Cmca Complete Study Guide

Front 1

Abstention

Back 1

When a participant in a vote either does not go to vote or, is present during the vote, but does not cast a ballot

Front 2

Acceleration

Back 2

The collection of all assessments due through the end of the fiscal year.

Front 3

Accrual basis of accounting

Back 3

Accounting method that records income when it is earned (or assessed to owners) and expenses when they are incurred or acquired.

Front 4

Action Item List

Back 4

A documented event, task, activity or action that needs to take place (usually recorded in meeting minutes)

Front 5

Actual cash value (ACV)

Back 5

The depreciated value of an item.

Front 6

Ad hoc committee

Back 6

A committee used on a short-term basis when an objective needs consideration and no standing committee within the organization can absorb that issue into its scope.

Front 7

Advertising injury

Back 7

Damages resulting in “misappropriation of advertising ideas or style of doing business” or “infringement of copyright, slogan or title.”

Front 8

Agenda

Back 8

A list of meeting activities in the order in which they are to be taken up, beginning with the call to order and ending with adjournment

Front 9

Agreed amount endorsement

Back 9

A policy endorsement that provides for an agreed upon limit of property insurance.

Front 10

Alternative dispute resolution

Back 10

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.

Front 11

Amend a Motion

Back 11

Used to modify another motion (inserting or adding words, striking words)

Front 12

Appeal

Back 12

A request for a review of a case by a higher authority - if permitted by the governing docs or statute

Front 13

Articles of incorporation

Back 13

A document to 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

Front 14

Assessment

Back 14

The owner’s financial obligation to the community association during a given period of time.

Front 15

Assets

Back 15

anything owned that has value.

Front 16

Assignability provision

Back 16

One of the 6 legally binding contract provisions that states that neither party may assign its obligations under the contract to any other person without the express written consent of the other party.

Front 17

Audit

Back 17

An examination of the accounting records and procedures of an organization by a CPA for the purpose of verifying the accuracy and completeness of financial records.

Front 18

Bad debt write-off

Back 18

Recording an uncollectible debt as an expense that the association must absorb. This usually requires a resolution of the board.

Front 19

Balance sheet

Back 19

A summary of a community’s financial position at a specific point in time.

Front 20

Ballot

Back 20

A device used to record the choices made by voters

Front 21

Baseline funding

Back 21

A funding strategy whose goal is to keep the reserve cash balance above zero.

Front 22

Bid request

Back 22

An announcement that an organization is interested in receiving proposals for a particular project.

Front 23

Bid specifications

Back 23

Detailed instructions about the products or services requested through the bid request.

Front 24

Board liaison system

Back 24

When directors are assigned to certain committees to guide the committee on Board policy and procedures and to report back to the Board.

Front 25

Business judgment rule

Back 25

If a board has exercised reasonable business judgment in making a decision, a court will generally not consider the board negligent in its fiduciary duty, nor substitute its judgment for that of the board.

Front 26

Bylaws

Back 26

Formally adopted governing regulations for the administration and management of a community association.

Front 27

Cash basis of accounting

Back 27

Accounting method that records income when it is collected and expenses when they are paid.

Front 28

Certified Public Accountant (CPA)

Back 28

An accountant who has passed certain examinations and met statutory and licensing requirements of a US State

Front 29

CC & Rs (Covenants, Conditions & Restrictions)

Back 29

The governing documents that dictate how the homeowners association operates and what rules the owners—and their tenants and guests —must obey. Legally enforceable unless a specific provision conflicts with federal, state or local laws.

Front 30

Certificate of deposit

Back 30

A savings instrument which, when reinvested together with its accumulated interest, the ultimate yield will be higher than the stated rate of interest.

Front 31

Chapter 11 bankruptcy

Back 31

A corporate reorganization designed to allow for an orderly payment to creditors that enable a corporation to continue.

Front 32

Chapter 13 bankruptcy

Back 32

A reorganization of personal or non-corporate debt that pays off all or nearly all of the debt over a specified period of time.

Front 33

Chapter 7 bankruptcy

Back 33

Straight bankruptcy or liquidation that involves the prompt conversion of all the individual’s or corporation’s non-exempt property to cash, and payment of creditors to the extent possible.

Front 34

Chart of accounts

Back 34

An organized list of titles, descriptions and assigned numbers of all accounts in an organization’s general ledger.

Front 35

Coinsurance

Back 35

A standard element in most property policies that obligates the insured to maintain a certain limit of property insurance based on a stated percentage.

