Property Management & Leasing — Real Estate License practice questions

A property manager negotiates a lease renewal that includes a tenant-improvement (TI) allowance funded by the landlord. This allowance is BEST described as?

1. A landlord contribution toward build-out costs, often amortized into rent
2. A tenant's personal loan that has no connection to the lease terms
3. A government subsidy paid directly to tenants under federal housing law
4. A security deposit substitute that replaces the tenant's deposit entirely

Answer: A — A landlord contribution toward build-out costs, often amortized into rent

A) Correct — TI allowances are landlord-funded contributions toward tenant build-out, frequently recovered through rent structure or amortization. B) It's a lease-related landlord contribution, not an unrelated personal loan. C) TI allowances are negotiated lease terms, not a federal housing subsidy. D) A TI allowance addresses build-out costs, not a substitute for a security deposit.

The implied warranty of habitability generally obligates a residential landlord to?

1. Provide luxury-grade finishes and amenities regardless of the rent charged
2. Guarantee the tenant will never experience any maintenance issue at all
3. Maintain the premises in a condition fit for basic human habitation
4. Renovate the unit fully between every tenancy regardless of condition

Answer: C — Maintain the premises in a condition fit for basic human habitation

A) The warranty sets a baseline habitability standard, not a luxury standard. B) The warranty doesn't guarantee zero issues ever arise, only that serious defects are remedied. C) Correct — landlords must maintain basic livability (safe structure, working utilities, no serious hazards). D) Full renovation between every tenancy isn't required by the habitability warranty.

A property manager sets aside a portion of collected rents each month into a reserve for future roof and HVAC replacement. This practice is an example of?

1. Commingling funds improperly with the manager's personal operating account
2. Reserve planning for capital expenditures as part of sound operating budgeting
3. An illegal diversion of tenant security deposits for unrelated purposes
4. A required federal escrow arrangement under RESPA for commercial property

Answer: B — Reserve planning for capital expenditures as part of sound operating budgeting

A) Properly designated reserve accounts, kept separate from personal funds, aren't commingling. B) Correct — setting aside funds for anticipated capital replacements is standard reserve/budget planning. C) This describes rent-derived operating reserves, not tenant security deposits. D) RESPA escrow rules apply to certain residential mortgage transactions, not this reserve practice.

A gross residential lease is BEST characterized by:

1. Tenant is billed separately for taxes, insurance, and building upkeep costs
2. The tenant is assigned the duty to manage the entire rental building unit
3. Tenant pays one rent amount while the landlord covers most operating costs
4. The tenant pays no rent at all but assumes management duties for the unit

Answer: C — Tenant pays one rent amount while the landlord covers most operating costs

A) Wrong - that is net lease. B) Wrong - not gross. C) Correct - common residential structure. D) Wrong - no such standard.

A property management agreement is BEST described as which type of relationship between owner and manager?

1. A fiduciary agency relationship authorizing the manager to act for the owner
2. A general partnership sharing all profits and losses of the property equally
3. A joint tenancy giving the manager an ownership interest with survivorship
4. A simple vendor contract with no fiduciary duties owed to the owner

Answer: A — A fiduciary agency relationship authorizing the manager to act for the owner

A) Correct — the property manager acts as the owner's agent, owing fiduciary duties within the agreement's scope. B) A management agreement doesn't create a partnership sharing losses. C) Joint tenancy involves co-ownership of title, not a management role. D) Property managers generally do owe fiduciary duties, unlike an ordinary vendor.

What is the difference between actual and constructive eviction?

Actual: legal proceeding by the landlord to remove a tenant. Constructive: landlord's actions or inaction make the property uninhabitable, effectively forcing the tenant to leave.

What is constructive eviction?

When a landlord's actions or failure to act make the premises uninhabitable, forcing the tenant to leave.

Universal vs. general vs. special agency?

Universal: unlimited authority. General: handles ongoing transactions (property manager). Special: hired for one transaction (typical RE listing/buyer agent).

What is a double-net lease (NN)?

A lease where the tenant pays base rent plus property taxes and insurance. The landlord remains responsible for maintenance and structural repairs.