chapter 4 : property management Flashcards
1
Q
What does BOMA stand for? what type of real estate?
A
Building owners and managers association
Commercial real estate
2
Q
What does CAI stand for? what type of real estate?
A
Community Associations Institute
Homeowners associations, condominiums, and other planned communities
3
Q
What does ICSC stand for? what type of real estate?
A
International council of shopping centers
Shopping centers worldwide
4
Q
What does BOMI stand for? What type of real estate?
A
Building owners and managers institute international
education programs for commercial property and facility management industries
5
Q
What does NAHB stand for? what type of real estate?
A
National association of home builders
All aspects of home building
6
Q
What does NARPM stand for? what type of real estate?
A
National Association of Residential Property Managers
Single - family and small residential properties
7
Q
Property manager there principal responsibilities
A
- Achieve the objectives of the property owners
- Generate income for the owners
- Preserve and/or increase the value of the investment property
8
Q
The property manager carries out the goals of the property owners by….
A
making sure the property earns income
9
Q
Duties / goals of a property manager
A
keeping the physical property in good condition
suitable tenants must be found
Rent must be collected
Hire and supervise employees
Budget and control expenses
Keeping proper accounts
Making periodic reports
10
Q
Illinois property managers must be
A
licensed managing brokers
11
Q
property managers who work for property management companies
A
manage properties for a number of owners
12
Q
property managers who are independent
A
has an agency relationship ; holds more responsibility
13
Q
the property manager must be a
A
licensed managing broker
14
Q
first step in taking over the management of any property is to
A
enter into a management agreement with the owner
it creates a general agency relationship between the owner and the property manager
15
Q
the management agreement should have…
A
description of the property including address
time period of the agreement
definition of the property managers responsibilities ; any limitations / restrictions should be included
clearly states the owner’s purpose (what they need to accomplish)
what authority the manager is to have
reporting : the frequency of periodic reports
management fee :
Allocation costs : states which property manages expenses will be paid by the manager or by the owner
Antitrust provisions : no price fixing
Equal opportunity statement : properties will be available to everyone protected by state or federal law
16
Q
types of financial reports (5)
A
operating budget
cash flow report
profit and loss statement
budget comparison
budget statement
17
Q
operation budget
A
the projection of income and expense for the operation of a property over a one year period
18
Q
income includes (6)
A
gross rental collected
delinquent rental payments
utilities
vending contracts
late fees
storage charges
19
Q
Type of expenses (3)
A
building personnel
operating expenses
maintenance costs
20
Q
Fixed expenses that remain constant
A
employee wages
utilities
other basic operating costs
21
Q
variable expenses
A
recurring or nonrecurring include ;
capital improvements
building repairs
landscaping
22
Q
Cash flow report
A
a monthly statement that details the financial status of the property
23
Q
why is the cash flow report most important?
A
it provides a picture of the current financial status of a property
24
Q
profit and loss statement
A
determines whether the business has made money or suffered a loss
the formula is :
gross receipts - expenses - total mortgage payments (principal &interest) = net profits
25
budget comparison statement
compares the actual results with the original budget
26
setting rental rates
must be sufficient to cover propertys fixed charges and operating expenses
must provide a fair return on the owners investments
should be in line with other buildings rates in the area
current vacancy rent
27
a rental rate for residential space is stated as
monthly rate per unit
28
a rental space for commercial leases is according to
annual rate per square foot
29
high level of vacancy may indicate
poor management, defective/undesirable property
30
high occupancy rate may mean
rental rates are too low
31
property managers/ leasing agents should accept only those tenants who...
can be expected to meet their financial obligations
by checking.
credit
criminal background
eviction history
interviewing former landlord
32
terms of rental payment is lease agreement
time and place of payment
penalties for late payments and retuned checks
provisions for cancelations and damages
33
every attempt should be made to collect rent without...
resorting to legal action since its costly, time consuming and breaks good tenant relations
34
property managers must put security deposits in a
special escrow account by the next business day after a lease is signed
35
after the security deposit is in the escrow account..
the security deposit must be recorded in a journal
then recorded into a ledger that contain information about how much ad when the deposit was returned after the lease
36
no security deposit is returned with interest unless
the property is residential with 25 or more units
37
real estate licensees must ensure that landlords disclose any possible lead-based paint or related hazards from leasing properties built before .....