Front 36

Commercial reporting method

Back 36

Reporting method that combines operating and reserve activities in the same column.

Front 37

Committee Report

Back 37

Report that highlights matters to be decided and recommendations by the committee.

Front 38

Common declarations

Back 38

The title page" of a policy which It typically includes such information as the name and address of the insured and the period of coverage."

Front 39

Common policy conditions

Back 39

The basic provisions that apply to all insurance coverages in the package, such as when to file proof of a loss or what happens when a premium is not paid.

Front 40

Community association

Back 40

A group of owners who wish to provide a communal basis for preserving, maintaining, and enhancing their homes and property.

Front 41

Compilation

Back 41

A presentation of financial statements by a CPA without the assurance that the information conforms to GAAP.

Front 42

Condominium

Back 42

A living unit fully owned by an individual with an undivided interest in the common elements of the community.

Front 43

Contingent liability

Back 43

A property loss exposure coverage for building ordinance that covers the value of any undamaged portion of a building which may have to be replaced because of building laws.

Front 44

Contract

Back 44

An agreement between two or more parties—enforceable by law—by which each party promises to do, or not to do, something.

Front 45

Contractual transfers

Back 45

One of the four ways to control risk that involves entering into a contract that will, among other things, transfer the community association’s legal responsibility for any loss.

Front 46

Cooperative

Back 46

Wherein an individual owns stock or membership and holds a proprietary lease or occupancy agreement for his or her living unit.

Front 47

Cross liability

Back 47

A liability coverage which allows an owner to bring a claim against his or her community association.

Front 48

Debate

Back 48

During an election, a formal discussion involving opposing candidates vying for the same position

Front 49

Declaration

Back 49

A term used interchangeably with CC & Rs.

Front 50

Default

Back 50

Failure of either party to fulfill the terms of the contract.

Front 51

Default Hearing

Back 51

A hearing held when the alleged violator fails to appear

Front 52

Direct writer system

Back 52

A system of insurance comprised of employees of a single insurance company who only place the insurance of that company.

Front 53

Directors and officers liability insurance

Back 53

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.

Front 54

Discretionary budget line items

Back 54

Items based on owner, board and committee desires.

Front 55

Due process procedure

Back 55

A formal process designed to protect the rights of all parties involved.

Front 56

Electronic data processing (EDP)

Back 56

A type of property insurance which may be needed for computer equipment, networks, websites, security systems, protection from hackers, and similar information technology exposures.

Front 57

Emergency services maintenance

Back 57

The ability to respond to unpredictable problems such as sewer backups, slope failures, roof leaks and frozen pipes.

Front 58

Employee Handbook

Back 58

Personnel Manual. Summarizes behavior requirements, outlines benefits, and answers employee questions

Front 59

Employment at will

Back 59

This is a statement to the effect that the community association retains the right to dismiss an employee without cause at any time.

Front 60

Endorsements

Back 60

Items that expand, contract or clarify coverage.

Front 61

Engagement letter

Back 61

Describes the nature of the work to be done, type of report to be prepared, fee for services and time frame for the assignment.

Front 62

Entire obligation provision

Back 62

One of the 6 legally binding contract provisions that states that the written, signed contract constitutes the entire agreement between the parties.

Front 63

Ethics

Back 63

The specific choices to be made by an individual in his or her relationships with others.

Front 64

Executive Session

Back 64

When a board must hold a discussion or make decisions of a sensitive nature. Topics allowed by law include personnel, contract negotiations, lawsuits, legal matters, governing docs

Front 65

Expenses

Back 65

The cost of goods and services used to operate and maintain the community’s property.

Front 66

Exposure avoidance

Back 66

Avoiding the circumstances that would expose the community association to certain type of loss.

Front 67

Extra demolition

Back 67

A property loss exposure coverage for building ordinance that covers the value of demolishing any undamaged portion of a building.

Front 68

Facilities management

Back 68

The process of operating, maintaining, repairing, and replacing common property—that is, the common elements or areas.

Front 69

Fair Debt Collection Practices Act

Back 69

A law which requires that the person who owes a debt receive written notice.

Front 70

Fair Labor Standards Act (FLSA)

Back 70

This act addresses minimum wage requirements, maximum hours of work and overtime pay.

Front 71

Federal Deposit Insurance Corporation (FDIC)

Back 71

A government agency that guarantees investors’ deposits in member institutions.

Front 72

Federal Home Loan Mortgage Corporation (FHLMC)

Back 72

Buys mortgages from lenders and in doing so require certain types of insurance to be in place.

