Certified Manager of Community Associations (CMCA) Exam — Questions and Answers

Question 1: When a board member has a financial interest in a vendor being considered for a contract, what should they do?

Negotiate a better price before disclosing
Ignore it if the vendor offers the lowest bid
Disclose the conflict of interest and recuse themselves from the vote (Correct answer)
Vote in favor to support the local business

Correct answer: Disclose the conflict of interest and recuse themselves from the vote

Board members must disclose conflicts of interest and abstain from voting on matters where they have a personal financial stake to uphold fiduciary duty.

Question 2: A board member learns that a contract being voted on would benefit their own business. What should the board member do?

Abstain only if another board member raises an objection
Resign from the board immediately
Disclose the conflict of interest and recuse themselves from the vote (Correct answer)
Vote in favor to ensure the best service for the community

Correct answer: Disclose the conflict of interest and recuse themselves from the vote

Board members with a conflict of interest must disclose it and typically recuse themselves from voting to uphold their fiduciary duty and avoid self-dealing.

Question 3: The business judgment rule protects board members from personal liability when they:

Ignore the CC&Rs in favor of their personal preferences
Vote to waive the association's insurance coverage
Approve self-dealing transactions without disclosure
Make decisions in good faith, on an informed basis, and in what they honestly believe is the association's best interest (Correct answer)

Correct answer: Make decisions in good faith, on an informed basis, and in what they honestly believe is the association's best interest

Courts will defer to board decisions made in good faith, with reasonable inquiry, and without personal financial interest. This is the business judgment rule and it is the primary liability shield for board members.

Question 4: A CMCA manager has a personal friendship with a contractor who submits the highest bid. How should the manager handle the bid review?

Rank the friend's bid lower to avoid the appearance of favoritism
Ask the friend to resubmit a lower bid privately
Award the contract since friendship ensures reliability
Disclose the personal relationship to the board and recuse from the selection decision (Correct answer)

Correct answer: Disclose the personal relationship to the board and recuse from the selection decision

Personal relationships with bidders create conflicts of interest that must be disclosed to the board; the manager should then recuse from the final selection to ensure impartiality.

Question 5: An association's property insurance policy includes a "waiver of subrogation" clause. What is the primary function of this clause?

It prevents the insurance company from increasing premiums after a claim is filed.
It waives the association's responsibility to pay the policy deductible.
It requires disputes between the association and the insurer to be settled by arbitration instead of in court.
It prevents the insurance company from suing a negligent homeowner to recover funds paid for a claim. (Correct answer)

Correct answer: It prevents the insurance company from suing a negligent homeowner to recover funds paid for a claim.

Subrogation is a legal right that allows an insurance company, after paying a claim, to "step into the shoes" of the insured (the association) and sue the party responsible for the loss to recover the payment. A waiver of subrogation clause prevents the insurer from exercising this right against the association's members, protecting homeowners from being sued by their own association's insurance carrier.

Question 6: A board votes to use reserve funds for operating expenses without a properly adopted reserve study or membership approval as required by state law. What should the CMCA do?

Consult the management company's attorney without informing the board
Transfer the funds but document the manager's objection in writing
Execute the transfer since the board voted to approve it
Advise the board of the legal requirement and decline to execute the transfer until proper procedures are followed (Correct answer)

Correct answer: Advise the board of the legal requirement and decline to execute the transfer until proper procedures are followed

Transferring reserve funds in violation of state law is impermissible; the ethical manager must advise the board of the legal constraint and withhold action until proper authorization is obtained.

Question 7: What does 'subrogation' mean in the context of community association insurance?

The process of splitting a claim between two insurers
The insurer's right to pursue a third party responsible for a loss after paying the claim (Correct answer)
The association's right to increase coverage mid-policy term
A provision allowing the insurer to cancel coverage without notice

Correct answer: The insurer's right to pursue a third party responsible for a loss after paying the claim

Subrogation allows the insurer, after paying a claim, to step into the insured's shoes and sue the negligent third party to recover the paid amount.

Question 8: Which type of insurance covers the association for claims arising from bodily injury or property damage occurring in common areas?

Workers' compensation
Directors and officers liability
Commercial general liability (Correct answer)
Fidelity or crime insurance

Correct answer: Commercial general liability

Commercial general liability or CGL insurance is the primary coverage for third-party claims of bodily injury or property damage that occur on association-maintained property.

Question 9: An association's bylaws require a two-thirds vote to amend its rules of order. This type of vote requirement is called a:

Simple majority
Plurality
Unanimous consent
Supermajority (Correct answer)

Correct answer: Supermajority

A supermajority requires more than a simple majority, often two-thirds or three-quarters, and is used for significant decisions such as governing document amendments or board recall votes.

Question 10: A manager receives an invoice for $8,500 that was not included in the approved budget. What should the manager do first?

Pay the invoice immediately to avoid late fees
Reject the invoice and ask the vendor to resubmit next year
Present the unbudgeted expenditure to the board for approval before payment (Correct answer)
Charge the amount to the reserve fund

Correct answer: Present the unbudgeted expenditure to the board for approval before payment

Unbudgeted expenditures above a board-established threshold require board authorization before payment to maintain proper financial controls.

Question 11: A community association discovers that fire sprinkler inspection tags are expired. What is the immediate priority?

Contact the fire marshal only if a fire occurs
Notify the board at the next quarterly meeting
Schedule a licensed inspection immediately to ensure life-safety compliance (Correct answer)
Replace the tags without conducting a new inspection

Correct answer: Schedule a licensed inspection immediately to ensure life-safety compliance

Expired fire sprinkler inspection tags indicate a life-safety system may be out of compliance, requiring immediate re-inspection by a licensed professional.

Question 12: Accrual basis accounting recognizes revenues and expenses when:

Year-end financial statements are prepared
Cash is actually received or paid
The board approves them
They are earned or incurred regardless of when cash changes hands (Correct answer)

Correct answer: They are earned or incurred regardless of when cash changes hands

Accrual accounting records revenue when it is earned such as when assessments are due, and expenses when they are incurred such as when a service is performed, regardless of actual cash flow timing.

Question 13: Under the Fair Housing Act, which of the following is a protected class when enforcing community association rules?

Familial status (Correct answer)
Occupation
Political affiliation
Pet ownership

Correct answer: Familial status

Familial status is one of the seven protected classes under the Federal Fair Housing Act, protecting households with children under 18.

Question 14: A homeowner sues the Board of Directors, alleging they acted negligently by failing to properly maintain the common area drainage system, which led to water damage in the homeowner's unit. Defense against this type of lawsuit would primarily be covered by which policy?

Commercial Umbrella Insurance
Directors & Officers (D&O) Liability Insurance (Correct answer)
Property Insurance
Fidelity Bond

Correct answer: Directors & Officers (D&O) Liability Insurance

Directors & Officers (D&O) liability insurance protects board members and the association from claims arising from their decisions and actions (or inactions) taken while managing the community. This includes allegations of negligence, errors, and omissions in their performance of fiduciary duties. Property insurance covers direct damage to property, a Fidelity Bond covers theft, and an Umbrella policy provides excess liability coverage over other policies.

Question 15: A board member insists on using his brother-in-law's landscaping company without obtaining competing bids. What is the manager's BEST course of action?

Reject the vendor without explanation at the next board meeting
Advise the board that competitive bidding is required by governing documents or best practices, and that the conflict of interest must be disclosed (Correct answer)
Proceed with the hire to avoid conflict with the board member
Hire the vendor but do not document the board member's relationship

Correct answer: Advise the board that competitive bidding is required by governing documents or best practices, and that the conflict of interest must be disclosed

The manager must advise the board of competitive bidding requirements and ensure the conflict of interest is disclosed and handled per governing documents and fiduciary duty standards.

