CMCA Practice Test -with 100% verified solutions 2024-2025, Exams of Advanced Education

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C. A work order/response form - A, B, and D speak to elements OTHER than a control to ensure maintenance work is completed. Which of the following is a common management control for ensuring maintenance work is performed in a timely manner? A. A purchase order system B. An equipment warranties C. A work order/response form D. A contractor's invoice C. Maintenance responsibility chart along, with the governing documents, defines parameters of association maintenance responsibility. The other answers have no bearing on necessity of maintenance or maintenance responsibility. The primary management control tool for identifying whether the association needs to maintain a particular property element is: A. Physical inspections B. Association bylaws C. Maintenance responsibility chart D. Community asset inventory B. Re-roofing the buildings - Large contracts involving significant material purchase and/or use of sub-contractors commonly include lien waivers and should be recommended to the board. A, C, and D typically do not include significant material purchases or the use of sub-contractors so a waiver of lien is not necessary. In what type of a contract would a waiver of lien by recommended?

A. Repair of the HVAC system B. Re-roofing the buildings C. Repair of the pool pump D. Annual tree pruning B. Maintain certain limits of insurance - Co-insurance seeks to the limits of insurance in place at the time of a loss and speaks to insurance obligation for the parties involved in the claim. Co-insurance does not obligate the Association to pay a deductible. Provides no obligation to provide insurance for homeowners. What does "Co-Insurance" obligate the Association to do? A. Pay the deductible B. Maintain certain limits of insurance C. Cover the depreciated value of all association buildings D. Provide insurance for homeowners A. Negotiate contracts within the bidding process. Incorrect Answers: B. Employment practices liability insurance is typically purchased by an association that has employees to provide coverage against certain types of claims by those employees, and usually accompanies a workers compensation insurance policy. C. The association MUST NEVER assume that contractors carry their own insurance coverage and should require all contractors to provide evidence of insurance. D. D&O insurance policies is designed to pay for wrongful acts that do not lead to property damage (PD), bodily injury (BI), personal injury (PI), or advertising injury (AI); an example of a claim for coverage under D&O would be if a board of directors is accused of not uniformly enforcing rules

or covenants. Therefore, it is unlikely that the services of independent contractors would lead to claims under D&O. When an association contracts out all of its services and has no employees, it is a best business practice to: A. Negotiate contracts within the bidding process. B. Purchase employment practices liability insurance. C. Assume the contractors carry their own insurance coverage. D. Increase the coverage under the D&O insurance policy. A. Did not notify association of their current address. It is the owner's responsibility to provide current contact information to Management. Incorrect: B. The duty to notify all owners of meetings belongs to the Board, which is often delegated to Management. C. Signing a petition to hold a meeting is not legal notice of the meeting. The duty to notify all owners of meetings belongs to the Board, which is often delegated to Management. D. The notice of meetings is sent to the "Owner of Record" at the last known address. In the case of multiple owners sharing title to a unit, the owners of that unity have the duty to notify the Board/Management which one of the owners will receive notices, and provide current contact information. If an owner fails to receive notice of a meeting, the association is not responsible if the owner: A. Did not notify association of their current address. B. Does not usually attend the meetings. C. Already signed the petition to call the meeting. D. Shares title with multiple owners.

A. Governing documents Incorrect: B. The maintenance plan is plan for doing repairs. C. Will show financial position but not what maintenance work is required. D. Reserves are funded separately for long term repairs. What is the primary source of requirements when developing the association's annual maintenance budget? A. Governing documents B. State law C. Annual audit D. Reserve Study B. More accurately reflects the association's financial condition. Under the modified accrual basis, also sometimes referred to as modified cash basis, some accounts, such as assessment income, are maintained on the accrual basis and other accounts, such as interest or other miscellaneous income accounts, and some expenses, such as miscellaneous repairs, are maintained on a cash basis. The accrual of major expenses in particular, such as a contract for landscaping, trash removal, etc., regardless of non- receipt invoices, gives the read a much more accurate depiction of the association's financial standing, as the accruals serve to alert the reader to recognition of obligations that the association must meet. Incorrect:

A. Audit work is and should be conducted by an independent CPA on a scheduled basis, typically annually. The accuracy of such work will be wholly determined by the person(s) performing such work. C. It is not necessarily accurate to say that board members will understand one type of accounting system over another as the make-up of boards is different in various associations. In particular a board member with an accounting background will have no trouble understanding reports produced on all bases of accounting. D. If anything it may take more time to produce a report on the modified accrual basis as the person preparing the report is likely to have to take more time to analyze various items of income and expense to determine the best way to report those transactions. The best reasoning for recommending the modified accrual accounting method is that, compared to cash accounting, it: A. Will make future audit work more accurate. B. More accurately reflects the association's financial condition. C. Is more easily understood by board members. D. Can be accomplishment more quickly. FALSE TRUE OR FALSE: The basic authority in a community association lies with the developer. b. fiduciary duty The board of directors in a community association has a _____________ to act in the best interests and for the benefit of the community as a whole.

