CCS Condominium Governance & Association Relations 2 — Questions and Answers
Question 1: A condominium association's board votes to impose a special assessment without a unit owner vote. Under what condition is this typically permissible?
- When the amount does not exceed a threshold set in the governing documents (Correct answer)
- When at least one board member is a licensed attorney
- When the association has no reserve fund
- When more than half of units are owner-occupied
Correct answer: When the amount does not exceed a threshold set in the governing documents
Most governing documents allow the board to impose special assessments up to a specified dollar amount or percentage without requiring a full owner vote.
Question 2: Which fiduciary duty requires board members to act on the basis of adequate information before making decisions?
- Duty of loyalty
- Duty of care (Correct answer)
- Duty of obedience
- Duty of disclosure
Correct answer: Duty of care
The duty of care requires directors to be reasonably informed and deliberate before making decisions on behalf of the association.
Question 3: A unit owner requests to inspect the association's financial records. Under most state statutes, the association must provide access within:
- 5 business days
- 10 business days (Correct answer)
- 30 calendar days
- 60 calendar days
Correct answer: 10 business days
Most state condo statutes require associations to make financial records available within 10 business days of a written request.
Question 4: What is the primary purpose of an association's reserve study?
- To set annual maintenance fees
- To estimate future repair costs and required reserve contributions (Correct answer)
- To audit current board members' performance
- To determine voting weights for unit owners
Correct answer: To estimate future repair costs and required reserve contributions
A reserve study analyzes the condition and remaining life of common elements to project future repair costs and necessary reserve fund contributions.
Question 5: When a condominium board enters into a contract for services exceeding a certain value, many states require:
- Approval by a simple majority of unit owners
- Competitive bidding from at least three vendors (Correct answer)
- Approval by the state real estate commission
- A licensed contractor to serve on the board
Correct answer: Competitive bidding from at least three vendors
Many state statutes and governing documents require competitive bids from multiple vendors for contracts above a specified dollar threshold to ensure transparency.
Question 6: A board member who owns a company that the association is considering hiring has a conflict of interest. The proper course of action is to:
- Cast a vote but disclose the conflict afterward
- Recuse themselves from the vote and disclose the conflict (Correct answer)
- Resign from the board immediately
- Have a family member vote on their behalf
Correct answer: Recuse themselves from the vote and disclose the conflict
The conflicted board member must disclose the conflict and abstain from voting to satisfy the duty of loyalty and avoid self-dealing.
Question 7: The 'business judgment rule' protects condominium board members from liability when they:
- Act in bad faith to benefit a particular unit owner
- Make decisions that are uniformly unpopular with residents
- Act in good faith, with due care, and in the association's best interest (Correct answer)
- Fail to follow the association's governing documents
Correct answer: Act in good faith, with due care, and in the association's best interest
The business judgment rule shields directors from personal liability for decisions made in good faith, with adequate information, and in the honest belief they served the association.
CCS Condominium Governance & Association Relations 2
A condominium association's board votes to impose a special assessment without a unit owner vote.
Under what condition is this typically permissible?