M100 Quiz Review:M100 Community Association
Management:M 100 The Essentials of Community
Association Management:M100 Exam Study Guide:
Updated Solutions : Guaranteed A+ Guide
55 and older community - ANSWERMust have one person who is 55 years of age or
older living in at least 80% of its occupied units. The community must be designated
"55 and older" to qualify as this type of housing that legally prohibits children and
limits occupancy to a certain age span. The designation process involves submitting
applications and obtaining approval before any enforcement of the ages of residents
commences. Approval from the Department of Housing and Urban Development
(HUD) must be received before construction begins.
Abstention - ANSWERIs to not cast a vote. Board members should abstain from
voting only for clearly stated reasons such as a conflict of interest or ignorance of the
matter at hand.
Acceleration - ANSWERThe collection of all assessments due through the end of the
fiscal year. Acceleration is a technique used to collect assessments from habitually
delinquent owners.
Accrual basis of accounting - ANSWERRecords revenue when it is earned and
expenses when they are incurred. It provides an accurate picture of the association's
financial condition. GAAP (Generally Accepted Accounting Principles) requires the
use of accrual accounting.
Action item list - ANSWERA list of actions to be taken before the next board of
directors meeting as a result of decisions made at the current one or between
meetings. An action item list contains the decisions to be implemented together with
the names of those assigned implementation responsibility. Excel, Google Docs and
Microsoft Outlook Tasks may be useful programs for helping you compile your action
item list.
Actual cash value (ACV) - ANSWERACV is the depreciated value of an item,
commonly used in property insurance coverage.
Workers' Compensation Insurance - ANSWERA common insurance coverage and
endorsement for personnel exposures to loss—in this case, loss of services due to
injuries received while working on behalf of the community association. State
statutes determine the classes of employees to be insured and coverage for loss of
services due to employment related injuries. In most states, workers' compensation
insurance is obtained from commercial insurers. Coverage for associations with no
employees is rated on an "if any employee" basis and usually is a minimum
premium. Every community association should consider obtaining workers'
compensation insurance.
,Wrongful acts - ANSWERLegal claims can be brought against a community
association based on the manner in which it conducts its business. Examples of
"wrongful acts" include the failure to file taxes, collect assessments, maintain
replacement reserves, or deliver core services to its residents (member/owners and
tenants). Directors and officers (D&O) liability insurance is designed to pay for
damages arising from wrongful acts that do not lead to property damage, bodily
injury, advertising injury, or personal injury.
Yield - ANSWEROne of three essential investment objectives for community
associations, yield is the amount of return on an investment. The other two essential
investment objectives are liquidity and safety.
Zero-base budgeting - ANSWERA method of budget preparation where all amounts
are set to zero and the budget amount must be justified, instead of assuming the line
item is needed and adjusting the amount for the coming year. The zerobase
approach keeps you from accepting this year's figures at face value. It requires you
to analyze the reasons for the actual amounts spent. The actual dollar figure may be
less or more than the budgeted figure because of circumstances you cannot assume
will exist during the coming year. For example, lawn maintenance costs during a dry
season will be low— but a community cannot assume that the coming year will be
just as dry.
Work order/response form - ANSWERA form for assigning maintenance work to be
done. With some planning, it can be used— To document owner and tenant
requests To assign maintenance tasks to both maintenance staff and contractors As
a response form to be returned to an owner or tenant, indicating that work was
completed or confirming that it was assigned As a basis for allocating charges, when
appropriate A work order/response form has several benefits. It— Identifies whether
the need is an emergency or not Requires attention Allows follow-up to evaluate
satisfactio Provides a means of monitoring costs Provides a history of the repairs that
have been made Documents any problems with contractors reported by owners or
tenants Indicates if the work is a recurring problem necessitating further evaluation
Most software programs have work order/response forms as part of their system.
Warranty - ANSWERA promise or guarantee that parts, materials, or labor will last
for a designated period of time. Warranties required should be part of the RFP
(request for proposal) packet when a community association is interested in
receiving proposals for a particular project. In addition, any contract the association
signs should state the agreed upon warranties clearly and in detail. A warranty
should state: What is covered For how long What is not covered What the contractor
will do if the work or product proves defective
Waiver of lien - ANSWERContract provision that gives up the right to make a claim
against the community association for payments not received. A waiver of lien
should be used when a project involves the heavy use of materials or subcontractors
—e.g., some type of construction project—and the community association wants to
,avoid the risk of having to pay for materials or subcontractors if the contractor fails
to do so. A performance bond, payment bond, and waiver of lien all provide for the
community association's financial protection if the contractor should default.
