Property Management Unit 3

1: The principal-agent relationship in property management is created by: (a) management agreement. (b) listing agreement. (c) employment contract. (d) equitable title.

(a) management agreement.

5: Mixing owners funds with personal funds is an illegal activity called: (a) redlining. (b) commingling. (c) steering. (d) conversion.

(b) commingling.

4: If a property manager were negotiating with a property owner to manage a large property, the term of the management contract should be at LEAST: (a) six months. (b) one year. (c) three years. (d) five years.

(b) one year.

10: To maintain an on-going satisfactory relationship with the owner, the manager should: (a) send the owner reports only upon written request from the owner. (b) send monthly earnings report and a personal letter. (c) contact the owner only in an emergency. (d) send quarterly written reports and monthly phone calls. Answers

(b) send monthly earnings report and a personal letter.

9: Security deposit balances and accounting are an essential part of a property takeover. How should the new property manager handle security deposits? (a) Follow the owner's instructions (b) Handle the deposits in the same manner as the previous manager (c) Adhere to state laws (d) Create a new system

(c) Adhere to state laws

3: The relationship that a property manager, who is an agent, has with the owner, who is a principal, is: (a) confidential. (b) ethical. (c) fiduciary. (d) power of attorney.

(c) fiduciary.

6: How are management fees determined? (a) Agreement of participating property managers (b) Average of local rates charged (c) Set by state law (d) Negotiated between the parties

(d) Negotiated between the parties

2: A property manager who is authorized to obligate the principal in a contractual manner is a: (a) trustee. (b) trustor. (c) special agent. (d) general agent.

(d) general agent.

8: To insure a smooth takeover of a property, all of the following should be done EXCEPT: (a) owner should provide all necessary documents. (b) manager should use a takeover checklist. (c) manager should personally inspect the entire property. (d) offer the tenants an opportunity to terminate their leases.

(d) offer the tenants an opportunity to terminate their leases.

7: Which type of fee is a wonderful incentive when the owner wants the manager to generate more income? (a) Per-unit fee (b) Flat fee (c) Percentage fee d) Cost plus fee

(c) Percentage fee