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CMCA Terminology
CMCA Examination
175
Real Estate & Planning
Professional
09/22/2012

Additional Real Estate & Planning Flashcards

 


 

Cards

Term
AMEND A MOTION
Definition

Amend a motion is used to modify another motion. The motion to amend takes three basic forms:

  • Inserting or adding words or paragraphs
  • Striking out words or paragraphs
  • Striking out words and inserting or adding others, or substituting an entire aragraph or complete resolution for another
Term
Ballot
Definition
Device used to record choices made by voters. Each voter uses one ballot, which are not shared.
Term
Committee report
Definition
Highlights maters to be decided and recommendations by the committee. Supporting research should be included in the reports. Committees need to clearly state the actions they are asking the bord to take and you should provide your committees with a suggested format for their reports and a sample.
Term
Debate
Definition
A formal discussion during an election involving opposing candidates vyin for the same position.
Term
Executive session
Definition

When a board has a discussion or makes decisions of sensitive nature.

Typical topics:

  • Personnel issues
  • Contract negotiations & discussions
  • lawsuits
  • legal matters
  • doverning document violations
Term
Financial Report
Definition

Report on the community's financial condition and activities includes:

  • General ledger
  • Variance
  • A/P
  • Income statement
  • Balance sheet
Term
Majority
Definition

Over 50% of votes needed to win an election.

Majority vote can come from owners attending in person or by proxy to decide all matters - except special issues

Term
Management report
Definition
This is the manager's report on the association's current management and administrative activities.
Term
Minutes
Definition

Document decisions made during the meeting.

Provides a permanent public record of positions and actions taken by the board.

Term
Motion
Definition
Formal proposal stating that the association took a certain action.
Term
Notice of meeting
Definition

Official announcement meeting will take place

sent in writin to board memebers at least a week before meeting

Term
Parliamentary procedure
Definition

Body of rules, ethics, and customs governing meetings and other operations.

Advantages:

- staying on the agenda

-Discussing one subject at a time

- Giving each participant a chance to speak

-Speaking only on the issue being discussed

- Speaking only when recognized by the chair

-Addressing questions and comments to the chair

-Deciding issues through motions, seconds and votes

 

Term
Plurality
Definition
Awards the election to the candidate with the most votes, regardless of whether they received majority votes.
Term
Proxy
Definition
Agency, function or power of a persona uthorized to act or vote in place of another resident who could not be present.
Term
Quorum
Definition

# of residents required to be present to transact business legally.

# is established in By-laws

Term
Abstention
Definition

-Participant does not go to vote or does not cast a ballot.

-Can be used to indicate voters ambivilance about the measure or mild disapproval that does not rise to the level of active oppositions.

-Do not count in tallying votes

-Only attent meeting for quorum purposes

Term
Action item list
Definition

Documented event, task, activity or action that needs to take place.

Usually documented in meeting minutes and recorded in task list of group.

Reviewed at the next meeting and meeting facilitator will check status of these items

 

Term
Agenda
Definition

List of meeting activities in the order in which they are to be taken up.

Begin with call to order

End with adjournment

Term
Robert's Rules of Order
Definition
Book that provides common rules and procedures for deliberation and debate in order to place the whole membership on the same footing and speakin the same language.
Term
Second a motion
Definition
Once a motion has been proposed, consideration by the assembly occurs only if another member of the body immediately seconds the motion
Term
Table a motion
Definition
Incomplete items on the agenda rescheduled or tabled for another meeting
Term
Timed Agenda
Definition

Specific agenda that limits the amount of time focused on specific areas

Used to move meeting along in a mor thorough and prompt pace

Term
Planned Community
Definition

- Most common type of community association

- owner owns his or her lot and/or living unit

- community owns common areas such as tennis courts and roads for the use and benefit of the lot owners

Term
Articles of Incorporation
Definition

- Bring the corporation into existance

- define its basic purposes and powers

- indicate whether stock will be issued

- indicate whether there will be a board of directors

Term
Bylaws
Definition
-Formally adopted governing regs for the administration and management of a community association
Term
CC&Rs
Definition

COVENANTS - CONDITIONS - RESTRICTIONS

- governing docs regulating how association operates and what rules & regs owners, tenants and guest must obey

- may also be called Bylaws, Master Deed, the houses rules or another name

- legally enforceable by the homeowners association (unless a specific provision conflicts with federal, state or local laws)

Term
Community association
Definition
Group of owners that wish to provide a communal basis for preserving, maintaining, and enhancing their homes and property
Term
Condominium
Definition

-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.

