Last Ch (ch 12): 12.1 Property Management

Question 1

Beyond defining the scope of the manager’s authority, the agreement at a minimum should state:
1)
2)
3)

Answer 1

1) the agreement’s term,
2) the manager’s compensation, and
3) the property’s description.

Question 2

Additional provisions which should be part of the management agreement include:

Answer 2

• whether the manager is authorized to collect or disburse funds, and if so, for what purposes;
• whether the manager is authorized to hold and disburse tenant security deposits;
• a description of other management duties, with any exceptions spelled out;
• any reports the manager must give the owner (and how frequently); and
• how costs will be allocated (who will pay for what).

Question 3

A property manager’s compensation may take the form of a

Answer 3

set fee,
a percentage of rents collected,
a commission on new rentals, or
a combination of those.

Question 4

a licensee working as a property manager is an agent of ___

Answer 4

The owner

Question 5

T/F: Property managers owe the owner the standard agency duties of reasonable care and skill, good faith and loyalty, disclosure of material facts, and accounting.

Answer 5

True

Question 6

The manager may advertise the property for lease.

She can also execute, renew, and cancel rental agreements.

The owner can specify a maximum lease term and a minimum rent amount for those agreements.

The manager collects rents and security deposits and provides receipts to the owner.

Answer 6

Advertisements and rental agreements

Question 7

The manager is authorized to give notices of tenancy termination.

She is also given authority to have tenants evicted, recover property and rents due, and to settle related claims and lawsuits.

Answer 7

Tenancy termination

Question 8

Maintenance and Services

Answer 8

The manager may complete, order, or supervise repairs and improvements.

The manager is authorized to hire workers, buy supplies, and pay bills for this work. The owner can require the manager to seek approval for expenditures over a certain amount.

However, this approval isn’t necessary for regular monthly operating costs and any emergency expenditures.

Question 9

The manager pays property expenses, taxes, and insurance costs out of owner’s funds held by the manager. The owner can specify whether tenant security deposits are given directly to the owner or deposited into the manager’s trust account.

The manager’s trust account must be maintained separately from the brokerage’s other accounts. The owner can instruct the manager to maintain a certain amount of reserves in the trust account.

Answer 9

Expenses and trust accounts

Question 10

Disbursements

Answer 10

The manager pays herself her compensation out of the trust account.

After paying operating expenses and setting aside reserves, she will disburse the property’s net income on a specified regular basis to the owner, along with operating statements and receipts.

Question 11

The legal eviction process is called a(n) ___ action.

Answer 11

Unlawful detainer