Property Management Flashcards
(452 cards)
1
Q
Property management functions fall into four general categories:
A
- Marketing and Financial
- Tenant and Occupancy
- Facility Management
- Administration & Risk Management
2
Q
The property manager’s job is to maximize the owner’s return on investment by:
A
- Creating an effective marketing campaign
- Analyzing market data to help establish rent rates
- Manage tenants and tenant relations
- Manage the structures and outdoor areas
- Budget capital expenditures
- Keep records
- Manage risks
3
Q
The property manager has four primary functions:
A
- Accomplish the owner’s objectives
- Maintain the physical integrity of the property
- Develop a plan for building adequate reserves for replacement
- Establish a budget and maintain fiscal control
4
Q
Property zoning laws control:
A
the use of land, dictating what property owners can build on a property and how they can use those structures.
5
Q
The type of control that property zoning laws can have on a piece of property include:
A
- The size of lots for proposed subdivisions
- The type of structures that go on those lots, such as a commercial structure or a residential structure
- The use of the land, whether industrial or agricultural
- The external appearance and style of the structures erected
- The density of the property
6
Q
True or False: Property codes can be created by government agencies as well as community organizations.
A
True
7
Q
Texas property codes are organized as:
A
16 titles, and each title contains a varying number of chapters. Within the chapters are specific sections that explain different aspects of the laws.
8
Q
What does BOMA stand for?
A
The Building Owners and Managers Association International
9
Q
IREM Designation: Certified Property Manager (CPM) criteria:
A
Must be a candidate for at least a year;
Currently be in the real estate management business;
Hold a real estate license or certify that you are not required to hold one;
Be a member or affiliated with a local board of Realtors
Be approved by your local IREM chapter;
Subscribe to the Code of Ethics of the Certified Property Managers;
Be current with all national and chapter service fees;
Have at least a high school diploma.
10
Q
IREM Designation: Accredited Residential Manager (ARM) designation needs:
A
Submit letters of recommendation
Pass an examination;
Meet certain experience criteria
11
Q
IREM Designation: Accredited Management Organization (AMO) criteria:
A
Given to firms not individuals
Firm must have at least one person with CPM designation in management
That person must complete an IREM course called “Managing the Management Company.”
12
Q
BOMA Designation: Real Property Administrator (RPA) criteria:
A
Complete courses:
Design, Operation and Maintenance of Building Systems, Part I
Design, Operation and Maintenance of Building Systems, Part II
Property Manager’s Guide to Commercial Real Estate Law
Real Estate Investment and Finance
Environmental Health and Safety Issues
Ethics is Good Business-Short Course
- and 2 electives -
Risk Management and Insurance
Fundamentals of Real Property Administration
Leasing and Marketing for Property Managers
Asset Management
13
Q
BOMA Designation: Facilities Management Administrator (FMA)
A
requires completion of seven required courses and one ethics course
14
Q
ICSC Designations: Certified Leasing Specialist criteria:
A
meet certain experience and educational requirements pass a written CLS exam
full time experience in shopping center leasing for at least four out of the last six years
completion of ICSC Leasing I and II certificate courses as well as ICSC Leasing II Advanced Certificate Program
15
Q
ICSC Designations: Certified Shopping Center Manager (CSM) criteria
A
Must have had four years experience as a shopping center manager in the areas of maintenance, leasing, marketing and promotions
Must pass a six-hour examination
16
Q
ICSC Designations: Accredited Shopping Center Manager (ASM)
A
This designation is for international members outside of the United States
17
Q
ICSC Designations: Accredited Marketing Director (AMD) criteria:
A
Must have worked as a shopping center marketing director for four years or, as a shopping center manager, have handled the marketing director function for four years.
Must pass a four-hour exam
18
Q
ICSC Designations: Senior Level Accreditation
A
This accreditation is only available to those who have already achieved the SCSM or SCMD designations and have held them for three years.
19
Q
A planned unit development, or (PUD), is a
A
type of building development with a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained development or subdivision.
20
Q
A condominium is a
A
building in which each owner has a percentage ownership of the entire property.
21
Q
A housing cooperative forms when
A
people join with each other on a democratic basis to own or control the housing and/or related community facilities in which they live. Usually they do this by forming a not-for-profit cooperative corporation.
22
Q
Subsidized housing involves
A
renting units for a reduced rent rate while a rent subsidy is paid by the government on behalf of a tenant to help the tenant pay the rent.
23
Q
Subsidized housing is housing that is constructed under a
A
special low interest loan program
24
Q
“investment tax credit” program
A
the developer obtains investment tax credits from the state. The developer then sells the credits to a lending institution, which provides the equity for the project.
25
With subsidized housing, the developer must provide
a certain percentage of the units at below-market rents. Not all units must be below-market, but a percentage of them must be.
26
A time share is
an interest in a unit where the owner of the interest has the right to use a unit during a designated period of time during the year.
27
A time share interest is
either a fee simple (ownership) interest or a leasehold interest over the course of a certain number of years.
28
Economics refers to
the study of the production, consumption, and transfer of wealth.
29
Business economics is
a field of study that examines economic theory to analyze business enterprises.
30
Gross domestic product (GDP) is a
reliable indicator of the economic trends. It measures the value of goods and services produced in the U.S. during a given time period.
31
Two distinct metrics make up the employment forecast
the number of jobs created and the number of jobs lost compared to the population growth.
32
Inflation is
the generally rising price of goods and services detailed in the Consumer Price Index (CPI).
33
Supply is
the quantity of goods or services that can be sold at a given price.
34
In the real estate market, supply is made up of
vacant land, residential properties, and commercial properties.
35
Demand refers to
the amount of a product or service desired by buyers.
36
There are two factors that impact how supply and demand work in regards to real estate:
Uniqueness – this means that no two properties are exactly alike
Immobility – property cannot be relocated to accommodate changes in supply and demand
37
Supply is affected by:
Labor force, construction, and material costs
Government controls and financial policies
Local government factors
38
The Federal Reserve Board (the Fed) is
responsible for determining interest rates.
39
Demand is affected by:
Population
Demographics
Employment and wage levels
40
The principle of substitution is:
When supply outstrips demand, values drop, creating a buyer’s market. A home is only worth what a buyer is willing to pay. Often a homeowner will not want to sell a home for less than the price he paid. If the current market does not support that price, buyers will not be willing to pay more for that home then they would pay for one with similar features and amenities in a similar location.
41
Seller’s markets are sometimes called “renter’s markets” because
potential buyers need to keep renting until they can save up a higher down payment and compete with other buyers in the market.
42
The property management plan should be designed to address the owner's goals such as:
```
Property analysis
Tenant analysis
Physical structure
Staffing requirements
Cost savings
Market analysis
Cash flow
Budgeting
```
43
In estimating potential gross rent, you will need to consider a number of contributing factors, including:
Market rent in comparable properties in the trade area
Current and anticipated market conditions
Future rental rates - i.e., have rents been falling or rising in the area?
Occupancy levels of comparable properties
44
One of the reasons that investing in rental properties is so attractive is that
landlords can shelter their income from taxation by depreciating the building and improvements.
45
Increasing the attractiveness of rental properties is the fact that
capital gains tax rates have been reduced to 15 percent.
46
Rent is driven by the market and the market is driven by a number of factors:
supply and demand, interest rates, location of the property, condition of the property, and general economic stability.
47
Expenses used to calculate the property management expenses of the property are:
mortgage payment, insurance, utilities, maintenance, repairs, office assistance, supplies, property taxes and any other expense that can be anticipated
48
Components of successful marketing plan are:
```
The Mission Statement
Analysis of the Company's Place in the Marketplace
Marketing Strategy
Budget
Performance Evaluation
```
49
Where Do Property Managers Find Clients?
```
Condominium associations
Townhouse communities
Investment institutions
Developers
REO properties
Resort properties
Single-family residential rentals
```
50
The Real Estate Journal or the Business Journal's real estate section
will have the most current developments in the local real estate industry.
51
Marketing to Tenants
Referrals
Hang out with prospective tenants
Rental agencies
Welcome packets
52
There are 2 real estate advertising strategies:
Institutional advertising is used to create a favorable image of the real estate company in the public's eye.
Specific advertising, also called operational advertising, is used to describe a particular piece of property or a tract of homes.
53
Three ways to attract buyers:
Attention Getters - ads that grab the readers attention
Desirability - The ad creates desire by appealing to the senses and emotions.
Action - the ads should move readers to take action
54
There are six basic elements of advertising:
```
Choosing the right market
Knowing when to advertise
Knowing the profile of the buyers in that market
Advertising the right property
Using the right media
Using effective advertising techniques
```
55
In determining the media choice, the agent or broker must consider the following:
What is the target audience you are trying to reach?
