FREE CMCA Beginner's Questions and Answers Flashcards

Which governing document generally takes precedence when it conflicts with the bylaws?

Answer: Declaration (CC&Rs)

The declaration ranks above the bylaws, rules, and resolutions in the hierarchy of governing documents.

A homeowner asks the manager to waive a late fee. Who normally has the authority to approve the waiver?

Answer: The board of directors, or the manager only if the board has delegated that authority

Managers act only within the authority the board delegates to them, usually through written policy.

What is the main purpose of a reserve study?

Answer: To estimate the remaining life and replacement cost of common components and recommend funding

A reserve study combines a physical analysis of components with a funding plan for future repairs and replacements.

Under the business judgment rule, courts generally defer to board decisions that are made:

Answer: In good faith, with reasonable care, and within the board's authority

The rule protects good-faith, informed decisions made within the board's authority, even if the result is poor.

Which item is usually classified as an operating expense rather than a reserve expense?

Answer: Monthly landscaping maintenance

Routine, recurring costs belong in the operating budget, while periodic major replacements are funded from reserves.

A quorum at an association meeting is defined as:

Answer: The minimum number of members or directors who must be present to conduct business

Without a quorum as defined in the governing documents, no binding business can be conducted.

Which type of insurance protects board members from claims of wrongful acts in their decision-making?

Answer: Directors and officers (D&O) liability insurance

D&O coverage protects directors and officers against claims over their governance decisions.