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Property Management EXAM NEW VERSION
LATEST UPDATE 2025-2026 WITH ACCURATE
ANSWERS GUARANTEED PASS BEST STUDYING
MATERIAL
What is a maintenance request? A. A notice of eviction sent by the landlord B. A property manager's evaluation of needed upgrades C. A request from the tenant for repairs, usually in writing D. A routine inspection notice from the city Correct Answer: C. A request from the tenant for repairs, usually in writing Rationale: A maintenance request is initiated by a tenant to inform the property manager or landlord of the need for repairs. Best practice is for it to be submitted in writing. What is a management contract? A. A rental agreement between a landlord and a tenant B. A listing agreement between a broker and a seller C. A contract between the income property owner and property manager detailing authority, duties, and compensation D. A business partnership agreement Correct Answer: C. A contract between the income property owner and property manager detailing authority, duties, and compensation Rationale: A management contract legally outlines the roles, responsibilities, and payment for the property manager hired by the owner. What does a management plan include? A. Architectural drawings and blueprints B. A detailed plan outlining the owner’s objectives and budget for the property C. A marketing plan for new developments D. A rental listing service contract Correct Answer: B. A detailed plan outlining the owner’s objectives and budget for the property Rationale: The management plan guides the manager on how to meet the owner’s goals and includes operational and financial details. What is market analysis in property management? A. A tax assessment of the property's current value
B. A regional and neighborhood study to assess economic and market conditions C. A comparison of building materials D. A home inspection report Correct Answer: B. A regional and neighborhood study to assess economic and market conditions Rationale: Market analysis evaluates supply, demand, demographics, and economic factors to support investment or rental decisions. What is neighborhood analysis? A. A review of municipal zoning laws B. An analysis of competing property managers C. A study of neighborhood characteristics affecting property desirability D. A tenant satisfaction survey Correct Answer: C. A study of neighborhood characteristics affecting property desirability Rationale: Neighborhood analysis assesses factors like transportation, amenities, and economic activity to determine appeal to buyers or renters. What is a net lease? A. A lease where the landlord pays all property expenses B. A lease where the tenant pays rent only C. A lease requiring the tenant to pay rent plus maintenance, taxes, and insurance D. A lease without a security deposit Correct Answer: C. A lease requiring the tenant to pay rent plus maintenance, taxes, and insurance Rationale: A net lease shifts many property expenses to the tenant, common in commercial leases. What is a noncompeting clause? A. A clause that restricts tenants from subleasing B. A term in a lease that prohibits guests C. A contract that prevents employees from competing with their employer D. A requirement for silence in residential areas Correct Answer: C. A contract that prevents employees from competing with their employer Rationale: A noncompete clause limits an employee’s ability to enter into competition with their employer, often during or after employment. What is an operating budget? A. A landlord’s retirement investment plan B. A monthly rent summary
What is technical oversupply? A. A shortage of qualified maintenance staff B. More units available than demand from tenants C. A building with excessive amenities D. Lack of available building materials Correct Answer: B. More units available than demand from tenants Rationale: Oversupply occurs when the market has more rental units than there are tenants, causing vacancies. What is tenancy at sufferance? A. A lease signed under duress B. A tenant overstays without consent, but pays rent which landlord accepts C. A long-term lease agreement D. A tenant who voluntarily gives up rights Correct Answer: B. A tenant overstays without consent, but pays rent which landlord accepts Rationale: This occurs when a tenant remains after lease expiration and the landlord accepts rent, creating a holdover situation. What is tenancy at will? A. A month-to-month lease only B. Occupation with indefinite duration, terminable at any time C. A fixed-term lease D. Court-ordered tenancy Correct Answer: B. Occupation with indefinite duration, terminable at any time Rationale: Tenancy at will allows either party to end the agreement without a fixed term or required notice period (unless local law says otherwise). When must rents be deposited into a trust account after receipt? A. Within 10 business days B. Immediately C. Within 3 business days D. At the end of the month Correct Answer: C. Within 3 business days Rationale: Many state laws require landlords or managers to deposit received rents into trust accounts within 3 business days to avoid commingling. In which housing situation may children legally be denied? A. Any single-family dwelling B. Properties under rent control
