Property Management & Leasing Flashcards
A _______ _______ is a person who manages property for an owner as an agent. Like the real estate broker, the property
manager’s role is a _________ one, that is, he owes a special obligation of trust, accountability and loyalty to the person employing him.
property manager
fiduciary
The basic functions of a property manager are:
1. To produce the best possible ___ _________ ______. As an agent this is accomplished by maintaining a favorable balance of income over expenditures, either by increasing the property’s gross
income or by reducing the costs of maintenance and operation.
2. To ________ and ________ the value of the principal’s investment. This involves not only maintaining the property but also establishing rent schedules that will provide a maximum return on the
owner’s investment.
net operating income
maintain and increase
There are three types of properties that require management:
1. ___________
2. ______ and __________
3. __________
- Residential
- Retail and Commercial
- Industrial
________ of a ________ _______
1. Show and lease space.
2. Solicit and qualify potential tenants.
Qualifying potential tenants refers to finding out their ability to pay rent.
3. Collect rent.
4. Hire, train and supervise employees to operate and maintain the property.
5. Maintain tenant relations and mediate complaints.
6. Provide maintenance for the property.
7. Provide for tenant security.
8. Maintain adequate insurance.
9. Maintain adequate records.
10. Audit and pay bills.
11. Must abide by the Fair Housing Laws in all activities.
Activities of a Property Manager
The __________ _________
The management contract is the basis of the manager-owner agreement. It is the first step in taking over the management of a property. This agreement creates an agency relationship between the owner of the property and the property manager. A property manager is said to be a _______ _____. The management contract should be in writing and should contain the following:
1. Parties to the contract and starting date.
2. Description of the property to be managed.
3. The term or time period of the agreement.
4. Method of termination of agreement.
5. Agent’s fee.
6. Extent of agent’s authority.
7. Agent’s covenants (promises).
8. Owner’s covenants.
9. Disposition of security deposits by agent (to be placed in escrow account).
10. Signatures of all parties.
The Management Agreement
General Agent
A _____ is both a contract and an instrument of conveyance. The Lessee contracts to pay rent to the lessor, and the lessor conveys an interest in the property to the lessee. A _____ of more than one year’s term must be in writing. For terms of a year or less, oral leases are
permitted. In most states, including Louisiana, the lessee does not need to sign the lease in order for it to be valid.
lease
The _____ must be delivered by the lessor to the lessee and accepted by the lessee.
Acceptance of the _____ is signified by:
1. possession of the _____,
2. payment of rent, or
3. occupying the premises.
lease
While not usually required, leases of long duration, especially commercial leases of three years or longer, should be recorded. Recording gives ____________ ______ of the lessee’s interest in the property
constructive notice
The lessor has a ___________ ________ in the rights he leases. That is, whatever he grants to the lessee, he will recover in the future.
Reversionary Interest
In some leasing agreements, the lessor retains the _____ of __-_____. This means
that if the lessee breaches the agreement in certain ways, or if exceptional circumstances require it, such as maintenance emergencies, the lessor may enter without the lessee’s consent.
Right of re-entry
The lessor also has the _____ to _____________, that is, the right to collect rent from the lessee as agreed upon in the lease. The lessee’s failure to pay rent constitutes a breach of the lease. When a lessee falls behind in his rent, the lessor must first serve notice for remedy of the default. If no corrective action is taken, the lessor may then take the lessee to court to recover damages.
right to consideration
______ to ________. In general, when the conditions of a lease are breached by the lessee, the lessor may recover possession of the premises through court-ordered eviction
Right to eviction
_____ to _________. There is, however, an alternative to eviction. If the property manager thinks that there is a possibility of recovering unpaid rent, he or she can file for _____________ of property. It is defined as the removal of property from the owner of the property until the problem is resolved, i.e., the rent paid plus the renter must pay for the charges for filing the order of _____________. The court will require that the property be held by the landlord in an approved location. Also, the total value of the property removed must be in line with the amount of money owed. As soon as the outstanding rent balance is paid, the property is returned to its owner. The order to _________ is obtained by taking a copy of the lease and all records of unpaid rent, including late notices, to court for approval.
