Chapter 23

Question 1

agency
duties

Answer 1

the
legal obligations that real
estate agents owe to their
clients, including loyalty,
obedience, disclosure,
confidentiality, accounting,
and reasonable care

Question 2

antitrust

Answer 2

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.

Question 3

confidentiality

Answer 3

the
obligation to protect sensitive
or proprietary information
shared by clients or
customers and not disclose it
to third parties without
permission

Question 4

conflict of
interest

Answer 4

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

Question 5

ECOA
(Equal Credit
Opportunity
Act)

Answer 5

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

Question 6

errors and
omissions
insurance

Answer 6

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

Question 7

fair
housing

Answer 7

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

Question 8

general
liability

Answer 8

refers to the
legal responsibility of
individuals or entities for
injuries or damages caused
to others as a result of
negligence or unsafe
conditions

Question 10

risk
reduction

Answer 10

Risk reduction involves taking
measures to minimize the
likelihood or impact of
potential risks.

Question 11

risk
retention

Answer 11

Risk retention is the decision
to accept and bear the
financial consequences of
potential risks rather than
transferring them to
another party

Question 12

risk
transference

Answer 12

Risk transference involves
shifting the financial burden
of potential losses to another
party, typically through
contractual agreements or
insurance.

Question 13

trust
fund

Answer 13

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.

Question 14

unauthorized
practice of law

Answer 14

refers to the provision of
legal advice or services by
individuals who are not
licensed attorneys, which is
prohibited by law.

Question 15

What is the primary reason for mastering risk management in real estate?

Answer 15

To create a safety net for your business and build trust with clients

Question 16

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

Answer 16

Net operating income minus debt service and reserves

Question 17

One of the principal concerns for a manager in selecting a commercial tenant is

Answer 17

compatibility of the tenants business with that of other tenants

Question 18

Commercial fire and hazard insurance policies usually require coverage to equal at least 80 percent of the propertys

Answer 18

replacement value

Question 19

If a propertys vacancy rate is significantly lower than market rates, it may be a sign that the manager needs to

Answer 19

raise rental rates

Question 20

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

Answer 20

poor management

Question 21

If an apartment contains a refrigerator that is not included in the lease,

Answer 21

the property manager does not have to maintain it

Question 22

If an apartment contains a washer and drier that are included in the lease,

Answer 22

the property manager is responsible for maintaining them

Question 23

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

Answer 23

apportioned under the terms of the management contract

Question 24

Why does a manager need to keep tenants happy?

Answer 24

High tenant turnover increases expenses and reduces profits

Question 25

What kind of agency is commonly created by a management agreement?

Universal

Specific

General

Vicarious

Answer 25

General