a. bond b. fiduciary duty c. ballot d. quorum D. Applicable statues and governing documents. Rules cannot conflict with statues and governing documents. Incorrect: A. Penalty is not part of development it is part of enforcement. B. Resolution is method of formalizing rule not developing. C. Rules usually are expanded on or clarify governing documents. When developing a rule, it must be consistent with: A. Fine schedules as approved by the courts B. Board recommendations and resolutions C. Guidelines established within the governing documents D. Applicable statues and governing documents C. The offer to meet to hear the owner's viewpoint. Best way to get compliance is to let owner be heard and explain rule to the owner. Knowledge Tested: Successful rule enforcement Procedures. Incorrect: A. You cannot assess a fine without due process; the goal is compliance.

B. This is a burdensome process and outside the scope. An amendment would need to be initiated by the board. D. The is only relevant in enforcement (must treat everyone the same). In an initial letter you send to an owner who has violated one of the association's adopted rules, which of the following is included? A. The amount of fine assessed. B. Steps to amend the rules. C. The offer to meet to hear the owner's viewpoint. D. What the outcome of similar cases has been. b. State laws - The hierarchy of documents is as follows: Federal Laws State Laws Declaration Bylaws If the governing documents and laws present conflicting notice periods, follow: a. The bylaws b. State laws c. Your attorney's advice d. Declarations d. Be the time keeper - It is the manager's responsibility to ensure meetings are efficient and that the Board conducts its business in a timely fashion, particularly if a timed agenda is being used.

Which of the following is a duty of a manager attending a board meeting? a. Call the meeting to order. b. Establish the agenda. c. Take the minutes of the meeting. d. Be the time keeper d. Preventive maintenance - Preventive maintenance contracts are used for such items as pool and A/C equipment, boilers and water heaters where regular service is likely to reduce the chance of expensive emergency repairs. INCORRECT: A. Time and material contracts are typically used when the amount of time and/or material cannot be determined in advance. B. Specific repair contracts are for such things as painting, re-roofing and other specific repairs such as paving and concrete and major building repairs. C. Service contracts are used for ongoing services such as landscaping, website maintenance, trash removal, etc. In older condominiums, an association should have what type of contract covering mechanical equipment? a. Time and materials b. Specific repair c. Service d. Preventive maintenance

b. Repairing and/or replacing all roofs - An outside consultant is most likely to be used in a large, complicated project, such as replacement of all roofs in a HOA. For which project would a board most likely want to use a consultant to help develop bid specifications? a. Landscape renovation project b. Repairing and/or replacing all roofs c. Painting the interior of lobbies and hallways d. Repairing HVAC and boilers c. Specific state statues - There may be specific state statues addressing regulations which effect the management of a community association. Which of the following has the greatest regulatory influence on the management of a community association? a. Federal statues b. Articles of Incorporation c. Specific state statues d. General state statues FALSE TRUE OR FALSE: Employees are finished with training after they receive their initial training for a job.

a. Frequent neighborhood inspections - The key for the correct answer is "control" and the only response that speaks to an overall system of control is frequent neighborhood inspections. Incorrect: B, C, D - A methodology that can contribute to control, but A is the only answer that speaks to an action that create a control. Which of the following is an example of an association control system? a. Frequent neighborhood inspections b. Owner garage door locks c. Telephone entry system d. Posting police department information on building bulletin boards TRUE TRUE OR FALSE: The "business judgement rule" means that if a board has exercised reasonable business judgement in making a decision, the court will generally not consider the board negligent in its fiduciary duty. d. mandatory committees Which of the following community association committees typically are assigned responsibilities related to elections, nominations, and architectural standards? a. standing committees b. professional committees c. ad hoc committees

d. mandatory committees b. goals Performance _____________ are those regular and special tasks management expects an employee to perform during a certain time period. a. evaluation b. goals c. planning d. standards d. Board resolutions - Maintenance guidelines are established by Board action. Where would a manager find guidelines regarding the association's responsibility for maintaining the physical assets? a. equipment warranties b. Real estate sales contract c. Governing documents d. Board resolutions c. Assigns maintenance tasks. - The purpose of the work order is to capture needed work to be done and assign the work to the appropriate party/parties. Incorrect:

