CMCA - Certified Manager of Community Associations CMCA-FREE Cmca 1 — Questions and Answers
Question 1: A homeowner disputes an assessment charge and requests a hearing before the board. Under most state statutes and governing documents, the board is required to:
- Waive the charge immediately to avoid legal conflict
- Provide the homeowner with a reasonable opportunity to be heard before imposing any fine or lien (Correct answer)
- Refer the matter directly to the association's attorney without further board involvement
- Table the dispute until the next annual meeting when all homeowners can vote on it
Correct answer: Provide the homeowner with a reasonable opportunity to be heard before imposing any fine or lien
Due process protections in most community association statutes require that homeowners be given notice and an opportunity to be heard before the board imposes fines or takes collection action. This protects the association from legal challenges and ensures fair treatment.
Question 2: Which financial statement best shows whether an association can meet its short-term obligations as they come due?
- Income statement (profit and loss)
- Balance sheet with current assets and liabilities highlighted (Correct answer)
- Reserve fund schedule
- Year-end audit report
Correct answer: Balance sheet with current assets and liabilities highlighted
The balance sheet shows current assets versus current liabilities, which reveals an association's liquidity — its ability to pay short-term obligations. A current ratio derived from the balance sheet is the standard measure of short-term financial health.
Question 3: A community association's reserve study is most useful for:
- Setting annual operating budget line items for routine maintenance
- Determining how much to collect and save for major component repair and replacement over time (Correct answer)
- Calculating the management fee owed to the community manager
- Establishing fines for covenant violations
Correct answer: Determining how much to collect and save for major component repair and replacement over time
A reserve study analyzes the useful life and replacement cost of major common-area components, then calculates the funding needed so reserves are adequate when those components must be repaired or replaced. It is the foundation of long-term capital planning.
Question 4: When an association board enters executive session, the primary purpose is to:
- Conduct a vote on the annual budget in private to avoid homeowner interference
- Discuss sensitive matters such as litigation, contract negotiations, or personnel issues outside of the open meeting (Correct answer)
- Exclude board members with a conflict of interest from routine business discussions
- Permanently seal the minutes from that portion of the meeting from all homeowners
Correct answer: Discuss sensitive matters such as litigation, contract negotiations, or personnel issues outside of the open meeting
Executive session allows the board to discuss legally sensitive topics — including pending litigation, personnel matters, and contract negotiations — without those discussions becoming part of the public record. Most statutes require that executive session minutes still be recorded and maintained, though access may be restricted.
Question 5: An association manager discovers that the board approved a contract with a vendor owned by the board treasurer without disclosing the relationship. This situation is best described as:
- A permissible transaction as long as the price is competitive
- A conflict of interest that should have been disclosed and recused before the vote (Correct answer)
- An arms-length transaction because the board voted on it collectively
- A routine business decision within the board's sole discretion
Correct answer: A conflict of interest that should have been disclosed and recused before the vote
Board members owe a duty of loyalty to the association, which requires disclosing any personal or financial interest in a transaction and recusing themselves from the vote. Failure to disclose a conflict of interest can expose the board member to personal liability and void the contract.
Question 6: Which of the following actions would most directly help an association manager ensure that a vendor contract protects the association's interests?
- Allowing the vendor to use their own standard contract without modification
- Reviewing the contract for scope of work, indemnification, insurance requirements, and termination clauses before execution (Correct answer)
- Having the board president sign immediately to secure the vendor's availability
- Asking the vendor to provide references rather than reviewing contract terms
Correct answer: Reviewing the contract for scope of work, indemnification, insurance requirements, and termination clauses before execution
A thorough contract review covering scope of work, insurance and indemnification provisions, payment terms, and termination rights protects the association from liability and ensures the vendor's obligations are clearly defined. Managers should coordinate with association counsel on significant contracts.
CMCA - Certified Manager of Community Associations CMCA-FREE Cmca 1
A homeowner disputes an assessment charge and requests a hearing before the board.
Under most state statutes and governing documents, the board is required to: