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Property Management Exam TEST QUESTIONS
ACCURATE AND VERIFIED ACTUAL EXAM
QUESTIONS WITH DETAILED ANSWERS FOR
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In a large management organization, the general administration of the daily operation of a property is performed by the: A. Leasing agent B. Building superintendent C. Field manager D. Real estate broker Correct Answer: C. Field manager Rationale: The field manager, or property supervisor, is responsible for general administration and oversees the day-to-day operations of the property. Which Sunshine Apartments rental policy is considered legal under the Fair Housing Act of 1968? A. Rentals are refused to people with children. B. Rentals are refused to individuals with disabilities. C. Rentals are refused to long-haired motorcycle riders. D. Rentals are refused to people of a certain race. Correct Answer: C. Rentals are refused to long-haired motorcycle riders Rationale: Long-haired motorcycle riders are not a protected class under the Fair Housing Act. The owners of an apartment complex have given specific instructions to their rental manager to NOT rent to Hispanics or African Americans. Who is liable? A. Only the owners B. Only the manager C. Neither D. Both the manager and owners Correct Answer: D. Both the manager and owners Rationale: Both parties involved in discriminatory practices are held liable under the Fair Housing Act. A property manager may deny a lease to someone because the individual: A. Is of a specific religion B. Has a disability
C. Has insufficient income D. Is over the age of 55 Correct Answer: C. Has insufficient income Rationale: Financial qualification is a legal reason for denying a lease, as it is not discriminatory. Owners and managers of older residential rental properties must: A. Provide solar panel access B. Allow pets C. Avoid chipping and peeling paint D. Replace all plumbing Correct Answer: C. Avoid chipping and peeling paint Rationale: Properties built before 1978 must comply with lead-based paint disclosure laws, which include maintaining paint conditions. Managers must make a lead-based paint disclosure when the property they manage was built before: A. 1985 B. 1978 C. 1990 D. 1965 Correct Answer: B. 1978 Rationale: Lead-based paint disclosures are required for residential properties built before
Of the following, which generally offers a marginal financial return for management? A. Retail shopping centers B. Office buildings C. Apartment complexes D. Single family housing Correct Answer: D. Single family housing Rationale: Single-family homes usually provide lower returns due to limited rental income and higher per-unit management costs. What is the major type of advertising used to rent apartments and single-family homes? A. Billboards B. Classified ads C. Flyers D. Television Correct Answer: B. Classified ads
A benefit that a professional property manager can offer multiple-owner occupied projects includes: A. Reduced rent B. Decentralized authority and responsibility for operations of the property C. Property tax exemptions D. Fewer maintenance responsibilities Correct Answer: B. Decentralized authority and responsibility for operations of the property Rationale: Professional managers help owners by organizing and delegating operational tasks effectively. A newer field of property management involves working with individual, inexpensive home ownership and homesite rental in: A. Condominiums B. Retirement villages C. Manufactured home parks D. Commercial office parks Correct Answer: C. Manufactured home parks Rationale: Manufactured home parks are growing in popularity as an affordable housing option. Subsidized housing is managed as other types of housing are; however, one observable difference is that: A. Maintenance costs are lower B. Rent prices are higher C. Tenant turnover, vacancy rates, rent loss, and collection costs are higher in this type of housing D. Tenants are more financially stable Correct Answer: C. Tenant turnover, vacancy rates, rent loss, and collection costs are higher in this type of housing Rationale: These challenges are common in subsidized housing due to absentee ownership and income instability. Subsidized housing managers realize that: A. Minimal oversight is needed B. Government compliance is optional C. Subsidized housing developments need professional ongoing management D. Rents can be increased freely Correct Answer: C. Subsidized housing developments need professional ongoing management Rationale: Managing subsidized housing requires expertise in regulatory compliance and financial reporting.
The 55 to 65 age group tends to sell their larger homes and move into a(n): A. Industrial zone B. Rental-only community C. Active, resort-oriented community D. Subsidized housing unit Correct Answer: C. Active, resort-oriented community Rationale: Many in this age group seek lifestyle amenities and leisure, often found in resort- style communities. A neighborhood analysis for a subject office property will highlight transportation and parking facilities in the community, as well as: A. Local housing prices B. School district ratings C. Emphasize the prestige of address D. Nearby grocery stores Correct Answer: C. Emphasize the prestige of address Rationale: The prestige of location can greatly impact the desirability and rental income of office properties. A neighborhood analysis would also include economy, supply and demand, amenities and facilities. Which of the following is also emphasized in such an analysis for an office property? A. Number of residential units nearby B. Zoning for agricultural use C. Emphasize the prestige of address D. Utility provider details Correct Answer: C. Emphasize the prestige of address Rationale: For commercial and office properties, the prestige of the location (such as a recognizable or prestigious address) adds value and marketability, making it a crucial component of neighborhood analysis. A neighborhood analysis for a subject office property will highlight transportation and parking facilities in the community, as well as: Options: A. Number of residential units nearby B. Zoning for agricultural use C. Emphasize the prestige of address D. Utility provider details Correct Answer: C. Emphasize the prestige of address Rationale: A neighborhood analysis for office property includes factors such as economic trends, amenities, access, and the prestige of the address, which influences the property's desirability and value.