1978
38
what pamphlet should be given to the tenant for lead based paint in property
Federal Lead Hazard Information Pamphlet
39
if the building is cited as a lead paint hazard the tenants must receive
a written notice of the danger unless the owners have a certificate of compliance
40
when a mitigation order is issued to an owner the oner has
90 days to eliminate the hazard
30 days if occupied by a child under 6 or by a pregnant woman
41
a rental-finding service may not list or advertise any rental unit without...
the express written authority of he units owner or agent
42
the most critical areas of responsibility for a property manager is..
risk management
43
considering a loss the property manager must decide whether it is better to
Avoid risk by removing the source of risk
Control risk by preparing for an emergency before it happens
Transfer risk by shifting the risk onto another party
Retain risk by deciding that the chances of the event occurring are too small to justify the expense of any other response
44
insurance - the audit will indicate areas in which..
greater or less coverage is recommended and will highlight particular risks
45
what is a multi-peril policies
a "package" of standard commercial coverages such as fire, hazard, public liability and casualty
46
insurance - fire and hazard coverage
provides coverage against direct loss or damage to property from a fire on the premises
47
insurance - consequential loss, use, and occupancy
covers the results of a disaster, loss of rent or revenue to a business that occurs if the business property cannot be used
48
insurance - contents and personal property
covers building contents and personal property during periods when they are not actually located on the premises
49
insurance - liability
a claim paid under this coverage is used for medical senses by a person who is injured in the building as a result of the owners negligence
50
insurance - liability
claims for those art in the course of their employment are covered by...
state laws known as workers compensation acts
51
insurance - casualties
includes coverage against theft, burglary, vandalism, and machinery damage as well as health and accident insurance
52
insurance - surety bonds
surety bonds cover an owners against financial losses resulting from employees criminal acts or negligence while performing assigned duties
53
true or false :
landlord and tenants interests are mutually exclusive
false
54
move in inspections - inspecting with a tenant is a
must
55
move in inspections - the same checklist form the inspection is the
same form used at the time the tenant leaves
56
clear understanding of the lease terms - the managers needs to establish a basic understanding o all the matters relating to the lease terms such as... (6 topic)
building rules and regulations
handling maintenance requests
procedures for paying rent
penalties for late payments or no payments
terminating the tenancy
security deposits
57
part of lease - building rules
to reference day to day matters such as use of common areas, parking spaces, and building operating hours
58
part of lease- condemnation
provides equitable cancellation of the agreement in the event that the tenant is denied use of property because it has been either appropriated or condemned by a government agency
59
part of lease - compliance clause
identifies which party is responsible for complying with any new local, state or federal regulations.
60
part of lease - assignment and subletting provisions
tenant has the right to assign or sublet his or her interest in the property
61
fire and casualty damage - when a tenants property is damaged or destroyed...
the tenant may vacate immediately and notify the owner in writing of the intent to terminate the lease as of the date possession was surrendered
62
fire ad casualty damage - of the portions of the premises are still habitable, the tenant can...
vote the unusable area and reduce the rent proportionately
63
fire and casualty damage - for the owners protection the lease should include a clause stating the damage caused by a tenant ...
will be repaired without a rent reduction and that the owner may take legal action against a tenant. most leases permit the owner to terminate the tenancy if the fire completely destroys the property usefulness
64
tenant improvements - tenants should not be allowed to make alterations to the property without...
advance written consent from the owner
65
tenant improvements - tenant improvements to property are classified as
fixtures and become part of the real estate
66
security deposit - the property manager must provide a list of the damages and cost to repair to the tenant within
30 days of the end of the lease. if the landlord or property manager doe snot provide this list within 45 days the full security deposit must be returned to the tenant immediately.
67
personal property - a clause should be included that obligates the tenant to...
remove personal property from the premises and to broom clean the area at termination of the lease
any property left behind is considered abandoned and may be removed from the premises
68
landlord/manager is generally is responsible for (2 things)
Maintaining the property and to provide certain services
69
disclosure and billing : the owner should disclose in writing the...
name and address of the property manager and of the person authorized to receive legal notice on behalf of the owner
70
quiet enjoyment : the terms of the lease must limit the cases which the owner or manager is....
allowed on the premises
71
quiet enjoyment : most leads allow the owner to enter in...
emergencies
necessary agreed-upon repairs
to show the space to possible tenants near the end of a lease
72
quiet enjoyment : a clause should be included to permit showing possible buyers he property in the event...
the property is place on the market for sale
73
maintaining the premises : the lease and state statutes often indicate that maintenance and repairs are the responsibility of the..
owner
74
maintain the premises: owner tends to the upkeep of
common areas
trash removal
Window cleaning
other services
running water
hot water
heat during required season
75
noncompliance with rental agreement: if the owner or property manager fails to perform the required duties he tenant may...
sue for damages or terminate the lease by giving the owner the specified notice for breach of contract
76
noncompliance with rental agreement: many leases require the termination proceedings to stop if...
the owner begins good faith effort to remedy the breach by the deadline stated
77
noncompliance with rental agreement : if the owner's noncompliance is willful, the tenant may also obtain / recover ...
a court injunction and attorney fee's
78
failure to deliver premises: if the right to possession is not conveyed the tenant doesn't have to...
pay rent. the tenant can terminate the rental agreement or sue
79
failure to deliver premises : it is not uncommon for a property manager to...
be unable to deliver possession because the previous tenant has not vacated the premises or because repairs and alterations have not been completed
80
Failure to supply essential services : Constructive eviction occurs when the tenant must...
