PREP: Ch 24 Property Management

Which of the following is an illustration of a risk avoidance procedure that a property manager might take? A. The manager closes a stairwell that is in need of repair. B. The manager increases the reserves for replacing the carpeting. C. The manager hires a firm to provide security guards. D. The manager adds a rider to the building's hazard insurance policy.

A. The manager closes a stairwell that is in need of repair.

For the proper handling of client and owner monies, a property manager is generally required to A. maintain a special trust account in a qualified financial depository. B. deposit all funds every month in the management firm's central operating account. C. disburse all funds to their legal owners on a weekly basis. D. employ a notary to witness and record every deposit or payment received.

A. maintain a special trust account in a qualified financial depository.

What are "tenant improvements"? A. Increased occupancy resulting from a population increase in the market area. B. Alterations to a rental space made to fit a particular tenant. C. Marketing programs that yield a higher quality of tenant. D. Increased revenue resulting from a rise in rental rates.

B. Alterations to a rental space made to fit a particular tenant.

Which of the following is "cash flow"? A. Fixed operating expenses minus variable operating expenses. B. Net operating income minus debt service and reserves. C. The total of rents plus revenues from other sources generated by a property. D. Effective gross income minus net operating income.

B. Net operating income minus debt service and reserves.

The Universal Residential Landlord-Tenant Act A. makes it illegal for landlords to demand more than two weeks rent as a security deposit. B. aims to clarify imprecise language in residential leases. C. establishes a national board that hears complaints from tenants and landlords. D. provides a standard lease form that is required in all 50 states.

B. aims to clarify imprecise language in residential leases.

How does an actual eviction occur? A. A tenant declares a landlord in default and vacates the leased premises. B. The landlord's agents forcibly remove the tenant from the premises. C. A landlord obtains a court order to force the tenant to vacate the leased premises. D. A landlord declares a tenant in default and take possession of the leased premises.

C. A landlord obtains a court order to force the tenant to vacate the leased premises.

Financial reporting is A. a duty imposed on a property owner by the Internal Revenue Service. B. a function usually outsourced by the owner to a Certified Public Accountant. C. a fundamental responsibility of the property manager. D. a property management technique used to ensure that tenants pay the correct amount of rent.

C. a fundamental responsibility of the property manager.

A management agreement establishes a(n) A. vicarious liability. B. trust account. C. agency relationship. D. power of attorney.

C. agency relationship.

One of the principal concerns for a manager in selecting a commercial tenant is A. the location of the tenant's corporate headquarters. B. the tenant's corporate management philosophy. C. compatibility of the tenant's business with that of other tenants. D. the current cost of borrowed funds for build-outs.

C. compatibility of the tenant's business with that of other tenants.

A certain building has a vacancy rate above that of the general market. The most likely reason for this is A. a bad market. B. high property tax rates. C. poor management. D. lack of incentives from the municipality.

C. poor management.

The general task of a property manager is to A. relieve the owner of all responsibility for operating and maintaining the property. B. find and retain tenants at the least expense to the owner. C. produce the highest net return for the owner while safeguarding the property. D. negotiate rents and regulations between the tenants and the landlord.

C. produce the highest net return for the owner while safeguarding the property.

If an apartment contains a washer and dryer that are included in the lease, A. the lessee is required to maintain them at the lessee's expense. B. the lessee has the right to remove them. C. the property manager is responsible for maintaining them. D. the landlord retains the right to use them at any time.

C. the property manager is responsible for maintaining them.

It is important for tenants to understand that A. they do not need any insurance coverage other than the standard fire and flood policy. B. their landlord is required to provide insurance coverage for their personal belongings. C. their personal belongings are not covered by their landlords insurance policies. D. there are no insurance policies that specifically cover tenant property.

C. their personal belongings are not covered by their landlords insurance policies.

Which of the following is one of the landlord's rights under most residential leases? A. Enter the tenant's property at any time without notice. B. Raise the rent at any time during the lease term after giving due notice. C. Retake possession of the premises at any time after giving due notice. D. Expect prompt payment of rent.

D. Expect prompt payment of rent.

Which of the following statements about management compensation is false? A. It must be negotiated between the agent and the principle. B. It may be a commission based on rent. C. It may be a flat fee based on square footage. D. It is a standardized amount established by the Universal Landlord and Tenant Act.

D. It is a standardized amount established by the Universal Landlord and Tenant Act.

Which of the following describes a net lease? A. The tenant pays a fixed rent, and the landlord pays all operating expenses. B. The tenant pays a base rent plus an amount based on income generated in the leased space. C. The tenant pays a rent that increases at specified times over the lease term. D. The tenant pays a base rent plus some or all of the operating expenses.

D. The tenant pays a base rent plus some or all of the operating expenses.

One of a manager's common environmental responsibilities is A. remodeling the building every year to keep up with changing standards. B. ensuring that the building is properly waterproofed. C. seeing that all hazardous materials are hidden from view. D. arranging for environmental audits.

D. arranging for environmental audits.