D. The maintenance staff Correct Answer: C. The property owner Rationale: Property managers are fiduciaries of the property owner and must act in the owner's best interest. When a lease agreement is signed by a property manager on behalf of the owner, it is binding on: A. The property manager only B. The leasing agent C. The tenant and the property manager D. The tenant and the owner Correct Answer: D. The tenant and the owner Rationale: The property manager acts as the agent for the owner, so the agreement is legally binding on the owner and the tenant. Which of the following actions would be considered discriminatory under the Fair Housing Act? A. Refusing to rent to a convicted felon B. Charging a higher deposit to a family with children C. Declining to rent to someone with poor credit D. Offering rent discounts for military personnel Correct Answer: B. Charging a higher deposit to a family with children Rationale: Familial status is a protected class under the Fair Housing Act; differential treatment of families with children is discriminatory. A key responsibility of a property manager during budgeting is to: A. Set mortgage rates B. Prepare a capital improvement plan C. Enforce zoning ordinances D. Adjust property tax assessments Correct Answer: B. Prepare a capital improvement plan Rationale: Property managers prepare operating budgets and capital plans to maintain and enhance the property. Which type of maintenance is performed to prevent future problems? A. Corrective maintenance B. Emergency maintenance C. Cosmetic maintenance D. Preventive maintenance Correct Answer: D. Preventive maintenance
Rationale: Preventive maintenance is scheduled in advance to avoid more costly repairs down the line. A tenant with a disability requests a reasonable accommodation to install grab bars in the bathroom. The landlord must: A. Refuse because it alters the unit B. Agree but require the tenant to remove them later C. Provide and pay for installation D. Allow the tenant to install at their own expense Correct Answer: D. Allow the tenant to install at their own expense Rationale: Under the Fair Housing Act, landlords must allow reasonable modifications at the tenant’s expense in most cases. Which type of insurance would cover injuries sustained by a visitor on the rental property? A. Fire insurance B. Renters insurance C. Liability insurance D. Workers' compensation Correct Answer: C. Liability insurance Rationale: Liability insurance protects against bodily injury claims occurring on the property. Which of the following would likely be considered a capital expenditure? A. Replacing HVAC systems B. Paying utility bills C. Lawn mowing service D. Monthly janitorial service Correct Answer: A. Replacing HVAC systems Rationale: Capital expenditures are long-term improvements or replacements, not routine operating costs. What is the primary purpose of a move-in inspection report? A. To ensure the property is up to zoning code B. To record pre-existing conditions C. To calculate rent increases D. To verify property taxes Correct Answer: B. To record pre-existing conditions Rationale: A move-in inspection protects both landlord and tenant by documenting the property's condition at move-in.
D. To determine the tenant’s responsibilities Correct Answer: B. To define the duties and compensation of the property manager Rationale: The property management agreement is a contract between the owner and manager outlining services, responsibilities, and fees. Which of the following would be considered corrective maintenance? A. Regularly scheduled HVAC filter replacement B. Repainting exterior trim every 5 years C. Fixing a leaking faucet D. Installing energy-efficient windows Correct Answer: C. Fixing a leaking faucet Rationale: Corrective maintenance addresses a problem after it occurs. Preventive maintenance is done to avoid issues before they arise. What is the main purpose of a reserve fund in property management? A. Pay the manager’s bonus B. Cover long-term capital expenditures C. Subsidize rent for low-income tenants D. Pay monthly maintenance staff wages Correct Answer: B. Cover long-term capital expenditures Rationale: Reserve funds are saved specifically to handle large-scale repairs or replacements, such as roofing or HVAC systems. Under federal fair housing laws, which of the following is a protected class? A. Employment status B. Marital status C. National origin D. Pet ownership Correct Answer: C. National origin Rationale: Federal law prohibits housing discrimination based on national origin, among other protected characteristics. Which document allows a property manager to act legally on behalf of a property owner? A. Lease agreement B. Power of attorney C. Management agreement D. Listing contract Correct Answer: C. Management agreement Rationale: A signed management agreement gives the property manager the authority to act in the owner's best interest regarding the property.