What message do you wish to convey?
What is your budget?
56
Texas Real Estate Licensing Act (TRELA) specifically states that:
the Texas Real Estate Commission will not regulate real estate advertising, except to prohibit a false, misleading, or deceptive practice by the person.
57
Truth In Lending Act, or Regulation Z, requires
- disclosure of all costs associated with closing a sale and/or mortgage.
- it makes bait-and-switch advertising a federal offense
58
The Civil Rights Act of 1968
prohibits discriminatory advertising of any real property.
59
Discriminatory advertising includes
advertising any preference, limitation, or discrimination, overt or implied, because of race, color, national origin, religion, gender, handicap or familial status.
60
NOI
net operating income = income minus expenses
61
Property management functions fall into four general categories:
Marketing and Financial
Tenant and Occupancy
Facility Management
Administration & Risk Management
62
Uniform Electronic Transaction Act (1999)
made digital signing possible and which states had the option to adopt.
63
Uniform Electronic Transaction Act (1999) states that
any physical action by someone on the Internet is a legal binding contract
64
The Business Plan Components
```
Executive Summary
Market Research
Business Structure
Marketing & Sales
Objectives & Plans
The Financial Plans
```
65
triple net" lease
means the landlord will pass through to the tenants of the building the landlord's insurance, taxes and operating expenses for the common area.
66
common area maintenance (CAM) provisions
operating costs of common areas that may be passed on to tenant unknowingly
67
Budget Variance Report contains these categories:
Rental Income
Expense Recoveries
Other Revenue
Variance
68
Balance Sheet common entry items:
Assets
| Liabilities
69
Tenant Rent Roll consists of
```
Tenant name
Suite or apartment number
Square footage
Lease expiration date
Rental amount (per square foot or monthly)
Graduated rental increases
```
70
The cash flow statement
breaks down income and expenses by category, but not by tenant, as with the General Ledger.
71
The General Ledger
is an active, live document in that it is always in motion. It records every transaction from deposit to withdrawal to interest and fee additions.
72
This inspection report is meant to be done
on a quarterly basis on most properties, with monthly updates that are much less detailed.
73
A demographic analysis of the market area should include:
```
Population
Age
Income levels
Education levels
Family make-up (number of houses with children)
Ethnicity
Home ownership (vs. rental)
Average home price
Employment data (white collar, blue collar)
```
74
Operating Expenses includes:
all utilities, janitorial services, repairs and maintenance.
75
Return on Investment: (ROI)
Owners of property will likely perform an analysis of the improvement to decide whether the improvement will be a good return on their investment.
76
Variance:
shown as a dollar amount, positive or negative, and as a percentage over or under budget.
77
What is an escalation clause?
A lease clause that allows for set increases in rent
78
There are two different reasons to perform an income analysis:
One is to report the actual income for a property. The other is to do budget projections. One is based on history; the other on estimates.
79
Projected Income and Expense Analysis basic elements include:
Potential gross rent (contract rent)
Minus vacancy and credit loss
Plus additional secondary income, if any
Equals effective gross rent
80
How is effective gross rent calculated?
Potential gross rent – vacancy and credit loss + additional secondary income = effective gross rent.
81
Depreciation is basically
a loss of value for any cause.
82
Physical deterioration (Inherent)
Something within the property itself causes a loss in value (such as normal wear and tear, deferred maintenance, aging of the buildings, or even negligence by the tenant)
83
Functional Obsolescence (Inherent)
can result from certain features being outdated or obsolete, poor architectural design or construction style, or other changes that cause the property to be less useful than it once was, or than other properties in the market area.
84
Economic Obsolescence (Extraneous)
Something outside the property causes a loss in value.
85
An Employer Identification Number (EIN)
is a nine-digit number assigned by the IRS to businesses or entities that report taxes, whether or not they employ others. It is used to identify the tax accounts of those businesses or employers. It is comparable to a Social Security Number for individual taxpayers.
86
A sole proprietorship is
an unincorporated business that is owned by one individual. It is the simplest form of business ownership. The business has no existence apart from the individual owner. Its assets and liabilities are not separate from those of the owner. The income and expenses of the business are included on the owner's individual tax return.
87
A corporation is defined as
a legal entity or structure created under the authority of the laws of an individual state, where a person or group of persons become shareholders.
88
A partnership is
the relationship existing between two or more persons who join together to carry on a trade or business. Each partner contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
89
An estate is
a legal entity created as the result of a person's death and consists of real and/or personal property of the deceased person. The estate exists until the final distribution of the assets is made to the heirs and other beneficiaries.
90
A trust is
an arrangement through which trustees take title to property for the purpose of protecting or conserving it for the beneficiaries.
91
Limited Liability Company (LLC)
is an entity formed under state or foreign law by filing articles of organization as an LLC
92
The W-4 form
allows the taxpayer (the employee) to designate how many dependents he or she wishes to claim, as well as the filing status.
93
Form I-9
is to be completed jointly by the employee and the employer to certify that all new employees are authorized to work in the United States hired after November 6, 1986.
94
The Preparer/Translator Certification must be completed if
a person other than the employee prepared the preceding section. A preparer/translator may only be used when the employee is unable to complete Form I-9 Section 1 on his or her own; however the employee must still sign the section personally.
95
Form I-9 Section 2 must be completed
by the employer by examining evidence of identity and employment authorization within three business days of the date employment begins.
96
Form W-7 is
the Application for IRS Individual Taxpayer Identification Number (ITIN) (if they are ineligible for a SSN)
97
Unlike an SSN, the ITIN cannot be used for
identification purposes, authorization to work in the U.S. or to apply and receive benefits from the SSA. It is for tax reporting purposes only, and is not valid for identification outside the tax system.
98
Form W-9
used to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption.
99
Form 941: Employer's Quarterly Federal Tax Return must be filed if:
you have participated in any of the following during the previous quarter:
Wages to employees
Federal income tax withheld from employees
Tips your employees have received
Employer's and employee's share of Social Security and Medicare taxes
Current quarter's adjustments to Social Security and Medicare taxes for fractions of cents, sick pay, tips, and group-term life insurance.
Advance earned income tax credit (EIC) payments.
Credit for COBRA premium assistance payments
100
After you file your first Form 941,
you must file a return for each quarter, even if you have no taxes to report, unless you filed a final return.
101
Businesses needing an EIN must
apply for a number and use it throughout the life of the business on all tax returns, payments and reports.
102
Employer's Quarterly Federal Tax Returns are due by
the last day of the month that follows the end of each calendar quarter.
103
The IRS uses two separate sets of deposit rules to determine when businesses must deposit their social security, Medicare, and withheld income taxes. These schedules tell you when a deposit is due after you have a payday.
Your deposit schedule is not determined by how often you pay your employees. Your deposit schedule depends on the total tax liability you reported for your previous four-quarter "lookback period" (July 1 through June 30 of last year). If you reported $50,000 or less in the previous lookback period, you must deposit monthly. If you reported more than $50,000, you must deposit semi-weekly.
104
The information you need to have reliably at hand in order to file your Employer's Quarterly Federal Tax Return includes:
Number of employees who received compensation during the quarter
Total amount of compensation paid
Income tax withheld
Taxable social security and Medicare wages
Advance earned income credit (EIC) payments made to employees
COBRA premium assistance payments
Number of individuals provided COBRA premium assistance
105
Form 1099 - Miscellaneous Income is required when
you have paid for services in excess of $600 to any person or business
106
The Federal Unemployment Tax Act (FUTA) provides for
payments of unemployment compensation for workers who have lost their jobs.
107
For deposit purposes, Federal Unemployment Tax Act (FUTA) is deposited
quarterly and is due on the last day of the month following the quarter in which it is due.
108
In October 1936 the Texas legislature passed the Texas Unemployment Compensation Act, which
accepted the unemployment insurance provisions of the Social Security Act and established the Texas Unemployment Compensation Commission.
109
Unemployment Compensation taxes on covered employers payrolls began
on January 1, 1936, and payments to covered eligible workers were effective January 1, 1938.
110
Texas Workforce Commission (TWC) is composed of
three members appointed by the governor for six-year terms. One represents labor, one employers, and one the public-- with the public's representative serving as chairman. This is a paid board.
111
The Texas Workforce Commission (TWC) is
the state government agency charged with overseeing and providing workforce development services to employers and job seekers of Texas. For employers, TWC offers recruiting, retention, training and re-training, and outplacement services, as well as valuable information on labor law and labor market statistics. For job seekers, TWC offers career development information, job search resources, training programs, and, as appropriate, unemployment benefits.
