CMCA - Certified Manager of Community Associations Governance and Legal Issues Questions and Answers Flashcards

A bylaw provision conflicts with a provision in the recorded declaration (CC&Rs). Absent a statute saying otherwise, which generally controls?

Answer: The declaration, because it ranks higher in the hierarchy of governing documents

The usual hierarchy is federal/state law, then the recorded declaration, articles of incorporation, bylaws, and finally rules and board resolutions.

Under the business judgment rule, a court reviewing a board decision will typically ask whether the directors:

Answer: Acted in good faith, with reasonable information, and within their authority

The business judgment rule protects good-faith, informed decisions made within the board's authority even if the result turns out poorly.

A director owns the landscaping company bidding on the association's contract. What is the most appropriate action?

Answer: The director discloses the interest and abstains from discussion and voting on the contract

Disclosure and abstention are the standard ways to handle a director's conflict of interest and preserve the decision's validity.

The board adopts a rule that goes beyond the powers granted by the governing documents and state law. Such an action is called:

Answer: Ultra vires

An ultra vires act is one taken beyond the legal authority of the association or board and may be invalid.

An owner requests to keep an emotional support animal in a no-pets community. Under the federal Fair Housing Act, the association should generally:

Answer: Evaluate it as a reasonable accommodation request for a person with a disability

Assistance animals are not 'pets' under the FHA, and a request must be evaluated as a reasonable accommodation even when documents ban pets.

Which insurance coverage primarily protects board members against claims of wrongful acts in their decision-making?

Answer: Directors and officers (D&O) liability

D&O coverage responds to claims alleging wrongful acts, errors, or omissions by directors and officers in their governance role.

If the association has repeatedly ignored violations of a fence-height rule for years, a later attempt to enforce it against one owner may be challenged on the grounds of:

Answer: Waiver or selective enforcement

Long-term non-enforcement or inconsistent enforcement can support defenses of waiver or selective enforcement.