Condominium Governance & Association Relations Flashcards

A condominium association's fidelity bond (crime insurance) primarily protects against:

Answer: Dishonest acts or embezzlement by board members or employees

A fidelity bond protects the association's funds from theft, fraud, or embezzlement committed by directors, officers, employees, or managing agents.

The concept of 'selective enforcement' in condominium governance refers to:

Answer: Applying rules inconsistently against some owners but not others in similar situations

Selective enforcement—applying rules to some owners while ignoring the same violations by others—can expose an association to discrimination claims and waiver defenses.

Under what circumstance may a condominium board take action via 'unanimous written consent' without holding a formal meeting?

Answer: When all board members sign a written consent agreeing to the action

Most states allow boards to act without a formal meeting if every board member signs a written consent approving the specific action, as permitted by state law and governing documents.

A condominium association that fails to enforce a provision in its governing documents for an extended period may find that provision:

Answer: Subject to a waiver defense when later enforced against an owner

Prolonged non-enforcement can create a waiver, making it difficult for the association to suddenly enforce a rule against owners who relied on the prior lax enforcement.

When a dispute arises between a unit owner and the association over an alleged rule violation, what is the recommended first step before pursuing legal action?

Answer: Engaging in the association's internal dispute resolution process

Most governing documents and state statutes require or encourage parties to exhaust internal dispute resolution procedures before resorting to litigation.

The 'common surplus' of a condominium association refers to:

Answer: The amount by which revenues exceed expenses for the fiscal year

Common surplus is the excess of the association's revenues over its expenses and obligations, and its disposition is typically governed by the declaration or state statute.

Which of the following actions would most likely constitute a breach of a board member's duty of loyalty?

Answer: Awarding a contract to a vendor in which the board member has an undisclosed ownership interest

The duty of loyalty prohibits board members from self-dealing or benefiting personally at the association's expense, especially when the conflict is not disclosed.