Question 16: What does running with the land mean in the context of CC&Rs?

The CC&Rs bind not only current owners but also all future owners of the property (Correct answer)
CC&Rs expire when a property is sold
The association president must run for office annually
Owners must maintain the landscaping along their property lines

Correct answer: The CC&Rs bind not only current owners but also all future owners of the property

Running with the land means the CC&Rs are attached to the property itself. Every future buyer is automatically bound by them at purchase regardless of whether they agreed to them personally.

Question 17: What information does a cash flow statement provide that the income statement does not?

The association's net worth at period end
Depreciation of common area assets
Total revenue and expenses for the period
The timing and sources of actual cash inflows and outflows (Correct answer)

Correct answer: The timing and sources of actual cash inflows and outflows

The cash flow statement shows when and where cash actually moved, which differs from accrual-based revenue and expense recognition on the income statement.

Question 18: Which of the following best describes a threshold funding approach in a reserve study?

Setting contributions at whatever owners are willing to pay
Funding only the most expensive components
Funding reserves to 100% at all times
Keeping the reserve balance above a minimum floor to avoid reaching zero or going negative (Correct answer)

Correct answer: Keeping the reserve balance above a minimum floor to avoid reaching zero or going negative

Threshold funding aims to keep the reserve balance above a predetermined minimum rather than targeting full funding, balancing financial security with owner assessment levels.

Question 19: Which of the following is an example of an improper application of payments received from a delinquent owner?

Applying payments to the oldest outstanding balance first
Applying payments in the order specified by state statute
Applying payments to attorney fees before principal assessments against the owner's wishes when restricted by state law (Correct answer)
Applying payments as directed by the association's written collection policy

Correct answer: Applying payments to attorney fees before principal assessments against the owner's wishes when restricted by state law

Many states mandate a specific payment application order (e.g., assessments before fees and costs), and ignoring that statutory order when the owner objects can expose the association to legal liability.

Question 20: Which of the following best reflects the CMCA's duty of loyalty?

Favoring long-term residents over new owners in dispute resolution
Prioritizing the management company's financial interests over the association's
Aligning decisions with the most influential board member's preferences
Acting in the best interests of the association, not personal or employer gain (Correct answer)

Correct answer: Acting in the best interests of the association, not personal or employer gain

The duty of loyalty requires the CMCA to act solely in the best interests of the association and its members, free from personal or third-party conflicts.

Question 21: What does a preventive maintenance schedule primarily help a community association avoid?

Vendor price increases
Unexpected emergency repairs and premature component failure (Correct answer)
Board member term limits
Reserve study updates

Correct answer: Unexpected emergency repairs and premature component failure

Preventive maintenance extends the life of components and reduces the frequency and cost of emergency repairs.

Question 22: Continuing education requirements for CMCA recertification primarily serve to:

Increase the revenue of the management company
Satisfy insurance carrier requirements only
Demonstrate that managers can pass written tests
Ensure managers stay current with evolving laws, best practices, and industry standards (Correct answer)

Correct answer: Ensure managers stay current with evolving laws, best practices, and industry standards

Continuing education keeps certified managers current with changes in state law, industry best practices, and emerging issues in community association management.

Question 23: When providing notice for an annual meeting of members, the notice period required by most state laws and governing documents is typically:

Exactly 60 days before the meeting
At least 10 to 30 days in advance (Correct answer)
24 hours before the meeting
No notice is required if the date is published in the budget

Correct answer: At least 10 to 30 days in advance

Most governing documents and state statutes require advance written notice of member meetings—commonly between 10 and 30 days—to give owners adequate time to prepare.

Question 24: When an association's financial audit reveals a material weakness in internal controls, this means:

The association failed to complete a reserve study
The audit found a minor clerical error
The association has a strong financial position
There is a significant deficiency in internal controls that could allow material misstatement of financial statements to go undetected (Correct answer)

Correct answer: There is a significant deficiency in internal controls that could allow material misstatement of financial statements to go undetected

A material weakness is a serious gap in internal controls, one significant enough that there is a reasonable possibility that a material misstatement in the financial statements would not be prevented or detected in a timely manner.

Question 25: Which principle requires that board-adopted rules must be reasonably related to a legitimate purpose of the association and applied uniformly?

The doctrine of promissory estoppel
The rule of perpetuities
The privity of contract doctrine
The reasonableness and uniformity standard (Correct answer)

Correct answer: The reasonableness and uniformity standard

Courts evaluate association rules under a reasonableness standard—rules must serve a legitimate community purpose and be enforced uniformly to be upheld.

Question 26: Standing rules in a community association differ from rules and regulations primarily in that standing rules:

Are recorded with the county and run with the land
Must be approved by a membership vote to become effective
Are procedural rules adopted by the board for its own internal operations, not governing homeowner conduct (Correct answer)
Override the CC&Rs when they conflict

Correct answer: Are procedural rules adopted by the board for its own internal operations, not governing homeowner conduct

Standing rules are internal procedural guidelines for how the board conducts its own affairs such as meeting procedures and committee assignments, as distinguished from rules and regulations that govern homeowner behavior.

Question 27: Which practice best supports transparency in community association communications?

Limiting financial information to the treasurer and property manager
Conducting all board discussions in executive session to avoid controversy
Sharing board meeting minutes only with board members
Publishing approved board meeting minutes and financial summaries accessible to all homeowners (Correct answer)

Correct answer: Publishing approved board meeting minutes and financial summaries accessible to all homeowners

Publishing approved minutes and financial summaries gives all homeowners visibility into association decisions and finances, which is a cornerstone of transparent governance.

Question 28: An owner challenges the eligibility of a candidate at the annual election, claiming the candidate is delinquent in assessments. The inspector of elections should:

Allow only the delinquent candidate to decide whether to withdraw
Postpone the entire election until the delinquency is resolved
Immediately disqualify the candidate based on the owner's allegation
Allow the election to proceed and refer the eligibility question to the board or legal counsel for a ruling (Correct answer)

Correct answer: Allow the election to proceed and refer the eligibility question to the board or legal counsel for a ruling

The inspector of elections oversees the voting process but eligibility disputes are typically resolved by the board or legal counsel, so the election should proceed while the challenge is referred.

Question 29: Which of the following is an example of a board acting outside its authority, also known as ultra vires?

Adopting a parking policy within the authority granted by the CC&Rs
Approving a contract within the board's designated spending authority
Hiring a management company as permitted by the bylaws
Amending the CC&Rs by board resolution alone without the required membership vote (Correct answer)

Correct answer: Amending the CC&Rs by board resolution alone without the required membership vote

Acting ultra vires means acting beyond the scope of authority granted by governing documents or law. Amending CC&Rs is a power reserved to the membership, so a board-only amendment would be unauthorized and voidable.

Question 30: Why are there special membership meetings?

To elect members to the board.
To vote on a new budget.
To conduct specific business. (Correct answer)
As a means to communicate to membership.

Correct answer: To conduct specific business.

Special membership meetings are called outside of the regular annual meeting schedule to address urgent or specific matters that require member input or a vote. These matters are typically too important to wait for the next annual meeting and are explicitly stated in the meeting notice. Examples include voting on a major special assessment, amending governing documents, or addressing a significant community crisis.

Question 31: When a community association enters into a contract, it is acting as:

An extension of the local municipality
A governmental entity with sovereign immunity
A real estate brokerage
A legal entity such as a nonprofit corporation with capacity to contract (Correct answer)

Correct answer: A legal entity such as a nonprofit corporation with capacity to contract

Community associations are typically incorporated as nonprofit corporations, giving them legal capacity to enter contracts, sue and be sued, and hold property in their own name.

Question 32: What is 'alternative dispute resolution' (ADR) and why might a board prefer it over litigation?

