CMCA MCQ 5 — Questions and Answers
Question 1: What is a 'special assessment' in the context of community association management?
- An annual increase to regular dues
- A one-time charge levied on owners for a specific unbudgeted expense (Correct answer)
- A fee charged only to delinquent owners
- A tax imposed by the local municipality on common areas
Correct answer: A one-time charge levied on owners for a specific unbudgeted expense
A special assessment is an extraordinary charge levied on all owners — in addition to regular dues — to cover a specific expense not covered by the operating budget or reserves.
Question 2: Which of the following best describes the role of a managing agent in a community association?
- The managing agent has full fiduciary authority equal to the board
- The managing agent implements board policies and handles day-to-day operations under the board's direction (Correct answer)
- The managing agent can amend governing documents without board approval
- The managing agent is the primary decision-maker for all community matters
Correct answer: The managing agent implements board policies and handles day-to-day operations under the board's direction
The managing agent is a service provider who carries out the board's decisions and manages daily operations, but policy authority remains with the elected board.
Question 3: A condominium unit owner claims the association failed to maintain a common area pipe, causing water damage to their unit. What type of coverage typically applies to the association's liability?
- Fidelity bond
- Umbrella liability policy (Correct answer)
- Directors and Officers insurance
- Workers' compensation insurance
Correct answer: Umbrella liability policy
An umbrella liability policy provides excess liability coverage above primary general liability limits, protecting the association against large damage claims.
Question 4: The Servicemembers Civil Relief Act (SCRA) affects community association collections by:
- Exempting servicemembers from all assessments while deployed
- Limiting interest rates on pre-service debts and restricting certain enforcement actions (Correct answer)
- Requiring the association to waive all fines for military members
- Prohibiting liens on properties owned by active-duty personnel
Correct answer: Limiting interest rates on pre-service debts and restricting certain enforcement actions
The SCRA caps interest rates at 6% on debts incurred before active duty and restricts certain judicial proceedings against servicemembers.
Question 5: When conducting an enforcement hearing, what procedural protection must the association typically provide the accused owner?
- A jury of fellow homeowners
- Notice of the alleged violation and an opportunity to be heard (Correct answer)
- Legal counsel appointed by the association
- A unanimous board vote to impose any fine
Correct answer: Notice of the alleged violation and an opportunity to be heard
Due process in association enforcement requires adequate written notice of the violation and a fair opportunity for the owner to present their side before any fine is imposed.
Question 6: An association's investment of reserve funds must prioritize which two characteristics above return on investment?
- Growth potential and liquidity
- Safety and liquidity (Correct answer)
- Yield and diversification
- Tax efficiency and yield
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 7: A board adopts a new rule banning all political signs from the community. In a planned community (not a condominium), which legal issue may arise?
- Violation of the Telecommunications Act
- First Amendment free speech concerns on private property (Correct answer)
- Conflict with FCC antenna regulations
- Violation of state consumer protection laws
Correct answer: First Amendment free speech concerns on private property
Some states have laws protecting political sign display rights even in private planned communities, creating potential conflicts with blanket sign bans.
CMCA MCQ 5
What is a 'special assessment' in the context of community association management?