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Random CMCA Practice Test Questions (Under
Construction)
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 - Correct answer C. A work order/response form - A, B, and D speak to elements OTHER than a control to ensure maintenance work is completed. 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 - Correct answer 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. 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 - Correct answer 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. 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 - Correct answer 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. 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. - Correct answer 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. 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. - Correct answer 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. 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 - Correct answer 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. 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. - Correct answer 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.
a. Call the meeting to order. b. Establish the agenda. c. Take the minutes of the meeting. d. Be the time keeper - Correct answer 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. 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 - Correct answer 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. 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 - Correct answer 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. 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 - Correct answer c. Specific state statues - There may be specific state statues addressing regulations which effect the management of a community association. TRUE OR FALSE: Employees are finished with training after they receive their initial training for a job. - Correct answer FALSE 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 - Correct answer 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. 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. - Correct answer TRUE
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 - Correct answer d. mandatory committees 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 - Correct answer b. goals 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 - Correct answer d. Board resolutions - Maintenance guidelines are established by Board action. 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. - Correct answer 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. What "duty" do the Board members and the manager have to the members? a. Accountability b. Loyalty c. Service d. Conduct - Correct answer 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." TRUE OR FALSE: It's generally a good idea to schedule a performance evaluation meetings with an employee in a public place. - Correct answer FALSE
b. 2 days c. 3 months d. a week - Correct answer d. a week 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. - Correct answer 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. 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. - Correct answer d. Explain employee rights and responsibilities. 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. - Correct answer 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. Alternative dispute resolution includes which of the following methods? a. Mediation b. Subrogation c. Litigation d. Indemnification - Correct answer 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. MATCH THE COMMITTEE TYPES
- Usually include elections, nominations, and architectural standards. Required by the governing documents.
- Established by the Board to meet some on-going need of the community.
- 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 - Correct answer 1. b. Mandatory
- a. Standing
- d. Ad-hoc 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. - Correct answer c. Assigns maintenance tasks. 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. - Correct answer a. Decide issues of policy for the owners in the community. 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. - Correct answer c. Cutting the grass 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. - Correct answer b. Without admitting negligence. A component of building ordinance insurance coverage includes: a. Glass damage b. Extra demolition c. Water damage d. Power failure - Correct answer b. Extra demolition 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 - Correct answer a. substance abuse on the job
A board of directors can legally conduct the business of the association without a quorum. - Correct answer FALSE 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 - Correct answer b. Contract
- 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.
- The date upon which owners gain control of their association. a. audit b. turnover c. restoration d. transition - Correct answer 1. d. transition
- b. turnover 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. - Correct answer d. Deal with governance and business. 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. - Correct answer 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. 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 c. The developer until turnover. d. The Executive Committee. - Correct answer a. The Board of Directors You have a proprietary lease in XYZ development. Which of the following best describes your interest in the property? a. A time-share interest. b. A divided interest. c. An undivided interest. d. Stock membership - Correct answer d. Stock membership A proprietary lease is given to the shareholder only in a Cooperative Cooperation. The shareholder receives stock membership.
TRUE OR FALSE:
The role of a professional community association manager is to make all decisions for the association and to delegate information-gathering and fact-finding support to the board of directors. - Correct answer FALSE TRUE OR FALSE Assessment Fee Receivable insurance coverage provides coverage for the association if an owner refuses or fails to pay assessments. - Correct answer FALSE Community association employees are obligated to do each of the following EXCEPT: a. possess the skills needed to perform assigned tasks. b. use reasonable care in performing assigned tasks in order to protect the community's assets and interest. c. complete assignments in conformity to performance standards within a reasonable time frame. d. participate in the association's health program. - Correct answer d. participate in the association's health program. The federal government prohibits discrimination against otherwise qualified people for each of the characteristics EXCEPT: a. religion b. gender c. skill d. race and ethnicity - Correct answer c. skill TRUE OR FALSE: If a community association has just one part-time employee, it doesn't need a written personnel manual or employee handbook. - Correct answer FALSE In which of the following forms of community association management is the association management by the board itself or by committees under the direction of the board? a. management company b. volunteer or self-management c. association-employed manager d. municipal management - Correct answer b. volunteer or self-management Which of the following terms regarding the process of making a motion most closely fits this definition: "to change a motion by inserting, adding, striking out, striking out and inserting, or substituting words." a. Take a motion from the table b. Second a motion c. Amend a motion d. Table a motion - Correct answer c. Amend a motion A ___________________ is a statement of goals and objectives approved by the board that includes the yearly cycle of tasks that management should perform on the community association's behalf: a. management audit b. management contract c. management plan d. employment agreement - Correct answer c. management plan TRUE OR FALSE: It is ethically acceptable for a professional community association manager to arrange for a kickback for giving a contractor an association contract. - Correct answer FALSE A _____________ includes reviewing the governing documents and existing policies and procedures, the current condition of the property, owner/resident satisfaction, and fiscal operations.