112
Primary services of the Texas Workforce Commission are funded by
federal tax revenue and are generally free to all Texans
113
An employer must pay FUTA to workers if their wages are more than
$1,500
114
What is the simplest form of business ownership?
Sole proprietorship
115
there might be an accountant that works in the office who takes direction from both the owner and the property manager. What defines whether these employees are employees of the owner or the property manager?
The management agreement
116
TREC rules provide that the TREC can take disciplinary action against a broker or salesperson who
pays or associates with an unlicensed person engaging in activities that require a license.
117
True or False: Someone who represents himself as a property manager for someone other than himself and expects compensation to do so must be licensed if the person rents or leases the property on behalf of the property owner. Activities that are ancillary to the primary function, like administrative tasks, making repairs, etc, do not require a license.
True
118
The property manager has four primary functions:
Accomplish the owner's objectives.
Maintain the physical integrity of the property.
Develop a plan for building adequate reserves for replacement.
Establish a budget and maintain fiscal control.
119
First and foremost, the property manager’s duty is to
the owner.
120
As a property manager, the fiduciary duties to an owner include
loyalty, confidentiality and honesty.
121
What type of coverage includes fire, riot, vandalism, theft, glass breakage, lightning, hail, smoke and explosion?
Dwelling policy
122
Management fees are those fees
the Broker collects to manage the property. This fee is owed regardless of what else happens and is usually the greater of a flat fee per unit or a percentage of the gross monthly rents collected that month.
123
Leasing fees for new tenancies are
fees the Broker earns each time the Property is leased to a new tenant. These fees are earned and payable at the time the lease is EXECUTED.
124
Services fees are fees
the Broker earns each time the Broker arranges for the property to be repaired, maintained, redecorated or altered. The fee is usually a percentage of the cost of the service and is payable upon the Owner's receipt of the Broker's invoice.
125
Interest on Trust Accounts
The agreements provide that any trust account the Broker maintains may be interest bearing, and the Broker is entitled to the interest as additional compensation. The Broker must remove the interest within 30 days after the interest or income is paid.
126
Administrative Fees
If the Broker collects administrative fees from the tenants, such as application fees, late charges, returned check fees or similar fees, these belong to the Broker when the Broker collects them.
127
Fees related to Insurance and Legal Matters
If the Owner requests the Broker to appear in any legal proceedings or deposition related to the Property, the Owner will pay the Broker a fee for the Broker's time. These fees are earned at the time the services are rendered and are payable upon the Owner's receipt of the Broker's invoice.
128
Fees in the Event of a Sale
1) Fee if a tenant purchases the property - This fee applies if a tenant purchases the property from the Owner. It is usually a percentage of the sales price.
2) Fee if a buyer is procured through the Broker - This fee is earned by the Broker if, during the agreement period, the Broker procures a buyer who purchases the property from the Owner.
129
Service Fees
1) Sales coordination fee - This fee is earned if the Broker does not receive a sales commission fee. It is payment for the Broker's time and services to coordinate showings, inspections, appraisals, repairs or other related matters.
2) Fees upon Termination - Upon termination, the Owner must pay the Broker all amounts the Owner owes the Broker under the agreement and if the Broker leases a property to a tenant on the day the agreement terminates, the Owner owes the Broker a fee in an amount equal to the lesser of the management fees that would accrue over the remainder of the term of the lease or a predetermined flat fee
130
The Owner must reimburse the Broker for the Broker's expenses. This includes, but is not limited to:
```
Copy charges
Long distance and faxes
Postage and couriers
Notary fees
Photos and videos
Reasonable travel expenses
Parking and tolls
Other authorized expenses
```
131
Funds Received After Termination
Sometimes the Broker will receive funds after the management agreement has terminated. The Broker has an obligation to deposit those funds into the Broker's trust account and pay them to the Owner except for an offset of a percentage that the Broker may keep as compensation.
132
Cooperation with other Brokers
Under paragraph 15 of the commercial agreement, the Broker must agree to allow other brokers to show the property to prospective tenants. If the other broker procures the tenant, the Broker must pay the other broker a fee out of the compensation the Broker earns under Paragraph 15. The agreement spells out the amount the Broker will pay to the other broker. The agreement separates the amounts owed according to whether the other broker is a participant in the MLS in which the listing is filed.
133
"Indemnification" means
the agreement to compensate another party for a loss or cost the other party incurred.
134
A party is not in default unless
there is a violation or breach of the agreement
AND
the other party has given the breaching party notice of their claim of default
AND
the breaching party has not cured the default within ten days after receiving the notice.
135
Only when the claim has ripened into a default does the non-defaulting party have a remedy. The remedies provided under the agreements are:
Terminate the agreement by providing at least 10 days notice.
Recover all amounts due to the non-defaulting party under the agreement.
Recover reasonable collection costs and attorney's fees.
Exercise any other remedy available at law.
136
Information about Brokerage Services Addendum
defines for whom the Broker is working in the various transactions. It also defines the rules the Broker must follow depending upon whom the Broker represents
137
Owner’s Notice Concerning Condition of Property under Property Management Agreement (TAR-2206)
Like a Sellers Disclosure Notice
138
Property Manager’s Inventory and Condition Report (TAR-2006)
This form is given to the tenant at the time of moving into the residential unit.
139
If a tenant purchases a property from the owner, the broker's fee is usually ___________.
a percentage of the sales price
140
Under the management agreement, how many days prior to the end of the term must notice of termination be given?
30 days
141
Single-Room Occupancies (SROs) are
units with a single bedroom and bath.
142
The Uniform Condominium Act governs condominiums in Texas, which is Chapter 82 of the Texas Property Code.
Chapter 82 applies to all types of condominiums-commercial, industrial, residential and any other type of condominium.
143
A plat is
a type of survey that shows the schematic map of the property. It will show the location and dimensions of the property and the improvements within the property. It will also show the easements that serve the property, including underground utility lines.
144
Materials and fixtures outside the interior walls of the unit that serve only that unit are called
limited common elements
145
Unit Owners' Association (UOA)
The association is comprised exclusively of all the unit owners and it may be organized as a profit or a nonprofit corporation. The property manager is really the manager of the association.
146
A quorum is established if
persons entitled to cast at least 20 percent of the votes that may be cast for election of the board are present in person or by proxy at the beginning of the meeting.
147
If there is not enough money in the condo insurance policy to repair or replace the damage,
the expense becomes a common expense.
148
UOA must maintain:
1) Property insurance on the insurable common elements insuring against all risks of direct physical loss commonly insured against, including fire and extended coverage, in a total amount of at least 80 percent of the replacement cost or actual cash value of the insured property as of the effective date and at each renewal date of the policy
2) Commercial general liability insurance, including medical payments insurance, in an amount determined by the board but not less than any amount specified by the declaration covering all occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements.
149
The UOA must repair or replace any portion of the condominium for which insurance is required that is damaged or destroyed unless:
The condominium is terminated.
Repair or replacement would be illegal.
80 percent of the unit owners vote not to rebuild.
150
The UOA lien has priority over other liens except for
tax liens, liens recorded prior to the declaration, a first mortgage, or a construction lien for construction of improvements to the unit.
151
T or F: Once a lien is established, it can be foreclosed by judicial or non-judicial foreclosure, except the association cannot foreclose a lien for assessments consisting only of fines.
True
152
Condo management fees are
usually a set monthly fee per unit plus actual costs incurred. Some associations will also provide an office within the complex. Typical fees range from $8.00 per month per unit to $15.00 per month per unit depending on the size of the unit.
153
A housing cooperative is a
corporation or other legal entity that owns real estate. Usually, there are multiple units in a housing cooperative. Each shareholder or member of the legal entity is entitled to occupy one housing unit. There is an occupancy agreement or lease to memorialize the rights of the shareholders with regard to their units.
154
In the student-housing cooperative,
the students pay a fee to use the common areas but are not shareholders of the entity that owns the property.
155
What interest does a time share owner have in the time share unit?
fee simple or leasehold
156
The definition of Freehold Estates is simply,
"I own the property." It is what we think of as "ownership." There is no definite ending date.
157
A landlord owns the property in freehold but rents it to the tenant in leasehold.
note to remember
158
Fee Simple (Fee Simple Absolute)
Owns the bundle of rights. Some of its characteristics include:
Highest degree of ownership;
Has unlimited duration;
Is inheritable;
All other estates may be created from Fee Simple;
Is subject to only the government powers (PETE).
159
Voluntary Life Estates are sometimes referred to as
"Conventional Life Estates"
160
Ordinary Life Estates:
Estate in Reversion - the grantor separates his/her fee simple estate into two parts, which are:
1) A life estate, which is deeded to a life tenant, and
2) Reversion estate, which is retained by the grantor.