The board's internal grievance committee review process
A method of amending governing documents without a member vote
Processes like mediation or arbitration that resolve disputes without going to court (Correct answer)
A state agency that adjudicates HOA disputes

Correct answer: Processes like mediation or arbitration that resolve disputes without going to court

ADR—including mediation and arbitration—resolves disputes faster and less expensively than litigation while preserving community relationships.

Question 33: A manager discovers that a former board treasurer improperly transferred association funds. The manager's FIRST obligation is to:

Keep the matter confidential to protect the association's reputation
Conduct a personal investigation before alerting anyone
Immediately report the situation to the board and recommend involving legal counsel (Correct answer)
Send a letter directly to the former treasurer demanding repayment

Correct answer: Immediately report the situation to the board and recommend involving legal counsel

Financial misconduct must be promptly reported to the board so they can take immediate action, including involving legal counsel and potentially law enforcement.

Question 34: A community manager is asked by the Board of Directors to draft a complex amendment to the association's bylaws that redefines quorum and voting rights. Which of the following is the most appropriate action for the manager to take?

Proceed with drafting the amendment but include a disclaimer that the manager is not an attorney.
Ask another experienced community manager to review the drafted amendment for accuracy.
Draft the amendment as requested, using templates found online.
Advise the Board that this action constitutes the unauthorized practice of law and that legal counsel should draft the amendment. (Correct answer)

Correct answer: Advise the Board that this action constitutes the unauthorized practice of law and that legal counsel should draft the amendment.

Drafting amendments to governing documents, especially those involving legal definitions like quorum and voting rights, often requires statutory or case law analysis and can affect the legal rights of the association and its members. This falls into the category of practicing law, which a community manager is not licensed to do. The manager's proper role is to act as a liaison to and recommend the board seek guidance from the association's legal counsel.

Question 35: An association manager receives a vendor invoice that is $3,000 higher than the contracted amount with no change order on file. The manager should:

Approve the overage if it is less than 10% of the contract value
Reject the invoice entirely and terminate the contract
Pay only the contracted amount and request documentation supporting the overage (Correct answer)
Pay the invoice to maintain a good vendor relationship

Correct answer: Pay only the contracted amount and request documentation supporting the overage

The manager should pay only the contracted amount and require the vendor to provide a formal change order with justification before approving any additional cost.

Question 36: A community association newsletter is BEST used to:

Replace the minutes of board meetings
Build community spirit, share upcoming events, and highlight policy reminders in a friendly format (Correct answer)
Issue formal legal notices required by governing documents
Communicate confidential financial details to all homeowners

Correct answer: Build community spirit, share upcoming events, and highlight policy reminders in a friendly format

Newsletters are informal communication tools best suited for building community engagement and sharing general information, not for formal legal notices.

Question 37: Which of the following best describes the 'first in time, first in right' principle as it applies to HOA assessment liens?

The first creditor to file a lawsuit automatically wins regardless of lien recording date
A lien recorded earlier generally has priority over liens recorded later, affecting who gets paid first in a foreclosure sale (Correct answer)
The owner who has lived in the community longest has priority in payment disputes
Assessment liens always have first priority regardless of when they were recorded

Correct answer: A lien recorded earlier generally has priority over liens recorded later, affecting who gets paid first in a foreclosure sale

Lien priority is generally determined by the order of recording, so an earlier-recorded first mortgage typically ranks ahead of a later-recorded HOA lien unless state law provides otherwise.

Question 38: A fully funded reserve plan aims to maintain the reserve balance at what target?

Equal to the sum of the depreciated value of all reserve components (Correct answer)
A minimum balance of $10,000 at all times
50% of the total replacement cost of all components
Enough to cover one year of projected operating expenses

Correct answer: Equal to the sum of the depreciated value of all reserve components

Full funding targets a reserve balance equal to the total accrued depreciation of all components at any given time.

Question 39: An association's investment of reserve funds must prioritize which two characteristics above return on investment?

Tax efficiency and yield
Yield and diversification
Safety and liquidity (Correct answer)
Growth potential and liquidity

Correct answer: Safety and liquidity

Reserve funds must remain safe (low risk of loss) and liquid (accessible when capital expenditures arise), making preservation and accessibility paramount over returns.

Question 40: Under the CAMICB Code of Professional Ethics, a CMCA manager who receives a gift from a vendor the manager recommends to the board must:

Accept gifts up to $500 without disclosure
Accept the gift privately and not disclose it
Disclose the gift to the board and decline or return it to avoid a conflict of interest (Correct answer)
Forward the gift to another manager

Correct answer: Disclose the gift to the board and decline or return it to avoid a conflict of interest

The CAMICB Code requires managers to disclose any gifts, gratuities, or benefits received from vendors and to avoid situations where personal gain could conflict with the association's interests.

Question 41: Which of the following actions by a community manager would constitute an unauthorized practice of law?

Explaining the association's established collections process, as defined in a board-approved policy, to a new board member.
Drafting a formal letter to a homeowner detailing their violation of a specific covenant as outlined in the governing documents.
Forwarding a draft of a proposed rule change to the association's attorney for review and comment. (Correct answer)
Advising the board of directors on the legal interpretation of a recently passed state statute affecting community associations.

Correct answer: Forwarding a draft of a proposed rule change to the association's attorney for review and comment.

The CMCA Standards of Professional Conduct explicitly prohibit managers from providing legal advice or engaging in the unlicensed practice of law. Interpreting state statutes and advising the board on their legal meaning falls into this category. The other actions, such as citing documents, communicating with legal counsel, and explaining established procedures, are all within the appropriate scope of a manager's duties.

Question 42: Which document typically authorizes the association to levy fines for rule violations?

The management agreement
The governing documents (Declaration or bylaws) and applicable state statutes (Correct answer)
The municipality's zoning ordinance
The original developer's sales contract

Correct answer: The governing documents (Declaration or bylaws) and applicable state statutes

The authority to impose fines must be expressly granted by the association's governing documents and must comply with state statutes governing enforcement procedures.

Question 43: A community association's Declaration (CC&Rs) prohibits all pets. A resident with a documented disability requests to keep an assistance animal as a reasonable accommodation. According to the Fair Housing Act, what is the association's obligation?

To grant the request, as it is a change to a rule or policy necessary for the person to have equal opportunity to use and enjoy their dwelling. (Correct answer)
To require the resident to pay a pet deposit to cover any potential damages.
To deny the request because the Declaration is a legally binding document that supersedes federal law.
To grant the request only if the resident agrees to move to a designated pet-friendly section of the community.

Correct answer: To grant the request, as it is a change to a rule or policy necessary for the person to have equal opportunity to use and enjoy their dwelling.

The Fair Housing Act requires housing providers, including community associations, to make reasonable accommodations in rules, policies, practices, or services when necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling. A waiver of a 'no pets' policy for an assistance animal is a common example of a reasonable accommodation. The association cannot charge a pet deposit for an assistance animal, as it is not considered a pet.

Question 44: An association's umbrella policy has a $5 million limit, and the underlying CGL has a $1 million limit. A judgment of $3.5 million is entered against the association. Assuming no deductible complications, how much does the umbrella policy pay?

$5 million
$1 million
$2.5 million (Correct answer)
$3.5 million

Correct answer: $2.5 million

The CGL pays its $1 million limit, and the umbrella pays the remaining $2.5 million to reach the $3.5 million judgment total.

Question 45: A homeowner with limited English proficiency struggles to understand association notices. What is a best practice for the manager?

Work with the board to provide translations or multilingual resources for key communications where practical (Correct answer)
Ask a neighboring homeowner to translate on the association's behalf
Excuse the homeowner from all rules since they cannot understand them
Inform the homeowner that all official communications are in English only and there are no alternatives

Correct answer: Work with the board to provide translations or multilingual resources for key communications where practical

Providing translated materials where practical demonstrates good faith, supports fair enforcement, and reduces discrimination risk.