Term
Cooperative
Definition

-Individual owns stock or membership in the cooperative

-also holds a proprietary lease or occupancy agreement for his or her living unit.

Term
Declaration
Definition
-CC&Rs
Term
Governing documents
Definition

 

-provide for legal structure and operation of community

-Give boards authority to govern by providing for the operation and regulation of association

-Give guidence and protect boards

-Protect association members by spelling out their rights and responsibilities

-supported by local ordinances, state statues, and federal regulations

Typically Include:

- Declaration or master deed, Covenants, Conditions & Restrictions (CC&Rs) -condos & planned communities

-Proprietry lease, master lease, or occupancy agreement -cooperatives

-Articles of incorporation

-Bylaws

-Rules & Regs

 

Term
Indemnification
Definition

-hold harmless

-exempt an individual or entity from responsibility of claims made against the organization and to reimburse the individual or entity for damages or expenses incurred as a result of such claims

Term
Master association
Definition

An organization of homeowners in a large condo or planned unit development (PUD)

-includes reps from other smaller homeowner organizations

Term
Mixed use development
Definition

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

-like shopping center with room for a dentists office

Term
Proprietry lease
Definition
rental agreement between cooperative housing corp and a share holder allowing use of a certain unit on premises
Term
Public offering statement
Definition

Disclosure statement prepared by the developer that contains all material facts about a property offered for sale

-must be provided to a prospective purchaser in accordance with applicable state or federal law

Term
Resolution
Definition
Motion that follows a set format and is formally adopted by the board of directors
Term
Statute
Definition
Formal written enactment of a legislative authority that focerns a country, state, city or county
Term
Umbrella association
Definition
Cluster of community association types that can include aspects of homeowners associations, condominiums and cooperatives
Term
Ad hoc committee
Definition

-Short-term basis

-temporary oversight of issue or review of standing rules of that community

-when issue cannot be absorbed into scope by other standing committees present in association

-Task-oriented

-Disband when task is completed

Term
Board liason system
Definition

-directors assigned to certain committees

-guide committee on Board policy and procedures

- report back to Board

-must distinguish role from committee chairperson

Term
Business judgement rule
Definition

- court will not consider board negligent if board has exercised reasonable business judgement making a decision

-court will not subsitute own judgement for the Boards

-board must demonstrate how it reached decsions

- up to the court to decide whether board exercised reasonable business judgement

Term
Fiduciary duty
Definition

-requires directors to act in the best interests and for the benefit of the corporation (community as whole)

-members must avoid conflicts of interest and acting out of self-interest

-members required to act as reasoble people in managing the association's affairs

Term
Management ethics
Definition

Ethics - specific choices to be made by an indicidual in his or her relationship with others

Professional ethics - rules or standards that govern the conduct of member of a profession.

- The assumption is that the special expertise held by members of the profession holds them to a high standard of trust by others.

Term
Management audit
Definition

Review of:

-governing documents and existing policies and procedures

- current conditions of property

- owner/resident satisfaction

-fiscal operations

Can be done by board and manager together or by a third-party management consultant

Term
Management plan
Definition

Statement of goals and objectives appoced by the board

-includes yearly cycle of tasks that management should perform on the community association's behalf

Term
Standing committee
Definition

-Committees which have a continued existence - remain in force indefinitely

-are not related to accomplishment of a specific, once-only task

-budget and nomination committees are examples

-Function oriented

Term
Alternative dispute resolution
Definition

Mediation, arbitration and other ways of resolving conflics with the help of a specially trained neutral third party

- no need for formal trial or hearing

Term
Appeal
Definition

request for a review of a case by higher authority

-only if permitted by governing documents or statute

Term
Default hearing
Definition
Hearing held when alleged violator fails to appear
Term
Due process procedure
Definition
Formal process designed to protect the rights of all parties involved
Term
Hearing notice
Definition
Written notice to alleged violator that a hearing will be held to consider his or her alleged violation
Term

Hierarchy of authority

 

Definition

 

- rules and architectural guidelines may nt contradict or be in conflict with the legal sources that take precedence over them.