- e. Business ethics
- b. Duty of Loyalty
- d. Professional ethics
- a. Conflict of Interest TRUE OR FALSE: Personnel issues are an example of a topic that often requires an executive session and are allowable by law. - Correct answer TRUE A _______________ is a written means of voting when secrecy is desired. a. proxy b. residents forum c. action item list d. ballot - Correct answer d. ballot TRUE OR FALSE: The primary purpose of a community association is to provide for the governance, business, and communal aspects of the associations. - Correct answer TRUE Reasons for establishing community rules and architectural guidelines include each of the following EXCEPT: a. There is the need to create a sense of fairness and equity among residents. b. In contemporary society, people are more likely to question and challenge authority. c. In cases where rules have been poorly developed or engraved, the courts are ruling against community associations. d. Fines imposed on residents who break community rules are frequently the primary source of association income. - Correct answer d. Fines imposed on residents who break community rules are frequently the primary source of association income. TRUE OR FALSE: According to the general hierarchy of authority for operating community associations, rules and regulations take precedence over the articles of incorporation. - Correct answer FALSE Which of the following is an example of an architectural guideline? a. pets b. noise c. fencing d. parking - Correct answer c. fencing Each of the following are basic types of residential community associations EXCEPT: a. Planned community b. Townhouse c. Cooperative d. Condominium - Correct answer b. Townhouse Each of the following are key characteristics of community associations EXCEPT: a. Mandatory lien-based economic charges or assessments are levied on each owner in order to operate and maintain the community association. b. Membership in the community association is mandatory and automatic for all owners. c. A requirement of community association ownership is serving on the board of directors.
d. Certain documents bind all owners to be governed by the community association. - Correct answer c. A requirement of community association ownership is serving on the board of directors. Each of the following are sections of a resolution EXCEPT: a. authority b. purpose c. scope and intent d. self help - Correct answer d. self help TRUE OR FALSE: Governing documents are one of the most important sources of a community's authority to make and enforce rules. - Correct answer TRUE TRUE OR FALSE: Using alternative dispute resolution to encourage residents to comply with rules and guidelines is more costly and time consuming than going through the court system. - Correct answer FALSE Which of the following is not one of the basic steps in a due process procedure? a. Issue a "cease and desist" letter. b. Issue a hearing notice if the violation does not end within the state time. c. Hold the scheduled hearing if the violation does not end within the stated time. d. Issue a decision before a hearing is held. - Correct answer d. Issue a decision before a hearing is held. TRUE OR FALSE: To increase the likelihood that a court of law will uphold an association's enforcement of architectural guidelines, the board of directors should turn a blind eye towards violations and permit unapproved architectural changes to exist. - Correct answer FALSE Adoption of the annual budget is an example of which of the following type of resolution? a. policy resolution b. administrative resolution c. special resolution d. general resolution - Correct answer d. general resolution TRUE OR FALSE: The purpose of a community association's governing documents is to provide for the legal structure and operation of the community. - Correct answer TRUE TRUE OR FALSE: According to the general hierarchy of authority for governing documents, the bylaws would control conflict with the recorded map, plat or plan. - Correct answer FALSE The Recorded Map, plat or plan is at the TOP of the hierarchy. A ___________________ state statue is one that applies only to one or more types of community associations. a. general b. complex c. specific d. uniform - Correct answer c. specific The __________________ bring the community association into existence, define its basic purposes and powers, and indicate whether stock will be issued.