Question 46: A reserve component inventory in a reserve study typically includes:

All personal property owned by homeowners
The names of all vendors currently under contract
All association-owned common area components with significant replacement costs and predictable useful lives (Correct answer)
Every consumable supply used by the association

Correct answer: All association-owned common area components with significant replacement costs and predictable useful lives

A reserve component inventory lists association-owned assets such as roofs, pools, pavement, and HVAC systems that have significant replacement costs and predictable lifespans, forming the basis of the reserve funding plan.

Question 47: An association's boiler in a high-rise is due for its annual state inspection. Who is authorized to conduct this inspection?

The building maintenance technician after completing an online course
Any HVAC contractor holding a general contractor's license
The property manager after reviewing the manufacturer's manual
A licensed boiler inspector certified by the state or an authorized insurance company inspector (Correct answer)

Correct answer: A licensed boiler inspector certified by the state or an authorized insurance company inspector

State law requires boiler inspections to be performed by a licensed or authorized inspector; unlicensed inspections create legal and safety liability.

Question 48: Which of the following represents the correct hierarchy of authority for a community association's governing documents, from highest to lowest?

Bylaws, Rules & Regulations, Declaration (CC&Rs), Articles of Incorporation, Recorded Plat/Map.
Articles of Incorporation, Bylaws, Rules & Regulations, Recorded Plat/Map, Declaration (CC&Rs).
Rules & Regulations, Bylaws, Declaration (CC&Rs), Articles of Incorporation, Recorded Plat/Map.
Recorded Plat/Map, Declaration (CC&Rs), Articles of Incorporation, Bylaws, Rules & Regulations. (Correct answer)

Correct answer: Recorded Plat/Map, Declaration (CC&Rs), Articles of Incorporation, Bylaws, Rules & Regulations.

The generally accepted hierarchy of authority for governing documents starts with the documents that establish the physical and legal existence of the community and progresses to the operational rules. The Recorded Plat or Map defines the property itself. The Declaration (CC&Rs) establishes the core covenants and restrictions. The Articles of Incorporation create the legal corporate entity. The Bylaws outline the governance and operational procedures of the corporation. Finally, the Rules and Regulations provide specific details for day-to-day living. All of these are subordinate to federal, state, and local laws.

Question 49: What is the key distinction between a 'repair' and a 'replacement' for reserve funding purposes?

Repairs are funded by reserves; replacements by the operating budget
Repairs require board approval; replacements require a vote of owners
Repairs cost more than $1,000; replacements cost less
Repairs restore function without extending useful life; replacements renew the component for a full new lifespan (Correct answer)

Correct answer: Repairs restore function without extending useful life; replacements renew the component for a full new lifespan

Repairs maintain existing function without resetting useful life, while replacements start a new full useful life cycle.

Question 50: When an association board enters executive session, the primary purpose is to:

Exclude board members with a conflict of interest from routine business discussions
Discuss sensitive matters such as litigation, contract negotiations, or personnel issues outside of the open meeting (Correct answer)
Conduct a vote on the annual budget in private to avoid homeowner interference
Permanently seal the minutes from that portion of the meeting from all homeowners

Correct 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.

Question 51: Which project would a board be most likely to hire a consultant for assistance in creating bid specifications?

Specific state statues (Correct answer)
General state statues
Articles of Incorporation
Federal statues

Correct answer: Specific state statues

While the question's phrasing is somewhat ambiguous, a consultant hired to assist in creating bid specifications for a community association project would need to ensure those specifications comply with all applicable laws. Specific state statutes often contain crucial requirements related to building codes, environmental regulations, accessibility standards, and contractor licensing that must be incorporated into project bids. The consultant's expertise helps ensure the project is legally compliant and meets necessary standards.

Question 52: A fire in the community clubhouse causes $75,000 in damages. The association's property insurance policy has a replacement cost provision and a $5,000 deductible. Assuming the loss is fully covered, how much will the insurance company pay for the claim?

$70,000 (Correct answer)
$5,000
$80,000
$75,000

Correct answer: $70,000

The deductible is the portion of a covered loss that the association is responsible for paying out-of-pocket before insurance coverage begins. The insurance company's payment is calculated by taking the total amount of the covered loss and subtracting the deductible amount ($75,000 - $5,000 = $70,000). The association pays the first $5,000.

Question 53: Which part of an insurance policy lists the limits of coverage, the deductible, the length of the policy, and the premium?

Policy Endorsements
Policy definitions
Declaration page(s) (Correct answer)
Policy conditions

Correct answer: Declaration page(s)

The declaration page, often found at the beginning of an insurance policy, acts as a summary of the most critical policy details. It explicitly lists key information such as the named insured, the types of coverage, the specific limits of liability, the deductible amounts, the policy period (length), and the premium charged. This page provides an essential overview of what the policy covers and under what financial terms.

Question 54: Regarding electronic voting (e-voting) in community associations, the general rule is:

E-voting requires a notarized digital signature to be valid
E-voting is only valid if explicitly authorized by the association's governing documents and/or state law (Correct answer)
E-voting is prohibited for board elections but allowed for budget ratification
E-voting is always permitted under federal law regardless of state law

Correct answer: E-voting is only valid if explicitly authorized by the association's governing documents and/or state law

Electronic voting is permissible only where state law and/or the governing documents specifically authorize it; otherwise, traditional ballot methods are required.

Question 55: Which financial statement provides a snapshot of the association's reserve account balance at a specific point in time?

Balance sheet (Correct answer)
Income statement
Budget variance report
Cash flow statement

Correct answer: Balance sheet

The balance sheet shows assets, liabilities, and equity including the reserve fund balance at a specific date.

Question 56: What is the effect of 'estoppel letters' or 'resale certificates' on assessment collections at the time of a property sale?

They permanently waive all outstanding assessments owed by the seller
They transfer all past-due assessments to the buyer without limitation
They disclose the current assessment status and typically freeze the stated balance for the closing transaction (Correct answer)
They cancel the association's lien upon issuance

Correct answer: They disclose the current assessment status and typically freeze the stated balance for the closing transaction

An estoppel or resale certificate states the amounts currently owed and typically binds the association to those figures for a set period, protecting the buyer and closing process.

Question 57: A 'sunset clause' in CC&Rs most commonly means:

The association dissolves at sunset each fiscal year
The developer retains rights indefinitely
Restrictions expire after a set number of years unless renewed (Correct answer)
Assessment obligations end after 30 years

Correct answer: Restrictions expire after a set number of years unless renewed

A sunset clause sets an expiration date on certain CC&R provisions, after which they lapse unless the membership votes to extend them.

Question 58: Which of the following best describes the 'acceleration' clause in HOA collection proceedings?

A clause allowing the association to declare all future assessments for the year immediately due upon a default (Correct answer)
A process for converting assessment debt to equity in the unit
A requirement to file a lawsuit within 30 days of a missed payment
A provision that reduces the amount owed if paid early

Correct answer: A clause allowing the association to declare all future assessments for the year immediately due upon a default

An acceleration clause allows the association to declare the entire remaining balance of assessments for the year (or another period) due immediately once an owner is in default.

Question 59: At an annual meeting, owners want to remove a board member. Which vote threshold typically applies to board member removal?

A unanimous vote of all remaining board members
A majority vote of the entire membership (not just those present), or the threshold specified in governing documents (Correct answer)
Removal requires a court order and cannot be done by membership vote
A simple majority of a quorum present at the meeting

Correct answer: A majority vote of the entire membership (not just those present), or the threshold specified in governing documents

Board member removal typically requires a vote of the entire membership or the threshold specified in the governing documents, which is often higher than a quorum-based majority.