C. Housing designated for tenants 62 or older D. All apartment complexes Correct Answer: C. Housing designated for tenants 62 or older Rationale: The Fair Housing Act allows age-restricted communities (such as 62+) to exclude children legally. When may a landlord adopt new building rules? A. Only with tenant approval B. After legal proceedings C. When applied fairly to all occupants D. After the building is sold Correct Answer: C. When applied fairly to all occupants Rationale: A landlord can implement new rules if they are nondiscriminatory and fairly applied to all residents. Which of the following is NOT a protected class in Montana housing law? A. Race B. Religion C. Political affiliation D. Disability Correct Answer: C. Political affiliation Rationale: While federal and Montana laws protect against housing discrimination based on race, religion, and disability, political affiliation is not a protected category. If a tenant violates rental agreement terms, the landlord may: A. Evict immediately without notice B. Provide a 14-day notice to remedy nonemergency issues C. Change the locks D. Raise the rent Correct Answer: B. Provide a 14-day notice to remedy nonemergency issues Rationale: The law typically requires landlords to give tenants a chance to correct violations before eviction proceedings begin. What is the effective gross monthly income for a 29-unit building with $475/unit rent and 8% vacancy? A. $11, B. $12, C. $13, D. $10,
Correct Answer: B. To determine the appeal of the area to prospective buyers or renters Rationale: Neighborhood analysis includes studying amenities, utilities, transportation, and land use to assess the desirability of the area. A net lease differs from a gross lease in that: A. The landlord pays all expenses in a net lease B. The tenant pays rent only in a net lease C. The tenant pays rent plus property expenses such as taxes and insurance D. The lease only applies to residential properties Correct Answer: C. The tenant pays rent plus property expenses such as taxes and insurance Rationale: In a net lease, tenants are responsible for many operating costs in addition to the rent. When is technical oversupply in the rental market most likely to occur? A. When rent control is in place B. When property values drop C. When available units exceed the number of interested tenants D. When landlords raise rent prices Correct Answer: C. When available units exceed the number of interested tenants Rationale: Technical oversupply leads to higher vacancy rates due to limited tenant demand compared to available units. What is the significance of the 'option to renew' in a term insurance policy? A. It provides a premium discount for early renewal B. It guarantees the right to renew without showing insurability C. It allows conversion to a permanent policy D. It prevents cancellation for any reason Correct Answer: B. It guarantees the right to renew without showing insurability Rationale: The option to renew allows policyholders to extend coverage regardless of changes in health or insurability status. What is a tenancy at will? A. A lease with fixed expiration B. A lease that renews annually C. A rental arrangement that can be ended by either party at any time D. A lease requiring court approval Correct Answer: C. A rental arrangement that can be ended by either party at any time Rationale: Tenancy at will is flexible and can be terminated at any moment by the tenant or landlord without a fixed term.
What is tenancy at sufferance? A. A tenant’s legal right to remain after lease ends B. A tenant who stays without the landlord’s consent and refuses to leave C. A lease signed during an emergency D. A landlord’s lease with no rights given to the tenant Correct Answer: B. A tenant who stays without the landlord’s consent and refuses to leave Rationale: In tenancy at sufferance, a holdover tenant remains in possession without legal rights and may face eviction What is the definition of “operating budget” in property management? A. A landlord’s long-term retirement plan B. A projection of income and expenses for the operation of a property over one year C. A maintenance schedule D. A summary of past tenant complaints Correct Answer: B. A projection of income and expenses for the operation of a property over one year Rationale: The operating budget is a financial forecast that helps the property manager plan for income and control costs over a 12-month period. What are operating costs based on? A. The owner’s personal financial goals B. Property taxes alone C. Comparable property expenses and the specific maintenance needs of the subject property D. Zoning restrictions Correct Answer: C. Comparable property expenses and the specific maintenance needs of the subject property Rationale: Operating costs are estimated using data from similar properties and take into account the unique conditions of the property being managed. What is meant by the term "optimum price" in property marketing? A. The lowest possible rent B. The price that guarantees zero vacancies C. The highest price that will generate the desired sales in a target market D. The price mandated by local authorities Correct Answer: C. The highest price that will generate the desired sales in a target market Rationale: Optimum price is strategically set to balance profitability with market demand to ensure successful occupancy or sales. What is meant by “optimum rents”? A. The rent that maximizes tenant turnover B. The highest legal rent possible under rent control laws
Correct Answer: C. Issue a 14-day notice to remedy the issue if it affects health or safety Rationale: Landlords must give tenants a 14-day notice to fix nonemergency violations that impact property safety or health. What is the effective gross monthly income of a 29-unit apartment building renting for $475/unit with an 8% vacancy rate? A. $11, B. $13, C. $12, D. $13, Correct Answer: C. $12, Rationale: Total potential income is 29 units × $475 = $13,775. Applying the 8% vacancy loss: $13,775 × 0.92 = $12, Institute of real estate management (IREM) - Ans - An organization acting as an exchange for management ideas, and recognizing achievement in the field. Has a Code of Ethics for real estate managers. Lease application
- Ans - a form the landlord uses to determine whether someone qualifies for a rental
property Lease renewals
- Ans - After the lease expires, signing the new lease with the existing tenant.