Waiver of subrogation - ANSWERA common insurance contract endorsement
designed to minimize a community association's property exposure to loss, the
waiver of subrogation prohibits the insurer from attempting to seek restitution from
a third party who causes any kind of loss to the insured. This type of arrangement is
allowable under certain circumstances where the insured could be held liable for a
claim that is paid. In other words, a waiver of subrogation is the endorsement that
deletes the right of the association to seek reimbursement for a covered loss from
the owner who caused the damage. Also commonly known as a "waiver of the
transfer of recovery rights."
Waiver of the transfer of recovery rights - ANSWERA common insurance contract
endorsement designed to minimize a community association's property exposure to
loss, the waiver of the transfer of recovery rights prohibits the insurer from
attempting to seek restitution from a third party who causes any kind of loss to the
insured. This type of arrangement is allowable under certain circumstances where
the insured could be held liable for a claim that is paid. In other words, a waiver of
the transfer of recovery rights is the endorsement that deletes the right of the
association to seek reimbursement for a covered loss from the owner who caused
the damage. Also commonly known as a "waiver of subrogation."
Waiver provision - ANSWERContract provision that states that a waiver (permission)
by one party of any breach of contract (failure to fulfill a provision) by the other
party shall not act as a general waiver of future breaches. In other words, each party
says to the other, "If we let you slide on any contract requirement at any time, it
doesn't mean we're letting you slide on any other requirements, or even on that one
a second time— unless we decide to let you do it again."
Work order/response form - ANSWERA form for assigning maintenance work to be
done. With some planning, it can be used— • To document owner and tenant
requests • To assign maintenance tasks to both maintenance staff and contractors •
As a response form to be returned to an owner or tenant, indicating that work was
completed or confirming that it was assigned • As a basis for allocating charges,
when appropriate A work order/response form has several benefits. It— • Identifies
whether the need is an emergency or not • Requires attention • Allows follow-up to
evaluate satisfaction • Provides a means of monitoring costs • Provides a history of
the repairs that have been made • Documents any problems with contractors
reported by owners or tenants • Indicates if the work is a recurring problem
necessitating further evaluation Most software programs have work order/response
forms as part of their system.
Treasury bonds - ANSWERInvestment option that matures in more than 10 years.
Treasury bonds are issued in denominations from $1,000 to $100,000. They are also
interest-bearing with interest paid every six months. When the bond matures, the
, buyer receives the full face value. Treasury bonds are among the safest investment
options for community associations because payment is guaranteed by the
government.
Treasury notes - ANSWERInvestment option that matures in one to 10 years.
Treasury notes are issued in denominations from $1,000 to $100,000. They are also
interest-bearing with interest paid every six months. When the note matures, the
buyer receives the full face value. Treasury notes are among the safest investment
options for community associations because payment is guaranteed by the
government.
Turnover - ANSWERThat date upon which homeowners gain control of their
association from the developer. Typically, turnover occurs at an annual or special
meeting of the homeowners.
U. S. Bankruptcy Code - ANSWERThe purpose of bankruptcy laws is to help honest
people and businesses find a way to pay their debt or get a fresh start. Bankruptcy
laws help people who can no longer pay their creditors start anew—by liquidating
assets to pay their debts or by creating a repayment plan. Among many other
corrections and revisions, and with the strong lobbying efforts of CAI staff and
volunteers, the Bankruptcy Prevention and Consumer Protection Act passed in 2005
contained a small provision benefitting community associations. It clarified that
associations have the authority to collect assessments that come due after the date
the homeowner filed for bankruptcy.
Umbrella association - ANSWERGovernance structure where there is more than one
residential community association grouped together. Often there is a hierarchy with
independent subassociations under an umbrella association Also known as a Master
Association. Words Definition
Veterans Administration (VA) - ANSWEROne of four entities—including Fannie Mae,
Freddie Mac, FHA and VA—that have an impact on community association insurance
obligations. Federallyestablished secondary mortgage institution that sets
requirements that community associations have to meet if owners are to participate
in their financing or repurchase programs. Federal agency regulates and influences
such items as the amount of insurance a community association must carry,
procedures for financial operations, procedures an association must follow to
dissolve, and requirements for the upkeep of property.
Volunteer or self-management - ANSWERThe community association is managed by
volunteer members of the board itself or by committees under the direction of the
board. While there are no out-ofpocket management fees, continuity can be difficult
because of volunteer turnover and inconsistent service. Professionalism depends on
the skills and experience of those who volunteer. Other management options
include hiring an associationemployed manager or management company.
