6.0 Property Management Real Estate License Practice Quiz

• A. the owner's agent, owing fiduciary duties to the owner
• B. the tenant's representative in all disputes with the landlord
• C. an independent contractor with no agency relationship to either party
• D. a neutral arbitrator between the owner and the tenants

A property manager acts as the owner's agent and owes fiduciary duties, loyalty, care, disclosure, and accounting, to the owner as principal.

• A. calculate the depreciation schedule for the owner's income tax return
• B. determine competitive market rents and vacancy trends to set optimal rental rates
• C. negotiate the property's assessed value with the county tax assessor
• D. prepare the annual capital expenditure budget for major renovations

A rental market analysis surveys competing properties' rents, vacancy rates, and amenities to help the manager set competitive rental rates that maximize occupancy and income.

• A. a flat annual fee paid regardless of occupancy or rental income
• B. a percentage of gross rents collected, often ranging from 4% to 12%
• C. an hourly rate billed for each maintenance call responded to by the manager
• D. a share of the property's equity appreciation at the end of each year

Most residential property management agreements compensate the manager with a percentage of gross rents collected, aligning the manager's financial interest with the owner's income.

• A. after legitimate expenses and reserves have been deducted and an accounting rendered
• B. only after the property has been sold and all tenants have vacated
• C. at any time the manager chooses, since the manager controls the account
• D. exclusively by wire transfer to a bank account in the owner's home state

A property manager disburses net rental proceeds to the owner after deducting authorized expenses, management fees, and reserves, and then provides the owner with a detailed accounting statement.

• A. allow the manager to purchase additional investment properties on the owner's behalf
• B. guarantee that all tenants will pay rent on time throughout the management period
• C. exempt the manager from all liability for tenant actions during the management term
• D. prevent disputes about what actions the manager may take without seeking owner approval

Clearly defining the scope of authority prevents misunderstandings and disputes between the owner and manager over what decisions require owner approval.

• A. only the base rent, with all expenses paid by the landlord
• B. base rent plus the landlord's mortgage payment on the building
• C. base rent plus property taxes, building insurance, and maintenance costs
• D. a percentage of gross sales in addition to a fixed base rent

In a triple-net (NNN) lease, the three 'nets' are property taxes, building insurance, and maintenance/operating costs, which the tenant pays in addition to the base rent.

• A. proceed with the repair immediately because tenant safety overrides all contractual limits
• B. refuse to authorize any repair because the quote exceeds the manager's authority
• C. reduce the scope of the repair to bring the cost under $500 without notifying the owner
• D. contact the owner for approval before authorizing the repair, given that the cost exceeds the contractual limit

When a repair exceeds the manager's authorized spending limit, the manager must obtain the owner's approval before proceeding, except in a genuine emergency.

• A. permitted to do so if the owner has signed a waiver of the trust account requirement
• B. following standard practice when the portfolio has fewer than five units
• C. complying with state law as long as a separate ledger is maintained
• D. in violation of the duty of accounting and likely in breach of license law

Commingling client funds with a licensee's personal funds is a serious breach of the duty of accounting and typically a license law violation subject to discipline.