Free 5-question sample test with instant feedback. See how ready you are.
Question 1
What document establishes the legal relationship between a property owner and a property manager?
Answer: A property management agreement, which defines the scope of authority, duties, compensation, and duration of the manager's role as the owner's agent.
Question 2
What type of agency relationship is created when a property owner hires a property manager?
Answer: A general agency relationship, where the manager is authorized to handle a range of ongoing tasks on behalf of the owner.
Question 3
Which element in a property management agreement specifies what percentage or flat fee the manager earns for collecting rents?
Answer: The compensation clause, which details how and when the property manager is paid, typically as a percentage of collected rents.
Question 4
What is the primary purpose of an 'owner's reserve fund' established in a property management agreement?
Answer: To maintain a cash buffer that allows the property manager to cover routine operating expenses and minor repairs without seeking prior owner approval for each transaction.
Question 5
If a property management agreement is silent on a specific repair expense, what principle guides the manager's authority to spend owner funds?
Answer: The manager may only spend up to the authorized limit stated in the agreement; expenses beyond that threshold require explicit owner approval.