Assessment Flashcards
The ___ creates a general agency relationship between the owner and the property manager
Management agreement
Any ___ should contain a description of the property, definition of the management’s responsibilities, statement of the owner’s purpose, and the extent of the manager’s authority.
Management agreement
Cleaning common areas is what type of maintenance?
Routine
Fixing a leaking faucet is what type of maintenance?
Corrective
Repairing a broken AC unit is what type of maintenance?
Corrective
Seasonal servicing of appliances and systems is what type of maintenance?
Preventative
Regularly scheduled landscaping is what type of maintenance?
Routine
Fair housing laws do not apply to…
Commercial properties
Who’s responsibility is it to maintain financial reports?
Property manager
What are the 4 types of financial reports that property managers are responsible for?
1) Operating budget
2) Cash flow report
3) profit and loss statement
4) budget comparison statement
The Americans with Disabilities Act recommends ___ to provide access to a buildings facilities and services
reasonably achievable accomodations
___ insurance is used for medical expenses by. a person who is injured in the building as a result of the owner’s negligence
Liability
___ insurance covers the consequences of a disaster, and can include the loss of rent or revenue to a business that occurs if the property cannot be used
Consequential
When a manager develops an operating budget, which of these is considered a variable expense?
a) basic operating costs
b) utilities
c) employee wages
d) building repairs
Building repairs
A property manager who enters into a management agreement with an owner is usually a(n) ___ agent.
General
A high rise apartment building burns to the ground. What type of insurance covers the landlord against the resulting loss of rent?
Consequential loss, use, and occupancy
High building occupancy might indicate that…
rents are too low
A property manager’s total compensation consists of a monthly salary, a 12% commission based on annual rental for each vacant unit the property manager fills, and the free use of one of the apartments as the property manager’s personal primary residence. Based on these facts, is the property manager required by Illinois law to obtain a real estate broker or managing broker license? Why or why not?
No because . Persons acting as resident managers, who live in the managed property, are specifically exempt from the general licensing requirements.
In IL, persons acting as resident managers, who live in the managed property, are specifically exempt from…
the general licensing requirements.
In MOST market areas, rents are determined by…
supply and demand
From a management point of view, apartment building occupancy that reaches as high as 98% would tend to indicate that…
rent could be raised
The property manager of a small, 20-unit apartment building requires a security deposit. In this case, the property manager is not required to…
pay interest on the security deposit
Which law requires removing existing barriers when readily achievable in public buildings and adding Braille markings to elevator buttons?
Americans with Disabilities Act
Which action by a property manager is a breach of her fiduciary relationship to the owner?
a) scrutinizing property expenses
b) checking credit histories of minority applicants ONLY
c) generating a high net operating income by maintaining the property
d) maintaining good relations with tenants
Checking the credit history of minority applicants only
Residential leases are usually expressed as a(n) ___ rate per ___
monthly rate per unit
Contaminated groundwater, toxic fumes from paint and carpeting, and lack of proper ventilation are all examples of….
environmental concerns that a property manager may have to address
When a property manager is establishing a budget for the building, what should be included as an operating expense?
utilities
Avoid, control, transfer, or retain are the four alternative techniques of,…
risk management
Tenant improvements are
adaptations of space to suit tenants’ needs
A property manager hires a full-time maintenance person. While repairing a faucet in one of the apartments, the maintenance person steals a television set, and the tenant sues the owner. The property manager could protect the owner against this type of loss by purchasing…
a surety bond
A guest slips on an icy stair at an apartment building and is hospitalized. A claim against the building owner for medical expenses may be paid under which policy held by the owner?
Liability
A property manager is offered a choice of three insurance policies with different deductibles. If the property manager selects the policy with the highest deductible, which risk management technique is being used?
Retaining risk
Which type of insurance coverage insures an employer against MOST claims for job-related injuries?
Workers compensation
A property manager repairs a malfunctioning boiler in the building. This is classified as which type of maintenance?
Corrective
The document that creates the agency relationship between an owner and property manager
management contract
A type of property management specialty that helps owners decide which properties to purchase and when to sell
asset management
performance of regularly scheduled activities, such as painting and servicing appliances and systems
preventative maintenance
major alterations to a building’s interior to meet a tenant’s particular needs
tenant improvements
evaluating perils of any risk in terms of options
risk management
an owner’s protection against financial losses due to an employee’s criminal acts
surety bond
insurance policies that offer a package of standard coverages
multiperil
insurance policies that provide coverage against theft, burglary, vandalism, specific, not all inclusive
casualty
insurance that covers the revenue a business loses due to a disaster
consequential loss
an investigation to determine the need for insurance and types of insurance required
audit
One of the key responsibilities of a property manager is to ___ or ___ the value of the property
preserve or increase
The ___ creates a general agency relationship between an owner and the property manager
Management agreement
The management agreement creates a general agency relationship between ___ and ___.
Owner and property manager
Like real estate brokers’ commissions, property management fees may not be ___ by local professional organizations, but must be negotiated between the parties.
standardized
Like real estate brokers’ commissions, property management fees may not be standardized by local ___, but must be ___.
professional organizations
negotiated between the parties
Rental rates are influenced primarily by…
supply and demand
An example of a(n) ___ under the ADA is installing a ramp at a building entrance
readily achievable modification
The manager of a(n) ___ building should carefully consider a prospective tenant’s compatibility with existing tenants, such as traffic counts, noise, etc.
commercial
A ___ tenant turnover rate results in lower profits for the owner.
High
A high tenant turnover rate results in ___ profits for the owner.
lower
What are the 3 types of maintenance necessary to keep a property in good condition?
