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

An association's assessment becomes a lien on the property on what date in most governing documents?

Answer: The date the assessment is due and unpaid

In most CC&Rs and state statutes, assessments automatically become a lien on the property as of the date they become due and remain unpaid, without any additional action by the association.

Which statement best describes the business judgment rule as applied to an association's collection decisions?

Answer: Courts will not second-guess a board's collection decisions made in good faith, with adequate information, and in the association's best interest

The business judgment rule protects board members from personal liability when they make collection decisions in good faith, on an informed basis, and in the honest belief the action is in the association's best interest.

In community association collections, acceleration means:

Answer: Declaring the entire unpaid balance due immediately upon default

Acceleration means that upon a default such as missing a payment plan installment, the entire remaining balance becomes immediately due, preventing the owner from resuming partial payments.

Which federal law most directly affects how community associations communicate with homeowners about delinquent assessments when a third-party collection agency is involved?

Answer: The Fair Debt Collection Practices Act

The FDCPA governs how third-party debt collectors communicate with consumers about debts, including required disclosures, prohibited practices, and dispute rights.

What is a super lien in the context of community association collections?

Answer: A statutory lien giving the association priority over a first mortgage for a limited amount of unpaid assessments

In states with super lien statutes, the association's lien for a specified number of months of assessments takes priority over the first mortgage lender, giving associations powerful leverage in collection.

What does it mean when an association writes off a delinquent account as a bad debt?

Answer: The association removes the balance from active receivables for accounting purposes but may still pursue collection

Writing off a bad debt is an accounting adjustment that removes the uncollectable balance from active receivables. It does not legally extinguish the debt, and the association can still pursue collection within the statute of limitations.