PSI Exam Prep: Leasing and Property Management

Question 1

What is A property manager’s primary goal?

Answer 1

to produce the greatest net return for the owner.

Question 2

these are the parties to a property management agreement that establishes a general agency relationship.

Answer 2

The licensee and the property owner

Question 3

Property management agreements should include:

Answer 3

description of the property, terms, reporting, Compensations, manager’s authority, manager’s duties, management costs, owner’s purpose, owner’s responsibilities and An equal opportunity statement

Question 4

Common property manager duties can include:

Answer 4

Maintaining and delivering financial reports
Renting and Marketing properties
Collecting rent
handling tenant problems
Maintaining the property
Complying with local, state, and federal regulations

Question 5

it is a binding contract that allows a tenant to occupy (not own) a property.

Answer 5

A lease

Question 6

The tenant stays after the right to possess has terminated. The tenant is known as a holdover tenant.

Answer 6

Estate at sufferance

Question 7

The lease’s duration is unknown when it’s created.

Answer 7

Estate at will

Question 8

The lease terminates automatically when the specified period (day, week, month, year, etc.) ends.

Answer 8

Estate for years

Question 9

The lease automatically renews at the end of each period specified in the lease.

Answer 9

Periodic estate

Question 10

it is one in which the tenant pays some or all of the property’s costs in addition to rent.

Answer 10

A net lease

Question 11

When the tenant is paying for property taxes, insurance, and maintenance along with the rent, the lease is generally referred to as a

Answer 11

triple net lease (NNN)

Question 12

it is a triple net lease in which the tenant is also responsible for all building expenses and repairs, including roofing and structural repairs. This has no legal protection

Answer 12

An absolute net lease

Question 13

These leases are often used for large commercial and industrial leases. These leases tend to favor the landlord’s interests because property costs fall on the tenant.

Answer 13

A net lease

Question 14

it is one in which the landlord pays all expenses related to the property, such as taxes, repairs, insurance, utilities, maintenance) while the tenant pays a fixed rent. these are often used for office space.

Answer 14

A gross lease or full-service leases.

Question 15

the tenant pays a base rent plus an additional charge that’s a percentage of the tenant’s gross sales once a specific ‘breakpoint’ is met. The landlord usually pays all the property’s costs (as seen in a gross lease), but this may not always be the case. these are often used for retail businesses and malls.

Answer 15

percentage lease

Question 16

it allows specific rent increases at future dates. It’s a type of variable lease that permits an increase/decrease in rent during the lease period. The increase can be based on a number of factors, such as changes to appraised value, index, or time.

Answer 16

A graduated lease

Question 17

these are often used for longer terms than other common lease types. Tenants may be able to get into a lease at a lower cost that gradually increases over time. This can be beneficial for new businesses. The lease also provides protection to property owners, who can increase rent as property values or costs increase over time.

Answer 17

A graduated lease

Question 18

One party owns the land and a different party owns the improvements. it is leased on a long-term basis, often 50–99 years. The lessee builds and owns an improvement, such as an office building, on the leased land. At the conclusion, the improvements become the lessor’s property.

Answer 18

Ground lease

Question 19

Provides for rental of floor space of wide-open loft spaces. The tenant may divide the space but can’t make structural changes.

Answer 19

Loft lease

Question 20

When a tenant wants to buy a property but can’t (either due to financing, title, or tax issues), a lease purchase may be an option. There’s both a purchase and lease component to this arrangement. The tenant makes rental payments, and a portion of that payment is applied to the property’s purchase price. This continues until the tenant can purchase the property outright.

Answer 20

Lease purchase

Question 21

The owner of a building sells the building (usually to an investor) and then leases the building back. Owners will usually do this as a way to raise extra capital. The original owner gains access to the equity, and the new owner has a reliable source of rental income.

Answer 21

Sale and leaseback

Question 22

Often used for minerals, oil, or gas, a company will enter into a lease agreement with the landowner. The company explores the land, looking for minerals, oil, or gas in exchange for a cash payment to the landowner. If the company finds the item, the landowner usually gets a percentage of the item’s value. If nothing is found, the lease expires.