Right to sequester
sequestration
sequester
. The lessor has the _____ to ____, ________ or otherwise ________ his ______ in the leased property without the consent of the lessee. Generally, the new owner acquires the property subject to the conditions of the existing lease. He assumes all the responsibilities of the original lessor toward the lessee, as well as all his rights.
Right to Sell, mortgage or transfer his interest
The lessor also has the _____ to ______ ____________ made on the premises by the lessee, with the exception of trade fixtures, which the lessee may remove prior to the termination of the lease.
right to retain improvements
______ of __________, ___ and _____ _________. The lessor assigns the right of possession for the term of the lease. The right of possession is limited by the reversionary interest of the lessor. The lessee
may not do anything to damage the property, commit waste, or alter the property without the permission of the lessor, even if the improvements increase the property’s value.
Rights of possession, use and quiet enjoyment
_____ to ______ or ______. Unless otherwise stated in the lease, the lessee may transfer his leasehold interest to another party, either by assignment or subletting. To assign a leasehold interest means to
transfer it totally, for the duration of its term, to another party. Although all of the interests of the assignor, (the original lessee), transfer to the assignee, the landlord can still hold the assignor responsible for unpaid rent should the assignee default.
Right to assign or sublet
__________ involves a similar transferring of leasehold interest, but with the lessee retaining some reversionary interest in the leasehold. Typically, in a __________ arrangement, a third party, the sublessee,
takes over the lease for only a portion of the remaining term. The responsibilities of the sublessee are toward the original lessee, who himself remains the responsible tenant of the lessor. The original lessee thus functions in a double capacity: he is lessor to the sublessee, and lessee to the original lessor. An
arrangement of this type is known as a ________ _____.
Subletting
sandwich lease
_____ to ________. A lessee may also transfer his leasehold interest in a business property by mortgage, that is, by conveying it as security on a loan. In some cases, the person receiving the leasehold, the mortgagee, acts as assignee and pays rent to the lessor. Usually, however, he assumes the role of a sublessee with the original lessee remaining personally liable for payment of rent.
Right to mortgage
This is the most common type of leasehold interest. A _______ for _____ is a leasehold that runs for a determinate length of time, up to a specified date of
expiration. The definite term is absolutely necessary for the creation of this type of tenancy. Despite its name, a _______ for _____ may be of any specified length - a day, month, year, ten years, or whatever the lessor and lessee agree upon. The tenancy for years automatically terminates upon the expiration of the
lease, so neither the lessor nor the lessee need give notice prior to its termination. No renewal of the tenancy occurs without the completion of a new lease. This type of lease is used for hotel rooms.
Tenancy (or estate) for years
Like the tenancy for years, the ________ _______, also known as estate from period to period, is a leasehold of determinate length, of so many days, months, or years.
Unlike the tenancy for years, however, the ________ _______ renews automatically when it expires for another term of equal length, unless the lessor or the lessee acts to terminate it. They terminate only when one party has given sufficient notice to the other. Sufficient notice may mean anything from a week to three months, depending upon individual state law and the term of the tenancy involved. ________ _______ automatically ______ unless action is taken to terminate it. Whereas the tenancy for years automatically _________ at a given time unless a new lease is drawn.
Periodic tenancy (or estate)
renews
terminates
Periodic tenancies occasionally arise when the lessee in a tenancy for years remains on the premises after his lease expires, without having signed a new lease. Such a lessee is known as a ________ ______.
If the lessee continues to pay rent, and the lessor accepts his rent payment, a periodic tenancy is created. The new tenancy is considered to have the same length as the original tenancy for years, and will be
renewed automatically at the end of its term, as long as neither party acts to terminate it.
holdover tenant
The _______ at ____ is a leasehold that runs indefinitely. It has no determinate period in days, months, or years, nor any specific date of termination. The will of the parties
is the basis of the _______ at ____. So long as lessor and lessee agree to it, the tenancy continues to exist. In some states, _______ at ____ can be terminated by either party without notice. Most states, however, require that sufficient notice, usually the length of a rent-paying period, be given. _______ at ____ also terminate upon the death of either the lessor or the lessee.
Tenancy (or estate) at will
The _______ at __________ is an interest formed by a tenant’s occupying a premises without the landlord’s consent. It is the lowest estate interest recognized by law. In a _______ at __________, the tenant’s interest is solely possessory. He has no rights deriving from any existing agreement with the landlord.
tenancy at sufferance