1) Preventative
2) Corrective
3) Routine
___ maintenance helps prevent problems and expenses before they arise.
Preventative
Preventative maintenance helps prevent ___ and ___ before they arise.
problems and expenses
___ maintenance involves the actual repairs that keep the building’s equipment, utilities, and amenities functioning.
Corrective
Corrective maintenance involves the ___ that keep the building’s equipment, utilities, and amenities functioning.
Repairs
___ are major alterations to the interior of commercial or industrial property to accommodate the tenant.
Tenant improvements
Under Title III of the ADA, ___ must be removed from commercial properties when this can be accomplished in a readily achievable manner.
Existing barriers
Under Title III of the ADA, existing barriers must be removed from ___ properties when this can be accomplished in a readily achievable manner.
Commercial
The ADA requirements for ___ are stricter than those for ___.
stricter for new construction
not as strict for buildings existing before the law was implemented
The ADA requirements for new construction are ___ than those for buildings existing before the law was implemented.
stricter
What are the 4 alternative risk management techniques?
1) Transfer
2) Control
3) Avoid
4) Retain
In a(n) ___ property, insurance against the risk of a shopper suffering a slip-and-fall injury would be covered by liability insurance.
Commercial
In a commercial property, insurance against the risk of a shopper suffering a slip-and-fall injury would be covered by ___ insurance.
liability
A building insured for what it would cost to rebuild it is a(n) ___ policy.
current replacement cost
A(n) ___ is the most important financial report.
cash flow report
Why is a cash flow report the most important financial report?
Provides a picture of the current financial status of the property
Property managers have a responsibility to properly manage ___, such as asbestos
hazardous environmental problems
Court decisions have held ___ and ___ responsible for physical harm that was inflected on tenants by intruders
Owners and their agents
A critical maintenance objective is to protect the ___ of the property over the long term
Physical condition
Examples of ___ of property management are employee wages and utilities.
variable expenses
A property manager’s first responsibility to the owner should be to realize the ___ consistent with the ___.
Highest return possible consistent with the owner’s instructions
The ___ relationship with the ___ is most similar to that of a sales associate with the employing broker
Property manager
Owner
The property manager’s relationship with the owner is most similar to that of…
a) Tenant and landlord
b) cashier and owner of a store
c) stockholder with board of directors of a corporation
d) sales associate with the employing broker
sales associate with the employing broker
ALL of these should be included in a written management agreement EXCEPT…
a) list of manager’s duties and responsibilities
b) statement of owner’s purpose
c) statement identifying the manager’s creditors
d) allocation of costs
statement identifying the manager’s creditors
A list of manager’s duties and responsibilities, a statement of the owner’s purpose, and an allocation of costs must all be included in a(n) ___.
Written management agreement
If an apartment rents for $750 per month and the manager receives a 12% commission on all new tenants, how much will the manager receive when renting an apartment, assuming that this commission is calculated in the usual way?
$1080
750 (monthly rent) x 12 (months per year) x 0.12 (12%) = 1080
What is the ANNUAL rent per square foot for a 30 ft x 40 ft property that rents for $2950 per month?
$29.50
30 x 40 = 1200
2950 x 12 = 35,400
35,400 divided by 1200 = 29.50
Out of the following, a high vacancy rate is MOST likely to indicate…
a) rental rates are too low
b) property is attractive
c) building management is effective and responsive
d) undesirable property
undesirable property
Repairing a leaking water heater is an example of ___ maintenance.
Corrective
Which is an example of corrective maintenance?
a) seasonal recharge of refrigerant in an air conditioning unit
b) picking up litter in common areas
c) repairing a leaking water heater
d) moving a partition wall to make a larger office
Repairing a leaking water heater
How can tenants insure their personal belongings in apartments they rent?
Obtain HO-4 or renter’s insurance
Under the ADA, existing barriers must be removed…
when removal may be accomplished in a readily achievable manner
A company was moving from one part of the city to another. During the move, a truck carrying computer equipment worth more than $250,000 was trapped in a flooded underpass, and the equipment was destroyed. Fortunately, the company was insured under several policies. The policy that would most likely cover the computer equipment during the move from one facility to another is…
A contents and personal property policy
All of the following are principal responsibilities of the property manager EXCEPT…
a) forcibly removing tenants for nonpayment of rent
b) generating income for owners
c) preserving and/or increasing the value of the property
d) achieving objectives of the owners
forcibly removing tenants for nonpayment of rent
Who carries out eviction proceedings?
An officer of the court
The ___ is a guide for the property’s financial performance in the future
Operating budget
What type of plan dies a property manager implement to manage renters who do NOT pay their rent in a timely way?
Collection plan
One way the property managers meet the goals of __ is by making sure to use the same lease application for every applicant
ECOA
One way the property managers meet the goals of ECOA is by…
a) making sure to use the same lease application for every applicant
b) Disqualifying tenant applications on the basis of receiving welfare payments
c) not evaluating certain tenant applicants
d) establishing that certain buildings do not allow children as residents
making sure to use the same lease application for every applicant
According to the Fair Housing Act, ___ is channeling of protected class members to certain buildings or neighborhoods
steering
Washing a wall mirror in a common area is ___ maintenance.
Preventative
Fixing an air conditioner is ___ maintenance
Corrective
Repainting exterior brick is ___ maintenance
Preventative
Replacing torn carpet is ___ maintenance
Corrective
Repairing a cracked window is ___ maintenance.
Corrective
Annual elevator inspections & repairs are ___ maintenance
Preventative
Cleaning off a cobweb above a doorway is ___ maintenance
Routine