Leasing agent
- Ans - A broker who markets the availability of space to rent and locates and negotiates
the terms of a lease with suitable tenants. Unless otherwise specified in a rental agreement: - Ans - Periodic rent is payable at the beginning of a term of a month or less and otherwise in equal monthly installments at the beginning of each month.
A landlord who rents an apartment for $800 per month, may charge what amount for a deposit under the Residential Landlord-Tenant Act of 1977? - Ans - Landlord may charge any amount agreed upon between the parties to the contract. Which of the following is true as it relates to a guide dog in a "no pets" apartment building: - Ans - they are not considered a pet and should be allowed What is the gross potential annual income of a 32 unit apartment building that rents each unit for $475/month when there is an 9% vacancy rate? - Ans - $182, When must property managers withdraw their management fees from a trust account? - Ans - within 10 business days after due and payable or when ledger is reconciled Following a tenant's response for an action for possession of a residential dwelling unit, the court shall schedule a hearing within ______ days. - Ans - 14 What is the annual rent on a building where the annual rent is $8.20 per sq. ft? The size of the building is 2,800 sq. ft. - Ans - $22,960. For the Board of Realty Regulation to revoke a license, they must first: - Ans - conduct an investigation A landlord must provide the prior tenants' statement of deposit withholding to an incoming tenant: - Ans - if requested in writing by incoming tenant If the Board of Realty Regulation has an unsatisfied judgment against a property manager, payment will be made from the: - Ans - real estate recovery account Which of the following is true as it relates to security deposits: - Ans - Landlords may be able to charge a reasonable amount for their labor to clean a unit
A building measures 64ft. x 72ft and the rent is $3540.00 per month. What is the annual rent per square foot? - Ans - $9. Prior to the removal of abandoned personal property from a residential rental a period of _______ must elapse. - Ans - 48 hours In order for a landlord to adopt a new rule, the rule must be - Ans - reasonably related to the purpose for which it is adopted You manage a building with 13 vacant apartments and 39 occupied apartments. The monthly expenses (not including a $2400 debt service) are $8600 (including mgmt fee) and the monthly effective gross income is $19,280. What would your monthly management fee be if you charged 9%? - Ans - $1735. When is new licensee required to complete the continuing education requirements? - Ans - by the 2nd renewal date In the event a property is not ready for move-in at the agreed upon date, the tenant: - Ans - may provide landlord with 5 days notice of termination Which of the following is true regarding security deposits? - Ans - there is no limit to their amount The maximum amount of rent a property can generate is referred to as the: - Ans - gross possible income Which of the following is true as it relates to license status? - Ans - Licensees in a "lapsed" status may utilize their license The two parties on a lease agreement are the: - Ans - tenant and landlord
A rental agreement with a 16 month duration between a landlord and a tenant is signed by the tenant, but is not signed by the landlord. However the landlord accepts rental payment without reservation. Which of the following is true as it relates to this arrangement? - Ans - The rental agreement is given effect by the landlord's action. The duration is for 1 year. In which housing situation would you be legally allowed to deny children? - Ans - if it is a property designated for tenants aged 62 or older If a tenant rents a home for a period of 180 days, she is most likely in a: - Ans - bilateral agreement An employee who works for a HOA and steals money from the HOA's account would be covered under which insurance: - Ans - Fidelity An 8-plex rents for $575 per unit, however 3 units are vacant. What is the Gross Potential Income of the building? - Ans - $ Lead-based paint disclosures are required for residential buildings built prior to what year? - Ans
- 1978 A trust account must be: - Ans - specifically designated as a "trust account" What type of insurance would typically cover a dishonest employee: - Ans - Fidelity Insurance What is the pro-rated rent for a $525/month apartment when a tenant moves in on the 16th of the month? (Assume 30 day month.) - Ans - $262. A trust account must not be: - Ans - in a financial institution located in a state other than Montana Management personnel who reside at the property are called: - Ans - site managers
If no length is specified, the default lease length for commercial properties is: - Ans - 1 year If a tenant damages the leased premises the landlord may: - Ans - provide tenant with a 3 day to vacate notice A real estate investor would typically be most interested in which of the following metrics in evaluating the suitability of a potential investment rental property: - Ans - anticipated cash flow What is the number of educational hours required, and by when? - Ans - 12 hours, annually Which of the following is not included in a market analysis: - Ans - vacancy rates How much is the monthly rent for office space that measures 28ft x 56 ft, with a yearly rent price of $9.50/sq. ft.? - Ans - $1241. The lease on a commercial space charges $14,000 per year, with an incentive of 6 months free for a 5 year contract. In this example what would the average monthly rent be for a tenant who occupied the space for 5 years? - Ans - $1050. What is the monthly rent paid on a unit with a rental agreement that calls for 7% of gross sales or $885 per month, whichever is greater? The annual gross sales is $160,000 - Ans - $933.33 An 8 - plex rents for $575 per unit, however 3 units are vacant. What is the Effective Gross Income of the building? - Ans - $ If a tenant is found to have a pet dog at a property that does not allow pets, the landlord can give written notice to: - Ans - correct or vacate within 3 days
