Term
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Definition
This document records the decisions made during the meeting and provides a permanent public record of positions and actions taken by the board. |
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Term
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Definition
Formally adopted governing regulations for the administration and management of a community association. |
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Term
CC & Rs (Covenants, Conditions & Restrictions) |
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Definition
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. |
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Term
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Definition
A group of owners who wish to provide a communal basis for preserving, maintaining, and enhancing their homes and property. |
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Term
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Definition
A living unit fully owned by an individual with an undivided interest in the common elements of the community. |
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Term
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Definition
Wherein an individual owns stock or membership and holds a proprietary lease or occupancy agreement for his or her living unit. |
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Term
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Definition
Documents which provide for the legal structure and operation of the community |
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Term
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Definition
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 |
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Term
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Definition
An organization of homeowners in a large condominium or planned unit development (PUD) which includes representatives from other, smaller homeowner organizations. |
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Term
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Definition
A development which is designed to mix two or more "uses" of land together |
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Term
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Definition
A term used interchangeably with CC & Rs. |
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Term
Articles of incorporation |
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Definition
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 |
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Term
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Definition
A community association type where an owner owns his or her lot and/or living unit and the community owns any common areas |
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Term
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Definition
A rental agreement between a cooperative housing corporation and a share holder allowing use of a certain unit in the premises |
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Term
Public offering statement |
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Definition
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. |
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Term
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Definition
A motion that follows a set format and is formally adopted by the board of directors |
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Term
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Definition
A formal written enactment of a legislative authority that governs a country, state, city or county. |
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Term
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Definition
A cluster of community association types that can include aspects of homeowners associations, condominiums and cooperatives. |
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Term
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Definition
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. |
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Term
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Definition
When directors are assigned to certain committees to guide the committee on Board policy and procedures and to report back to the Board. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
The specific choices to be made by an individual in his or her relationships with others. |
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Term
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Definition
The rules or standards that govern the conduct of members of a profession. |
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Term
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Definition
A review of governing documents and existing policies and procedures, current condition of the property, owner/resident satisfaction, and fiscal operations. |
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Term
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Definition
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. |
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Term
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Definition
Committees which have a continued existence and are not related to the accomplishment of a specific, once-only task. |
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Term
Alternative dispute resolution |
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Definition
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. |
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Term
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Definition
A formal process designed to protect the rights of all parties involved. |
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Term
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Definition
A written notice to an alleged violator that a hearing will be held to consider his or her alleged violation. |
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Term
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Definition
State that rules and architectural guidelines may not contradict or be in conflict with the legal sources that take precedence over them. |
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Term
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Definition
A specific statement of required behavior whose violation carries a penalty (sometimes called a sanction). |
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Term
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Definition
The owner’s financial obligation to the community association during a given period of time. |
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Term
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Definition
A funding strategy whose goal is to keep the reserve cash balance above zero. |
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Term
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Definition
An organized list of titles, descriptions and assigned numbers of all accounts in an organization’s general ledger. |
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Term
Discretionary budget line items |
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Definition
Items based on owner, board and committee desires. |
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Term
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Definition
The cost of goods and services used to operate and maintain the community’s property. |
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Term
FHA - Federal Housing Administration |
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Definition
A government agency which 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. |
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Term
Federal Housing Administration (FHA) |
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Definition
A government agency which buys mortgages from lenders and in doing so require certain types of insurance to be in place. |
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Term