The life tenant possesses an incomplete bundle of rights for his/her lifetime. Once the life tenant dies, the life estate portion reverts back to the grantor, who once again has the complete bundle of rights.
161
Leasehold estates are sometimes called,
"Less than freehold estates" - leasehold estates are what we often think of as "renting" or "leasing."
162
The four main types of Leasehold Estates are:
1) Estate for Years
2) Estate from Period to Period
3) Estate at Will
4) Estate at Sufferance
163
An Estate for Years
It has definite beginning and ending dates
It is not necessary to give notice to the landlord to terminate
Renewal is NOT automatic
Many commercial leases and some apartment leases are estates for years
This type of lease can be for any length of time
**A one-day lease to rent a hotel room has a definite beginning and ending, so it would be considered an estate for years.
164
Estate from Period to Period
Also known as periodic tenancy, or a month-to-month lease.
Proper notice is required to terminate (30 days, 60 days or whatever is agreed to in the lease).
No definite ending date (this type of lease renews itself for whatever period of time was called for in the original lease or whatever is agreed upon in the actual lease).
***Most apartment leases are estates from period to period if the tenant is required to give notice to terminate.
165
Estate at Will
Landlord lets you stay without a lease.
Notice can be given by either party without warning.
Death of either party immediately terminates an estate at will.
166
Estate at Sufferance
When a tenant stays past the term of the lease, he/she is known as a holdover tenant because he/she is unlawfully in possession of the property. The landlord must evict the tenant through the court; in other words, he cannot lock the tenant out, turn off utilities, or forcibly remove the tenant.
167
Common Types of Leases
Ground lease - Long-term lease, usually 99 years. The tenant may build on a property with a ground lease but the property is still the landlord's. Depending upon how the ground lease is structured, any improvement the tenant builds upon the property becomes the landlord's once the lease is over. Ground leases are very common in commercial lease situations.
Index lease - Lease is based on some type of index such as Cost of Living, etc., and it usually adjusts upward.
Appraisal lease - A lease that states a date in the future for a new appraisal. If the appraisal is higher than the previous appraisal, the rent will go up accordingly.
Graduated lease - Cost goes up at regular intervals.
168
Net lease
The tenant has agreed to pay ownership expenses, usually utilities, property taxes, and special assessments.
169
Net-Net lease
The tenant pays for the insurance as well as utilities, property taxes, and special assessments.
170
Net-Net-Net lease (triple net lease)
The tenant also pays for some agreed upon items of repair and maintenance in addition to insurance, utilities, property taxes, and special assessments.
171
Escalator clause
A clause in a lease in which the parties agree to an adjustment of rent based on set increases in taxes, insurance, maintenance, and other operating costs.
172
Non-disturbance clause
A mortgage clause that requires a tenant cannot be disturbed or evicted if the property faces foreclosure.
173
"Gross Leases" are those in which
the tenant pays a fixed rent and the landlord pays all the expenses associated with the property, including taxes, insurance and maintenance.
174
Escalation clauses in leases are
those provisions establishing how the rent will be increased over a period of time.
175
In a holdover situation
the tenant becomes a tenant at will
176
A financial statement is
a statement of assets and liabilities in order to come up with a tangible net worth of liquidity.
177
The essential elements of the Guaranty include:
(a) name or names of the individual or individuals guaranteeing the lease, including the spouse if a married person is the Guarantor
(b) statement that the Guaranty is irrevocable and will be called upon only in the case of a Tenant default
(c) time period of the Guaranty
(d) pertinent details about the lease and the leased premises.
***Sometimes a Landlord will allow the Guaranty to expire after a period of time if there has been no default.
178
An alternative to executing a Personal Guaranty could be
1) a Letter of Credit
2) increased Security Deposit
3) pre-paid rent.
179
TRELA
Texas Real Estate Licensing Act
180
The purpose of the Letter of Intent is
to define the basic business and economic terms under which both Landlord and Tenant agree to enter into a lease. It is not a legally binding document and will most likely be stated as such in the document.
181
"right of recapture"
the Landlord has the right, but not the obligation, to take the space back and try to re-lease it
182
A medical office building, school or fitness center has the most intensive parking requirements, based again on the number of employees, visitors and customers.
Note to remember
183
In the case of Landlord's default, a Tenant has what type of recourse?
Demand a cure in writing
184
Which document requires that a broker disclose his representation of a party upon the first contact with a party or licensee representing a party?
The Texas Real Estate Licensing Act
185
Where should a tenant’s requirements for “up-fits” or “improvements” be set out?
In the lease
186
The landlord may increase the rent at the time of the renewal provided the landlord gives the tenant notice five days before the advance notice deadline.
Note to remember
187
If delay of occupancy notice is given after the lease commencement date and provides a date the apartment will be ready, the tenant may terminate within 3 days after receiving the notice. If the notice is given prior to the lease commencement date and provides a date the apartment will be ready, the tenant may terminate within 7 days after the tenant receives the notice. If there has been no notice of delay from the landlord, the tenant may terminate at any point up to the date when the apartment is ready for occupancy.
Note to remember
188
“Disclosure of Information” states that
the landlord may give out information about the tenant's rental history if someone requests it.
189
“Community Policy and Rules” requires
tenant to comply with all written apartment rules and that the rules are part of the Lease.
190
Limitations on Conduct paragraph
requires the tenant to notify the landlord within 15 days if the tenant or any occupant is convicted of a felony or a misdemeanor involving a controlled substance, violence to another person or destruction of property or if any person registers as a sex offender in any state.
191
Apartments : If the landlord believes that fire or casualty damage is substantial, the landlord may terminate the tenant's lease upon 5 days written notice. If the lease is terminated for this reason, the landlord will refund prorated rent and all deposits, less lawful deductions.
Note to remember
192
The Apartment Lease defines "reasonable time" as "takes into account the nature of the problem and the reasonable availability of materials, labor, and utilities."
Note to remember
193
Holdover rent is due in advance on a daily basis rather than monthly;
Note to remember
194
All occupants must surrender the apartment before the 30-days period for deposit refund begins
Note to remember
195
Broken air conditioning would not be considered a health or safety hazard
True
196
In order to be an indication of abandonment, the tenant must have been in default on the payment of rent for at least___ days.
Five
197
Under the TAA lease, the landlord must use_______________ to relet the premises if the tenant moves out early.
due process
extra diligence
X customary diligence
good faith efforts
198
The Residential Lead-Based Paint Hazard Reduction Act of 1992 requires
disclosure of the presence of any known lead-based paint hazards to potential buyers or renters.
199
Notification and Disclosure of Lead Hazards During Real Estate Transactions (Section 1018 of Title X). This regulation, issued by HUD and the EPA on March 6, 1996, pertains to housing built before 1978.
Note to remember
200
A common source of lead paint exposure for children in older homes comes from
chewing on surfaces such as doors and door frames, windows and window sills, stairs, railings, and other things that tend to look appetizing to toddlers.
201
The purpose of the lead-based paint disclosure requirement is to inform prospective renters and purchasers about:
The dangers, and potential dangers from dust, chips, and soil, that lead paint can pose to children and adults.
Methods designed to prevent lead poisoning.
The legal requirements of the Real Estate Disclosure and Notification Rule.
202
Effective December 2008, renovators, remodelers, contractors and landlords of pre-1978 housing are required to provide owners, tenants, and child care facilities with
the EPA's "Renovate Right" pamphlet.
203
Megan's Law is
the federal law requiring a public registry of known sex offenders, was enacted in 1996 after the murder of Megan Kanka.
204
In order for a lien to arise, there must be _____________.
a statutory mechanism creating it
205
The priority of liens depends upon ____________.
the order in which they arise
206
Landlord may terminate the tenant's right to occupy the property by providing the tenant with at least _______ written notice to vacate.
1 day
207
a security deposit is
any advance of money, other than a rental application deposit or an advance payment of rent, that is intended primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and tenant.
208
The "reasonable man" standard in the law is a term of art that means
what an average man or woman would do under the same circumstances. A "Reasonable" charges means uninflated, actual charges. "Reasonable" means not shocking or exorbitant.
209
The tenant must notify the landlord of any changes in the tenant's phone numbers not later than
5 days after a change.
210
The right to quiet enjoyment
This means that the tenant has the right to use the leased premises without interference from the landlord or any outsiders.
211
Normal wear and tear" means
deterioration that occurs without negligence, carelessness, accident, or abuse.