Which of the following is a major benefit of professional property management for owners? A. Reduced tenant rights B. Guaranteed rental income C. Increased efficiency and reduced liability D. Removal of fair housing compliance Correct Answer: C. Increased efficiency and reduced liability Rationale: Professional managers ensure legal compliance, tenant screening, maintenance, and budgeting, reducing the owner's liability and workload. In which situation can a landlord legally reject a rental applicant? A. The applicant has children B. The applicant is of a different religion C. The applicant has insufficient income D. The applicant is from another country Correct Answer: C. The applicant has insufficient income Rationale: Landlords can set reasonable financial requirements, as long as they do not discriminate based on protected characteristics. All the correspondence from tenants should be kept in a
- Ans - general correspondence file.---This file will contain all communication with the
tenants. In a property analysis, major vertical penetrations of the floor, such as utility shafts, stairwells, and elevators are excluded in the - Ans - dominant portion---The dominant portion is the inside finished surface of the outer building wall Rentable area of a floor is computed by measuring to the - Ans - inside finished surface of the dominant portion of the permanent outer building walls.--- Individual commercial offices are generally cleaned by - Ans - night janitors.---After business hours. In managing today's office buildings, the person who handles a team of specialists (architects, designers, engineers, communications specialists, and others) is called a(n) - Ans - facility
Because of rapid technological changes, industrial facilities run serious risks of loss through - Ans
- functional obsolescence.--Functional obsolescence would be a design or outdated problem. Industrial firms have been able to leave congested metropolitan areas as a result of - Ans - rapid emergence of the freight trucking industry---Due to the construction of interstate highways and expressways, trucking has emerged as a primary mover of goods. Industries that rely on a large consumer population and are sensitive to growth trends or shifts in the marketplace are called - Ans - market-oriented industries.---These industries locate near industrial users and consumers of its products. Small, secure storage units rented to individuals and small businesses are popularly known as - Ans - ministorage.--- What form of lease is generally utilized for industrial properties? - Ans - Net lease---The tenant would pay rent plus certain expenses incurred in the operation of the property. When qualifying a prospective tenant of an industrial property, the MOST important inquiry the property manager should make is - Ans - exact zoning status required by the prospect.--The utility of the building and the correct zoning to allow the use the tenant needs. Often, the only maintenance provided by industrial property management is - Ans - upkeep of grounds and exterior of the building.--In a net lease the tenant would assume some or all of the maintenance responsibility of the property. After a hurricane or an earthquake, the role of the property manager often becomes - Ans - claims adjuster---In the event of a disaster, the manager will be responsible to negotiate with the insurance company to obtain a fair settlement. Increasing the insurance deductible is an example of - Ans - retaining the risk.---The manager would retain more liability
The manger is responsible for a property on which there are several underground storage tanks that store fuel oil. What kind of insurance is required by law? - Ans - Pollution liability insurance- --This insurance is required for underground storage tanks of hazardous waste. The definition of a hazardous waste is - Ans - a byproduct of a manufactured item which, itself, may not be subject to environmental law or regulation.--- The purpose of the Clean Air Act is to - Ans - regulate the emission of toxic air pollutants--The act is to combat air pollution The demand for professional property management around the end of the nineteenth century resulted primarily from - Ans - the invention of the high-speed elevator---Also steel framed buildings, development of suburban areas and investment opportunities. What organization awards the designation Certified Property Manager (CPM)? - Ans - Institute of Real Estate Management (IREM)--IREM offers opportunities for property managers to share ideas and programs to instruct those coming into the business. They are an affiliate group of NAR Which of the following BEST defines real property? - Ans - Land, including its subsurface and airspace above and all improvements--Land from subsurface rights (oil, gas, mineral) to air rights above plus all man made improvements (buildings, streets, sewers) equals real property Two principal categories of commercial real estate are office property and - Ans - retail property- --Both are income producing properties. Warehouse properties would be part of industrial. A major contributing factor to the decline of centralized commercial districts was the - Ans - development of suburban areas.---With the expansion of transportation the population shifted to the suburbs. As a result suburban shopping centers were built away from the city.
The fact that a property manager must put the owner's interest above the property manager's own and act without self-interest is best expressed in which of the following fiduciary duties? - Ans - Loyalty---The manager is hired to represent the clients interest not their own. Generally, state laws require which of the following to obtain a real estate license? - Ans - An agent of a company managing property for several owners---The other three choices are exempt. To properly identify the subject property in a management contract, all of the following are correct EXCEPT - Ans - the full legal description is always required---The management contract must simply identify the property. When disbursements exceed receipts for a certain month, usually the manager can - Ans - pay costs from reserve funds previously established---Reserve funds are monies set aside for expenditures not covered by insurance. Since display ads generally cost more, they - Ans - carry greater visual impact than classified ads.---Display ads offer graphics, elaborate design and may be a quarter page in size. Which of the following forms of advertising is available to prospects 24/7 regardless of their location? - Ans - Internet websites---Prospects may pull up a website at will 24/ When comparing different forms of advertising, the property manager should realize that - Ans - direct mail is favored by industrial and commercial property owners---Industrial and commercial property owners and managers can compile a list of potential tenants making direct mail a cost effective method of advertising. An advertising brochure will be MOST effective if - Ans - all of the above---With a theme and good appearance, it will leave a lasting impression. Easy to comprehend will appeal to a larger audience.
