Chapter 24 - Property Management

Question 1

Property managers have a _______ relationship with the property owner.

a. non-binding
b. partnership
c. fiduciary
d. subagency

Answer 1

c. fiduciary

Question 2

One of the property manager’s fundamental responsibilities is

a. obtaining construction loans for the principal.
b. financial reporting to the principal.
c. finding a buyer for the property.
d. maintaining good standing in a managers’ professional association.

Answer 2

b. financial reporting to the principal.

Question 3

Effective gross income is defined as

a. the total of scheduled rents.
b. the total of all rents and revenues generated by a property.
c. potential gross income minus debt service and reserves.
d. revenue from all sources minus losses from uncollected rents, vacancies, and evictions.

Answer 3

d. revenue from all sources minus losses from uncollected rents, vacancies, and evictions.

Question 4

The efficiency of marketing activities can be measured in terms of

a. cost per tenant prospect generated per lease.
b. number of ads produced per marketing dollar.
c. dollars expended per square foot of vacant space.
d. percentage of reserves expended on marketing.

Answer 4

a. cost per tenant prospect generated per lease.

Question 5

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

a. lower rental rates.
b. raise rental rates.
c. find better tenants.
d. improve management quality.

Answer 5

b. raise rental rates.

Question 6

Why does a manager need to keep tenants happy?

a. Happy tenants make fewer demands for services.
b. Managers are contractually required to please tenants.
c. Unhappy tenants make the owner look bad.
d. High tenant turnover increases expenses and reduces profits.

Answer 6

d. High tenant turnover increases expenses and reduces profits.

Question 7

What are the three kinds of maintenance a manager has to carry out for a managed property?

a. Constructive, deconstructive, and reconstructive
b. Routine, preventive, and corrective
c. Scheduled, planned, and improvised
d. Emergency, elective, and optional

Answer 7

b. Routine, preventive, and corrective

Question 8

The Americans with Disabilities Act requires property managers to

a. ensure that disabled employees have the same level of access to facilities that all employees have.
b. hire the disabled whenever possible.
c. remove all existing barriers to the free movement of disabled persons within the property, regardless of the cost.
d. remodel the ground floor of the property in accordance with ADA standards if it was built before 1978.

Answer 8

a. ensure that disabled employees have the same level of access to facilities that all employees have.

Question 9

Which of the following statements about the property manager’s responsibility for security and safety is true?

a. The manager has no responsibilities for building safety beyond ensuring that fire doors and sprinklers are working.
b. The manager’s security responsibilities are limited to the common areas.
c. A court may hold the manager responsible for the physical safety of tenants, employees, and customers in leased premises.
d. The manager’s security responsibilities are limited to tenants and their employees in their leased premises.

Answer 9

c. A court may hold the manager responsible for the physical safety of tenants, employees, and customers in leased premises.

Question 10

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

a. replacement value.
b. reproduction value.
c. original cost.
d. depreciated basis.

Answer 10

a. replacement value.

Question 11

Trust funds to be handled by a property manager are likely to include all of the following except

a. rents collected from tenants.
b. cash for the management firm’s operating expenses.
c. security deposits.
d. capital contributions from the property owner.

Answer 11

b. cash for the management firm’s operating expenses.

Question 12

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

a. Universal
b. Specific
c. General
d. Vicarious

Answer 12

c. General

Question 13

The rights, duties, and liabilities of the landlord and manager are

a. apportioned under the terms of the management contract.
b. dictated by common law.
c. identical.
d. regulated by the Universal Landlord Tenant Relations Act.

Answer 13

a. apportioned under the terms of the management contract.

Question 14

Which of the following describes a gross lease?

a. The tenant pays a base rent plus some or all of the operating expenses.
b. The tenant pays a fixed rent, and the landlord pays all operating expenses.
c. The tenant pays a base rent plus an amount based on income generated in the leased space.
d. The tenant pays a rent that increases at specified times over the lease term.

Answer 14

b. The tenant pays a fixed rent, and the landlord pays all operating expenses.

Question 15

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

a. the lessee is required to buy it from the landlord.
b. the landlord is required to remove it.
c. the lease is invalidated because of an incomplete property description.
d. the property manager does not have to maintain it.

Answer 15

d. the property manager does not have to maintain it.

Question 16

A basic responsibility of a landlord is to

a. provide leased space at market rental rates.
b. deliver a habitable property.
c. keep the rental space freshly painted.
d. refrain from entering the leased space at any time during the lease term.

Answer 16

b. deliver a habitable property.

Question 17

How does a constructive eviction occur?

a. A landlord obtains a court order to force the tenant to vacate the leased premises.
b. A court officer forcibly removes the tenant from the premises.
c. A tenant declares a landlord in default and vacates the leased premises.
d. A landlord declares a tenant in default and takes possession of the leased premises.

Answer 17

c. A tenant declares a landlord in default and vacates the leased premises.

Question 18

Among the essential elements of a management plan is consideration of

a. the competitive market for the property.
b. the property manager’s career goals.
c. the property owner’s net worth.
d. the management firm’s income goals.

Answer 18

a. the competitive market for the property.