Management:M 100 The Essentials of Community
Association Management:M100 Exam Study Guide:
Updated Solutions : Guaranteed A+ Guide
55 and older community - ANSWERMust have one person who is 55 years of age or
older living in at least 80% of its occupied units. The community must be designated
"55 and older" to qualify as this type of housing that legally prohibits children and
limits occupancy to a certain age span. The designation process involves submitting
applications and obtaining approval before any enforcement of the ages of residents
commences. Approval from the Department of Housing and Urban Development
(HUD) must be received before construction begins.
Abstention - ANSWERIs to not cast a vote. Board members should abstain from
voting only for clearly stated reasons such as a conflict of interest or ignorance of the
matter at hand.
Acceleration - ANSWERThe collection of all assessments due through the end of the
fiscal year. Acceleration is a technique used to collect assessments from habitually
delinquent owners.
Accrual basis of accounting - ANSWERRecords revenue when it is earned and
expenses when they are incurred. It provides an accurate picture of the association's
financial condition. GAAP (Generally Accepted Accounting Principles) requires the
use of accrual accounting.
Action item list - ANSWERA list of actions to be taken before the next board of
directors meeting as a result of decisions made at the current one or between
meetings. An action item list contains the decisions to be implemented together with
the names of those assigned implementation responsibility. Excel, Google Docs and
Microsoft Outlook Tasks may be useful programs for helping you compile your action
item list.
Actual cash value (ACV) - ANSWERACV is the depreciated value of an item,
commonly used in property insurance coverage.
Workers' Compensation Insurance - ANSWERA common insurance coverage and
endorsement for personnel exposures to loss—in this case, loss of services due to
injuries received while working on behalf of the community association. State
statutes determine the classes of employees to be insured and coverage for loss of
services due to employment related injuries. In most states, workers' compensation
insurance is obtained from commercial insurers. Coverage for associations with no
employees is rated on an "if any employee" basis and usually is a minimum
premium. Every community association should consider obtaining workers'
compensation insurance.
,Wrongful acts - ANSWERLegal claims can be brought against a community
association based on the manner in which it conducts its business. Examples of
"wrongful acts" include the failure to file taxes, collect assessments, maintain
replacement reserves, or deliver core services to its residents (member/owners and
tenants). Directors and officers (D&O) liability insurance is designed to pay for
damages arising from wrongful acts that do not lead to property damage, bodily
injury, advertising injury, or personal injury.
Yield - ANSWEROne of three essential investment objectives for community
associations, yield is the amount of return on an investment. The other two essential
investment objectives are liquidity and safety.
Zero-base budgeting - ANSWERA method of budget preparation where all amounts
are set to zero and the budget amount must be justified, instead of assuming the line
item is needed and adjusting the amount for the coming year. The zerobase
approach keeps you from accepting this year's figures at face value. It requires you
to analyze the reasons for the actual amounts spent. The actual dollar figure may be
less or more than the budgeted figure because of circumstances you cannot assume
will exist during the coming year. For example, lawn maintenance costs during a dry
season will be low— but a community cannot assume that the coming year will be
just as dry.
Work order/response form - ANSWERA form for assigning maintenance work to be
done. With some planning, it can be used— To document owner and tenant
requests To assign maintenance tasks to both maintenance staff and contractors As
a response form to be returned to an owner or tenant, indicating that work was
completed or confirming that it was assigned As a basis for allocating charges, when
appropriate A work order/response form has several benefits. It— Identifies whether
the need is an emergency or not Requires attention Allows follow-up to evaluate
satisfactio Provides a means of monitoring costs Provides a history of the repairs that
have been made Documents any problems with contractors reported by owners or
tenants Indicates if the work is a recurring problem necessitating further evaluation
Most software programs have work order/response forms as part of their system.
Warranty - ANSWERA promise or guarantee that parts, materials, or labor will last
for a designated period of time. Warranties required should be part of the RFP
(request for proposal) packet when a community association is interested in
receiving proposals for a particular project. In addition, any contract the association
signs should state the agreed upon warranties clearly and in detail. A warranty
should state: What is covered For how long What is not covered What the contractor
will do if the work or product proves defective
Waiver of lien - ANSWERContract provision that gives up the right to make a claim
against the community association for payments not received. A waiver of lien
should be used when a project involves the heavy use of materials or subcontractors
—e.g., some type of construction project—and the community association wants to
,avoid the risk of having to pay for materials or subcontractors if the contractor fails
to do so. A performance bond, payment bond, and waiver of lien all provide for the
community association's financial protection if the contractor should default.