Federal National Mortgage Association (FNMA) |
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Definition
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. |
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Term
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Definition
A funding strategy whose goal is to attain and maintain the reserves at or near 100 percent as called for on the component inventory. |
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Term
Historical trend budgeting |
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Definition
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. |
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Term
Major improvement expenses |
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Definition
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. |
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Term
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Definition
The section of a budget devoted to operating activities includes operating expenses and major improvement expenses—but not the replacement fund. |
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Term
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Definition
Those items that occur on a regular basis—day to day, week to week, month to month, and year to year. |
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Term
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Definition
Funds put aside (in reserve) for the replacement of major components of a community’s common property. |
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Term
Reserve cash flow statement |
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Definition
Shows the amount to be funded and the amount to be expended from the replacement fund over a given period of time. |
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Term
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Definition
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. |
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Term
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Definition
The collective items or amounts of income which, in the case of a community association, are appropriated for public expenses. |
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Term
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Definition
A baseline-funding concept that sets minimum reserve cash balance at a predetermined dollar amount. |
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Term
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Definition
A budgeting method where all line items are set to zero and the amount of funds allotted to each must be justified. |
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Term
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Definition
The collection of all assessments due through the end of the fiscal year. |
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Term
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Definition
Recording an uncollectible debt as an expense that the association must absorb. This usually requires a resolution of the board. |
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Term
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Definition
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. |
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Term
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Definition
A corporate reorganization designed to allow for an orderly payment to creditors that enable a corporation to continue. |
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Term
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Definition
A reorganization of personal or non-corporate debt that pays off all or nearly all of the debt over a specified period of time. |
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Term
Fair Debt Collection Practices Act |
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Definition
A law which requires that the person who owes a debt receive written notice. |
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Term
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Definition
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. |
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Term
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Definition
A legal claim by one party on the property of another to obtain the payment of a debt or the satisfaction of an obligation. |
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Term
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Definition
A decision by a judge to allow the community association to claim the owner’s personal property to settle a delinquent account. |
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Term
Accrual basis of accounting |
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Definition
Accounting method that records income when it is earned (or assessed to owners) and expenses when they are incurred or acquired. |
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Term
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Definition
anything owned that has value. |
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Term
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Definition
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. |
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Term
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Definition
A summary of a community’s financial position at a specific point in time. |
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Term
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Definition
Accounting method that records income when it is collected and expenses when they are paid. |
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Term
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Definition
A savings instrument which, when reinvested together with its accumulated interest, the ultimate yield will be higher than the stated rate of interest. |
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Term
Commercial reporting method |
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Definition
Reporting method that combines operating and reserve activities in the same column. |
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Term
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Definition
A presentation of financial statements by a CPA without the assurance that the information conforms to GAAP. |
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Term
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Definition
Describes the nature of the work to be done, type of report to be prepared, fee for services and time frame for the assignment. |
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Term
Federal Deposit Insurance Corporation (FDIC) |
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Definition
A government agency that guarantees investors’ deposits in member institutions. |
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Term
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Definition
Consists of preparing separate columns for operating, reserve, and any special funds. |
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Term
Generally Accepted Accounting Principles (GAAP) |
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Definition
Guidelines whose purpose is to provide uniformity among reports from different organizations. |
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Term
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Definition
The purchase of anything with money value for the purpose of generating additional money over time |
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Term
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Definition
The return received on the investment. |
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Term
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Definition
What is owed to others or collected in advance (e.g. owner assessments received prior to the billed month). |
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Term
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Definition
