Real Estate Test Unit 19

Question 1

budget comparison statement

Answer 1

compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses

Question 2

building-related illness (BRI)

Answer 2

an illness due to air quality problems, typically toxic substances or pathogens; a clinically diagnosed condition. symptoms include asthma, allergies, and hypersensitivity

Question 3

cash flow

Answer 3

the net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income when expenses exceed income, a negative cash flow results

Question 4

cash flow report

Answer 4

a monthly statement that details the financial status of the property

Question 5

commingling

Answer 5

the illegal act by a real estate professional of placing client or customer funds with personal funds. by law, real estate professionals are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the real estate professional

Question 6

community association management

Answer 6

provides a team of property managers, accounting staff, office staff, and property consultants to manage property

Question 7

corrective maintenance

Answer 7

correction of problems after they have occurred

Question 8

management agreement

Answer 8

a contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager’s authority

Question 9

management plan

Answer 9

a highly detailed plan that lays out the owner’s objectives for a property, as well as what the property manager wants to accomplish and how, including all budgetary information

Question 10

multiperil policies

Answer 10

insurance policies that offer protection from a range of potential perils, such as fire, hazard, public liability, and casualty

Question 11

operating budget

Answer 11

a property’s anticipated financial performance in the present and future. it gives the owner a sense of expected profit

Question 12

profit and loss statement

Answer 12

a general financial picture based on the monthly cash flow reports; does not include itemized information

Question 13

property manager

Answer 13

someone who manages real estate for another person for compensation. duties include collecting rents, maintaining the property, and keeping up all accounting

Question 14

preventive maintenance

Answer 14

small repairs that help prevent bigger problems and expenses

Question 15

risk management

Answer 15

evaluation and selection of appropriate property and other insurance

Question 16

routine maintenance

Answer 16

day-to-day duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, and providing regularly scheduled upkeep of heating, air-conditioning, and landscaping

Question 17

sick building syndrome (SBS)

Answer 17

an illness caused by poor air quality, typically in large commercial buildings. symptoms include fatigue, nausea, headache, and sensitivity to odors

Question 18

surety bonds

Answer 18

an agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations incurred by an insured party; in essence, a policy insuring one’s personal and/or financial integrity. in the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated

Question 19

tenant’s insurance

Answer 19

insurance on the personal belongings of tenants

Question 20

tenant improvements

Answer 20

alterations to the interior of a building to meet the functional demands of the tenant. also known as build-outs

Question 21

workers’ compensation acts

Answer 21

state laws that require an employer to obtain insurance coverage to protect employees who are injured in the course of their employment