In the event that a tenant is not complying with their obligations under the terms of the rental agreement, the landlord may: - Ans - provide a 14 notice to remedy any non-emergency infractions that affect the health or safety of the property. How long does a landlord have to remedy nonemergency maintenance issues? - Ans - 14 days In lieu of a $200 security deposit, a landlord agrees to allow a Tenant to clean their dirty unit on arrival. Upon move-out the tenant leaves the unit clean with no damage or monies owed. The landlord: - Ans - must refund the tenant a $200 security deposit for value given for the cleaning at the start of the lease A landlord may require a tenant notify them of extended absences beyond ______ days. - Ans - 7 A property manager who manages multiple properties in a supervisory position is called a(n): - Ans - asset manager In contracts the "landlord" may also be referred to as the: - Ans - lessor A property manager has a legitimate concern about drug activity going on at one of their properties with a month-to-month lease. One option they have is to: - Ans - provide tenant with a 30 day notice to vacate When can a landlord deduct cleaning expenses without giving the tenant a 24 hour notice? - Ans - When the tenant failed to notify landlord of their intent to vacate Which of the following should a property manager not do for their tenants? - Ans - interpret legal documents A leasehold which the landlord or tenant may terminate at any time with reasonable notice is: - Ans - tenancy at will
nature within a 6 month period the landlord may give written notice to: - Ans - vacate within 5 days What does ADA stand for? - Ans - American's with Disabilities Act Which of the following is true as it relates to security deposits: - Ans - Landlords may be able to charge a reasonable amount for their labor to clean a uni A lease common in an industrial park, which requires the tenant to pay certain costs associated with the operation of the property would be a: - Ans - net lease If a tenant fails to provide a new address upon terminating a lease, the landlord: - Ans - should forward the deposit to the last-known address On rental agreements the "tenant" is also known as the: - Ans - lessee Fair housing laws would require a landlord to make all of the following reasonable accommodations / modifications, except: - Ans - installing an elevator to access a 2nd floor apartment You are managing a 56-unit apartment complex and your cost of doing business to manage these units is $6,000. What would your markup have to be per unit to maintain a 14% profit? - Ans - $17. What is the average annual effective gross income of a commercial space on a 3 year lease if the first 6 months are rent free and the annual rent is $5000? - Ans - $4166. When a property management company decides that they will not offer their services in an area of town that is predominately Jewish they are conducting an illegal practice called: - Ans - Redlining
A lease for a specific period of time (for example July 1st to September 17th) is also known as a(n): - Ans - estate for years What parties are the sole players in a fiduciary relationship? - Ans - principals and agents Which of the following is a good reason for deferring maintenance on a commercial property? - Ans - 1) Not enough time or money. 2) Seasonal or weather conditions. 3) Parts or labor unavailable. 4) Property is being sold "asis". The net change in the amount of occupied space from one period to the next is called: - Ans - Absorption is the space "absorbed" by tenants during the period (normally a year). It includes construction of new space and demolition of existing space. The Kirkpatrick Model of training evaluation recommends assessing the program on which four levels? - Ans - Reaction: What the participants thought and felt about the training.
- Learning: The resulting increase in knowledge, skills, or capability. 3. Behavior: How did the program influence their behavior on the job? 4. Results: What were the effects on the business or environment resulting from the participants performance? If ABC Insurance Company pays a loss that it believes is rightfully the responsibility of XYZ Insurance Company, this is called: - Ans - Subrogation. After paying your insurance claim, your insurer is then subrogated to the rights of your policy and can sue the negligent party on your behalf. Which of the following is not needed in order to calculate Effective Gross Income (EGI)? - Ans - Operating Expenses. Net Rent Revenue + Miscellaneous Income + Expense Reimbursements = Effective Gross Income The section of a contract that provides a detailed description on how the work should be done is the: - Ans - Specifications. The Scope of Work is the general summary of the work to be done. The Specifications are the detailed description of how the work should be done. The Punch List is a checklist developed jointly by the property manager and the contractor.