The difference between the community association’s assets and liabilities. Also called the fund balance under the fund method of reporting. |
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Term
Modified cash basis of accounting |
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Definition
Accounting method that records income and expenses on a cash basis with selected items recorded on an accrual basis. |
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Term
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Definition
A letter from the CPA that states that the information the community association provides is true to the best of its knowledge. |
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Term
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Definition
A summary of the flow of funds into and out of the community association. |
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Term
Statement of income and expense |
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Definition
A report recording the community association’s financial transactions during a given period of time. |
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Term
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Definition
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. |
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Term
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Definition
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 |
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Term
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Definition
The depreciated value of an item. |
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Term
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Definition
Damages resulting in “misappropriation of advertising ideas or style of doing business” or “infringement of copyright, slogan or title.” |
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Term
Agreed amount endorsement |
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Definition
A policy endorsement that provides for an agreed upon limit of property insurance. |
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Term
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Definition
A standard element in most property policies that obligates the insured to maintain a certain limit of property insurance based on a stated percentage. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
A liability coverage which allows an owner to bring a claim against his or her community association. |
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Term
Directors and officers liability insurance |
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Definition
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. |
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Term
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Definition
A system of insurance comprised of employees of a single insurance company who only place the insurance of that company. |
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Term
Electronic data processing (EDP) |
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Definition
A type of property insurance which may be needed for computer equipment, networks, websites, security systems, protection from hackers, and similar information technology exposures. |
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Term
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Definition
Items that expand, contract or clarify coverage. |
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Term
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Definition
Avoiding the circumstances that would expose the community association to certain type of loss. |
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Term
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Definition
A property loss exposure coverage for building ordinance that covers the value of demolishing any undamaged portion of a building. |
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Term
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Definition
A type of income insurance which protects against employee dishonesty which may lead to the theft of money, securities, or property. |
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Term
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Definition
A tenant’s insurance policy. |
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Term
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Definition
An insurance policy for a condominium or cooperative unit owner. |
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Term
Liability exposure to loss |
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Definition
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). |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
One of the 2 types of property exposure which includes buildings and land. |
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Term
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Definition
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. |
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Term
Property exposure to loss |
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Definition
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.). |
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Term
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Definition
The process of obtaining resources to pay for any financial consequences of accidental loss. |
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Term
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Definition
One of the 4 ways to control risk that involves the duplication or separation of property exposures to loss. |
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Term
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Definition
Liability coverage purchased by an insured (the first party) from an insurer (the second party) for protection against claims of another (third party). |
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Term
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Definition
When the insurer waives its right to require the association to transfer recovery rights to the insurer regarding unit owners. |
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Term
Emergency services maintenance |
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Definition
The ability to respond to unpredictable problems such as sewer backups, slope failures, roof leaks and frozen pipes. |
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Term
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Definition
The process of operating, maintaining, repairing, and replacing common property—that is, the common elements or areas. |
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Term
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Definition
A compilation of all the maintenance needs identified during an inspection. Also know as a "punch list" |
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Term
Maintenance contact sheet |
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Definition
A useful management control to record various maintenance services and information needed in case of an emergency. |
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Term
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Definition
Indicates when maintenance was done. |
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Term
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Definition
Any means used to track, record, remind or command attention; usually these means are forms or documents. |
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Term
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Definition
Periodic maintenance to avoid disruptive breakdowns and to prolong the useful life of the physical asset in question. |
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Term
Requested or corrective maintenance |
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Definition
This is maintenance requested by an owner, a tenant, or the board—or identified during routine inspection of the property. |
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Term