212
"Surrender" occurs when
all occupants have vacated the Property,
213
"Abandonment" occurs when all of the following occur:
a) all occupants have vacated the Property, in landlord's reasonable judgment
(b) tenant is in breach of this lease by not timely paying rent
(c) landlord has delivered written notice to tenant, by affixing it to the inside of the main entry door or if the landlord is prevented from entering the Property by affixing it to the outside of the main entry door, stating that landlord considers the Property abandoned, and tenant fails to respond to the affixed notice by the time required in the notice, which will not be less than 2 days from the date the notice is affixed to the main entry door.
214
How many days grace period does a tenant get before late charges begin to accrue?
0, unless shown differently in the TAR Lease
215
How much notice must a landlord provide a tenant prior to removing an unauthorized pet?
24 hours
216
What is the function of the Inventory and Condition Form?
To put the parties on notice of any defects in the property
217
A landlord may access a property at reasonable times without first attempting to contact the tenant and without notice in order to:
```
survey the property
make emergency repairs
exercise a lien
leave written notices
seize nonexempt property if the tenant is in default
```
218
Why are there two versions of the Extension of Residential Lease?
One is to use for leases executed prior to October 16, 2007
219
Affirmative defenses are
answers to the allegations that admit the tenant’s breach, but request the court to rule in the tenant’s favor because of a landlord’s actions.
220
Constructive eviction is a defense claiming
hat the landlord took action that resulted in the unit's becoming uninhabitable, such as turning off utilities or failing to fix a hole in the roof.
221
Retaliatory eviction is a claim by the tenant that
the landlord initiated eviction action in retaliation for something the tenant did that the tenant was legally entitled to do. For example, if the tenant reports the landlord to the local building inspector for violating a building code, and the landlord evicts the tenant because of the report, the eviction would be retaliatory.
222
The Writ of Possession
The Constable will enforce the Writ of Possession by forcibly removing the tenant and the tenant's belongings from the property. However, the Constable must give the tenant a 24-hour notice to vacate prior to executing the Writ. A Writ is issued by the Court to order the Constable to give the landlord possession of the property.
223
Because of the notice requirements and the procedural steps involved, the fastest a tenant can be evicted is
three weeks
224
Bond for Immediate Possession
An eviction process in Texas that can shorten the process to 10 days if the landlord prevails in court.
225
The notice of termination should be:
In writing and is required to be signed by the tenant
226
A constable must give a tenant _____ notice prior to executing on a Writ of Possession.
24 hours
227
the term "dwelling" is defined as
one or more rooms rented for use as a permanent residence under a single lease to one or more tenants.
228
"Landlord" means
the owner, lessor, or sublessor of a dwelling, but does not include a manager or agent of the landlord unless the manager or agent purports to be the owner, lessor, or sublessor in an oral or written lease.
229
"Lease" means
any written or oral agreement between a landlord and tenant that establishes or modifies the terms, conditions, rules, or other provisions regarding the use and occupancy of a dwelling.
230
"Normal wear and tear" means
deterioration that results from the intended use of a dwelling, including, for the purposes of Subchapters B and D, breakage or malfunction due to age or deteriorated condition
231
"Premises" means
a tenant's rental unit, any area or facility the lease authorizes the tenant to use, and the appurtenances, grounds, and facilities held out for the use of tenants generally.
232
"Tenant" means
a person who is authorized by a lease to occupy a dwelling to the exclusion of others and, for the purposes of Subchapters D, E, and F, who is obligated under the lease to pay rent.
233
the landlord must provide the tenant notice _____ calendar days prior to the date on which the locks are changed.
Five
234
Writ of Reentry
entitles the tenant to immediate and temporary possession of the premises. The writ of reentry is served on the landlord, the management company, the on-premises manager or the rent collector.
235
A "bedroom" is
an area of a dwelling intended as sleeping quarters and does not include other living areas.
236
Unless there is a specific exception, the maximum number of adults (persons over 18 years of age) that a landlord may allow to occupy a dwelling is
three times the number of bedrooms in the dwelling.
237
An injunction is
a ruling by the court to force a party to do or to cease doing an act.
238
"Family violence" means:
An act by a member of a family or household against another member of the family or household that is intended to result in physical harm, bodily injury, assault, or sexual assault or that is a threat that reasonably places the member in fear of imminent physical harm, bodily injury, assault, or sexual assault, but does not include defensive measures to protect oneself;
Abuse, as that term is defined by Sections 261.001(1)(C), (E), and (G), by a member of a family or household toward a child of the family or household; or
Dating violence, as that term is defined by Section 71.0021.
239
The Uniform Residential Landlord and Tenant Act (URLTA), drafted in 1972, was intended to
make residential landlord and tenant laws fair to all parties and more relevant to rentals in a modern urban setting.
240
The URLTA does not specify
whether landlords must keep security deposit money separate from his or her own money
whether interest must be paid on security deposits whether deposit funds must be placed in interest-bearing accounts
241
The purposes and policies of the Uniform Residential Landlord and Tenant Act (URLTA) are designed:
To simplify, clarify, modernize, and revise the law governing the rental of dwelling units and the rights and obligations of landlords and tenants
To encourage landlords and tenants to maintain and improve the quality of housing
To make the law uniform with respect to the subject of this Act among those states which enact it
242
Confession of judgment:
A lease provision where a tenant confesses judgment, if in default, is prohibited. A confession of judgment gives up the right to defend actions in court.
243
Attorney fees:
A provision where the tenant agrees to pay a landlord's attorney fees, regardless of a court decision, is prohibited. Attorney fees to the prevailing party would be proper.
244
Hold harmless:
A provision in which the tenant agrees to hold the landlord harmless for any personal injury or property loss, regardless of landlord fault, would be prohibited.
245
Knowingly including prohibited provisions:
If a landlord knows a provision is prohibited, but knowingly includes it in a lease, the tenant is entitled to actual damages plus up to three months' rent and attorney's fees.
246
Security deposits limit:
While there is no limit as to prepaid rent, residential security deposits are limited to one month's rent.
247
Accounting for deposits:
The landlord must account for funds within 21 days of termination of tenancy. Failure to return a deposit can result in return of the deposit plus twice the amount wrongfully held, as well as attorney's fees. Time limits and damage amounts may vary from state to state.
248
Name of manager:
The landlord must give the tenant the name and address of the manager or person authorized to receive notices and legal service.
249
Possession:
The landlord must deliver possession of the premises at commencement of the lease.
250
Unconscionable leases:
Leases that are considered unconscionable will not be enforced. A lease where a tenant waives his or her legal rights would be considered unconscionable
251
Failure of lessor to sign:
If a rental agreement is signed by the tenant and delivered to the landlord who fails to sign, but accepts rent without reservation, the lease has the same effect as if it were signed and delivered. If the term of the lease is longer than one year, the unsigned lease would only be valid for one year.
252
order to show cause"
This order mandates that the landlord appear in court and explain why he should not be adjudged in contempt of court. If the judge finds there is contempt, the judge may send the landlord to jail without bail until the landlord remedies the situation.
253
An estoppel certificate is
a sworn statement by the tenant about the status of any defaults, payments, obligations, and terms of the lease.
254
Before disposing of abandoned property, what must a landlord do?
deliver a notice to the tenant by certified mail
255
In order to obtain a contempt order against a landlord, what must the tenant first do?
File an affidavit with the justice
256
What is the penalty for failing to provide a written description of deductions from the security deposit in a commercial lease?
A forfeiture of the right to withhold the security deposit in the event of damages
257
Where does a tenant file for a writ of reentry?
Justice court
258
A landlord who does not provide a written description of damages when deducting from the security deposit is liable for_______
Attorney's fees
259
What is the tenant's penalty for withholding payment of the last month's rent on the grounds that the security deposit is security for the last month's rent?
3 X the rent wrongfully withheld
260
A security deposit is
any advance of money, other than a rental application deposit or an advance payment of rent that is intended primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and a tenant.
261
An escrow account is
a special type of bank account that is established by the property manager to retain funds the property manager has collected on behalf of someone else.
262
The Emergency Economic Stabilization Act of 2008, signed into law on October 3, 2008, increased
the insurance coverage on all accounts up to $250,000 through December 31, 2009.
263
The "Escrow Accounting Equation" requires the reconciled escrow bank account cash balance to be equal to ___________.
the escrow account liabilities
264
Can a landlord withhold the security deposit as a penalty for a tenant not giving advance notice of surrender of a unit?
Only if the lease allows it and the condition is prominently displayed in the lease
265
Punitive damages are
those damages that the court assesses against a defendant as punishment.
266
Actual damages are
those out of pocket damages that are a direct result of the defendant's actions.