Question 60: A board member has a direct financial interest in a contract being voted on at a board meeting. Best practice requires the director to:

Leave the room only during the vote but participate in discussion
Resign from the board before the vote
Vote in favor to demonstrate transparency
Disclose the conflict, recuse from discussion, and abstain from the vote (Correct answer)

Correct answer: Disclose the conflict, recuse from discussion, and abstain from the vote

Conflict-of-interest best practice requires disclosure, recusal from the discussion, and abstention from the vote to protect the association.

Question 61: A homeowner requests access to the association's financial records under state law. The manager should:

Deny all requests to protect financial privacy
Redirect all requests to the association attorney without any response
Comply with the request in accordance with state statute and governing documents, providing access to non-exempt records (Correct answer)
Charge a $500 inspection fee regardless of what the documents show

Correct answer: Comply with the request in accordance with state statute and governing documents, providing access to non-exempt records

State HOA statutes typically grant members the right to inspect certain association records, and the manager must comply by providing access to non-exempt records within the timeframe the law specifies.

Question 62: When preparing a Request for Proposal (RFP) for a major roof replacement project, which of the following is MOST critical to include to ensure the board receives comparable, "apples-to-apples" bids from contractors?

A request for each contractor's marketing brochure and list of all past clients.
A list of board member availability for interviews.
The association's complete financial statements for the past three years.
Detailed project specifications and a clearly defined scope of work. (Correct answer)

Correct answer: Detailed project specifications and a clearly defined scope of work.

Detailed specifications and a clear scope of work are essential in an RFP because they force all bidders to price the exact same materials, labor, and standards. This allows the board to make a true comparison of costs and qualifications, rather than comparing bids that may be for different quality work.

Question 63: Which document should a manager produce before authorizing a vendor to begin work on association property?

A change of address notification
A building permit for all projects regardless of size
A work authorization or signed contract with approved scope and price (Correct answer)
A special assessment notice to homeowners

Correct answer: A work authorization or signed contract with approved scope and price

Before any work begins, a signed contract or written work authorization defining scope, price, and terms protects both the association and the vendor and prevents scope creep and payment disputes.

Question 64: What is the function of a 'claims-made' liability policy compared to an 'occurrence' policy?

Claims-made policies automatically include a tail endorsement at no extra cost
Claims-made policies have higher premiums but broader coverage
Claims-made covers only property damage; occurrence covers only bodily injury
Claims-made requires both the incident and the claim to fall within the policy period or extended reporting period (Correct answer)

Correct answer: Claims-made requires both the incident and the claim to fall within the policy period or extended reporting period

Under a claims-made policy, coverage is triggered only if the claim is reported during the active policy period or an extended reporting period (tail).

Question 65: Directors and officers liability insurance protects:

The association's physical property
Homeowners from assessment increases
Employees injured during the course of employment
Board members from personal liability for wrongful acts in their governance capacity (Correct answer)

Correct answer: Board members from personal liability for wrongful acts in their governance capacity

D&O insurance covers board members for claims alleging they made wrongful decisions, breached their fiduciary duty, or violated governing documents in their governance role.

Question 66: An association receives a partial payment from a severely delinquent owner but the amount is less than the total owed. What does a properly drafted collection policy typically specify regarding acceptance?

Accepting any payment automatically resets the delinquency clock and waives late fees
All partial payments must be returned to avoid confusion
Partial payments require a board vote before being posted to the account
Partial payments may be accepted without waiving the right to collect the remaining balance (Correct answer)

Correct answer: Partial payments may be accepted without waiving the right to collect the remaining balance

A well-drafted policy allows the association to accept partial payments and apply them per the policy or statute while preserving the right to pursue the outstanding balance.

Question 67: What is the primary purpose of a community association's welcome packet for new homeowners?

To collect emergency contact information only
To solicit donations for community events
To introduce new owners to the board candidates before the next election
To provide new owners with key information about governing documents, community rules, contact information, and amenity access (Correct answer)

Correct answer: To provide new owners with key information about governing documents, community rules, contact information, and amenity access

A welcome packet orients new owners to community living by providing governing documents, rules, contact information, amenity instructions, and key procedures, setting expectations and reducing early compliance issues.

Question 68: Under the Fair Housing Act, which of the following association policies would most likely constitute illegal discrimination?

A policy requiring all guests to sign in at the gate
A rule prohibiting service animals in common areas (Correct answer)
A rule requiring all owners to maintain their lawns
A requirement to notify the association before beginning a renovation

Correct answer: A rule prohibiting service animals in common areas

Prohibiting service animals in common areas violates the Fair Housing Act, which requires reasonable accommodations for individuals with disabilities, including allowing service animals.

Question 69: Which reserve funding strategy is most likely to result in large special assessments if not regularly updated?

Baseline (minimum) funding (Correct answer)
Threshold funding
Percent-funded targeting 100%
Full funding

Correct answer: Baseline (minimum) funding

Baseline funding keeps reserves just above zero, leaving the association highly vulnerable to special assessments when major replacements occur.

Question 70: A proxy in the context of an HOA membership meeting is:

The agenda distributed at the meeting
A type of board resolution
A written authorization allowing one person to vote on behalf of another member (Correct answer)
A substitute manager hired for the event

Correct answer: A written authorization allowing one person to vote on behalf of another member

A proxy is a written instrument by which a member authorizes another person to attend and vote on their behalf at a membership meeting.

Question 71: A licensed pest control company's contract specifies use of a particular chemical treatment. New state regulations ban that chemical. Who bears responsibility for updating the scope of work?

The homeowners whose units are being treated
Neither party; the contract is void by operation of law
The vendor, who must comply with current regulations and update the service approach (Correct answer)
The association, who must pay extra for regulatory compliance

Correct answer: The vendor, who must comply with current regulations and update the service approach

Licensed contractors are responsible for complying with current regulations; the vendor must adapt their methods and notify the association of any scope or cost changes.

Question 72: Which of the following should be in the minutes of a board meeting?

summary of board remarks
names of all the members present
summary of owner comments
exact wording of each motion (Correct answer)

Correct answer: exact wording of each motion

The minutes of a board meeting serve as the official legal record of the proceedings and decisions made. To ensure accuracy and avoid future disputes, it is crucial to record the exact wording of every motion proposed, who made the motion, who seconded it, and the outcome of the vote (whether it passed or failed). Summaries of comments or remarks are less critical than the precise actions taken by the board.

Question 73: What is the primary legal purpose of recording the association's CC&Rs with the county recorder?

To provide constructive notice to all future property owners that the restrictions exist and run with the land (Correct answer)
To create an annual filing requirement with the state
To obtain a tax exemption for the association
To establish the association's nonprofit status

Correct answer: To provide constructive notice to all future property owners that the restrictions exist and run with the land

Recording CC&Rs with the county gives constructive notice to anyone who purchases property in the community that the restrictions apply, binding future owners even if they were unaware at purchase.

Question 74: Which of the following best describes 'loss assessment coverage' available to individual unit owners?

Coverage that pays a special assessment levied by the association due to an uninsured loss (Correct answer)
Coverage for damage to the owner's unit caused by a neighbor
Coverage for the owner's share of the master policy deductible only
Coverage for loss of rental income when a unit is uninhabitable

Correct answer: Coverage that pays a special assessment levied by the association due to an uninsured loss

Loss assessment coverage in an HO-6 policy pays the unit owner's share of a special assessment the association levies because its insurance was insufficient to cover a covered loss.

Question 75: The doctrine of 'promissory estoppel' could bind an association when:

The association's insurance lapses for 30 days
An owner fails to pay assessments for more than one year
A manager makes an unauthorized promise that an owner detrimentally relies upon (Correct answer)
The board votes on a resolution without a quorum

Correct answer: A manager makes an unauthorized promise that an owner detrimentally relies upon

Promissory estoppel can hold a party liable for an unauthorized promise if the other party reasonably relied on it to their detriment, even without a formal contract.

