Chapter 23 Flashcards
agency
duties
the
legal obligations that real
estate agents owe to their
clients, including loyalty,
obedience, disclosure,
confidentiality, accounting,
and reasonable care
antitrust
Antitrust laws are regulations
designed to promote fair
competition in the
marketplace and prevent
monopolistic practices,
collusion, price-fixing, and
other forms of
anticompetitive behavior.
confidentiality
the
obligation to protect sensitive
or proprietary information
shared by clients or
customers and not disclose it
to third parties without
permission
conflict of
interest
A conflict of interest occurs
when an individual or entity’s
personal interests or
relationships interfere with
their ability to act in the best
interests of their client or
employer
ECOA
(Equal Credit
Opportunity
Act)
ECOA is a federal law that
prohibits lenders from
discriminating against
applicants based on race,
color, religion, national
origin, sex, marital status,
age, or receipt of public
assistance in any aspect of a
credit transaction
errors and
omissions
insurance
Errors and omissions (E&O)
insurance is a type of
professional liability
insurance that provides
coverage for claims alleging
negligence or mistakes in
professional services
provided
fair
housing
the
principle of equal opportunity
in housing and the
prohibition of discrimination
based on protected
characteristics such as race,
color, religion, national
origin, sex, familial status,
or disability
general
liability
refers to the
legal responsibility of
individuals or entities for
injuries or damages caused
to others as a result of
negligence or unsafe
conditions
risk
reduction
Risk reduction involves taking
measures to minimize the
likelihood or impact of
potential risks.
risk
retention
Risk retention is the decision
to accept and bear the
financial consequences of
potential risks rather than
transferring them to
another party
risk
transference
Risk transference involves
shifting the financial burden
of potential losses to another
party, typically through
contractual agreements or
insurance.
trust
fund
designated
account where funds are
held in trust by a real estate
broker or agent on behalf of
their clients, typically for
earnest money deposits or
other escrow funds related to
real estate transactions.
unauthorized
practice of law
refers to the provision of
legal advice or services by
individuals who are not
licensed attorneys, which is
prohibited by law.
What is the primary reason for mastering risk management in real estate?
To create a safety net for your business and build trust with clients
Which of the following is cash flow?
The total of rents plus revenues from other sources generated by a property
Fixed operating expenses minus variable operating expenses
Effective gross income minus net operating income
Net operating income minus debt service and reserves
Net operating income minus debt service and reserves
One of the principal concerns for a manager in selecting a commercial tenant is
compatibility of the tenants business with that of other tenants
Commercial fire and hazard insurance policies usually require coverage to equal at least 80 percent of the propertys
replacement value
If a propertys vacancy rate is significantly lower than market rates, it may be a sign that the manager needs to
raise rental rates
A certain building has a vacancy rate above that of the general market. The most likely reason for this is
high property tax rates
a bad market
poor management
lack of incentives from the municipality
poor management
If an apartment contains a refrigerator that is not included in the lease,
the property manager does not have to maintain it
If an apartment contains a washer and drier that are included in the lease,
the property manager is responsible for maintaining them
The rights, duties, and liabilities of the landlord and manager are
apportioned under the terms of the management contract
dictated by common law
identical
regulated by the Universal Landlord Tenant Relations Act
apportioned under the terms of the management contract
Why does a manager need to keep tenants happy?
High tenant turnover increases expenses and reduces profits
What kind of agency is commonly created by a management agreement?
Universal
Specific
General
Vicarious
General
