CMCA-FREE Cmca 1 Flashcards

A homeowner disputes an assessment charge and requests a hearing before the board. Under most state statutes and governing documents, the board is required to:

Answer: Provide the homeowner with a reasonable opportunity to be heard before imposing any fine or lien

Due process protections in most community association statutes require that homeowners be given notice and an opportunity to be heard before the board imposes fines or takes collection action. This protects the association from legal challenges and ensures fair treatment.

Which financial statement best shows whether an association can meet its short-term obligations as they come due?

Answer: Balance sheet with current assets and liabilities highlighted

The balance sheet shows current assets versus current liabilities, which reveals an association's liquidity — its ability to pay short-term obligations. A current ratio derived from the balance sheet is the standard measure of short-term financial health.

A community association's reserve study is most useful for:

Answer: Determining how much to collect and save for major component repair and replacement over time

A reserve study analyzes the useful life and replacement cost of major common-area components, then calculates the funding needed so reserves are adequate when those components must be repaired or replaced. It is the foundation of long-term capital planning.

When an association board enters executive session, the primary purpose is to:

Answer: Discuss sensitive matters such as litigation, contract negotiations, or personnel issues outside of the open meeting

Executive session allows the board to discuss legally sensitive topics — including pending litigation, personnel matters, and contract negotiations — without those discussions becoming part of the public record. Most statutes require that executive session minutes still be recorded and maintained, though access may be restricted.

An association manager discovers that the board approved a contract with a vendor owned by the board treasurer without disclosing the relationship. This situation is best described as:

Answer: A conflict of interest that should have been disclosed and recused before the vote

Board members owe a duty of loyalty to the association, which requires disclosing any personal or financial interest in a transaction and recusing themselves from the vote. Failure to disclose a conflict of interest can expose the board member to personal liability and void the contract.

Which of the following actions would most directly help an association manager ensure that a vendor contract protects the association's interests?

Answer: Reviewing the contract for scope of work, indemnification, insurance requirements, and termination clauses before execution

A thorough contract review covering scope of work, insurance and indemnification provisions, payment terms, and termination rights protects the association from liability and ensures the vendor's obligations are clearly defined. Managers should coordinate with association counsel on significant contracts.