-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 other governing docs

 

Term
Rule
Definition
specific statement of required behavior whose violation carries a penalty (aka sanction)
Term
Assessment
Definition

owner's financial obligation to the community association during a given period of time - usually 1 year

-covers owners share of common expense

-aka common expense liabilities

 

Term

 

Baseline funding

Definition
keep reserve cash balance above 0
Term
Chart of accounts
Definition

organized list of titles, descriptions and assigned numbers of all accounts in organization's general ledger

-assigned number helps locate account

-title describes purpose of account

Term
Discretionary budget line items
Definition

-Based on owner, board and committee desires

-items people would like to have - given their values, lifestyle and preferred level of service

-like social rec expenses and picnic areas

Term
Expenses
Definition
cost of goos and services used to operate and maintain the community's property
Term

FHA

Federal Housing Administration

Definition

Regulates and influences items like:

-Insurance an association must carry

-procedures for financial operations

-requirements for the upkeep of property

 

Term

FHLMC

 

Federal Home Loan Mortgage Corporation

Definition
Buys mortgages from lenders and in doing so require certain tupes of insurance to be in place
Term

FNMA

 

Federal National Mortgage Association

Definition

-Federally established

-secondary mortgage institution

-may set reqs that association will have to meet if owners wish to participate in their financial programs

Term
Full funding
Definition
Attain and maintain max reserves at or near 100 percent as called for on the component inventory
Term
Historical trend budgeting
Definition

-assumes that existing line items are needed

-amount of funds alloted to each during the current year is adjusted for expected changes in the coming year

Term
Major improvement expenses
Definition

-items that are not necessarily required, but are added to improve the overall welfare, safety or life of residents

- or to enhance the value of the community association as reflected in the resale value of units

Term
Operating budget
Definition

section of budget devoted to operating activities including operating expenses and major improvement expenses

-does not include replacement fund

Term
Operating expenses
Definition

items that occur on regular basis

day to day

week to week

month to month

year to year

Term
Reconciliation of expenses and revenue
Definition

After operating and replacement fund budgets are drafted for coming year

must reconcile your estimated expenses with your community's anticipated revenue

reconcile - bring together after a difference

Term
Replacement fund
Definition

funds put aside

in reserve

for replacement of major components in common property

Term
Reserve cash flow statement
Definition
Shows amount to be funded and the amount to be expended from the replacement fund over a given period of time
Term
Reserve study
Definition

-budget planning tool

-considers the current status of replacement fund

-determines stable and equitable funding plan to offset the anticipated future major common area expenditures

Term
Revenue
Definition
Collective items of income which are appropriated for public expenses
Term
Threshold funding
Definition

- Based on baseline-funding concept

-Minimum reserve cash balance in threshold funding is set at a predetermined dollar amount

Term
Zero-based budgeting
Definition
All line items are set to zero and the amount of funds allotted to each must be justified.
Term
Acceleration
Definition

-Collection of all assessments due through end of fiscal year

-If annual assessments are due monthly and become delinquent at the end of March, all monthly payments through December of that year are due immediately.

Term

Bad debt write-off

 

Definition

Consists of recording an uncollectible debt as an expense that the association must absorb.