267
that in order to recover punitive damage in an action based on contract, there must be
an independent tort or cause of action
268
A declaratory judgment is
a judgment by the court interpreting a document that is in dispute.
269
An injunction is
in order by the court for a party to do something or refrain from doing something.
270
A tenant can recover one month's rent plus $_______ from a landlord who retaliates.
$500
271
A landlord who fails to refund an application fee is liable for 3x the amount of the application deposit plus $____
$100
272
Antitrust laws are
state and federal laws designed to maintain and preserve business competition.
273
a violation of an antitrust law occurs when all three of these parameters apply to a business activity:
There is a monopoly, a contract, a conspiracy or a combination of such.
The existence of the monopoly or conspiracy creates a restraint of trade – which is a negative impact on an individual’s or a company’s ability to do business.
The restraint of trade unreasonably restricts competition and functions against the public interest.
274
Price Fixing
Collusion between or among members of a particular trade to maintain prices at a set level.
275
Group Boycotts
Agreements between or among members of a particular trade that would prevent other members from fair participation in the trade’s activities.
276
Market Allocation
Agreements between or among members of a trade to avoid doing business in specific market areas.
277
Tie-in Arrangements
Arrangements that requires a buyer to purchase additional or unrelated products or services when making a product purchase.
278
Antitrust laws prohibit:
Price Fixing
Group Boycotts
Market Allocation
Tie-in Arrangements
279
Sherman Antitrust Act of 1890
is the principal federal statute that covers competition and is one of the most important pieces of antitrust legislation.
280
Individual violators of the Sherman Act can be
fined up to $350,000 and sentenced to up to 3 years in federal prison for each offense; corporations can be fined up to $10 million for each offense.
281
In June of 2004, President George W. Bush signed into law the Criminal Antitrust Penalty Enhancement and Reform Act,
increasing the maximum criminal penalty for individuals to 10 years' imprisonment and a $1 million fine, and the maximum penalty for corporations to a $100 million fine.
282
The Clayton Antitrust Act of 1914
was designed to cover restraints on interstate trade or commerce that are not covered under the Sherman Act. This included preventing individuals from serving as directors at competing companies.
283
Under the Clayton Act,
private individuals are permitted to sue antitrust violators. If the suits are successful, the individuals can recover three times the damages incurred plus court costs and attorneys’ fees.
284
The Federal Trade Commission Act
prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties.
285
Federal Trade Commission (FTC)
polices violations of the Federal Trade Commission Act
286
Civil Rights Act of 1866
prohibits racial discrimination in all real estate sales. "All citizens have the same rights to inherit, buy, sell, or lease all real and personal property.
287
Civil Rights Act of 1964
forbids discrimination in federally subsidized housing
288
Federal Fair Housing Act of 1968
prohibits discrimination in housing based on race, color, religion or national origin when selling, buying or leasing residential real estate.
289
Jones v. Mayer 1968
Supreme Court Case that prohibits racial discrimination in any real estate transaction (residential or commercial).
290
Housing and Community Development Act of 1974
added gender (sex) to the protected classes
291
Federal Fair Housing Amendments Act of 1988
added mental or physical handicap and familial status (people with children under 18) to protected classes.
292
Civil Rights Act of 1964
Gave the federal government the right to end segregation in the South;
Prohibited segregation in public places (a public place was anywhere that received any form of federal [tax] funding);
Created an Equal Employment Commission;
Determined that federal funding would not be given to segregated schools;
Determined that any business that wanted federal business had to have a pro-civil rights charter.
293
Civil Rights Act of 1968
- specifically prohibits discrimination in the sale, lease or rental of real property.
- prohibited is discriminatory advertising related to these activities or any financing or brokerage service.
- created the protected classes of race (already in the Civil Rights act of 1866), color, religion and national origin.
294
Blockbusting is
inducing panic selling in a neighborhood for gain by a broker or sales associate. "You'd better sell now, because they are moving in" is a clear violation of the law.
295
Steering
directing a buyer to or away from a certain area because of race, color or national origin. Such statements as "You'll be more comfortable with your own kind" or "You don't want to live there, they're not your kind of people" are against the law.
296
Redlining
This is the practice by some lenders to refuse to lend in certain areas because of race, color, national origin or religion, regardless of the ability of an individual person to pay.
297
Complaints of Fair Housing Laws
may be made to either the Federal District Court or the Department of Housing and Urban Development (HUD).
298
There are four exceptions to the fair housing laws:
1) Housing developments may be restricted to the elderly if all units are occupied by people age 62 or older or at least 80% of the units are occupied by at least one person aged 55 or older.
2) Resident owners of four units or less.
3) Churches may restrict sale or occupancy of church-owned properties to church members.
4) Private clubs may restrict rental or occupancy of their units to members IF the lodging is not run commercially.
299
A complaint regarding the federal fair housing laws
Must be filed with HUD within one year after the discriminatory act occurs. A suit can be filed in a federal court within two years after the discriminatory act.
300
After a fair housing complaint is filed with HUD, HUD investigates and will give a decision within
100 days
301
The HUD administrative law judge (ALJ) can award:
actual damages
grant an injunction or equitable relief
grant civil penalties up to $50,000
302
Passed in 1990, the Americans with Disabilities Act (the "ADA"), requires
access to public transportation, public accommodation and commercial facilities. A disabled person must be given the same access as an able-bodied person.
303
"Architectural barriers" include
anything that would make it difficult for a person in a wheelchair to navigate. Examples of modifications would include installing wheelchair ramps, elevators, bathroom rails, etc.
304
If the court finds that discrimination has occurred, the person filing the complaint may be entitled to:
Actual damages
Punitive damages
Attorney's fees and costs
305
The Equal Credit Opportunity Act, which is enforced by the Federal Trade Commission, prohibits
creditors from discriminating on the basis of race, color, religion, national origin, sex, marital status, age or those on public assistance (collectively, the "protected classes".)
306
Fair Credit Reporting Act (FCRA) is designed to
promote the accuracy, fairness and privacy of information in the files of consumer reporting agencies. These agencies include the credit bureaus as well as other agencies that sell information about consumers, such as rental histories.
307
The advertising of real property is regulated by
Texas real estate law
Texas Real Estate Licensing Act
federal Consumer Credit Protection Act, also known as the Truth-In-Lending Act
308
Truth In Lending Act, or Regulation Z, a part of the federal Consumer Credit Protection Act of 1968, requires
disclosure of all costs associated with closing a sale and/or mortgage. Additionally, it makes bait-and-switch advertising a federal offense.
309
Texas Property Code
Chapter 91 Applicability: Provisions generally applicable to landlords and tenants
Chapter 92 Applicability: This chapter applies only to the relationship between landlords and tenants of residential rental property
Chapter 93 Applicability: This chapter applies only to the relationship between landlords and tenants of commercial rental property
Note to remember
310
Funds that are typically deposited into a trust account include:
rents collected on someone else's property and security deposits collected from tenants
311
The Servicemembers Civil Relief Act of 2003 (SCRA)
s to ease legal and financial burdens on military personnel and their families brought on by the demands of active duty. The Act contains provisions that are designed to postpone or suspend certain civil obligations to allow service members to "devote their entire energy to the defense needs of the Nation."
312
The Servicemembers Civil Relief Act of 2003 (SCRA) affords
protection to spouses and other dependents against eviction and provides relief related to the termination of residential and motor vehicle leases.
313
Servicemembers Civil Relief Act of 2003 (SCRA) protection begins
on the start date of active duty and terminates within 30 to 90 days after the discharge date from active duty.
314
Servicemembers Civil Relief Act of 2003 (SCRA)
limits the amount of interest that may be collected on debts of persons in military service to 6% per year during the period of military service. Any portion of interest above 6% is permanently forgiven.
315
Servicemembers Civil Relief Act of 2003 (SCRA) eligibility is dependent on certain conditions:
The Servicemember took out the loan during a time when he or she was not on any form of active duty in any branch of the military
The interest rate is currently above 6% per year
Military service affects the Servicemember’s ability to pay the loan at the regular, pre-service interest rate
The Servicemember makes less money in the military than was made as a civilian
316
An administrative law judge may impose a penalty for up to $____ if two or more violations of Fair Housing Laws occur within 7 years
$50,000
317
When does the ADA apply to residential real estate?
If it is multifamily residential
318
Who enforces the Equal Credit Opportunity Act?
The Federal Trade Commission
319
Buildings with an elevator and four or more units constructed after _______ must be ADA compliant.
1991
320
In order to terminate under the "indecency" provision,
the landlord must give written notice of termination to the tenant or occupant within six months after the right to terminate arises. The landlord may retake possession on the 10th day after the date on which the notice is given.
