:
a. Mandatory lien-based economic charges or assessments are levied on each owner in order to operate and maintain the
community association.
b. Membership in the community association is mandatory and automatic for all owners.
c. A requirement of community association ownership is serving on the board of directors.
d. Certain documents bind all owners to be governed by the community asso-ciation.: c. A requirement of community
association ownership is serving on the board of directors.
This is one of the three key characteristics common to all community associations. Members of an association are not
legally required to serve on the board of directors; however, the overall success on the community is dependent upon
the members' involvement its affairs.
2. True or False. The primary purpose of a community association is to provide for the governance, business, and communal
aspects of the association.: True
Providing for the governance, business, and communal aspects of the association 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. Each of the following are basic types of residential community associations EXCEPT:
a. Planned community
b. Townhouse
c. Cooperative
d. Condominium: b. Townhouse
While many community associations are indeed townhouse communities, not all such developments are necessarily
associations. A community association is defined in terms of ownership rights—not architectural style.
4. Adoption of the annual budget is an example of which of the following type of resolution?
a. policy resolution
b. administrative resolution
c. special resolution
, M100 Community Association
Management
d. general resolution: d. general resolution
General resolutions involve routine events such as adoption of the annual budget.
5. True or false. The purpose of a community association's governing documents is to provide for the legal structure and
operation of the community.: True
The governing documents define the rights and obligations of both the community association and its owners, create a
binding relationship between each owner and the community association, and establish the mechanisms for governing
and funding the community association's operations.
6. True or false. According to the general hierarchy of authority for governing documents, the bylaws would control in a
conflict with the recorded map, plat, or plan.: False
As a general rule, documents lower in the hierarchy of authority cannot conflict with or change the terms of those above
them. The recorded map, plat, or plan is above the bylaws in the hierarchy, and therefore would prevail in such a
conflict.
7. 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: 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.
8. True or false. A proprietary lease or occupancy agreement in a cooperative defines the member or stockholder's rights
and obligations in relation to the living unit.: True
In a cooperative, the proprietary lease or occupancy agreement serves generally the same purpose as the declaration,
CC&R, or master deed in other community associations. Among other things, the proprietary lease or occupancy
agreement identifies the premises that the stockholder is permitted to occupy exclusively, defines the term of the lease
and the rent that is payable by the stockholder, and establishes the powers and obligations of the cooperative's board
of directors, including assessment rights.
9. Complete the following sentence: The __________ bring the community association into existence, define its basic
purposes and powers, and indicate whether stock will be issued.
, M100 Community Association
Management
a. recorded map, plat, or plan
b. declaration, CC&Rs, or master deed
c. proprietary lease or occupancy agreement
d. articles of incorporation: d. articles of incorporation
A community association's corporate structure is established when a developer sets up the association. The developer
files articles of incorporation—sometimes called a corporate charter—with the appropriate state corporation agency.
10. True or False. The public offering statement is a governing document, as it often distributed along with the governing
documents.: False
The public offering statement is not a governing document; instead, it is simply a disclosure statement that provides
information on the community association to prospective buyers.
11. Each of the following legal sources specify management authority and responsibilities for community associations
EXCEPT:
a. survey data
b. state statutes
c. community association governing documents
d. court decisions: a. survey data
All three types of legal sources—state statutes, governing documents, and court decisions—specify the authority or
power of different parties in a community association and the responsibilities or duties of the different parties.
12. True or false. The basic authority in a community association lies with the developer.: False
The basic authority in a community association lies with the owners. In order for the association to govern effectively the
owners elect a board of directors to act on their behalf. The governing documents delegate most of the association's
decision-making powers to a board.
13. Complete the following sentence: The board of directors in a community association has a _____________ to act in the
best interests and for the benefit of the community as a whole.
a. bond
b. fiduciary duty
, M100 Community Association
Management
c. ballot
d. quorum: b. fiduciary duty
The board's fiduciary duty has two components: (1) Board members are required to avoid conflicts of interest and acting
out of self-interest. (2) They are also required to act as reasonable people in managing the association's affairs.
14. True or false. The "business judgment rule" means that if a board has exercised reasonable business judgment in making a
decision, the court will generally not consider the board negligent in its fiduciary duty.: True
Through judicial decision, a substantial body of law has developed concerning the standards to which directors must
conform while conducting a community association's affairs. Many courts apply the "business judgment rule" to a
board's actions.
15. Which of the following community association committees typically are assigned responsibilities related to elections,
nominations, and architectural standards?
a. standing committees
b. professional committees
c. ad hoc committees
d. mandatory committees: d. mandatory committees
A mandatory committee is one that is required by the governing documents. Mandatory committees typically are
assigned responsibilities related to elections, nominations, and architectural standards.
16. True or false. The role of the professional community association manager is to make all decisions for the association
and to delegate information-gathering and fact-finding support to the board of directors.: False
The professional community association manager is charged with assisting the board of directors' decision making
process by means of providing information-gathering and fact-finding support, implementing the decisions of the board;
and administering the services, programs, and operations of the community association within the policies and
guidelines set by the board.
17. In which of the following forms of community association management is the association managed by the board itself or
by committees under the direction of the board?
a. management company
b. volunteer or self-management
c. association-employed manager
