CH 31 PROPERTY MANAGEMENT
QUESTIONS AND ANSWERS WITH
VERIFIED SOLUTIONS 2024
property management - ANSWER leasing or renting, or offering to lease or rent, real property of others
for a fee, commission, compensation, or other valuable consideration pursuant to a property
management employment contract. Property management is a growing field, and there is a demand for
properly trained and licensed professionals; therefore, many real estate licensees are choosing to make
property management their specialty.
Who Is a Property Manager? - ANSWER a person hired by a real property owner to administer, market,
and maintain property, especially rental property.
However, property management goes beyond collecting rent and leasing apartments or office buildings.
A property manager is considered the custodian and supervisor of an owner's property.
Unlicensed personnel are able to interact with tenants__________________________________for
example, to collect rents, arrange for maintenance, etc., but they cannot negotiate a lease and sign it.
This lease would likely be unenforceable. - ANSWER after a unit has been leased,
For those wanting to specialize in a property management career,
___________________________________ - ANSWER a real estate license is a must.
Most states require anyone who takes a listing, publishes a listing, negotiates a lease, and/or interacts
with potential clients to have a real estate license. Unlicensed personnel are able to interact with tenants
after a unit has been leased, for example, to collect rents, arrange for maintenance, etc., but they cannot
negotiate a lease and sign it. This lease would likely be unenforceable.
Property managers need a diverse set of skills, regardless of the type of property they manage. For
example, anyone choosing to specialize in the property management field must: - ANSWER Understand
leasing regulations to collect rents.
Possess basic construction knowledge to ensure routine maintenance is performed.
Know how to develop a management proposal.
Create and manage reports and budgets for property owners.
,Communicate well.
Understand basic marketing principles.
Both a property manager and a property management company have an
___________________________ with a property owner, who is the principal. - ANSWER agency
relationship
As an agent, a property manager owes the property owner the same fiduciary duties of obedience,
loyalty, disclosure, confidentiality, accountability, and reasonable care owed to all clients. Such an agent
is a person in a position of trust, held by law to high standards of good faith and loyalty.
Property managers are typically authorized to handle which of these tasks? Select all correct responses.
Choose all that apply.
collecting rents
evicting tenants
leasing units
security deposit returns - ANSWER
(T/F) A property manager would be considered a special agent of the property owner. - ANSWER False
A property manager would more likely be considered a general agent of the property owner because of
the broad range of duties performed.
One of the most important jobs a property manager has is to understand the goals of the owner. An
effective property manager is a true asset for a property owner, maximizing an owner's income and
minimizing expenses. These are a property manager's main jobs: - ANSWER Fulfill the goals and
objectives of the owners
Maintain or increase the property's value
Create income and manage expenditures for the owners
Reduce the property owner's risk
,The property manager must also develop and maintain a plan for the maintenance and rehabilitation of
the building so it produces ______________________________________________ for as long a period
of time as possible. - ANSWER the greatest amount of rental income
The property management agreement (PMA)
AKA
management agreement or the property management employee contract, - ANSWER a written
agreement that creates an agency relationship between the property owner/investor and the licensed
brokerage that employs the property manager. This agreement details the duties, responsibilities,
allocation of costs, and compensation of the property manager. The management agreement should be
signed by both parties.
A critical component of the management agreement is the detailed description of the property
manager's authority and any limitations related to tasks, such as the following: - ANSWER Selecting
tenants
Signing leases
Setting and collecting rents
Handling security deposits
Initiating eviction procedures as necessary
Hiring staff and outside vendors
Paying expenses related to the operating and maintenance of the building
Any _________to the property manager's authority must be indicated in the management agreement. -
ANSWER limitations
For example, some owners limit the property manager's authority for signing leases to a specific time
frame or amount.
Whenever the duties and powers of a property manager change, the property management agreement
must be ____________. It's not sufficient to get oral or written permission from the owner. - ANSWER
amended
A management agreement should contain the following elements: - ANSWER Description of the
Property.
, Terms of Agreement
Management Fee.
Habitability Repairs Policy.
Accounting Responsibilities and Reports
Management Agreement Termination.
Description of the Property. - ANSWER An exact address must be part of the agreement and sometimes a
full legal description is necessary. It is also important to define the perimeters of the property, including
any ancillary buildings, structures, or other amenities. For example, is the landscaping out front or the
gift shop in the lobby included in the management responsibilities? If not, those exclusions need to be
written into the contract.
Terms of Agreement. - ANSWER The time of the agreement varies from property to property and from
owner to owner, and is negotiated between the property manager and owner. One year is a common
term. If the owner and property manager are satisfied with the relationship after one year, a longer term
can be negotiated, and the contract can be renewed. It's important to note that in many states, property
management agreements must provide for a definitive expiration date. Failure to include such a
provision in the agreement could result in the loss of license.
Management Fee. - ANSWER Since so many factors can affect the profitability of a property, there is not
a single hard-and-fast way to compute management fees; much depends on the level of services being
offered by the property manager. And of course, just as rents are dictated by the market, so too are
property management fees. Property managers should determine both the direct and indirect costs
associated with their job. They can use this information to arrive at an agreement with the property
owner on the management fee they charge. Management fees may be fixed (flat) or a percentage. A flat
fee is a specific fee paid out at specific increments. It's more common to pay a percentage fee that is
based on the operation's gross collectible income. The percentage fee could also be a fixed percentage of
rent or a bonus when a certain number of leases are signed.
flat fee - ANSWER (management fee) specific fee paid out at specific increments
percentage fee - ANSWER more common to pay
management fee that is based on the operation's gross collectible income. The percentage fee could also
be a fixed percentage of rent or a bonus when a certain number of leases are signed.