Question 76: The purpose of directors' and officers' liability insurance is to cover claims that come from:

Bodily injury of directors and officers.
Wrongful acts of employees of the association. (Correct answer)
Theft of funds by an association board member.
Damage to board owned property.

Correct answer: Wrongful acts of employees of the association.

Directors' and officers' (D&O) liability insurance is specifically designed to protect the association and its leadership from claims arising from alleged 'wrongful acts' committed in their official capacity. These wrongful acts typically include errors, omissions, breaches of duty, or misstatements made by directors, officers, and sometimes employees acting on behalf of the association. It covers the financial costs of defending against such claims and any resulting settlements or judgments.

Question 77: An association's board wants to amend the CC&Rs. This typically requires:

Unanimous consent of all unit owners
A simple majority vote of the board alone
Approval from the local municipality
A supermajority vote of the membership (commonly 67%–75%) (Correct answer)

Correct answer: A supermajority vote of the membership (commonly 67%–75%)

Amending the CC&Rs usually requires a higher threshold—often two-thirds or three-quarters of all members—because it changes the fundamental property rights of owners.

Question 78: A condominium association's declaration is best described as which type of document?

A contract between the property manager and the association
A recorded legal instrument that creates the condominium (Correct answer)
A bylaws amendment requiring owner approval
An internal policy adopted by the board

Correct answer: A recorded legal instrument that creates the condominium

The declaration (or master deed) is the recorded governing document that legally creates the condominium and runs with the land.

Question 79: When a board is evaluating multiple proposals received from an RFP for a long-term service contract, such as security or janitorial, which of the following should be the primary basis for their decision?

The proposal that offers the best overall value to the association. (Correct answer)
The proposal with the lowest bid price.
The manager's personal recommendation based on prior relationships.
The proposal with the earliest possible start date.

Correct answer: The proposal that offers the best overall value to the association.

The board's fiduciary duty is to act in the best interest of the association. This requires evaluating proposals based on the best overall value, which is a balance of price, vendor qualifications, experience, reputation, references, and a clear understanding of the scope of work. [16, 22] The lowest bid is not always the best value and can sometimes lead to substandard service.

Question 80: A proximate cause in a premises liability case against an association means:

The association provided adequate notice of the hazard
The association's negligent action or inaction directly caused the plaintiff's injury (Correct answer)
The hazard was covered by the association's insurance
The homeowner signed a liability waiver

Correct answer: The association's negligent action or inaction directly caused the plaintiff's injury

In negligence cases, the plaintiff must prove that the defendant's breach of duty was the proximate or direct cause of the harm suffered, not just a background condition.

Question 81: Under Robert's Rules of Order, which motion takes precedence over all other motions on the floor?

Motion to adjourn (Correct answer)
Motion to postpone indefinitely
Motion to table
Motion to refer to committee

Correct answer: Motion to adjourn

The motion to adjourn is privileged and takes precedence over all other motions, allowing the meeting to end.

Question 82: The board wants to change the time of the annual meeting from 7 PM to 10 AM. Which governance step is required before implementing this change?

Owner approval by two-thirds vote is always required to change meeting times
The manager must file the change with the county recorder before it takes effect
No action is required; the board may announce the change at any time
A board resolution alone is sufficient if the bylaws do not specify the time (Correct answer)

Correct answer: A board resolution alone is sufficient if the bylaws do not specify the time

If the bylaws do not specify the meeting time, a board resolution is sufficient authority to set or change the time of the annual meeting.

Question 83: A reserve study's 'percent funded' metric indicates:

The percentage of components that have been replaced this year
The ratio of actual reserves to the fully funded reserve balance (Correct answer)
The share of the operating budget allocated to capital expenses
The percentage of owners who have paid assessments on time

Correct answer: The ratio of actual reserves to the fully funded reserve balance

Percent funded compares the association's current reserve balance to what it theoretically should have if every component were funded proportionally to its age.

Question 84: A community association's Balance Sheet shows 'Assessments Receivable' of $25,000. What does this line item represent?

The total amount of assessments the association expects to collect for the entire fiscal year.
Funds that have been collected from homeowners but not yet deposited in the bank.
Pre-paid assessments from homeowners for the following fiscal period.
Money owed to the association by homeowners for assessments that have been billed but not yet paid. (Correct answer)

Correct answer: Money owed to the association by homeowners for assessments that have been billed but not yet paid.

On a Balance Sheet, 'Assessments Receivable' (or Accounts Receivable) is an asset that represents money legally owed to the association by its members for assessments and other charges that have been billed but not yet collected as of the date of the report.

Question 85: Before signing a contract with a new vendor, a community manager should at minimum verify:

Proof of adequate insurance and valid state licensing (Correct answer)
Whether the vendor has worked for a competing association
The vendor's personal credit score
The vendor's social media follower count

Correct answer: Proof of adequate insurance and valid state licensing

Verifying insurance certificates naming the association as an additional insured and state licensing protects the association from liability for vendor-caused injuries or unlicensed work.

Question 86: What is the MAIN reason a community association should maintain current as-built drawings for its buildings?

As-built drawings replace the need for reserve studies
As-built drawings are required to obtain D&O insurance
They allow contractors to accurately locate utilities and structural elements during repairs (Correct answer)
They are needed to calculate annual operating budgets

Correct answer: They allow contractors to accurately locate utilities and structural elements during repairs

As-built drawings document the actual location of plumbing, electrical, and structural components, which is critical for safe and accurate repair work.

Question 87: A homeowner submits a written complaint about a neighbor's violation. The board's first step in the enforcement process should be to:

Forward the complaint directly to the association's attorney
Conduct an independent investigation to verify the violation (Correct answer)
Ignore the complaint if the board has not personally observed the violation
Immediately fine the alleged violator

Correct answer: Conduct an independent investigation to verify the violation

The association must independently verify a violation exists before initiating enforcement action to ensure fair and defensible enforcement.

Question 88: According to Robert's Rules of Order, what is the correct sequence of events after a motion is made?

Chair states the question, Debate, Second, Vote
Second, Chair states the question, Debate, Vote (Correct answer)
Vote, Second, Debate, Chair states the question
Debate, Second, Vote, Chair states the question

Correct answer: Second, Chair states the question, Debate, Vote

The proper parliamentary procedure according to Robert's Rules of Order is: 1) A member makes a motion. 2) Another member seconds the motion. 3) The chair states the question on the motion, placing it before the assembly for consideration. 4) Members debate the motion. 5) The chair puts the question to a vote. 6) The chair announces the results of the vote.

Question 89: When a major plumbing repair is needed and the cost exceeds the board's spending authority, what should the manager do?

Ask the vendor to start work and invoice later without board involvement
Proceed with the repair and retroactively seek approval
Delay the repair until the next scheduled board meeting regardless of urgency
Call a special board meeting or obtain written approval per governing documents (Correct answer)

Correct answer: Call a special board meeting or obtain written approval per governing documents

Expenditures exceeding the board's spending threshold require proper authorization; a special meeting or written consent satisfies this requirement while addressing urgency.

Question 90: A CMCA is asked by the board to waive late fees for a board member's account while enforcing them for all other owners. What ethical principle is at stake?

The manager's discretion to grant case-by-case exceptions
The board's authority to establish collection policies
Equal treatment and the prohibition against preferential treatment for board members (Correct answer)
Fiduciary duty to maximize revenue

Correct answer: Equal treatment and the prohibition against preferential treatment for board members

Waiving fees exclusively for board members violates the principle of equal treatment and can expose the association to legal claims of selective enforcement and self-dealing.