Waiver of subrogation - ANSWERA common insurance contract endorsement
designed to minimize a community association's property exposure to loss, the
waiver of subrogation prohibits the insurer from attempting to seek restitution from
a third party who causes any kind of loss to the insured. This type of arrangement is
allowable under certain circumstances where the insured could be held liable for a
claim that is paid. In other words, a waiver of subrogation is the endorsement that
deletes the right of the association to seek reimbursement for a covered loss from
the owner who caused the damage. Also commonly known as a "waiver of the
transfer of recovery rights."
Waiver of the transfer of recovery rights - ANSWERA common insurance contract
endorsement designed to minimize a community association's property exposure to
loss, the waiver of the transfer of recovery rights prohibits the insurer from
attempting to seek restitution from a third party who causes any kind of loss to the
insured. This type of arrangement is allowable under certain circumstances where
the insured could be held liable for a claim that is paid. In other words, a waiver of
the transfer of recovery rights is the endorsement that deletes the right of the
association to seek reimbursement for a covered loss from the owner who caused
the damage. Also commonly known as a "waiver of subrogation."
Waiver provision - ANSWERContract provision that states that a waiver (permission)
by one party of any breach of contract (failure to fulfill a provision) by the other
party shall not act as a general waiver of future breaches. In other words, each party
says to the other, "If we let you slide on any contract requirement at any time, it
doesn't mean we're letting you slide on any other requirements, or even on that one
a second time— unless we decide to let you do it again."
Work order/response form - ANSWERA form for assigning maintenance work to be
done. With some planning, it can be used— • To document owner and tenant
requests • To assign maintenance tasks to both maintenance staff and contractors •
As a response form to be returned to an owner or tenant, indicating that work was
completed or confirming that it was assigned • As a basis for allocating charges,
when appropriate A work order/response form has several benefits. It— • Identifies
whether the need is an emergency or not • Requires attention • Allows follow-up to
evaluate satisfaction • Provides a means of monitoring costs • Provides a history of
the repairs that have been made • Documents any problems with contractors
reported by owners or tenants • Indicates if the work is a recurring problem
necessitating further evaluation Most software programs have work order/response
forms as part of their system.
Treasury bonds - ANSWERInvestment option that matures in more than 10 years.
Treasury bonds are issued in denominations from $1,000 to $100,000. They are also
interest-bearing with interest paid every six months. When the bond matures, the
, buyer receives the full face value. Treasury bonds are among the safest investment
options for community associations because payment is guaranteed by the
government.
Treasury notes - ANSWERInvestment option that matures in one to 10 years.
Treasury notes are issued in denominations from $1,000 to $100,000. They are also
interest-bearing with interest paid every six months. When the note matures, the
buyer receives the full face value. Treasury notes are among the safest investment
options for community associations because payment is guaranteed by the
government.
Turnover - ANSWERThat date upon which homeowners gain control of their
association from the developer. Typically, turnover occurs at an annual or special
meeting of the homeowners.
U. S. Bankruptcy Code - ANSWERThe purpose of bankruptcy laws is to help honest
people and businesses find a way to pay their debt or get a fresh start. Bankruptcy
laws help people who can no longer pay their creditors start anew—by liquidating
assets to pay their debts or by creating a repayment plan. Among many other
corrections and revisions, and with the strong lobbying efforts of CAI staff and
volunteers, the Bankruptcy Prevention and Consumer Protection Act passed in 2005
contained a small provision benefitting community associations. It clarified that
associations have the authority to collect assessments that come due after the date
the homeowner filed for bankruptcy.
Umbrella association - ANSWERGovernance structure where there is more than one
residential community association grouped together. Often there is a hierarchy with
independent subassociations under an umbrella association Also known as a Master
Association. Words Definition
Veterans Administration (VA) - ANSWEROne of four entities—including Fannie Mae,
Freddie Mac, FHA and VA—that have an impact on community association insurance
obligations. Federallyestablished secondary mortgage institution that sets
requirements that community associations have to meet if owners are to participate
in their financing or repurchase programs. Federal agency regulates and influences
such items as the amount of insurance a community association must carry,
procedures for financial operations, procedures an association must follow to
dissolve, and requirements for the upkeep of property.
Volunteer or self-management - ANSWERThe community association is managed by
volunteer members of the board itself or by committees under the direction of the
board. While there are no out-ofpocket management fees, continuity can be difficult
because of volunteer turnover and inconsistent service. Professionalism depends on
the skills and experience of those who volunteer. Other management options
include hiring an associationemployed manager or management company.