QUESTIONS AND ANSWERS WITH
VERIFIED SOLUTIONS 2024
property management - ANSWER leasing or renting, or offering to lease or rent, real property of others
for a fee, commission, compensation, or other valuable consideration pursuant to a property
management employment contract. Property management is a growing field, and there is a demand for
properly trained and licensed professionals; therefore, many real estate licensees are choosing to make
property management their specialty.
Who Is a Property Manager? - ANSWER a person hired by a real property owner to administer, market,
and maintain property, especially rental property.
However, property management goes beyond collecting rent and leasing apartments or office buildings.
A property manager is considered the custodian and supervisor of an owner's property.
Unlicensed personnel are able to interact with tenants__________________________________for
example, to collect rents, arrange for maintenance, etc., but they cannot negotiate a lease and sign it.
This lease would likely be unenforceable. - ANSWER after a unit has been leased,
For those wanting to specialize in a property management career,
___________________________________ - ANSWER a real estate license is a must.
Most states require anyone who takes a listing, publishes a listing, negotiates a lease, and/or interacts
with potential clients to have a real estate license. Unlicensed personnel are able to interact with tenants
after a unit has been leased, for example, to collect rents, arrange for maintenance, etc., but they cannot
negotiate a lease and sign it. This lease would likely be unenforceable.
Property managers need a diverse set of skills, regardless of the type of property they manage. For
example, anyone choosing to specialize in the property management field must: - ANSWER Understand
leasing regulations to collect rents.
Possess basic construction knowledge to ensure routine maintenance is performed.
Know how to develop a management proposal.
Create and manage reports and budgets for property owners.
,Communicate well.
Understand basic marketing principles.
Both a property manager and a property management company have an
___________________________ with a property owner, who is the principal. - ANSWER agency
relationship
As an agent, a property manager owes the property owner the same fiduciary duties of obedience,
loyalty, disclosure, confidentiality, accountability, and reasonable care owed to all clients. Such an agent
is a person in a position of trust, held by law to high standards of good faith and loyalty.
Property managers are typically authorized to handle which of these tasks? Select all correct responses.
Choose all that apply.
collecting rents
evicting tenants
leasing units
security deposit returns - ANSWER
(T/F) A property manager would be considered a special agent of the property owner. - ANSWER False
A property manager would more likely be considered a general agent of the property owner because of
the broad range of duties performed.
One of the most important jobs a property manager has is to understand the goals of the owner. An
effective property manager is a true asset for a property owner, maximizing an owner's income and
minimizing expenses. These are a property manager's main jobs: - ANSWER Fulfill the goals and
objectives of the owners
Maintain or increase the property's value
Create income and manage expenditures for the owners
Reduce the property owner's risk
,The property manager must also develop and maintain a plan for the maintenance and rehabilitation of
the building so it produces ______________________________________________ for as long a period
of time as possible. - ANSWER the greatest amount of rental income
The property management agreement (PMA)
AKA
management agreement or the property management employee contract, - ANSWER a written
agreement that creates an agency relationship between the property owner/investor and the licensed
brokerage that employs the property manager. This agreement details the duties, responsibilities,
allocation of costs, and compensation of the property manager. The management agreement should be
signed by both parties.
A critical component of the management agreement is the detailed description of the property
manager's authority and any limitations related to tasks, such as the following: - ANSWER Selecting
tenants
Signing leases
Setting and collecting rents
Handling security deposits
Initiating eviction procedures as necessary
Hiring staff and outside vendors
Paying expenses related to the operating and maintenance of the building
Any _________to the property manager's authority must be indicated in the management agreement. -
ANSWER limitations
For example, some owners limit the property manager's authority for signing leases to a specific time
frame or amount.
Whenever the duties and powers of a property manager change, the property management agreement
must be ____________. It's not sufficient to get oral or written permission from the owner. - ANSWER
amended
A management agreement should contain the following elements: - ANSWER Description of the
Property.
, Terms of Agreement
Management Fee.
Habitability Repairs Policy.
Accounting Responsibilities and Reports
Management Agreement Termination.
Description of the Property. - ANSWER An exact address must be part of the agreement and sometimes a
full legal description is necessary. It is also important to define the perimeters of the property, including
any ancillary buildings, structures, or other amenities. For example, is the landscaping out front or the
gift shop in the lobby included in the management responsibilities? If not, those exclusions need to be
written into the contract.
Terms of Agreement. - ANSWER The time of the agreement varies from property to property and from
owner to owner, and is negotiated between the property manager and owner. One year is a common
term. If the owner and property manager are satisfied with the relationship after one year, a longer term
can be negotiated, and the contract can be renewed. It's important to note that in many states, property
management agreements must provide for a definitive expiration date. Failure to include such a
provision in the agreement could result in the loss of license.
Management Fee. - ANSWER Since so many factors can affect the profitability of a property, there is not
a single hard-and-fast way to compute management fees; much depends on the level of services being
offered by the property manager. And of course, just as rents are dictated by the market, so too are
property management fees. Property managers should determine both the direct and indirect costs
associated with their job. They can use this information to arrive at an agreement with the property
owner on the management fee they charge. Management fees may be fixed (flat) or a percentage. A flat
fee is a specific fee paid out at specific increments. It's more common to pay a percentage fee that is
based on the operation's gross collectible income. The percentage fee could also be a fixed percentage of
rent or a bonus when a certain number of leases are signed.
flat fee - ANSWER (management fee) specific fee paid out at specific increments
percentage fee - ANSWER more common to pay
management fee that is based on the operation's gross collectible income. The percentage fee could also
be a fixed percentage of rent or a bonus when a certain number of leases are signed.