Front 73

Federal Housing Administration (FHA)

Back 73

A government agency which buys mortgages from lenders and in doing so require certain types of insurance to be in place.

Front 74

Federal Insurance Contributions Act (FICA)

Back 74

This act requires employers and employees to make matching contributions to Social Security. The employer must withhold the employee’s share of the tax from his or her wages or salary.

Front 75

Federal National Mortgage Association (FNMA)

Back 75

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.

Front 76

Fidelity insurance

Back 76

A type of income insurance which protects against employee dishonesty which may lead to the theft of money, securities, or property.

Front 77

Fiduciary duty

Back 77

Requires directors to act in the best interests and for the benefit of the corporation, thus the community as a whole. Components require that members 1) avoid conflicts of interest and acting out of self-interest; and 2) act as reasonable people in managing the association’s affairs.

Front 78

Financial Report

Back 78

A reporton the community's financial condition and activities, including a general ledger, variance, accts. Payable, income statement, and balance sheet.

Front 79

Foreclosure

Back 79

A legal proceeding filed in court whereby a party with a claim against an owner can claim ownership of the unit involved in order to recover the money it is owed.

Front 80

Full funding

Back 80

A funding strategy whose goal is to attain and maintain the reserves at or near 100 percent as called for on the component inventory.

Front 81

Fund reporting method

Back 81

Consists of preparing separate columns for operating, reserve, and any special funds.

Front 82

Generally Accepted Accounting Principles (GAAP)

Back 82

Guidelines whose purpose is to provide uniformity among reports from different organizations.

Front 83

Governing documents

Back 83

Documents which provide for the legal structure and operation of the community.

Front 84

Governing law provision

Back 84

One of the 6 legally binding contract provisions that states that the law of a particular state will be applied if there are any disputes about the contract after it is signed.

Front 85

Hearing notice

Back 85

A written notice to an alleged violator that a hearing will be held to consider his or her alleged violation.

Front 86

Hierarchy of authority

Back 86

State that rules and architectural guidelines may not contradict or be in conflict with the legal sources that take precedence over them.

Front 87

Historical trend budgeting

Back 87

A budgeting method that begins with the assumption that existing line items are needed, and the amount of funds allotted to each during the current year is adjusted for expected changes in the coming year.

Front 88

HO-1, 2, 3, 5,

Back 88

Refers to policies for owner-occupied units

Front 89

HO-4

Back 89

A tenant’s insurance policy.

Front 90

HO-6

Back 90

An insurance policy for a condominium or cooperative unit owner.

Front 91

Indemnification

Back 91

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

Front 92

Inspection report

Back 92

A compilation of all the maintenance needs identified during an inspection. Also know as a punch list""

Front 93

Investment yield

Back 93

The return received on the investment.

Front 94

Investments

Back 94

The purchase of anything with money value for the purpose of generating additional money over time

Front 95

Job description

Back 95

A specific description of the required duties of a position, skills and knowledge necessary to perform required duties, and reporting relationships of the position.

Front 96

Liabilities

Back 96

What is owed to others or collected in advance (e.g. owner assessments received prior to the billed month).

Front 97

Liability exposure to loss

Back 97

One of the 4 types of loss exposure which involves a loss that arises when a person or entity threatens or actually brings a legal claim against the community association, its members or others whom it must indemnify by contract (such as a management company).

Front 98

Lien

Back 98

A legal claim by one party on the property of another to obtain the payment of a debt or the satisfaction of an obligation.

Front 99

Maintenance contact sheet

Back 99

A useful management control to record various maintenance services and information needed in case of an emergency.

Front 100

Maintenance record

Back 100

Indicates when maintenance was done.

Front 101

Major improvement expenses

Back 101

Expenses consisting 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.

Front 102

Majority

Back 102

Over 50% of the votes needed to win an election

Front 103

Management audit

Back 103

A review of governing documents and existing policies and procedures, current condition of the property, owner/resident satisfaction, and fiscal operations.

Front 104

Management control

Back 104

Any means used to track, record, remind or command attention; usually these means are forms or documents.

Front 105

Management Ethics

Back 105

Refers to the specific choices to be made by an individual in his or her relationships with others. Also rules or standards that govern the conduct of members of a profession

Front 106

Management plan

Back 106

A statement of goals and objectives approved by the board which includes the yearly cycle of tasks that management should perform on the community association’s behalf.

Front 107

Management Report

Back 107

The manager's report on the association's current management & admin activities

Front 108

Master association

Back 108

An organization of homeowners in a large condominium or planned unit development (PUD) which includes representatives from other, smaller homeowner organizations.