-usually requires resolution of the board

Term
Chapter 7 Bankrupcy
Definition

-straight bankrupcy or liquidation

-prompt conversion of all the individual's or corp's non-exempt property to cash and payment of creditors to the extend possible

Term
Chapter 11 Bankrupcy
Definition

-aka reorganization

-designed to allow for an orderly payment to creditors that enable a corporation to continue

Term

Chapter 13 Bankrupcy

 

Definition

-reorganize personal or non-corporate debt

-plan submitted to judge for paying off all or nearly all of debt over specified period of time

Term
Fair Debt Collection Practices Act
Definition
Required that the person who owes a debt receive written notice
Term
Foreclosure
Definition

Legal proceedings 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.

-Unit is usually auctioned by the court and sold to the highest bidder.

Term
Lien
Definition

Legal claim by one party (community association) on the property of another (delinquent owner) to obtain the payment of a debt or the satisfaction of an obligation.

-Placing lien protects the association's interests

Term
Personal money judgement
Definition
Decision by judge to allow the association to claim the owner's personal property to settle a delinquent account
Term
Accrual basis of accounting
Definition
Records income when it is earned (or assessed to owners) and expenses when they are incurred or acquired
Term
Assets
Definition

-Anything owned that has value

-Unlike businesses - actual land and buildings of the association are not generally shown as an asset

Term
Audit
Definition
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.
Term
Balance sheet
Definition
Summary of community's financial position at a specific point in time
Term
Cash basis of accounting
Definition
Records income when collected and expenses when they are paid
Term
Certificate of deposit
Definition
When CD is reinvested together with accumulated interest - ultimate yield will be higher than the stated rate of interest
Term
Commercial reporting method
Definition
Combines operating and reserve activities in the same column, as opposed to fund reporting, which consists of preparing seperate columns for operating, reserve and any special funds
Term
Compilation
Definition
Presentation of financial statements by CPA withou tthe assurance that the information conforms to GAAP
Term
CPA
Definition

Certified Public Accountant

-passed certain examinations and met statutory and licensing requirements of a US state

Term
Engagement Letter
Definition

CPA will send engagement letter when hired

-describes nature of the work to be done

-type of report to be prepared

-fee for services

-time frame for assignement

Term

FDIC

Federal Deposit Insurance Corporation

Definition
Gov't agency that guarantees investors deposits in member institutions
Term
Fund reporting method
Definition
Preparing seperate columns for operating, reserve and any special funds
Term

GAAP

Generally Acceptable Accounting Principles

Definition
Purpose is to provide uniformity among reports from different organizations
Term
Investments
Definition
Purchase of anything w. money value for the purpose of generating additional money over time (savings accts, CDs, stocks etc)
Term
Investment yield
Definition
Return received on an investment
Term
Libilities
Definition
What is owed to others or collected in advance (assesments received prior to billed months)
Term
Member's equity
Definition

Fund balance under the fund method of reporting

-Equals the difference between the association's assets and liabilities

Term
Modified cash basis of accounting
Definition

Income and expenses on cash basis

-selected items on accrual basis

-varies in format depending on number of items accrued

Term
Net income
Definition
amount elft afted deducting expenses from income
Term
Net loss
Definition
Loss occurs when expenses are greater than income
Term
Notes to financial statements
Definition

-Accompany the CPA-prepared financial statements

-footnotes provide additional information to help the reader understand the association's financial situation

Term
Representation letter
Definition
CPA letter that states the info the association provides is true to the best of its knowledge
Term
Statement of cash flows
Definition

Summary of the flow of funds into and out of community association

-summaries are prepared for normal operations

-investment activities

-any borrowing activities

Term
Statement of income and expense
Definition

Report records association's financial transactions during a given period of time - usually form month and fiscal year to date

-A way to keep track of association's financial activity

Term
Treasury bills
Definition

-Short term instruments that mature in 13, 26 or 52 week periods.

