Knowledge Flashcards

An association's insurance policy that covers claims arising from board members' decisions in managing the association is called:

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

Directors and Officers (D&O) insurance protects board members from personal liability arising from their management decisions.

When is a quorum required in a community association board meeting?

Answer: Whenever the board takes any official action or passes a resolution

A quorum — the minimum number of members needed to conduct business — is required before the board can officially act on any matter.

Under the FHA's Housing for Older Persons Act (HOPA), a community may lawfully restrict residency to persons 55 and older if:

Answer: At least 51% of units are occupied by a person 55 or older and the community publishes and follows policies demonstrating intent to be 55+ housing

HOPA requires that at least 80% of occupied units have one resident 55+, and the community must publish and adhere to policies demonstrating its senior housing intent.

A fidelity bond (employee dishonesty coverage) in a community association context primarily protects against:

Answer: Theft or fraud by employees or board members who handle association funds

A fidelity bond covers financial losses due to dishonest acts, such as embezzlement, by those who handle the association's funds.

Which of the following is typically considered a limited common element in a condominium?

Answer: A balcony attached to and exclusively serving one unit

A limited common element is a portion of the common area reserved for the exclusive use of one or more, but not all, unit owners.

An association transitions from developer control to owner control. Which document typically specifies when and how this transition occurs?

Answer: The community's declaration or state statute

The declaration and/or applicable state statute define the triggers and process for transitioning control from the developer to elected homeowners.

What does 'accrual basis' accounting mean for a community association?

Answer: Revenue and expenses are recorded when earned or incurred, regardless of cash flow timing

Accrual basis accounting recognizes revenue when earned and expenses when incurred, matching economic events to the period they occur rather than when cash changes hands.