Question 91: A homeowner in a condominium association requests to install a wheelchair ramp from their ground-floor unit door to the common area sidewalk. Under the Fair Housing Act, this request is considered a:

Capital improvement, which requires a membership vote.
Reasonable accommodation, which the association must pay for.
Reasonable modification, which the resident must pay for. (Correct answer)
Structural alteration, which is prohibited by the governing documents.

Correct answer: Reasonable modification, which the resident must pay for.

A reasonable modification is a physical or structural change to the premises needed to afford a person with a disability full enjoyment of the premises. A wheelchair ramp is a classic example of a reasonable modification. Under the Fair Housing Act, the resident is typically responsible for the cost of the modification. A reasonable accommodation, in contrast, is a change to a rule, policy, or service.

Question 92: An association's three-year waste management contract contains a clause that it will automatically renew for another three-year term unless 90 days' written notice of termination is provided. The manager realizes the 90-day deadline is only one week away. What is the manager's MOST appropriate immediate action?

Wait for the next board meeting in two weeks to ask the board for direction.
Immediately send a written notice of termination to preserve the association's options. (Correct answer)
Call the vendor and verbally tell them the association will decide whether to renew at a later date.
Assume the board wants to renew since there have been no service complaints and allow the deadline to pass.

Correct answer: Immediately send a written notice of termination to preserve the association's options.

An automatic renewal or 'evergreen' clause will lock the association into a new contract term if the notice period is missed. [6, 23] The most prudent action is to immediately send the required written notice of termination. This prevents the contract from renewing and gives the board the flexibility and time to evaluate the vendor's performance, test the market by seeking other bids, or negotiate a new contract from a position of strength.

Question 93: The Americans with Disabilities Act (ADA) primarily applies to community associations in which context?

Common areas that function as places of public accommodation, such as commercial spaces (Correct answer)
Every swimming pool and fitness facility in any HOA
All residential HOA common areas without exception
Only condominiums with more than 100 units

Correct answer: Common areas that function as places of public accommodation, such as commercial spaces

The ADA generally applies to places of public accommodation and commercial facilities; most private residential HOA amenities are not covered, though some state laws extend similar protections.

Question 94: A homeowner claims a fence they installed does not violate the CC&Rs because the rules only prohibit 'wooden' fences and theirs is vinyl. This is an example of:

A violation of the bylaws rather than the CC&Rs
Strict constructionism that may or may not reflect the intent of the document (Correct answer)
An exempt modification under federal housing law
A valid legal loophole that must be accepted

Correct answer: Strict constructionism that may or may not reflect the intent of the document

Strict literal interpretation of governing documents can conflict with the drafters' intent; the board may need to enforce the spirit of the restriction or seek a legal opinion.

Question 95: Which of the following BEST describes the difference between a capital improvement and a repair in community association accounting?

Capital improvements are funded from operating funds; repairs from reserves
There is no meaningful accounting distinction between the two
A repair increases the useful life or value of a component; a capital improvement restores it to original condition
A capital improvement adds new value or significantly extends component life; a repair restores existing function (Correct answer)

Correct answer: A capital improvement adds new value or significantly extends component life; a repair restores existing function

Capital improvements add new value or substantially extend useful life and are typically reserve-funded, while repairs restore existing functionality and are expensed operationally.

Question 96: Under the accrual basis of accounting, reserve contributions are recognized:

When the board passes a resolution to fund reserves
Only after the fiscal year-end audit is completed
When cash is deposited into the reserve bank account
In the period they are earned/assessed, regardless of cash receipt (Correct answer)

Correct answer: In the period they are earned/assessed, regardless of cash receipt

Accrual accounting records revenue when earned (when assessed), not when cash is actually received.

Question 97: When preparing the annual budget, which cost factor is most critical to review for reserve contributions?

The previous board's discretionary spending history
The management company's standard fee schedule
Prior year's actual operating expenses
The current reserve study's recommended annual contribution (Correct answer)

Correct answer: The current reserve study's recommended annual contribution

The reserve study calculates the annual contribution needed to keep reserves adequately funded; ignoring it risks underfunding future capital repairs.

Question 98: An amendment to a Declaration typically requires:

Only the approval of the HOA manager
Unanimous consent of all lienholders
A supermajority owner vote as specified in the Declaration (Correct answer)
A simple majority board vote

Correct answer: A supermajority owner vote as specified in the Declaration

Amending a Declaration usually requires a supermajority vote of the membership (commonly 67% or 75%) as specified within the document itself.

Question 99: What should the board take into account while reviewing the proposed budget for approval?

The financial position of the association (Correct answer)
The financial effect on the owners
The economic impact on tenants
The physical condition of the association members

Correct answer: The financial position of the association

When reviewing a proposed budget, the board of directors must primarily consider the overall financial position of the association. This involves assessing current assets, liabilities, reserves, and projected income and expenses to ensure the budget is realistic, sustainable, and adequately funds the association's operational and reserve needs. The budget's impact on individual owners is a consequence of the association's financial health, not the primary consideration for the budget itself.

Question 100: A quorum is required at a board meeting in order to:

Legally conduct business and take binding votes (Correct answer)
Hire a vendor without a formal bidding process
Allow homeowners to speak during open forum
Send meeting notices to homeowners

Correct answer: Legally conduct business and take binding votes

A quorum, the minimum number of board members required to be present, must be established before the board can legally transact business. Actions taken without a quorum are generally invalid.

Question 101: Which communication method is generally considered most effective for reaching all homeowners in a community association about an urgent matter?

Holding an in-person town hall meeting
Posting a notice on the community bulletin board
Sending a mass email blast to all registered residents
A combination of multiple channels including email, mail, and posted notices (Correct answer)

Correct answer: A combination of multiple channels including email, mail, and posted notices

Using multiple communication channels ensures the message reaches residents who may not monitor any single channel, maximizing reach for urgent matters.

Question 102: A 'statute of limitations' is relevant to community association governance because:

It defines the maximum term length for board members under state law
It sets the time period within which the association or an owner must file a legal claim (Correct answer)
It restricts how long an association can retain financial records
It limits how many rules a board can adopt in a single year

Correct answer: It sets the time period within which the association or an owner must file a legal claim

Statutes of limitations establish deadlines for filing lawsuits; missing these deadlines can permanently bar the association or a member from pursuing a legal claim.

Question 103: A community's parking lot has significant pavement cracking and ponding water. The MOST cost-effective long-term approach is to:

Paint over the cracks and monitor for one more year
Perform crack sealing and proper drainage correction now to extend pavement life (Correct answer)
Apply sealcoating only and defer full repair indefinitely
Repave the entire lot immediately regardless of cost

Correct answer: Perform crack sealing and proper drainage correction now to extend pavement life

Addressing cracks and drainage early prevents water infiltration that accelerates base failure, making timely crack sealing the most cost-effective long-term strategy.

Question 104: A community association's property insurance should cover common area buildings at what value to avoid a coinsurance penalty?

The original construction cost
80 to 100% of replacement cost value as required by most policies (Correct answer)
The tax-assessed value
50% of market value

Correct answer: 80 to 100% of replacement cost value as required by most policies

Most property insurance policies include a coinsurance clause requiring coverage at 80% or more of replacement cost. If the association is underinsured relative to this threshold, it shares in any loss proportionally.

Question 105: Under Roberts Rules of Order, a 'quorum' at a board meeting refers to:

The presence of the association's legal counsel
A two-thirds majority vote on major expenditures
The minimum number of members required to conduct official business (Correct answer)
A unanimous agreement among all board members present

Correct answer: The minimum number of members required to conduct official business

A quorum is the minimum number of board members (or members at an owner meeting) required to be present for the body to legally transact business.