-minimum denominations of 10K

-anything larger in 5k increments

-Buyer receives promised earnings as soon as bill is purchased

-when bill matures, buyer receives face value (value indicated on the wording of bill)

Term
Treasury bonds
Definition

treasury notes - mature in 1 - 10 yrs

treasury bonds - mature more than 10 yrs

-both issued in denominations from 1k - 100K

-interest bearing with interest paid every 6 months

- when note or bond matures - buyer receives full face value

Term
Actual cash value (ACV)
Definition
depreciated value of an item
Term
Advertising injury
Definition
Provisions in CGL (comprehensive general liability) include the language providing coverage to the community association with respect to damages resulting in "misappropriation of advertising ideas or style of doing business" or "infrindgement of copyright, slogan or title."
Term
Agreed amount endorsement
Definition
Provides for an agreed upon limit of property insurance
Term
Coinsurance
Definition
Standard element in most property policies that obligates the insured to maintain a certain limit of property insurance based on a stated percentage
Term
Common declarations
Definition
Section of policy is like the tile page of a book. Includes info like name, address and period of coverage
Term
Common policy conditions
Definition
basic provisions that apply to all insurance coverages in the pachage. For example, when to file proof of a loss or what happens when premium is not paid.
Term
Contingent liability
Definition
Covers valye of any undamaged portion of a building which may have to be replace due to building laws
Term
Contractual transfers
Definition
Entering into a contract that will, amont other things, transfer the association's legal responsibility for any loss
Term
Cross liability
Definition

Allows owner to bring a claim against his or her association.

-Coverage is in the owner's interest

-Standard for owners to be insured in liability insurance for condos and cooperatives

-planned communities must see to it that this concept is prsent in their liability coverage

Term
Directiors and officerc liability insurance
Definition
Designed to pay for damages arising from wrongful acts that do not lead to property damage, bodily injury, advertising or personal injusty
Term
Direct writer system of insurance
Definition
comprised of employees of a single ins. company who only place the ins. of that company
Term

Electronic data processing

EDP

Definition
Ins. may be needed for comp. equipment, networks, websites, security systems, protection from hackers, and simila info technology exposures.
Term
Endorsements
Definition
Expand, contract or clarify coverage
Term
Exposure avoidance
Definition
Involves avoiding circumstances that would expose association to certain type of loss
Term
Extra demolition
Definition
Covers value of demolishing any undamaged portion of building
Term
Fidelity insurance
Definition
protects against employee dishonesty which may lead to theft of money, securities or property
Term
HO-1,-2,-3, -4, -5, -6 policies
Definition

1,2,3 & 5 - policies for owner occupied units

4 - tenant policy

6 - condo or cooperative ins.

Term
Liability exposure to loss
Definition
liability losses arise when a person or entity threatens or actually brings a legal claim against association, its member or others whom it must indemnify by contract (like management)
Term

PI

Personal injury

Definition

Injury arising from:

libel, slander, false arrest invasion of privacy, wrongful entry, malicious prosecution

Term
Personal Property
Definition
Inventory, furniture, fine arts, equipment, supplies, machinery, electronic data processing (EDP) and valuable papers/records
Term
Policy forms
Definition

Define the type of ins. coverage provided.

ex - property, liability and boiler and machinery

-also defines how comprehensive coverage is, what is included and excluded

Term
Property exposure to loss
Definition
Losses can be tangible association property (buildings and contents) or intangible (information, websites)
Term
Real Property
Definition
Buildings, land and newest type of property exposure
Term
Risk financing
Definition
Obtaining resources to pay for any financial consequences of accidental loss
Term
Segregation of exposure
Definition
Duplication or seperation of property exposures to loss
Term
Third-party insurance
Definition
coverage purchase by an insured (first party) from an insurer (second party) for prtection against claim of another (third party)
Term
Waiver of subrogation
Definition
insurer waives right to require the association to transfer recovery right to the insurer regarding unit owners
Term
Emergency services maintenance
Definition

Ability to respond to unpredictable problems

-sewer backups, slope failures, roof leaks and frozen pipes

-key to successful response is to ainticipate different possibilities and develope a plan to respond to each one

Term
Facilities management
Definition
process of operating, maintaining, repairing and replacing common property
Term
Inspection report
Definition

aka punch list

compilation of all maintenance needs identified during an inspection

Term
Maintenance contact sheet
Definition
management control to record various maintenance services and information needed in case of an emergency
Term
Maintenance record
Definition
tells when maintenance was done
Term
Management control
Definition