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Definition
A management control you can use to keep track of who is responsible for the maintenance of various property elements or areas. |
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Term
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Definition
Replacing physical assets as they wear out or break which addresses the useful life of the asset. |
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Term
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Definition
A form for assigning work to be done in any one of the five maintenance programs described earlier. |
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Term
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Definition
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. |
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Term
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Definition
An announcement that an organization is interested in receiving proposals for a particular project. |
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Term
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Definition
Detailed instructions about the products or services requested through the bid request. |
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Term
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Definition
An agreement between two or more parties—enforceable by law—by which each party promises to do, or not to do, something. |
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Term
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Definition
Failure of either party to fulfill the terms of the contract. |
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Term
Entire obligation provision |
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Definition
One of the 6 legally binding contract provisions that states that the written, signed contract constitutes the entire agreement between the parties. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
Partial payments based on some demonstrable progress in completing the work involved. |
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Term
Prospective bidder’s questionnaire |
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Definition
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. |
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Term
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Definition
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. |
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Term
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Definition
A document which gives up the right to make a claim against the community association for payments not received. |
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Term
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Definition
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. |
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Term
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Definition
A statement which covers what is covered, for how long, and what the contractor will do if the work or product proves defective. |
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Term
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Definition
This is a statement to the effect that the community association retains the right to dismiss an employee without cause at any time. |
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Term
Federal Insurance Contributions Act (FICA) |
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Definition
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. |
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Term
Fair Labor Standards Act (FLSA) |
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Definition
This act addresses minimum wage requirements, maximum hours of work and overtime pay. |
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Term
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Definition
A specific description of the required duties of a position, skills and knowledge necessary to perform required duties, and reporting relationships of the position. |
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Term
Occupational Safety and Health Administration (OSHA) |
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Definition
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. |
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Term
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Definition
The process of reviewing a person’s work performance to determine the extent to which his/her established goals and standards have been met. |
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Term
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Definition
Those regular and special tasks management expects an employee to perform during a certain time period. |
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Term
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Definition
The process of establishing performance goals and standards for an employee. |
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Term
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Definition
A description of the results management expects an employee to accomplish during a certain time period. |
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Term
Progressive discipline system |
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Definition
A procedure whereby performance problems are brought to the employee’s attention and the employee and employer take appropriate actions to correct them. |
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Term
What are the characteristics of a community association? |
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Definition
1. Mandatory Membership 2. Mutually binding contract 3. Lien based assessments |
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Term
What is the calculation for assessments? T |
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Definition
Total annual assessments x % of interest / # payments per year |
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Term
Name the three accounting basis and describe how they record budget items. |
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Definition
1. Cash - Income when received, expenses when paid 2. Accrual - Income when earned, expenses when incurred 3. Modified cash - Select items on accrual. Most common records income when accrued and expenses when paid. |
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Term
What is the balance sheet calculation? |
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Definition
Assets = Liabilities + Member's Equity, or Assets - Liabilities = Member's Equity |
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Term
Name and describe the types of reserve accounts |
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Definition
1. Baseline - sets balance near $0, relies on special assessments or loan funding. 2. Threshold - a type of baseline funding that relies on a set # or percentage (minimal funding) 3. Statutory - Amount set by state statute 4. Full funding - reflects 100% of the funding as recommended by reserve study |
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Term
Name the major components of a statement of revenue and expenses |
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Definition
1. Revenue 2. Expenses 3. Excess revenue over expense (income or loss) |
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Term
What are the opinion letter result options from an audit? (5) |
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Definition
1. Unqualified or "clean" - Items are in order 2. Qualified - statements are fairly preented with exceptions 3. Explanatory paragraphs 4. "Disclaims" or refuses opinion - due to insufficient evidence 5. Adverse or negative opinion |
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Term
What are the tax filing options for a community association? |
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Definition
1. Regular corporation - IRS form 1120 2. HOA - IRS form 1120H |
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Term
