Reference no: EM132159159

1. A client wants to reduce the property's hazard insurance coverage substantially, in order to save money on the premiums. If the property manager tries to arrange this, the insurance company might:

a. terminate coverage based on a charge of fraud

b. keep the policy in force, but lower the client's credit rating

c. agree to reduce the coverage only if the deductible is increased by a corresponding amount

d. refuse to reduce the coverage, because insurers generally require that property be insured to at least 80% of its value

2. A continuous operation provision in a lease is most likely to apply to:

a. an anchor tenant in a shopping center

b. the landlord of a stand-alone retail property

c. a tenant leasing Class C office space

d. the owners association in a condominium or other CID 1 points

3. A conversion ratio measures:

a. how much of the multi-family housing stock in this market has been converted to condominiums

b. how many prospects it takes to get a signed lease for a rental space

c. what percentage of a property's tenants have occupied their spaces for over one year

d. what percentage of a property's tenants renew their leases if offered the opportunity

4. A developer builds a large office tower in a city where there is a shortage of office space and rents are high. This will:

a. increase demand, which will tend to lower rents

b. increase demand, which will tend to increase rents

c. increase supply, which will tend to lower rents

d. increase supply, which will tend to increase rents 1 points

5. A difficult and tight-fisted client is making it just about impossible for Serena to maintain and operate the property in compliance with landlord-tenant laws and other legal requirements. Assuming that their management agreement is typical, which of the following is correct?

a. The client's failure to keep the property in compliance with legal requirements is a breach of the management agreement

b. The contract requires Serena to use her own funds to prevent legal violations if the client fails to do so

c. Serena is contractually liable for any fines, damages, or other penalties that result from legal noncompliance

d. Serena is contractually obligated to report the legal violations to the appropriate authorities

6. A lease in which all of the operating expenses are passed through to the tenant is called

a. triple net lease

b. CAM lease

c. gross lease'

d. shadow lease

7. A maintenance employee assaulted one of the tenants in a building that Clive manages. Clive hired and supervised the employee. Regarding Clive's potential liability in connection with this incident, which of the following is correct?

a. Clive can't be held liable because he didn't authorize the employee's action

b. Clive's liability is likely to depend on whether he was negligent in his hiring, supervision, or retention of the employee

c. Clive can be held liable only if he failed to do a criminal background check when the employee was hired

d. Clive can be held liable only if he participated in the incident, benefited from it in some way, or assisted the employee after the fact

8. A maintenance request form for tenants to fill out should include:

a. an estimate of how long the work is likely to take

b. a hold harmless clause, protecting the manager against liability for work negligently performed

c. work order and purchase order numbers, if applicable

d. an authorization for entry into the tenant's rental space or unit, to be signed by the tenant

9. A new client who just inherited a commercial building has told her property manager that she doesn't plan to sell the property, but her primary financial goal is a quick, high return. In this situation, the manager should:

a. persuade the client to sell the property, even if that isn't in the manager's self-interest

b. realize that the client will probably be reluctant to authorize any expenditures unless they're necessary to maintain or increase the property's net income in the short term

c. explain the income tax consequences of that choice to the client

d. tell the client that his fiduciary duties do not allow him to represent her on those terms

10. A new commercial tenant is requesting build-out work that will cost more than the agreed improvement allowance. The property manager should:

a. notify the tenant that the requested improvements will have to be scaled back

b. remind the tenant that any construction costs in excess of the allowance will be the tenant's responsibility

c. increase the allowance to cover the additional work, as long as the changes will increase the value of the property as a whole

d. consult with the client before agreeing to increase the tenant's improvement allowance

11. A property manager has a legal obligation to protect and promote her client's interests. This is because the manager:

a. is the client's agent and owes the client fiduciary duties

b. is a member of a professional association with a code of ethics that specifically requires this

c. is subject to the Uniform Standards of Professional Property Management

d. has signed a contract (the management agreement) that expressly requires this

12. A property manager is preparing a management plan for a new client's property. The manager's property analysis:

a. should focus primarily on the property's physical condition at this stage

b. should include an evaluation of the property's current operations, leasing, management, and financial condition, as well as its physical condition

c. should be performed after the market analysis, for most types of property

d. must be based on an appraisal performed by a state-licensed or -certified appraiser within the previous six months

13. A property manager is deciding on a marketing plan for a vacant retail space. How much advertising will be needed in order to find the next tenant for the space is most likely to be affected by

a. branding

b. the target market

c. the property's location

d. the cost per prospect

14. A property manager is doing a preliminary study in order to prepare a management plan. As usual, the preliminary study will involve five main categories of analysis. These categories include all of the following, except:

a. analysis of alternatives

b. analysis of demographics

c. regional analysis

d. neighborhood analysis

15. A property manager may suggest physical changes to a client's property in order to correct or address different forms of depreciation. Which of the following is true?

a. Correcting curable external obsolescence is called remodeling

b. Correcting curable physical deterioration is called remodeling

c. Correcting curable functional obsolescence is called rehabilitation

d. Correcting deferred maintenance is called rehabilitation

16. A property manager needs a bad debt and vacancy factor for a residential property's annual operating budget. She is most likely to:

a. check the MSA website to see projected average vacancy rates for her area

b. evaluate the property's actual rent collection record in previous years

c. base it on changes in the Consumer Price Index

d. use the figure agreed to in the management agreement

17. A property manager rejected a rental application for a retail space because of the applicant's race. Was this legal or illegal?

a. Legal, because this is commercial property and the Fair Housing Act applies only to residential property

b. Legal, because antidiscrimination laws apply to real estate sales transactions, not lease transactions

c. Illegal, because any discrimination by a property manager is a violation of the manager's fiduciary duties

d. Illegal, because the Civil Rights Act of 1866 prohibits discrimination based on race or color in all real estate transactions

18. A property manager records rents collected from tenants when they are actually paid (not merely owed), but he records certain operating expenses as they accrue (as opposed to when they're paid). This manager is using the:

a. payment point accounting method

b. certified accounting method

c. modified cash-basis accounting method

d. triple-entry accounting method

19. A property manager should not give "welcome to the building" gifts to new tenants:

a. that cost more than $25, the legal limit

b. because such gifts are a form of illegal kickback

c. unless all tenants receive exactly the same gift

d. without the property owner's prior authorization 1 points

20. A property manager's rent collection records should include:

a. both a rental ledger and a rent roll

b. either a rental ledger or a rent roll

c. a rental ledger rather than a rent roll

d. a rent roll rather than a rental ledger