Means to track, record, remind or command attention

-usually forms or docs

Term
Preventive maintenance
Definition
Periodic maintenance to avoid disruptive breakdowns and prolong useful life or physical asset in questions
Term
Requested or corrective maintenance
Definition

Requested by owner, tenant or the board

-or identified during routine inspection

Term
Responsibility chart
Definition
Management control used to keep track of who is responsible for maintenance of various property elements or areas
Term
Scheduled replacement
Definition

Consists of replcing physical assets as they wear out or break

-considered a part of maint. b.c it addresses the useful life of asset

Term
Work order/response form
Definition
Form for assigning work to be done in any one of the five maintenance programs
Term
Assignability provisions
Definition
States that neither party may assign its obligations under the contract to any other person without the express written consent of the other party
Term
Bid request
Definition

aka RFP - req. for proposal

-announcement that org. is interested in receiving proposals for a particular project

Term
Bid specification
Definition

detailed instructions about products or services requested through bid req.

All contract terms should be included in bid req.

Term
Contract
Definition

-Agreement between two or more parties

-enforceable by law

-each party promises to do or not do something

Term
Default
Definition
failure of either party to fulfill terms of contract
Term
Entire obligaton provision
Definition
Provision that states that the written, signed contract constitutes the entire agreement between the parties
Term
Governing law provision
Definition

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

-Useful when association and contractor are out of different states

Term
Modification provision
Definition
States contract may not be modified in any ay unless such modification is written and signed by both parties
Term
Payment bond
Definition

-Comes in package w/ performance bond

-Guarantees that contracto's suppliers and any subcontractors will be paid if the contractor does not pay them

Term
Performance bond
Definition

Guarantee by surety (third party) to protect association of contractor failt to perform or finish the work.

-cost to association involved

-typically used with certain large projects

Term
Progress payments
Definition
Partial payments based on profress in completing work involved
Term
Prospective bidder's questionnaire
Definition

aka qualification sheet

-Asks for certain types of info to determine if the bidder is technically and financially qualified to handle job of this scope

Term

Request for proposal

RFP

Definition

aka bid request

Announcement that org is interested in receiving proposals for a particular project

Term
Severability provision
Definition
States if court finds that any clause of the contract is illegal or unenforceable, the clause shall be severed (seperated) from the rest of the contract so that whole contact remains binding
Term
Waiver of lien
Definition
document which gives up the right to make a claim against association for payments not received
Term
Waiver provision
Definition
States that a waiver (permission) by one party of any breach of contract by other pary shall not act as a gener waiver of future breaches
Term
Warranty
Definition
Should state what is covered, for how long and what the contractor will do if the work or product proves defective
Term
Employee handbook
Definition

aka personnel manual

-summarizes company behavior reqs

-outlines benefits offered

-gives tools that can be used to enforce disciplinary action of needed

-employer designs to answer employees questions before asked

-to advise on company policy that employee might not consider

Term
Employment at will
Definition
Statement that an association can dismiss an employee without cause at any time
Term

FICA

Federal Insurance Contributions Act

Definition

Requires employers and employees to make matching contributions to social security

-employer must withold employee's share of tax directly from wages or salary

Term

FLSA

Fair Labor Standards Act

Definition
Act addresses min wage reqs, max hrs of work & overtime pay
Term
Job description
Definition
required duties of positions, skills and knowledge necessary to perform duties and reporting relationships of the positions
Term

OSHA

Occupational Safety and Health Administration

 

Definition
agency responsible for promulgating rules, setting health and safety standards, and overseeing enforecement - either by direct federal effort or by relying on state enforcement programs
Term
Performance evaluation
Definition
process of reviewing a person's work performance to determine the extent to which his/her established golas and standards have been met
Term
Performance goals
Definition
Those regular and special tasks management expects an employee to perform during a certain time period
Term
Performance planning
Definition
process of establishing performance goals and standards for an employee
Term
Progressive discipline system
Definition
Procedure whereby performance problems are brought to the employee's attention and the employees employer take appropriate actions to correct them
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