Chapter 8: Real Estate Property Management

Question 1

Periodic Tenancy

Answer 1

The estate from year to year. The period length can be a week, a month, or any other negotiated time. The key feature of a periodic lease is that is automatically renews itself for another period at the end of each period unless one party gives notice to the other.

Question 2

Estate At Will

Answer 2

Duration of the Term is completely unknown at the time the estate is created because either party may terminate the lease by giving notice to the other party. The estate is open-ended.

Question 3

Estate at Sufferance

Answer 3

A tenant who is originally in lawful possession of another’s property but refuses to leave after his right to possession terminates. During this period the occupier is called a tenant at sufferance.

Question 4

Competent Property Management

Answer 4

Provides a comprehensive, orderly program on a continuing basis, analyzing all investment aspects of a property to ensure a financially successful project.

Question 5

Resident Manager

Answer 5

Lives on the premises and is a salaried employee of the owner. Not required to have a real estate license if employed directly by owner.

Question 6

Management Proposal

Answer 6

Setting forth the commitments of the manager if employed by the owner. This is one of the first duties of a prospective property manager.

Question 7

Management Agreement

Answer 7

The owner-manager relationship is formalized by (this). This contract creates an agency relationship in which the owner is the principal and the property manager is the agent.

Question 8

Risk Management

Answer 8

Embodies the concern for controlling and limiting risk in property ownership.

Question 9

Preventative Maintenance

Answer 9

Requires a periodic check of mechanical equipment on the premises to minimize excessive wear and tear from improper operation. An example is changing the air filters in air conditioners and furnaces.

Question 10

Corrective Maintenance

Answer 10

The work performed to fix a non-functioning item that a tenant has reported. An example is repairing a leaky faucet.

Question 11

Capital Expenses

Answer 11

Expenses that include expenditures required to maintain a building and future capital improvements.

Question 12

Operating Budget

Answer 12

An annual budget and includes only the items of income and expense expected for week-to-week operation.

Question 13

Capital Reserve Budget

Answer 13

Called a replacement reserve, is a projected budget over the economic life of the improvements of the property. This budget is variable expenses such as repairs, decorating, remodeling, and capital improvements.

Question 14

Variable Expense

Answer 14

One that is not always predictable and is subject to the needs of the property at any given time.

Question 15

Stabilized Budget

Answer 15

A forecast of income and expenses as may be reasonably projected over a short term, typically five years.

Question 16

Fixed Expenses

Answer 16

Costs that do not fluctuate with the operating level of the complex. They will remain the same whether the occupancy is 95 percent or 50 percent.

Question 17

Property Management Report

Answer 17

When the property manager provides a periodic (usually monthly) accounting of all funds received and disbursed.

Question 18

Lessor

Answer 18

The owner of the property is called the landlord or (this).

Question 19

Lessee

Answer 19

The tenant placed in possession.

Question 20

Actual Eviction

Answer 20

When the owner, without the aid or control of the court system, removes the tenant from the premises. This is different from Eviction. This is wrongful use of self help.

Question 21

Constructive Eviction

Answer 21

Occurs when the tenant is prevented from the quiet enjoyment of the premises.

Question 22

Anchor Store

Answer 22

A well-known commercial retail business, such as a national chain store or regional department store, placed in a shopping center to generate the most customers for all stores in the shopping center.

Question 23

Planned Unit Development

Answer 23

A neighborhood of cluster housing or other configurations with supporting business establishments.

Question 24

Property Manager

Answer 24

Manages property for owners as an agent. As an agent the property manager is a fiduciary and owes all the obligations imposed by the law of agency to each owner-principal.