When working with outside brokers in marketing space, the property manager may expect - Ans
- to share a portion of the leasing fee---There would commonly be a split negotiated. An estate owned by the tenant that continues for a specified period of time is called - Ans - estate for years---An estate for years must have a definite termination date. The estate does not have to be for years. A six month lease is an estate for years. A couple is renting an apartment from an owner while their house is being built. The couple's lease is about to expire but the owner has agreed to allow them to remain in the apartment on a month-to-month basis until their house is completed. What type of estate will the couple have? - Ans - Tenancy at will---A tenancy at will has no specific end date. The end of the tenancy often is based on an event happening completion of the house... A tenant of which of the following properties normally uses a gross lease? - Ans - Apartment--A gross lease is most common in residential A tenant is required to pay additional amounts to the landlord only if and when the business volume justifies an increase. This tenant MOST likely has a - Ans - percentage lease---Retail uses a percentage lease. The tenant would pay base rent plus a percentage of gross sales. In order to ensure continuity from store to store and to control expenses, many national franchising retail chains prefer - Ans - net leases---The tenant would pay part or all of the expenses. A long-term lease requires $400 for the first two years, $500 during the third year, and a $ for the last two years. This lease contains a(n) - Ans - step-up clause---The lease would include agreed upon rent increases at specific intervals. When renting residential property, a manager - Ans - may want to obtain individual credit reports---Finance terms are not discriminatory and may show the responsibility of the tenant. One of the MOST important considerations in selecting commercial tenants is - Ans - their compatibility with the other tenants---Gender race and religion are protected classes
The manager of a large commercial building became preoccupied with paperwork and did not inspect the premises as he should have, which resulted in lots of wear and tear from the tenants. The loss of value due to postponing repairs is called - Ans - deferred maintenance-- Deferred maintenance is the physical depreciation in value due to postponed maintenance of the building. When considering on-site maintenance personnel, the property manager should - Ans - carefully study the minimum personnel requirements---Building maintenance should fit into an efficient and cost effective pattern. Maintenance tasks performed by outside laborers on a regular basis for a specified fee are - Ans
- contract services---Many maintenance tasks can be performed more economically on a contract basis. When a property manager acts as the prime or general contractor, the property manager - Ans - must possess some knowledge of construction to supervise different trades---The manager would need similar knowledge to a general contractor to efficiently supervise different jobs Which of the following should be consulted first before making any investment into new technology? - Ans - Software program---A software program should be user friendly and address all of the data needs of operations What financial report tells the owner the sources of income and expenses, net operating income, and net cash flow? - Ans - Cash flow report---The report shows NOI minus disbursements and the amount remitted to the owner. One of the MOST important things for a manager to keep in mind while preparing an operating budget is to - Ans - be conservative in all forecasts---An operating budget is a projection of income and expense for the operation of the property over one year. Being conservative would pad the report for any unexpected problems in the future. Depreciation is divided into three categories: economic, functional, and - Ans - physical-- Economic would be outside factors. Functional is outdated or design. Physical is broken.
The Revenue Reconciliation Act of 1993 modified the 1986 passive loss restrictions by allowing individuals who materially participate in rental real estate to deduct rental losses from other income. To qualify, how much time must a person devote to personal services to real property trades or business during a tax year? - Ans - 0.5---Changes in government policies can cause random changes in real estate activity on a nationwide scale. Property #1 has a capitalization rate of 12% and property number #2 has a capitalization rate 14%. Both properties are comparable to each other and have a net operating income of $12, per year. Which of the following is TRUE? - Ans - Property #2 has a lower value than property #1.---When the capitalization rate goes up value comes down. Which of the following will be located in the permanent file? - Ans - Management agreement and mortgage information---The permanent file will include management contract and title information, labor contracts and legal description. The famous Superfund Law was so named because - Ans - two trust funds were created to finance clean-up projects and pay claims--- Courts have interpreted liability to be strict, joint and several for the responsibility of creating environmental hazards. Joint and several liability means - Ans - all persons as a group and individually have responsibility for the entire loss.--- Which of the following ranks highest among building management and design problems? - Ans - Air quality---New sources such as factories and power plants must install the most effective technology available to reduce air pollution. The primary purpose of life safety and security technology is to - Ans - discover and promptly report an emergency---This provides for the management of the total physical protection of the tenants.