abandon the premises due to owner's negligence in supplying essential services
81
failure to supply essential services: examples of constructive eviction include
failure to supply heat or water
failure to repair premises
other major defaults that render the premises unusable by the tenant
82
failure to supply essential services : for the owner's protection the lease should require the..
tenant to give notice of any failure and all the owner time to remedy the situation
83
tenants can lose their lease by
not paying rent on time or at all
seriously damaging the property
annoying other tenants by excessive sounds
etc
84
noncompliance with rental agreement : the owner can deliver a written notice to the tenant stating the nature of the contract so the tenant can...
repair the breach within a reasonable time to prevent termination
85
noncompliance with rental agreement : a 5 day notice applies to
monetary breaches
86
noncompliance with rental agreement : in Illinois a 10 day notice applies to
non - monetary breaches on the part of the tenant
87
if the tenant doesn't want to fix the damages in the premises the owner may...
enter the premises and have the necessary work performed
the bill will be presented in the next rent payment
88
the lease should also state if the owner chooses to terminate the lease...
the big comes due immediately on presentation
89
suit for eviction: eviction proceedings can be brought against a tenant for several reasons
nonpayment of rent
illegal possession of the premises after termination of lease
unlawful use of the premises
nonpayment of charges attributed to the tenant under the terms of the lease
certain other breaches of the leases
90
when a tenant has failed to perform in one of these areas...
the owner may file a court suit for recovery of the premises after giving the tenant required legal notice
91
a court suit for recovery of the premises is commonly known as (3)
suit for eviction
suit for possession
forcible entry and detainer suit
92
if the court issues a judgement decree possession in favor of the owner the tenant must..
peaceably leave or an officer of the court will forcibly remove the tenant and the tenant belongings (eviction)
93
default : the lease should include a clause that if the tenant defaults on rent payments
he owner can terminate the tenancy
94
bankruptcy : property managers should review bankruptcy default clauses in leases with an attorney to...
determine proper procedure to follow if a tenant declares bankruptcy
95
illegal activities : language in the lease should be very clear prohibiting certain activities such as
drug trafficking
felony crimes
threatening other tenants or the manager
96
bargaining factors : market conditions at the time of the end of the lease influence the terms for the new lease such as (3)
the length of the new lease term
the extent of repairs alterations or redecorating to be done
the amount of rent to be paid
97
concessions (benefit) : if the economy is going through inflation the rent will...
rise and there will be shorter leases
98
concessions (benefit) : if the economy is going through a deflation then...
leases are better off extended to keep the same high rent for a longer period of time
99
construction : repairs, alterations, redecorating will be influenced by
market conditions
100
proper notice : the manager can avoid complications with a holdover tenancy by
communicating with the tenant before lease expires
101
proper notice : residential tenants can be approached
90 days before lease expiration
102
a 100% occupancy level indicates
low rent compared to the market and its time for an increase
103
required notice : the owner must give the tenant a checklist after terminating tenancy stating..
expected cleaning
post occupancy inspections
return of security deposit
104
if a good tenant decides to move
the manager should contact him/her immediately to find out with the decision was prompted by poor management
105
exit interview : an exit interview should be made with the tenant to
analyze the results and reason behind the tenant turnover
106
refusal to renew : the manager may refuse to renew the lease by..
giving the tenant appropriate notice of termination
107
refusal to renew : the manager who does not renew a lease should have...
demonstrable proof of just cause for the refusal
108
inspection of the premises : after lease termination the manager should inspect the space with the tenant ....
to document the condition of the apartment through photos and videos
109
inspection of the premises : the same checklist during move in ...
determines any damages done
the tenant should also be required to sign the inspection checklist on move-out.
110
return of security deposit : if the landlord does not provide a list and estimated cost of the damages by 45 days after the end of lease
the security deposit is immediately returned
111
Retention for damages : acceptable grounds for keeping part or all of the security deposit typically include
damages to the premises
unauthorized, non - standard, or irreversible decorating
excessive cleaning expenses
unauthorized alterations
112
last months rent : where landlords do not utilize a security deposit but instead a non- refundable move in fee which means
the tenants do not have any invested money they can use to pay the last months rent
113
reasons for eviction includes (8)
noncompliance with building rules
violation of the law
excessive use of utilities
illegal drug activity
misrepresentation or fraud
excessive occupants on the premises
abuse of fixtures
unauthorized pets
114
notice before eviction suit : if possible before legal action can be taken the tenant must always be given a
notice of the breach or improper conduct and an opportunity to rectify the situation
115
eviction suit : in the event the tenant does not leave voluntarily
it will be necessary to file a legal action for possession
116
eviction process : if the tenant fails to appear at court
a default judgement is given to the landlord
117
eviction notice : if the tenant does appear at court
a trial must be held to determine the matter
118
actual removal : if the tenant refuses to vacate th property even after the court rules for the landlord
the landlord must secure a court order and the sheriff or constable serving the court will physically remove the ten from the property
119
