Chapter 15 Real Estate Management

A property manager is paid 8% of all collected rents each month from a 20-unit apartment building. There are 5 one-bedroom units that rent for $500, 10 two-bedroom units that rent for $650 and 5 three-bedroom units that rent for $800. If the units are fully leased and the property manager collects for all the units except two of the two-bedroom units, how much is the management fee for this month? A) $912 B) $936 C) $1,040 D) $1,950

$936 (The property manager collected the following rents: 5 x $500 = $2,500; 8 x $650 = $5,200 (because two of these units were not collected); 5 x $800 = $4,000. The rents total $2,500 + $5,200 + $4,000 = $11,700. $11,700 x 8% = $936.)

Property managers under NC law are required to keep all property records for how long? A) 1 year B) 3 years C) 5 years D) 10 years

3 years (All licensees, brokerages and firms in NC are required to keep records for a three year period. The three year period is from the date of closing, lease termination or termination of the employment, whichever occurs last.)

In regard to the transfer and retention of risk, which of the following statements is INCORRECT regarding property management? A) a low deductible transfers risk and a high deductible retains risk B) risks can be controlled by installing sprinklers and fire doors and taking other preventative measures C) a low deductible retains risk and a high deductible transfers risk D) removing a swimming pool avoids risk

a low deductible retains risk and a high deductible transfers risk ( A low deductible transfers risk from the owner to the insurance company. A high deductible results in the owner retaining the risk.)

Property managers are legally permitted to perform all of the following functions, EXCEPT: A) create concessions, discounts and inducements for occupancy B) collect and review competitive bids for improvements or repairs C) perform a market analysis of rents for the owner D) advise the property owner on the tax consequences of their investment

advise the property owner on the tax consequences of their investment (Property managers do not give or provide tax or investment advice.)

A real estate broker acting as an owner's property manager may: A) profit from private contracts at the expense of the owner B) manage the client's property in a manner most advantageous to the broker C) be held accountable for complete and accurate trust account records D) hold a provisional broker license so long as he is the principal broker of the management firm

be held accountable for complete and accurate trust account records (Property management firms are required to keep accurate and complete records.)

Premier Properties is an out-of-state apartment complex company. Premier has been engaged in the building of rental complexes in various states and has decided to erect a complex in North Carolina. The company hires a full-time employee who is located on site, receives a regular salary and is also compensated with a free unit provided to them by Premier. The company has asked this person to manage the entire property and perform all of the duties of a property manager, including the handling of all rent and security deposits. Under North Carolina law, this person: A) must be a a licensed broker B) has to be affiliated with a property management entity with a supervising BIC C) does not need to be licensed D) may act as a manager, but must hire NC real estate licensees to handle the money

does not need to be licensed (A person or entity does not have to be licensed to manage their own property. A company's own property includes property that is handled or managed by the company's own W2 salaried employees. These people do not need to be licensed.)

Functions of the property manager include all of the following, EXCEPT: A) producing the best possible net operating income for the owner B) preservation and maintenance of the property C) carrying out a fiduciary relationship to the owner D) fulfilling fiduciary duties and obligations to the tenants

fulfilling fiduciary duties and obligations to the tenants (A property manager does not have any fiduciary duties or obligations to the tenants. The property manager's client is the owner. They owe the owner fiduciary duties, not the tenants.)

A tenant makes a rental payment in cash. When is the property management firm required to deposit the cash in the escrow account? A) no later than three banking days after receipt B) no later than 72 hours after receipt C) immediately, but no later than three banking days after receipt D) no later than 72 hours after receipt but not counting holidays

immediately but no later than three banking days after receipt (All monies received by brokerages must be deposited within 3 banking days.)

Because of the complexity of the laws that affect today's properties, property managers are required to have knowledge in all of the following areas, EXCEPT: A)environmental hazards B) accessible construction C) nondiscriminatory practices D) investment securities laws

investment securities law (Property managers are not investment consultants and are not expected to be investment experts.)

The property manager's chief concern should be that the property: A) is seldom vacant because it is consistently rented at the lowest rent that produces a profit B) is managed to achieve the highest rate of return possible for the owner's investment C) manager's time is maximized in management of the property D) exhibits the proper amount of the owner's pride of ownership

is managed to achieve the highest rate of return possible for the owner's investment (This is the primary obligation of a property manager: to achieve the highest rate of return consistent with the property owner's investment objectives.)

Which of the following actions is a property manager permitted to perform? l. Prepare depreciation schedules for the property owner. ll. Make capital improvements to the property for the property owner when the property manager deems them necessary for the property owner. A) l only B) ll only C) Both l and ll D) Neither l nor ll

neither I nor II

All of the following are important functions of a property manager, EXCEPT: A) supervising the maintenance of the property B) protecting the physical integrity of the property C) meeting the functional requirements of the tenants D) preparing the owner's income tax returns

preparing the owner's income tax returns (All of the other answers are proper roles for a property manager. They would not be involved in the providing of tax advice or preparing tax returns for the owner.)

The type of maintenance that is most often overlooked is: A) corrective maintenance B) repairs C) routine maintenance D) preventative maintenance

preventative maintenance (Preventative maintenance includes activities and service that prevent future problems and expenses for the property owner.)

Unlicensed assistants in a property management office may do all of the following, EXCEPT: A) fill in the blanks on preprinted forms and leases B) show rental properties C) receive commissions based on the properties they handle D) collect and handle rent monies

receive commissions based on the properties they handle (In order to be a unlicensed assistant these personnel cannot be paid based on commissions and cannot be independent contractors. They must be salaried W2 employees of the property management firm.)

A property manager's primary obligation is to: A)the tenants B) the owner C) the banker D) government authorities

the owner (This is because the formal agency agreement exists between the owner and the property manager. This agency relationship imposes fiduciary obligations on the property manager.)