A. References standards which are not part of a written work order. B. References items to be completed during the year (a maintenance calendar). D. Creates a listing of items needing maintenance attention. A work order: a. Documents current maintenance standards. b. Identifies what needs to be done during the year. c. Assigns maintenance tasks. d. Is a punch-list of maintenance needs. b. Loyalty - The Board Members and Manager have the Fiduciary "Duty" of Loyalty to the owners. Incorrect: A. Even though the Board Members and Manager are accountable for their actions, it is not a Fiduciary "Duty". C. Although the Board Members have agreed to "serve" on the Board and Management is contracted to "serve" the community this is not a specified Fiduciary "Duty." D. Although the Board Members and Management must conduct themselves in a manner that cannot be construed, in anyway as a conflict of interest, conduct is not a specified Fiduciary "Duty." What "duty" do the Board members and the manager have to the members?

a. Accountability b. Loyalty c. Service d. Conduct FALSE TRUE OR FALSE: It's generally a good idea to schedule a performance evaluation meetings with an employee in a public place. b. Interests - Is not a relevant component of an employment contract. Incorrect: a. All contracts should reference compliance with the law. c. Almost all contracts should include a clause addressing terms for termination. In an employment contract, it must be included, to protect both parties. d. A notice clause is standard in contracts, noting how each party is to be notified in case of breach or modifications. Employment contracts need NOT include: a. Legal sources b. Interests c. Termination d. Notice

TRUE

TRUE OR FALSE:

A community association employee who supervises other staff members is automatically classified as salaried (or exempt). b. Occupational Safety and Health Act Which of the following federal laws regulate working conditions, specialized training, safety equipment, the posting of warnings related to products and work site conditions, and the reporting of accidents? a. Fair Labor Standards Act b. Occupational Safety and Health Act c. Federal Insurance Contributions Act d. Child labor laws TRUE TRUE OR FALSE: An agenda is more than an announcement of the order of business for a meeting; it is a meeting management tool. a. Counseling the employee - Counseling an employee and providing benchmarks to achieve (and penalties for short-falls) is part of the discipline process.

Incorrect: B. Selecting a system is not discipline. C. Termination may be the result of the failure of an employee to properly respond to discipline, but in itself is not discipline. D. Gathering performance information is part of performance evaluation, not discipline. Discipline as a part of the HR management can include: a. Counseling the employee b. Selecting using a progressive system c. Terminating an under-performing employee d. Gathering performance information from other employees a. Governing documents - will give notice requirements and budget cap information. What is the primary source of requirements when developing the association's annual maintenance budget? a. Governing documents b. State law c. Annual audit d. Reserv Study d. a week A notice of meeting should be sent in writing to board members at least ______ before meeting.

a. a year b. 2 days c. 3 months d. a week c. Expenditures out of reserve funds - The reserve funds are set aside, usually in investments such as money market accounts and certificates of deposits, for the purpose of funding the repair or replacement of major, capital components. Therefore the appropriate use of these funds will result in a decline in the amount of investments. Incorrect: a. A failure to invest properly is more likely to result in a decline or shortfall in the earnings, i.e. interest gained, on investments but not the total amount of investments. b. The timing of expenses is more likely to result in a decline or shortfall in the earnings, i.e. interest gained, on investments but not the total amount of investments. d. A failure to collect delinquent assessments may result in a decline in the amount of money received by the association. The assessment income is typically recognized in the operating (or checking) account and not in the investment funds. While a shortfall in revenue overall may eventually lead to the inability to fund the reserve accounts, thus an eventual decline in the total amount of investments, that shortfall is not as likely to lead to an overall decline as is the expenditure of funds from investments as indicated in answer c. A significant decline in the amount of investments is most likely the result of: a. Failure to invest association funds properly.

b. Seasonal timing of expenses. c. Expenditures out of reserve funds. d. Failure to collect delinquent assessments. d. Explain employee rights and responsibilities. The purpose of a personnel manual or employee handbook is: a. Provide a format for job evaluations. b. Define individual job descriptions. c. Detail the programs the company offers. d. Explain employee rights and responsibilities. b. Identifying potential contractors. INCORRECT: a. References are verified after bids are received. c. A recommendation would occur after bids are received and reviewed. d. Insurance verification occurs after bids are requested. Preparing a bid request includes which of the following? a. Verifying references. b. Identifying potential contractors. c. Recommending a contractor to the board. d. Verifying contractors insurance.

a. Mediation INCORRECT: Subrogation is a term often found in insurance policies but does not relate to alternative dispute resolution. Litigation is a court action and exactly what alternative dispute resolution tries to avoid. Indemnification, also known as "hold harmless" is often found in contracts, but is not a form of Alternative Dispute Resolution. Alternative dispute resolution includes which of the following methods? a. Mediation b. Subrogation c. Litigation d. Indemnification

1. b. Mandatory
2. a. Standing
3. d. Ad-hoc MATCH THE COMMITTEE TYPES
4. Usually include elections, nominations, and architectural standards. Required by the governing documents.
5. Established by the Board to meet some on-going need of the community.

