CMCA - Certified Manager of Community Associations Assessments and Collections Questions and Answers Flashcards

Mid-year, the board learns that an uninsured storm repair will cost far more than the operating budget can cover. Which funding tool is most commonly used?

Answer: Special assessment

Special assessments fund large unbudgeted expenses, subject to any owner-approval limits in the documents or state law.

Under the accrual basis of accounting, when is assessment income recorded?

Answer: When the assessment is billed or due

Accrual accounting records revenue when it is earned or due, whatever the payment date.

A delinquent owner asks for a payment plan. Which term is most important to put in writing?

Answer: A default clause stating that collection resumes if a payment is missed

A written default provision lets the association resume collection without starting over.

Why do many state statutes and documents give the association a lien for unpaid assessments?

Answer: It secures the debt against the unit so it must be paid before or at transfer

An assessment lien attaches to the property and gives the association security for the unpaid amount.

In many states that follow the UCIOA model, what is the special benefit of an association's 'super-priority' lien?

Answer: It lets a limited amount of assessments take priority over the first mortgage

A super-priority lien gives a set amount, often six to nine months of assessments, priority over the first mortgage.

When fixing a late-fee amount, what should a board confirm first?

Answer: That the fee is authorized by the governing documents and allowed under state law

Late fees must be authorized and reasonable, and many states cap the amount.

An account is uncollectible after the owner's debt was discharged in bankruptcy. How is it typically treated in the association's books?

Answer: Written off against the allowance for doubtful accounts or as bad debt expense

Uncollectible receivables are written off so the financial statements reflect realistic assets.