Name and describe the two types of budget reporting options. ( same column/separate) |
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Definition
1. Commercial - Operating and reserve accounts are in same column
2. Fund - Separate columns for operating, reserve and special funds |
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Term
Name and describe the four ways to control property exposure risk |
|
Definition
1. Exposure avoidance - control variables such as alcohol in clubhouse 2. Loss prevention and reduction - through safety inspections and installations like fire sprinkler systems 3. Segregation of exposure - Duplication or separation of exposures to loss - such as data backups 4. Contractual transfer - Transfers community association's legal responsibility for loss (through contracts) |
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Term
Name the 6 sources of insurance requirements for community associations. |
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Definition
1. State statutes and regulations 2. Association governing documents 3. Local/state/federal laws 4. Secondary mortgage market, agency and lender requirements 5. Contractual obligations 6. Good business judgment |
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Term
Name the three forms identifying covered causes of loss |
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Definition
1. Special - most comprehensive, covers everything not included (claim denial is by insurance company) 2. Broad - Only insures specific perils (burden of coverage is on assn) 3. Basic - Least coverage (burden on association) |
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Term
Name the 5 most common property insurance coverages |
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Definition
1. Commercial Package Plan (CPP) - includes property and liability 2. Mechanical/equipment breakdown - for elevators, security system, etc. 3. Ordinance/Law - CPP endorsements to cover: a) Contingent liability b) Extra demolition c) Increased cost of construction 4. Flood - Only available through NFIP 5. Electronic Data Processing (EDP) |
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Term
Name the 2 types of personnel insurance coverage |
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Definition
1. Workers Comp - Loss of services due to employment related injuries
2. Employers' Liability - Injured employee claims |
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Term
List the four types of income insurance coverage (BFAE) |
|
Definition
1. Fidelity - covers employee dishonesty 2. Business Income - Covers rental/clubhouse inclome 3. Assessments receivable - Covers assessment income only after a covered loss (not delinquencies) 4. Extra expense - Covers cost of temporary office, etc., after loss |
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Term
List the four types of liability claims (PBPA) |
|
Definition
1. Property damage 2. Bodily injury 3. Personal injury 4. Advertising injury |
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|
Term
List the four types of liability coverage |
|
Definition
1. Commercial general 2. Hired and non-owned auto liability 3. Commercial umbrella - extends amount of coverage 4. Directors and Officers - involves "claims made" coverage |
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|
Term
List the four types of exposure to loss (PLIP) |
|
Definition
1. Property - real or personal 2. Liability - 3rd party claim against association 3. Income - for loss of income or increased expense 4. Personnel - usually employee claims |
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|
Term
List the sources of legal obligations for a community association |
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Definition
1. Federal/state/local statutes, regulations and laws 2. Legal documents unique to community association 3. Lender requirements (FNMA/FHA) 4. Standards by professional bodies (GAAP |
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Term
Name the six types of legally binding contract provisions (AMWeGS) |
|
Definition
1. Assignability 2. Modification 3. Waiver 4. Governing Law 5. Severability 6. Entire Obligation |
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Term
What two financial reports required to meet minimum standards? |
|
Definition
1. Statement of revenue and expense 2. Balance sheet |
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Term
What are the four types of letters used with accounting audit/review? (MORE) |
|
Definition
1. Management 2. Opinion 3. Representation 4. Engagement |
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Term
What are the three types of accounting examination? |
|
Definition
1. Audit - most thorough & costly 2. Review - Less thorough 3. Compilation - no assurance that it conforms to GAAP |
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Term
What are the five types of maintenance?(PERRR) |
|
Definition
1. Routine 2. Preventive 3. Emergency Services 4. Requested/Corrective 5. Reserve replacement |
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|
Term
List four designations for the insurance industry |
|
Definition
1. CPCU - Chartered Property Casualty Underwriter 2. ARM - Associate in Risk Management 3. CIC - Certified Insurance Counselor 4. CIRMS - Community Insurance & Risk Management Specialist |
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|
Term
What are the five components of an insurance policy? (DPFEG) |
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Definition
1. Declarations - who/what/how long 2. Policy Conditions - common language RE: filing claims, premium defaults, etc 3. Forms - Notes type of insurance 4. Endorsements - add or subtract items covered & causes 5. Glossary |
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Term
What are the four types of resolutions? (GAPS) |
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Definition
1. General - Routine events 2. Administrative - Internal operations 3. Policy - Owner's rights & responsibilities 4. Specific - apply to individual situation |
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Term
What is the format for a resolution? (PASS) |
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Definition
1. Purpose 2. Authority 3. Scope and intent 4. Specifications |
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Term
What is the primary purpose of a community association? 3 Aspects |
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Definition
To provide for the governance, business and communal aspects of the association. |
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Term
What are the most important sources of a community's authority to make and enforce rules? *2 sources |
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Definition
1. State statutes & court decisions 2. Governing documents |
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Term
Name the Criteria for valid rules *5 |
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Definition
1. Must not violate constitutional rights 2. Must be consistent with laws, statutes & governing docs 3. Must relate to purpose of community 4. Must be reasonable and fair 5. Must be capable of uniform enforcement 6. Must be necessary |
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Term
What are the 6 steps in a due process procedure for rule violations? |
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Definition
1. Courtesy call or letter to resolve. 2. Issue "cease & desist" letter 3. Issue hearing notice 4. Hold hearing 5. Issue decision 6. Allow for an appeal |
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Term
List the internal resources for rule enforcement. *5 |
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Definition
1. Suspend voting rights 2. Suspend use of amenities 3. Fines 4. Eviction 5. Self help corrections |
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Term
List the external resources for rule enforcement *6 |
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Definition
1. Health department 2. Zoning department 3. Police 4. Fire department 5. Building/planning department 6. Animal control |
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