3. Task forces that meet some specific need and are then dissolved. Established by the Board. a. Standing b. Mandatory c. Parent Organization d. Ad-hoc c. Assigns maintenance tasks. A work order: a. Documents current maintenance standards. b. Identifies what needs to be done during the year. c. Assigns maintenance tasks. d. Is a punch-list of maintenance needs. a. Decide issues of policy for the owners in the community. Which of the following responsibilities relate to the governance function of a community association board of directors? a. Decide issues of policy for the owners in the community. b. Promote harmony through service programs and regular communication with owners. c. Monitor financial matters for the purpose of preserving and enhancing the community. d. Hear appeals of committee and management decisions that are protested by groups of owners.

c. Cutting the grass Which type of maintenance should be managed with a routine maintenance contract? a. Replacing dead shrubs b. Painting building hallways c. Cutting the grass d. Cleaning sewer lines. b. Without admitting negligence. Liability claims should be sent to the insurer: a. Requesting a public adjuster be assigned. b. Without admitting negligence. c. By the Insurance Trustee. d. Within 72 hours of the incident. b. Extra demolition A component of building ordinance insurance coverage includes: a. Glass damage b. Extra demolition c. Water damage d. Power failure a. substance abuse on the job

A community association is within its legal rights to dismiss an employee without cause or progressive discipline for which of the following reasons? a. substance abuse on the job b. inadequate work performance c. insubordination d. sexual harassment a. survey data Each of the following legal sources specify management authority and responsibilities for community associations EXCEPT: a. survey data b. state statues c. community association governing documents d. court decisions b. Wrongful acts of employees of the association. They are only covered under the D&O if the definition of "insured party" includes such employees. Directors and officers liability insurance is designed to cover claims resulting from: a. Theft of funds by an association board member. b. Wrongful acts of employees of the association. c. Bodily injury of directors and officers. d. Damage to board owned property.

b. Assessment fee receivable Assessment fee receivable insurance has a certain limited value to an association. Such insurance will assist in situations such as a fire destroying a home or unit and the association is unable to collect assessments from the owner. It does not provide coverage for the association if an owner refuses or fails to pay assessments. Which of the following types of insurance coverage is one of limited value to a community association? a. Liability b. Assessment fee receivable c. Worker's compensation d. Commercial umbrella b. Establishing internal controls. Helps avoid theft. Learning Tested: Ability to define understanding of fiduciary. INCORRECT: a. Fiduciary duty is "Duty of care" that cannot be delegated. c. This cannot be delegated. d. This could be a breach of duty cannot change rules without due process.

The board exercises its fiduciary responsibility by: a. Authorizing the manager to enforce rules. b. Establishing internal controls. c. Authorizing of a committee to adopt due process procedures. d. Voting to eliminate parking rules. c. Declaration Hierarchy:

1. Recorded deed or map
2. Declaration or Master Deed
3. Articles of Incorporation
4. Bylaws
5. Rules and Regulations In the hierarchy of a community association's governing documents, which of the following is the highest authority? a. Bylaws b. Articles of Incorporation c. Declaration d. Mortgage lender requirements FALSE TRUE OR FALSE:

A board of directors can legally conduct the business of the association without a quorum. b. Contract Management conducts its tasks for the day to day operation of the association in accordance with the: a. Minutes b. Contract c. Board President's instructions d. Resolutions

1. d. transition
2. b. turnover
3. The general process by which the control and responsibilities of the governing board of an association are transferred from the developer to the persons who bought unit/lots in the association is called.
4. The date upon which owners gain control of their association. a. audit b. turnover c. restoration d. transition d. Deal with governance and business.

The primary purpose of a community association is to: a. Guarantee property tax benefits. b. Protect the financial health of the owners. c. Provide owners protection from municipal laws. d. Deal with governance and business. c. Assist both parties in reaching a mutually acceptable agreement. INCORRECT: a. This would be arbitration. Mediation is non-binding. b. Mediation allows the parties themselves to come to an agreement. d. Only in arbitration is the decision binding. When a dispute is mediated, an uninvolved third party facilitates discussion and: a. Makes the final judgement for both parties. b. Presents a decision which the parties are free to reject. c. Assist both parties in reaching a mutually acceptable agreement. d. Decision is binding upon both parties. a. The Board of Directors Who has the ultimate responsibility for the care and maintenance of the common areas, facilities, and physical property? a. The Board of Directors b. The association manager