Front 109

Members’ equity

Back 109

The difference between the community association’s assets and liabilities. Also called the fund balance under the fund method of reporting.

Front 110

Minutes

Back 110

This document records the decisions made during the meeting and provides a permanent public record of positions and actions taken by the board.

Front 111

Mixed use development

Back 111

A development which is designed to mix two or more uses" of land together"

Front 112

Modification provision

Back 112

One of the 6 legally binding contract provisions that states that the contract may not be modified in any way unless such modification is written and signed by both parties.

Front 113

Modified cash basis of accounting

Back 113

Accounting method that records income and expenses on a cash basis with selected items recorded on an accrual basis.

Front 114

Motion

Back 114

A formal proposal stating that the association took a certain action

Front 115

Net Income

Back 115

The amount left after deducting expenses from income

Front 116

Net Loss

Back 116

Occurs when expenses are greater than income

Front 117

Notes to Financial Statements

Back 117

Notes that accompany the CPA-prepared financial statements. Footnotes that help the reader understand the financial situation.

Front 118

Notice of Meeting

Back 118

Official announcement that a meeting will take place, which should be sent in writing to board members at least a week before a meeting.

Front 119

Occupational Safety and Health Administration (OSHA)

Back 119

The agency responsible for promulgating rules, setting health and safety standards, and overseeing enforcement, whether by direct federal effort or by relying on state enforcement programs.

Front 120

Operating budget

Back 120

The section of a budget devoted to operating activities includes operating expenses and major improvement expenses—but not the replacement fund.

Front 121

Operating expenses

Back 121

Those items that occur on a regular basis—day to day, week to week, month to month, and year to year.

Front 122

Parliamentary Procedure

Back 122

The body of rules, ethics, and customs governing meetings

Front 123

Payment bond

Back 123

Where a surety guarantees that the contractor’s suppliers and any subcontractors will be paid if the contractor does not pay them. Comes packaged with performance bond.

Front 124

Performance bond

Back 124

This is a guarantee by a surety (a third party) to protect the community association if the contractor fails to perform or finish the work.

Front 125

Performance evaluation

Back 125

The process of reviewing a person’s work performance to determine the extent to which his/her established goals and standards have been met.

Front 126

Performance goals

Back 126

Those regular and special tasks management expects an employee to perform during a certain time period.

Front 127

Performance planning

Back 127

The process of establishing performance goals and standards for an employee.

Front 128

Performance standards

Back 128

A description of the results management expects an employee to accomplish during a certain time period.

Front 129

Personal injury (PI)

Back 129

One of the 4 types of loss exposure which involves an injury arising from libel, slander, false arrest, invasion of privacy, wrongful entry, or malicious prosecution.

Front 130

Personal money judgment

Back 130

A decision by a judge to allow the community association to claim the owner’s personal property to settle a delinquent account.

Front 131

Personal property

Back 131

One of the 2 types of property exposure which consists of inventory, furniture, fine arts, equipment, supplies, machinery, electronic data processing (EDP), and valuable papers and records.

Front 132

Planned community

Back 132

A community association type where an owner owns his or her lot and/or living unit and the community owns any common areas

Front 133

Plurality

Back 133

Awards the election to the candidate with the most votes, regardless of whether or not they received the majority.

Front 134

Policy forms

Back 134

Define the type of insurance coverage provided (ex: property, liability and boiler and machinery) and define how comprehensive each type of coverage is—what is included and what is excluded.

Front 135

Preventive maintenance

Back 135

Periodic maintenance to avoid disruptive breakdowns and to prolong the useful life of the physical asset in question.

Front 136

Progress payments

Back 136

Partial payments based on some demonstrable progress in completing the work involved.

Front 137

Progressive discipline system

Back 137

A procedure whereby performance problems are brought to the employee’s attention and the employee and employer take appropriate actions to correct them.

Front 138

Property exposure to loss

Back 138

One of the 4 types of loss exposure which can be to tangible property (buildings and contents) or intangible property (information, proprietary Web site, etc.).

Front 139

Proprietary lease

Back 139

A rental agreement between a cooperative housing corporation and a share holder allowing use of a certain unit in the premises

Front 140

Prospective bidder’s questionnaire

Back 140

A document that asks for certain types of information to determine if the bidder is technically and financially qualified to handle a job of this scope. Also known as qualification sheet.

Front 141

Proxy

Back 141

The agency, function, or power of a person authorized to act or vote in place of another resident who could not be present

Front 142

Public offering statement

Back 142

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.