321
"Mitigation" is
the duty of one party to take reasonable measures to minimize the other party's losses if the other party breaches a contract.
322
It is important to note the following about the Duty to Mitigate statute:
It applies to BOTH residential and commercial leaseholds
The statute applies only to leases entered into after September 1, 1997
The statute does not provide any details about the extent of the landlord's duty to mitigate
The parties cannot contract away the duty to mitigate. Any provision in the lease stating that the landlord has no duty to mitigate would be void
323
"Liquidated damages" are
a set amount of damages established by the contracting parties at the time the contract is entered. Liquidated damages provisions are used when the parties know that the amount of actual damages will be difficult to establish in the event of default
324
A detainer action is filed if
the person in possession of the property loses the legal right to remain in the property and refuses to leave.
325
The notice of eviction must be given _____ prior to filing the action for eviction.
3 days
326
If a tenant recovers property a landlord has seized, it is called _________.
replevy
327
How long does the landlord have after the sale to mail the tenant the excess proceeds of the sale?
30 days
328
If the tenant elects to make a repair that the landlord fails to make, who can make the repair?
A licensed contractor
329
After a complete casualty loss of the premises, if a tenant wants to terminate the lease, may he do so?
Yes, but he must do so before the repairs are complete
330
If the landlord delays making a repair after delivering the first affidavit for delay to the tenant, what are the legal consequences?
The landlord will have the burden of proving good faith for subsequent delays
331
How much time has the landlord to provide a written explanation for delay in performance until the burden of proof shifts to him/her?
5 days
332
What is the longest amount of time a landlord may delay repairs, even if he files affidavits?
6 months
333
"Deferred maintenance" is
maintenance that was not performed when it should have been or was scheduled to be and which, therefore, is put off or delayed for a future period.
334
How often should the electrical systems be inspected by a licensed electrician?
Every 3 to 5 years
335
How often should the parking-garage surfaces be cleaned?
Twice a year
336
With regards to minimum requirements, how thick should a carpet pad be?
At least 9/16” inch in thickness
337
How are capital improvements handled on a tax return?
They are depreciated.
338
A reserve study projects replacement of building components over the next ___.
20 years
339
The Environmental Protection Agency (EPA) has established
the Energy Star® program that provides guidelines for good energy management. The guidelines can be used to lower operating costs and reduce pollution and emissions.
340
U.S. Green Building Council's Leadership in Energy & Environmental Design (LEED) certification
rates buildings by awarding points for achieving environmentally preferred construction, design and systems goals.
341
Leadership in Energy & Environmental Design (LEED) certification components that are measured include:
```
Materials used in construction
Location
Indoor air quality
Water usage
Emissions
Energy efficiency
```
342
A mechanic's lien is
a lien that attaches to real property when a person or entity furnishes labor or materials for construction or repair.
343
Texas Mechanic's Lien Act covers
```
mechanics
laborers
architects
engineers
surveyors
suppliers
landscapers
demolition services
others similarly situated
```
344
Liens arise by
statute, by contract, or by obtaining a judgment in a court proceeding against another party.
345
What Does it Mean to Perfect a Lien?
the mechanic must follow the procedures set forth in the Statute EXACTLY. If the mechanic fails to follow the procedures, he/she has a lien, but it will not be "perfected." This means that it will not attach to the property.
346
The EPA recommends that residential properties use _______ for lighting.
qualified compact fluorescent
347
What is the advantage of "going green"?
Lower operating costs
Reduce pollution
Reduce emissions
348
What is the optimal pool temperature?
78 degrees Fahrenheit
349
Contractors for residential contracts must deliver a ____________ to the Owner prior to executing the contract.
Disclosure statement
350
What is the significance of obtaining a LEED certification?
It means the building has been constructed in accordance with LEED standards.
351
A mechanic's lien would not attach to
personal property
352
What is the bare minimum amount of insulation that should be installed in ceiling areas?
12 inches
353
The most efficient exterior lighting is________________.
fluorescent
354
Since the expenses in a shopping center are a direct pass-through of what the actual expenses are for taxes, insurance, utilities and CAM, the center will suffer a loss unless the other tenants make up the difference. This is often referred to as
the “slippage”
355
The percentage rent clause provides for
a stated percentage of the gross receipts of a business to be paid as rent.
356
Fees for managing a shopping center are nearly always structured on a
percentage of collected rent basis, with or without a base minimum charge.
357
In an office building there is a common area factor applied which includes the main lobby, corridors, elevator lobby and other areas that are commonly used by all tenants.
This is sometimes referred to as the “rentable” area as opposed to the “usable” area. So, if a building’s common area factor is 10% and a tenant leases a space that measures 5000 square feet, he will actually pay rent on 5,500 square feet.
358
A ___________ must be obtained by the local municipality prior to occupancy. This is most often the Tenant's responsibility.
Certificate of Occupancy
359
Delay of Occupancy
This clause allows for the delay to occur without penalty to the Landlord for a period of up to ninety days. If delayed, both the commencement and expiration dates will be adjusted so that the lease term remains the same. After ninety days, the Tenant can elect to terminate the lease, but is not obligated to do so.
360
Commercial Expense Reimbursement
certain expenses related to the property that are paid directly by the Landlord are subject to Tenant reimbursement. This may include real estate taxes, property insurance, common area utilities, and maintenance of the common areas of the property.
361
Commercial Percentage Rent
this is a provision by which the Landlord participates in a percentage of the Tenant's sales revenue. There is generally a floor or a base, over which the Landlord is entitled to a set percentage of the overage or upside.
362
Commercial Parking Addendum
this is typically used in multi-tenant office buildings where there is an attached or detached parking structure for which there is a charge for parking. The Tenant may be allowed a certain number of spaces at no charge and then must pay a set monthly amount, subject to adjustments.
363
A Tenant is required to maintain certain types of insurance, including
public liability and personal property
364
The prohibited uses, in summary, are those that would be unlawful and especially those that would include any environmental hazards in the use of the property. The specific uses that are prohibited are listing in the section called,
Legal Compliance
365
If a commercial tenant is in default, Landlord may:
terminate Tenant's right to occupy the leased premises by providing Tenant with at least 3 days written notice and accelerate all rents which are payable during the remainder of this lease or any renewal period without notice or demand
366
Tenant Holdover
the holdover tenant will be charged rent at 1.5 times the amount of the face rent at the time of the holdover.
367
The Tenant is required to provide an estoppel within _______ of Landlord's request, stating that the lease is in full force and effect.
10 days
368
TAR Addendum 2112, Tenant's Construction Addendum, does what?
Provides a detailed checklist, accountabilities and things the tenant must do to be granted permission to perform work in the space.
369
The first step in developing a risk management plan is to
perform a risk identification and assessment
370
Risk can be managed in four ways:
Avoidance
Reduction
Sharing
Retention
371
Risk reduction is
acknowledging the risk and taking steps to reduce it.
372
Risk sharing involves
purchasing insurance or contracting with another party to share the risks.
373
Risk retention involves
acknowledging the risk and deciding whether to assume it yourself.
374
Insurance policies are written with two major components:
the standard policy provisions
| the individualized endorsements that modify the standard policy provisions
375
A "named perils" policy will cover
losses resulting from a specific list of perils named in the policy. For example, named perils might be fire, lighting, wind, and hail.
376
The "all risk" policy covers
loss from all perils, except those that are excluded. Flood would be one peril that would likely be excluded.
377
For the actual cash value of the item or property that is destroyed, you will not receive proceeds equal to what you paid for the item. You will receive the depreciated value of the item.
Note to remember
378
If you have purchased replacement value insurance, you will receive
proceeds equal to what it will cost to replace the item with another item like the one that was destroyed.
379
There are three types of business interruption endorsements:
Business interruption insurance
Extended business interruption insurance
Contingent business interruption insurance
380
There are three types of business interruption endorsements:
Business interruption insurance
Extended business interruption insurance
Contingent business interruption insurance
**The second and third types of coverage are not different policies; they can be purchased as additional coverage to the business interruption policy for an additional premium.
381
Business interruption insurance
compensates the insured for the income lost while repairs are made to the property
382
Extended business interruption insurance
compensates the insured for income lost after the property is restored but while the business gets back on its feet. This type of insurance has a limited time frame.
383
Contingent business interruption insurance
compensates the insured for loss of income resulting from damage to the property of customers or suppliers. For example, it would compensate a bakery if the bakery shut down due to an explosion at the flour manufacturer.
384
A ________ will cover theft of tangible assets.
crime policy
385
Under a fidelity bond
the insurer will pay for losses resulting from employee dishonesty. You should bond any employee who has access to company funds. Bonds are written on individuals or groups of individuals.