Question 106: The community's wooden perimeter fence is scheduled to be re-stained every three years to prevent rot and extend its useful life. What type of maintenance does this action represent?

Preventive Maintenance (Correct answer)
Emergency Maintenance
Routine Maintenance
Corrective Maintenance

Correct answer: Preventive Maintenance

Preventive maintenance consists of proactive, scheduled tasks designed to preserve assets and extend their useful life to avoid future failure. Re-staining a fence on a set schedule is a classic example, as it prevents the more costly corrective maintenance of replacing a rotted fence.

Question 107: A payment plan agreement between an association and a delinquent homeowner should include which essential element?

A guarantee from the owner's employer
An acknowledgment of the total debt owed and clear repayment terms (Correct answer)
A release of the association's lien upon signing
A clause waiving all future assessments

Correct answer: An acknowledgment of the total debt owed and clear repayment terms

A valid payment plan agreement must include the total amount owed, repayment schedule, consequences of default, and the owner's acknowledgment of the debt so both parties are protected.

Question 108: When a manager is terminated by an association, their ethical obligation regarding association records is to:

Destroy sensitive records to protect homeowner privacy
Retain all records as leverage until outstanding invoices are paid
Transfer records only after receiving a written release
Return all association records to the board promptly and completely (Correct answer)

Correct answer: Return all association records to the board promptly and completely

Upon termination, managers must promptly return all association records to the board, as these records belong to the association, not the management company.

Question 109: All of the following topics are appropriate for discussion in an executive session of the board EXCEPT:

Discussion of a homeowner's delinquency and potential lien.
Review of personnel matters involving association employees.
Consultation with the association's legal counsel regarding pending litigation.
Adoption of the annual budget. (Correct answer)

Correct answer: Adoption of the annual budget.

Executive sessions are closed meetings of the board intended for discussing confidential matters such as legal issues, personnel problems, and contract negotiations. The adoption of the annual budget is a significant financial decision that affects all members and must be conducted in an open board meeting to ensure transparency.

Question 110: Under cumulative voting rules used in some association elections, an owner with three votes for three open board seats may:

Only vote if they hold a cumulative proxy from another owner
Allocate all three votes to a single candidate if desired (Correct answer)
Cast only one vote per candidate with no ability to concentrate votes
Vote for three different candidates with exactly one vote each, no exceptions

Correct answer: Allocate all three votes to a single candidate if desired

Cumulative voting allows an owner to concentrate multiple votes on one or more candidates rather than distributing exactly one vote per seat.

Question 111: An executive session of a board meeting is appropriate for discussing:

Routine maintenance contracts and budget approvals
Pending litigation, individual homeowner hearings, and employee personnel matters (Correct answer)
Capital improvement project bids
The community newsletter and upcoming social events

Correct answer: Pending litigation, individual homeowner hearings, and employee personnel matters

Executive sessions are reserved for sensitive matters where confidentiality is essential, including pending or threatened litigation, individual member disciplinary hearings, and employee matters.

Question 112: In a community association election, a 'cumulative voting' system allows members to:

Vote by secret ballot without identification
Vote once per candidate up to the number of open seats
Delegate their vote to the property manager
Pool all their votes and cast them for one candidate (Correct answer)

Correct answer: Pool all their votes and cast them for one candidate

Cumulative voting lets each owner multiply their votes by the number of open seats and allocate all votes to a single candidate, giving minority factions more electoral power.

Question 113: Which of the following best illustrates the concept of quiet enjoyment as it applies to community association residents?

The right to play music at any volume at any time
The right to use and enjoy one's home and common areas without unreasonable interference from the association or other residents (Correct answer)
The right to bypass association approval for exterior modifications
The right to attend all board executive sessions

Correct answer: The right to use and enjoy one's home and common areas without unreasonable interference from the association or other residents

Quiet enjoyment ensures residents can use their property peacefully without interference. Associations must balance rule enforcement with respecting residents' right to enjoy their homes.

Question 114: What does 'ratification' mean in the context of association governance?

A court process to validate election results
The manager's written confirmation that minutes are accurate
The process of appealing a board decision to the membership
Formal approval by the appropriate body of an action that was already taken without prior authorization (Correct answer)

Correct answer: Formal approval by the appropriate body of an action that was already taken without prior authorization

Ratification is the retroactive approval of a previously unauthorized action, giving it the same legal effect as if it had been authorized beforehand.

Question 115: What is the primary advantage of establishing a routine annual inspection program for common area components?

It satisfies the annual audit requirement
It eliminates the need for a reserve study
It provides documented evidence of the association's maintenance efforts and helps identify issues before they become emergencies (Correct answer)
It automatically generates vendor bids for the next fiscal year

Correct answer: It provides documented evidence of the association's maintenance efforts and helps identify issues before they become emergencies

Annual inspections create a documented record of component conditions, enabling early detection of deterioration and demonstrating the association's diligence in maintaining common areas.

Question 116: Which of the following is included in the initial letter you write to an owner who broke one of the regulations the organization has established?

Steps to amend the rules.
What the outcome of similar cases has been.
The amount of fine assessed.
The offer to meet to hear the owner's viewpoint. (Correct answer)

Correct answer: The offer to meet to hear the owner's viewpoint.

When addressing a rule violation, the initial communication should include an offer for the owner to meet with the board or a designated committee to discuss the alleged violation. This provides the owner with due process and an opportunity to present their side of the story or explain mitigating circumstances before any penalties are formally imposed. This approach promotes fairness and can help resolve issues amicably.

Question 117: Common elements in a condominium are typically maintained by:

Individual unit owners at their own expense
The developer until the last unit is sold
The condominium association, funded through assessments (Correct answer)
The local municipality

Correct answer: The condominium association, funded through assessments

Common elements such as lobbies, hallways, roofs, building exteriors, and recreational facilities are maintained by the condominium association as a whole, with costs shared through owner assessments.

Question 118: Which of the following is the best indicator that an association's operating budget is healthy?

The reserve fund balance exceeds one million dollars
The management fee has not increased in five years
Actual year-to-date expenses are tracking close to budgeted amounts with no major variances (Correct answer)
All homeowners paid their assessments on time

Correct answer: Actual year-to-date expenses are tracking close to budgeted amounts with no major variances

Minimal variance between actual and budgeted expenses indicates that the budget was realistic and spending is under control, reflecting sound financial planning and management.

Question 119: Under the Davis-Stirling Act in California (a common reference model for HOA law), which election violation can result in civil penalties against the association?

Allowing proxy voting when the bylaws permit it
Holding the election on a Saturday instead of a weekday
Adjourning the election due to lack of quorum
Failing to use a secret ballot for director elections as required by statute (Correct answer)

Correct answer: Failing to use a secret ballot for director elections as required by statute

California's Davis-Stirling Act mandates secret ballots for director elections, and failure to comply can expose the association to civil penalties.

Question 120: Which of the following is a primary fiduciary duty of a community association's Board of Directors?

To act in the best interests of the corporation and exercise the care an ordinarily prudent person would. (Correct answer)
To reduce annual assessments whenever possible, regardless of reserve funding needs.
To personally perform maintenance on common areas to save the association money.
To ensure every resident is personally satisfied with all board decisions.

Correct answer: To act in the best interests of the corporation and exercise the care an ordinarily prudent person would.

The Board of Directors has a fiduciary duty to the association, which includes the duty of care and the duty of loyalty. The duty of care requires them to act in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner they reasonably believe to be in the best interests of the corporation (the 'business judgment rule'). This involves making informed decisions, particularly regarding financial stewardship and maintenance.

Certified Manager of Community Associations (CMCA) Exam

The CMCA examination certifies individuals who possess the fundamental knowledge required to manage community associations effectively.

120

Questions

120 min

Time Limit

70%

To Pass

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