Front 143

Qualification Sheet

Back 143

Prospective Bidder's Questionaire

Front 144

Quorum

Back 144

The number of residents required to be present to transact business legally.

Front 145

Real property

Back 145

One of the 2 types of property exposure which includes buildings and land.

Front 146

Replacement fund

Back 146

Funds put aside (in reserve) for the replacement of major components of a community’s common property.

Front 147

Representation letter

Back 147

A letter from the CPA that states that the information the community association provides is true to the best of its knowledge.

Front 148

Request for Proposal (RFP)

Back 148

Bid Request. Announcement that an organization is intrested in receiving proposals

Front 149

Requested or corrective maintenance

Back 149

This is maintenance requested by an owner, a tenant, or the board—or identified during routine inspection of the property.

Front 150

Reserve cash flow statement

Back 150

Shows the amount to be funded and the amount to be expended from the replacement fund over a given period of time.

Front 151

Reserve study

Back 151

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.

Front 152

Resolution

Back 152

A motion that follows a set format and is formally adopted by the board of directors

Front 153

Responsibility chart

Back 153

A management control you can use to keep track of who is responsible for the maintenance of various property elements or areas.

Front 154

Revenue

Back 154

The collective items or amounts of income which, in the case of a community association, are appropriated for public expenses.

Front 155

Risk financing

Back 155

The process of obtaining resources to pay for any financial consequences of accidental loss.

Front 156

Robert's Rules of Order

Back 156

A book that provides common rules and procedures for deliberation and debate in order to place the membership on the same footing and speaking the same language.

Front 157

Rule

Back 157

A specific statement of required behavior whose violation carries a penalty (sometimes called a sanction).

Front 158

Scheduled replacement

Back 158

Replacing physical assets as they wear out or break which addresses the useful life of the asset.

Front 159

Second a Motion

Back 159

Generally, once the motion has been proposed, consideration from the board only occurs if another member of the body seconds the motion

Front 160

Segregation of exposure

Back 160

One of the 4 ways to control risk that involves the duplication or separation of property exposures to loss.

Front 161

Severability provision

Back 161

One of the 6 legally binding contract provisions that states that if a court finds that any clause of the contract is illegal or unenforceable, that clause shall be severed (separated) from the rest of the contract, so that the whole contract need not be invalidated.

Front 162

Standing committee

Back 162

Committees which have a continued existence and are not related to the accomplishment of a specific, once-only task.

Front 163

Statement of cash flows

Back 163

A summary of the flow of funds into and out of the community association.

Front 164

Statement of income and expense

Back 164

A report recording the community association’s financial transactions during a given period of time.

Front 165

Statute

Back 165

A formal written enactment of a legislative authority that governs a country, state, city or county.

Front 166

Table a Motion

Back 166

Incomplete items on the agenda should be rescheduled, or tabled, for another meeting

Front 167

Third-party insurance

Back 167

Liability coverage purchased by an insured (the first party) from an insurer (the second party) for protection against claims of another (third party).

Front 168

Threshold funding

Back 168

A baseline-funding concept that sets minimum reserve cash balance at a predetermined dollar amount.

Front 169

Timed Agenda

Back 169

A more specific agenda that limits the amount of time focused on specific areas, as to move the meeting along at a more prompt pace.

Front 170

Treasury bills

Back 170

Short-term instruments that mature in 13, 26, or 52 week periods, issued in minimum denominations of $10,000. Promised earnings when purchased, face value at maturity.

Front 171

Treasury bonds

Back 171

Savings instruments in denominations from $1,000 to $100,000 that mature in 10 years with interest paid every 6 months and face value paid at maturity.

Front 172

Umbrella association

Back 172

A cluster of community association types that can include aspects of homeowners associations, condominiums and cooperatives.

Front 173

Waiver of lien

Back 173

A document which gives up the right to make a claim against the community association for payments not received.

Front 174

Waiver of subrogation

Back 174

When the insurer waives its right to require the association to transfer recovery rights to the insurer regarding unit owners.

Front 175

Waiver provision

Back 175

One of the 6 legally binding contract provisions 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.

Front 176

Warranty

Back 176

A statement which covers what is covered, for how long, and what the contractor will do if the work or product proves defective.

Front 177

Work order/response form

Back 177

A form for assigning work to be done in any one of the five maintenance programs described earlier.

Front 178

Zero-based budgeting

Back 178

A budgeting method where all line items are set to zero and the amount of funds allotted to each must be justified.