386
Boiler insurance
protects for losses associated with a boiler explosion
387
Elevator insurance is also available and specifically insures against losses associated with elevator failures.
note to remember
388
Property insurance covers
direct losses sustained by the insured
389
Casualty insurance covers
losses sustained by third parties who sue to recover those losses from the insured
390
The most common types of casualty insurance coverage are:
```
Commercial general policy
Umbrella policy
Auto liability insurance
Errors and omissions insurance
Workers' compensation insurance
```
391
Comprehensive general insurance policies cover
claims by third parties who are not employees for injury and property damage caused by the insured's negligence, except for negligence related to the operation of automobiles.
392
Umbrella policy kicks in
once the comprehensive general insurance policy's limits have been reached
393
The business auto policy is
a hybrid in that it covers both property damage to the insured vehicles and casualty losses arising from the operation of the vehicles.
394
Workers' compensation provides
covered employees with income and medical benefits if they are injured on the job or have a work-related injury or illness.
395
The benefit to the employer for providing workers' compensation insurance is
that the employer's liability for the work-related injury or death will be limited.
396
The employer who provides workers' compensation insurance has the following rights according to the Texas Workers' Compensation Act:
The right to contest the compensability of a workers' compensation claim (claim) if the employer's insurance carrier accepts liability. Contesting the compensability of a claim means the employer can present evidence in dispute resolution proceedings held at TDI-DWC and in court that indicates the employee's injury, illness, or death did not occur on the job or is not work-related.
The right to receive notice, after making a written request to the insurance carrier, about any dispute resolution proceeding or court proceeding related to an employee's claim, or any proposal to settle the claim by an agreement.
The right to attend all dispute resolution proceedings related to an employee's claim.
The right to present relevant evidence about disputed issues at dispute resolution proceedings.
The right to report suspected workers' compensation fraud to TDI-DWC or to the insurance carrier.
The right to contest the failure of the insurance carrier to provide accident prevention services required by the Act.
397
Employers in Texas who do not provide Workers' Compensation Insurance must disclose this fact to new employees by
posting a sign in the workplace in English and Spanish
398
Employers who do not have workers' compensation must
give written notice of non-coverage to new employees upon hiring them. The employer should keep a copy of the notice and should have the employee sign the notice to acknowledge receipt.
399
If the non-covered employer has more than four employees, the employer must report to the Department of Workers' Compensation:
Any work-related injuries that cause an employee to miss more than one day of work
All occupational illnesses
All fatalities that occur at the workplace
400
Directors and officers liability insurance covers
liability arising from negligence in managing the business.
401
Employment practice liability insurance and fiduciary liability insurance
protect managers and directors from liability suits. Employee discrimination, wrongful termination and other suits by employees will frequently name the managers and directors of the company.
402
Under a typical policy, three things must occur before the insurer's obligation to pay arises:
1) The insured must submit a proof of loss
2) The insurer and the insured must agree upon the amount of the loss
3) A certain period of time (30, 60, or 90 days) must elapse from the date proof of loss is submitted and the amount of loss is agreed upon.
403
Proof of Loss
a sworn statement stating the time and origin of the loss, the amount of the loss, and the name of anyone with an interest in the proceeds.
404
Builder's Risk Coverage
covers against risk of loss from damage to property under construction, whether new construction or renovation.
405
Builder's risk insurance is
a "cash value" policy, not a "replacement" policy. That means that if there is a loss, only the depreciated cost to repair the damaged building will be covered.
406
In risk management the property manager balances the desired result with the _________
cost of management
407
What kind of policy compensates the insured for lost income while repairs are made to the property?
business interruption
408
A way to reduce insurance premiums would be to _______
Increase deductibles
409
Comprehensive general insurance policies do not cover damage related to ___________
the operation of automobiles
410
What part of an insurance policy modifies the standard policy provisions?
endorsements
411
An "all risk" insurance policy covers all perils except ________
An "all risk" insurance policy covers all perils except ________
412
Risk can be managed by avoidance, reduction, sharing and ____________
retention
413
There can never be liability without proximate cause
Note to remember
414
The general principal of security liability is that
the landlord or property owner has a duty to exercise reasonable care to protect invitees on the premises from criminal acts of third parties if the landowner knows or has reason to know of an unreasonable risk of harm to the invitee.
415
What might these "ordinary" security measures include?
Making sure lighting is good in entryways and pathways
Eliminating landscaping around entryways that might hide a predator
Making sure locks are not broken
Making sure security doors are closed and locked
416
Good Samaritan Statute
offers an affirmative defense to those who administer emergency care.
417
The Occupational Safety and Health Act (OSHA) is
a federal law that applies to safety and health in the workplace, including the workplaces of property management. Any employer that hires seven or more employees is required to keep proper records and file reports with OSHA.
418
In Texas, there are four different signs that restrict a person with an LTC or CHL from carrying their gun into a place of business.
a 30.06 sign
a 30.07 sign
a 51% sign
a 30.05 sign
419
Texas has three optional sign designs available depending what you would like to restrict:
one that forbids concealed handguns
one that forbids open carry of handguns
one that forbids long guns
420
A business owner that wants to ban concealed weapons from a place of business must post a
30.06 sign
421
A business owner that wants to restrict people from entering a business with a handgun carried openly must post a
30.07 sign
422
51% sign
This sign is required by law to be posted if a business generates 51% of their revenue from on-premises drinking of alcoholic beverages.
423
A business owner that wants to restrict people from entering a business with a shotgun or rifle must post a
30.05 sign
424
What kind of lights should be used to provide the best lighting?
mercury or sodium vapor
425
Premises liability arises as a result of ________________
a landlord's failure to act
426
"Security device" means
a doorknob lock, door viewer, keyed dead bolt, keyless bolting device, sliding door handle latch, sliding door pin lock, sliding door security bar, or window latch in a dwelling.
427
When must a landlord rekey a security device operated by a key, card or combination after the tenant turnover date?
Within 7 days
428
When is a landlord excused from the duty of repairing a smoke detector?
It is not the landlord's duty if the tenant causes the damage
429
If after an attempted break-in, a tenant requests the landlord to repair a security device, how long does the landlord have to repair it?
72 hours
430
Under what circumstances may a landlord require a tenant to pay for repairs to a security device?
Anytime the tenant causes the damage and the lease provides that the tenant must pay
431
In an efficiency apartment, where would the smoke detector have to be located?
Inside the main living area
432
What are two types of funds for starting a business operation?
Individual financing and funds from professional lenders
433
What is an equity partner?
An equity partner is a person or company that puts up the capital for an entity and then wants payback and an equity interest into the company.
434
What is a general operating budget and why is it important?
A general operating budget is a plan to set out spending for a real estate brokerage. Without a spending plan, a broker can run through all the money necessary to run the brokerage successfully. A budget will tell the broker how much and when to make expenditures.
435
Income statement
shows the revenues, expenses, gains and losses
436
_________ is the brokerage business’s “net worth.”
Balance Sheet
437
What financial statement is a record of cash available at different points of time?
Cash flow statement
438
What is a plan to set out spending for a real estate brokerage called?
General Operating Budget
439
What financial statement shows the brokerages assets and liabilities?
Balance Sheet
440
When a person owns real property they have obtained certain rights. A lessee will gain three of those rights:
possession, use, and exclusion
441
In an estate for years (also called a Tenancy for Years) is
a residential leasehold estate for a definite period of time, with a beginning date and an ending date
442
In an estate from period-to-period, also called a periodic tenancy,
the residential tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent.
443
The estate at will, also called a tenancy at will,
is terminated by proper notice, or by the death of either party.
444
In an estate at sufferance,
a residential or commercial tenant occupies the premises without consent of the landlord or other legal agreement with the landlord.
445
Gross lease
a tenant will be responsible for paying the lease amount and personal expenses of the leased space but the landlord is responsible for taxes, insurance, and maintenance on the entire property.
446
Net lease
tenant will pay base rent and a percentage (depending upon the number of tenants) of the fees (usually the taxes).
447
Net Net lease (double net)
tenant usually pays rent plus percentage of taxes and insurance
448
Net Net Net lease (Triple-net)
tenant pays most fees and other expenses for the property, including maintenance.
449
Land Lease
tenant leases bare land and builds on the property. Improvements go to the owner when the lease is over.
450
The Small Business Administration puts out these three essential marketing items:
1. Research and Strategy
2. Marketing Materials
3. Marketing Methods
451
There are three basic skills a leader should maintain that are essential to effective administration:
Technical Skills
Human Skills
Conceptual Skills
452
Where do leaders and managers get their power?
Managers get power from the position.
| Leaders get power through influence.
