Unit 18: Property Management

Question 1

Americans With Disabilities Act (ADA)

Answer 1

Legislation that prohibits discrimination against the physically or mentally impaired as it relates to employment opportunities and public accommodations.

Question 2

Management Agreement

Answer 2

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 3

Management Plan

Answer 3

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

Question 4

Multiperil Policy

Answer 4

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

Question 5

Property Manager

Answer 5

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

Question 6

Risk Management

Answer 6

Evaluation and selection of appropriate property and other insurance.

Question 7

Surety Bond

Answer 7

An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations contracted for by an insured party. 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 8

Tenant Improvements

Answer 8

Alterations to the interior of a building to meet the functional demands of the tenant.

Question 9

Workers’ Compensation Acts

Answer 9

Laws that require an employer to obtain insurance coverage to protect her employees who are injured in the course of their employment.

Question 10

Operating Budget

Answer 10

An operating budget is the projection of income and expenses for the operation of a property over a one-year period. This budget is based on anticipated revenues and expenses and serves as a guide for the property’s anticipated financial performance.

Question 11

Consequential loss, use, and occupancy. (Insurance)

Answer 11

Consequential loss insurance covers the results, or consequences, of a disaster. Consequential loss can include the loss of rent or revenue to a business that occurs if the business’s property cannot be used.

Question 12

Casualty insurance

Answer 12

policies include coverage against theft, burglary, vandalism, and machinery damage as well as health and accident insurance. Casualty policies are usually written on specific risks, such as theft, rather than being all-inclusive.

Question 13

Insurance in Illinois

Answer 13

In Illinois, the policy type tenants should ask for is HO-4, designed specifically to cover renters’ personal property.

Question 14

depreciated cash value (also called the actual cash value

Answer 14

That is, the property is not insured for what it would cost to replace it but rather for what it was originally worth, less the depreciation in value that results from use and the passage of time.

Question 15

current replacement cost.

Answer 15

In this sort of policy, the building or property is insured for what it would cost to rebuild or replace it today.

Question 16

A property manager is offered a choice of three insurance policies with different deductibles. If the property manager selects the policy with the highest deductible, which risk management technique is being used?

Answer 16

The answer is retaining risk. Retain risk by deciding that the chances of the event occurring are too small to justify the expense of any other response (an alternative might be to take out an insurance policy with a large deductible, which is usually considerably less expensive).

Question 17

Avoid, control, transfer, or retain are the four alternative techniques of?

Answer 17

The answer is risk management. The perils of any risk must be evaluated in terms of options. In considering the possibility of a loss, the property manager must decide whether it is better to avoid, control, transfer, or retain risk.

Question 18

A property manager who enters into a management agreement with an owner is usually what type of agent?

Answer 18

General agent