CMCA Study Guide Complete 2023

CMCA Study Guide Complete 2023 Articles of incorporation Ans- Bring the corporation into existence, define its basic purposes and powers, indicate whether stock will be issued, and indicate whether there will be a boa ...

CMCA Study Guide Complete 2023 Articles of incorporation Ans- Bring the corporation into existence, define its basic purposes and powers, indicate whether stock will be issued, and indicate whether there will be a board of directors Bylaws Ans- Formally adopted governing regulations for the administration and management of a community association CC & Rs (Covenants, Conditions & Restrictions) Ans- The governing documents that dictate how the homeowners association operates and what rules the owners—and their tenants and guests — must obey. These legal documents might also be called the bylaws, the master deed, the houses rules or another name. These documents and rules are legally enforceable by the homeowners association, unless a specific provision conflicts with federal, state or local laws Community association Ans- A group of owners who wish to provide a communal basis for preserving, maintaining, and enhancing their homes and property Condominium Ans- A living unit fully owned by an individual with an undivided interest in the common elements of the community. The community association itself owns no real estate as an association Cooperative Ans- Wherein an individual owns stock or membership in the cooperative, and holds a proprietary lease or occupancy agreement for his or her living unit Declaration Ans- Used interchangeably with CC & Rs Governing documents Ans- Documents which provide for the legal structure and operation of the community Indemnification Ans- to exempt an individual or entity from responsibility for claims made against the organization and to reimburse the individual or entity for damages or expenses incurred as a result of such claims Master association Ans- An organization of homeowners in a large condominium or planned unit development (PUD) which includes representatives from other, smaller homeowner organizations Mixed use development Ans- A development which is designed to mix two or more "uses" of land together (i.e. a shopping center which offers office space for dentists) Planned community Ans- the most common type of community association, where an owner owns his or her lot and/or living unit and the community owns any common areas, such as tennis courts and roads for the use and benefit of the lot owners Proprietary lease Ans- A rental agreement between a cooperative housing corporation and a share holder allowing use of a certain unit in the premises Public offering statement Ans- A disclosure statement prepared by a developer that contains all material facts about a property offered for sale and that must be provided to a prospective purchaser in accordance with applicable state or federal law Resolution Ans- A motion that follows a set format and is formally adopted by the board of directors Statute Ans- A formal written enactment of a legislative authority that governs a country, state, city or county Umbrella association Ans- A cluster of community association types that can include aspects of homeowners associations, condominiums and cooperatives Ad hoc committee Ans- Used when an objective needs consideration and no standing committee within the organization can absorb that issue into its scope. Usually these committees are used on a short - term basis, such as temporary oversight of an issue or review of the standing rules of that community Board liaison system Ans- Directors are assigned to certain committees to guide the committee on Board policy and procedures and to repo rt back to the Board. Directors serving as a liaison must distinguish their role from the role of the committee chairperson. Business judgment rule Ans- If a board has exercised reasonable business judgment in making a decision, the court will generally not c onsider the board negligent in it s fiduciary duty, nor will the court substitute its judgment for that of the board Fiduciary duty Ans- Requires directors to act in the best interests and for the benefit of the corporation, thus the community as a whole. the members are required to avoid conflicts of interest and acting out of self-interest; the members are also required to act as reasonable people in managing the association's affairs Management ethics Ans- consists of a review of governing documents and existing policies and procedures, current condition of the property, owner/resident satisfaction, and fiscal operations. This review can be done by the board and man ager together, or a third - party management consultant can be hired Management plan Ans- a statement of goals and objectives approved by the board. It includes the yearly cycle of tasks that management should perform on the community association's behalf Standing committee Ans- Committees which have a continued existence and are not related to the accomplishment of a specific, once - only task. Budget and nomination committees are examples of standing committees Alternative dispute resolution Ans- Mediation, arbitration and other ways of resolving conflicts with the help of a specially trained neutral third party without the need for a formal trial or hearing Appeal Ans- A request for a review of a case by a higher authority — if permitted by the governing documents or statute Default hearing Ans- A hearing held when the alleged violator fails to appear Due process procedure Ans- a formal process designed to protect the rights of all parties involved Hearing notice Ans- This is a written notice to an alleged violator that a hearing will be held to consider his or her alleged violation Hierarchy of authority Ans- Policy that: Rules and architectural guidelines may not contradict or be in conflict with the legal sources that take precedence over them. Although rules and architectural guidelines are lower in the hierarchy of authority for community associations, they may clarify and expand a community's governing documents — but may not conflict with the other governing documents. Rule Ans- A specific statement of required behavior whose violation carries a penalty (sometimes called a sanction). Assessment Ans- the owner's financial obligation to the community association during a given period of time — usually one year Baseline funding Ans- The goal of this funding strategy is to keep the reserve cash balance above zero Chart of accounts Ans- An organized list of titles, descriptions and assigned numbers of all accounts in an organization's general ledger. The assigned number helps you locate the account. The title describes the purpose of the account Discretionary budget line items Ans- These are items based on owner, board and committee desires. They are items people would like to have — given their values FHA or Federal Housing Administration Ans- Regulates and influences such items as the amount of insurance a community association must carry, procedures for financial operations and requirements for the upkeep of property. FHLMC or Federal Home Loan Mortgage Corporation Ans- Buys mortgages from lenders and in doing so require certain types of insurance to be in place. FNMA or Federal National Mortgage Association Ans- Federally established secondary mortgage institution that may set requirements that your community association will have to meet if owners are to participate in their financing programs Full funding Ans- The goal of this funding strategy is to attain and maintain the reserves at or near 100 percent as called for on the component inventory. Historical trend budgeting Ans- This method begins with the assumption that existing line items are needed. The amount of funds allotted to each during the current year is adjusted for expected changes in the coming year Major improvement expenses Ans- Expenses that consist of items that are not necessarily required, but are added to improve the overall welfare, safety or life of the residents — or to enhance the value of the community association as reflected in the resale value of units. Operating budget Ans- The section of a budget devoted to operating activities includes operating expenses and major improvement expenses — but not the replacement fund Operating expenses Ans- Expense items that occur on a regular basis — day to day, week to week, month to month, and year to year. Reconciliation of expenses and revenue Ans- After you draft both your operating and replacement fund budgets for the coming year, you must reconcile your estimated expenses with your community's anticipated revenue. To reconcile means to bring together after a difference. Replacement fund Ans- consists of funds put aside in reserve — for the replacement of major components of a community's common property Reserve cash flow statement Ans- Shows the amount to be funded and the amount to be expended from the replacement fund over a given period of time Reserve study Ans- a budget planning tool that considers the current status of the replacement fund and determines a stable and equitable funding plan to offset the anticipated future major common area expenditures Revenue Ans- the collective items or amounts of income which, in the case of a community association, are appropriated for public expenses. Threshold funding Ans- This method is based on the baseline-funding concept. The minimum reserve cash balance is set at a predetermined dollar amount Zero-based budgeting Ans- With this method, all line items are set to zero and the amount of funds allotted to each must be justified Acceleration Ans- The collection of all assessments due through the end of the fiscal year. For example, if an owner's payments on the annual assessment are due monthly and become delinquent at the end of March, all monthly payments through December of that year are due immediately Assessment Ans- the owner's financial obligation to the community association during a given period of time—usually one year. It covers the owner's share of the common expense, also known as "commo