CMCA MCQ 3 — Questions and Answers
Question 1: A condominium association's roof needs replacement costing $300,000, but reserves only hold $80,000. What funding option would spread the cost among owners over time without a lump-sum payment?
- Special assessment
- Reserve loan (Correct answer)
- Line of credit draw
- Deferred maintenance plan
Correct answer: Reserve loan
A reserve loan allows the association to borrow funds for the repair and repay over time, avoiding a large immediate special assessment on owners.
Question 2: Which body typically has the authority to adopt and amend association rules and regulations without a membership vote?
- The managing agent
- The board of directors (Correct answer)
- The architectural review committee
- The state housing authority
Correct answer: The board of directors
Most governing documents delegate authority to the board of directors to adopt reasonable rules and regulations governing the community.
Question 3: An owner installs a satellite dish on a common area roof without approval. Under the FCC's OTARD rule, the association:
- Must allow dishes anywhere on common areas
- Cannot restrict dishes only if on the owner's exclusive use area
- May require removal since common areas are not exclusive use (Correct answer)
- Must grant approval within 30 days
Correct answer: May require removal since common areas are not exclusive use
OTARD protects antenna installations on areas within the owner's exclusive use or control; common area roofs fall outside that protection.
Question 4: What is the primary purpose of an architectural review committee (ARC) in a community association?
- To conduct annual financial audits
- To maintain the appearance and integrity of the community (Correct answer)
- To manage vendor contracts for capital projects
- To resolve disputes between neighbors
Correct answer: To maintain the appearance and integrity of the community
The ARC reviews proposed modifications to ensure they conform to community standards, preserving aesthetic consistency and property values.
Question 5: Which accounting method records income when earned and expenses when incurred, regardless of when cash is received or paid?
- Cash basis accounting
- Modified accrual accounting
- Accrual basis accounting (Correct answer)
- Fund accounting
Correct answer: Accrual basis accounting
Accrual basis accounting matches revenues to the period they are earned and expenses to the period incurred, giving a more accurate financial picture.
Question 6: A manager discovers that a board member disclosed confidential executive session information to a neighbor. The most appropriate immediate action is:
- Notify local law enforcement
- Report the breach to the full board for action (Correct answer)
- Post a notice to all residents
- Ignore it if no financial harm occurred
Correct answer: Report the breach to the full board for action
Breaches of confidentiality by a board member are a governance matter that the full board must address, potentially including censure or removal proceedings.
Question 7: When an association bids out a maintenance contract, which practice best protects the association legally and financially?
- Accepting the lowest bid automatically
- Requiring all bidders to carry adequate insurance and bonding (Correct answer)
- Using a verbal agreement to save time
- Allowing the manager to select vendors without board approval
Correct answer: Requiring all bidders to carry adequate insurance and bonding
Requiring vendors to carry insurance and bonding protects the association from liability for on-site accidents and ensures contractor accountability.
CMCA MCQ 3
A condominium association's roof needs replacement costing $300,000, but reserves only hold $80,000.
What funding option would spread the cost among owners over time without a lump-sum payment?