Answer 22

Sub-surface leasing rights

Question 23

is a sample law that states may follow in enacting their own landlord-tenant legislation. The purpose of this act is to base landlord-tenant law on contract law instead of common law, thereby providing more specific guidance to both landlords and tenants.

Answer 23

The Uniform Residential Landlord Tenant Act (URLTA)

Question 24

URLTA means

Answer 24

The Uniform Residential Landlord Tenant Act

Question 25

This is the legal process used to physically remove the tenant.

Answer 25

Actual eviction

Question 26

The tenant is prohibited from quiet enjoyment of the premises and vacates prior to termination of the lease agreement.

Answer 26

Constructive eviction

Question 27

The landlord takes matters into his own hands and evicts the tenant without using legal procedures.

Answer 27

Self-help eviction

Question 28

means the right to use the property without undue interference from the landlord or others and the right to live in safety and comfort.

Answer 28

Quiet enjoyment

Question 29

A property manager is usually considered

Answer 29

a general agent

Question 30

A property manager have fiduciary duties to:

Answer 30

the owner, not the tenant

Question 31

these are used to pay expenses related to managing the property, such as maintenance, utilities, contractor expenses, or staff salaries. Rent is deposited into these accounts.

Answer 31

Operating accounts

Question 32

also called escrow accounts, hold funds belonging to others.

Answer 32

Trust accounts

Question 33

How many days to deposit to trust account?

Answer 33

between 1 and 3, but it really depends on the state

Question 34

Usually covering a one-year period, this report projects the income and expenses of operating the property.

Answer 34

Operating budget

Question 35

Usually created monthly, this report shows the current financial status of a property. It accounts for income received (such as rent, late fees, etc.) and expenses paid (such as utilities, personnel, repairs, etc.).

Answer 35

Cash flow report

Question 36

Prepared on a monthly, quarterly, semi-annual, or annual basis, this report shows whether the property profited during the period or suffered a loss.

Answer 36

Profit and loss statement

Question 37

This report compares actual results from the profit and loss statement to those projected on the operating budget.

Answer 37

Budget comparison statement

Question 38

it manipulates owners into the fear that the entry of a protected class will negatively impact property values to encourage an owner to rent or sell. This fear is used to convince owners to sell or rent at a lower price.

Answer 38

Blockbusting

Question 39

it occurs when members of protected classes are guided (or steered) toward certain areas, buildings, or neighborhoods by a property manager or real estate licensee. For example, only showing families with children units on the first floor is an example of it. Even phrases like “kid friendly” could be perceived as such. Basically, prospective tenants have the right to see all available housing options and to select the option of their choice.

Answer 39

Steering

Question 40

it specifically permits some housing facilities to discriminate based on familial status. This exemption permits senior housing facilities and communities to refuse to sell or rent homes to families with minor children. The facilities must meet certain requirements to be eligible for the exemption.

Answer 40

The Housing for Older Persons Act of 1995

Question 41

it is the hypothetical elderly widow who has converted a portion of her home into a rental apartment to supplement her limited income. it provides that if a dwelling has four or fewer rental units and the owner lives in one of those units, that home is exempt from the FHA

Answer 41

The Mrs. Murphy exemption

Question 42

apply to new construction and remodeling of public accommodations and commercial buildings. Community spaces in apartments built before 1990 must be compliant. All public spaces must be fully accessible in apartments built after 1990.

Answer 42

The Americans with Disabilities Act, or ADA

Question 43

they owe fiduciary duties to their clients (the landlord) and the community as a whole, not to individual residents.

Answer 43

Property managers

Question 44

this lease typically includes all the nets in the base rent, but not not all operating expenses.

Answer 44

A modified gross lease

Question 45

this duty is that licensees can't take any action that would adversely impact the client's legal interests.

Answer 45

The overarching theme of statutory duties

Question 46

Property managers must recognize the federally protected classes under ADA and the federal Fair Housing Act. Which list most accurately lists these classes?

Answer 46

Race, color, religion, national origin, sex, familial status, or disability

Question 47

this lease typically includes all the nets in the base rent, but not not all operating expenses.

Answer 47

A modified gross lease

Question 48

Leases for periods of more than one year must be in

Answer 48

writing