Florida Community Association Manager Practice Exam

What document generally outlines issues such as transfer fees, fidelity bonds, and arbitration in a cooperative?

1. Articles of Incorporation

2. Bylaws

3. Rules and Regulations

4. Declaration of Covenant

The correct answer is: Bylaws

The bylaws are critical documents in cooperative housing that govern the management and operation of the association. They typically include detailed provisions about the internal governance of the cooperative, such as transfer fees, fidelity bonds, and arbitration processes. Specifically, transfer fees are often addressed within the bylaws, detailing the conditions under which they apply when a member sells or transfers their unit. Additionally, bylaws may outline requirements for fidelity bonds, which are meant to protect the cooperative from losses due to fraudulent activities. Arbitration procedures can also be described in the bylaws to provide a framework for resolving disputes among members or between members and the association without resorting to litigation. In contrast, the articles of incorporation establish the cooperative as a legal entity and outline its fundamental structure but do not usually go into detail about operational issues. The declaration of covenants generally serves to inform potential buyers of the rules governing property use but lacks the specificity regarding governance practices and internal procedures. Rules and regulations are often more flexible and can change over time, but they do not typically encompass the foundational governance issues like transfer fees and fidelity bonds that are laid out in the bylaws. Thus, bylaws clearly serve the purpose of detailing these important governance matters within a cooperative setting.