CRECI Property Risk Management Questions and Answers

Question 1

A property manager is negotiating a lease with a new retail tenant.
To protect the landlord from liability claims arising from the tenant's operations or customer incidents within the leased space, which lease provision is most critical for risk transference?

Accepted Answer

A requirement for the tenant to carry adequate Commercial General Liability insurance and name the landlord as an additional insured.

Answer

A clause specifying the annual Common Area Maintenance (CAM) reconciliation process.

Answer

An exclusive use clause preventing competitors from leasing space in the center.

Answer

A subordination, non-disturbance, and attornment (SNDA) agreement.

Question 2

A property owner decides against purchasing earthquake insurance for a building in a region with very low seismic activity. Instead, the owner allocates funds to a contingency reserve to cover potential minor repairs. This strategy is an example of which risk management technique?

Accepted Answer

Risk Retention

Answer

Risk Avoidance

Answer

Risk Mitigation

Answer

Risk Transference

Question 3

Which of the following is the BEST example of a risk mitigation strategy for a commercial property's physical assets?

Accepted Answer

Implementing a comprehensive preventative maintenance program for the HVAC and roofing systems.

Answer

Requiring all tenants to provide a large security deposit.

Answer

Purchasing property insurance with a low deductible.

Answer

Evicting a tenant who consistently pays rent late.

Question 4

When reviewing a Certificate of Insurance (COI) from a contractor hired for a major renovation, a property manager must verify several key details. Which of the following is typically NOT found on or verified through the COI itself?

Accepted Answer

The contractor's insurance premium has been paid in full for the policy term.

Answer

The policy includes a 'Waiver of Subrogation' in favor of the property owner.

Answer

The property owner is named as an 'Additional Insured'.

Answer

The policy limits meet the minimums required in the service contract.

Question 5

In the context of property risk management, what is the primary purpose of an Emergency Action Plan (EAP)?

Accepted Answer

To outline procedures for employees and occupants to follow for life safety during an emergency. [1, 2, 8]

Answer

To secure lower annual insurance premiums from carriers.

Answer

To detail the long-term business recovery strategy after a catastrophic event.

Answer

To document all preventative maintenance schedules for life safety systems.

Question 6

A visitor slips and falls on a wet floor just inside the entrance of an office building on a rainy day. No 'wet floor' signs were displayed. In a subsequent liability claim, the building owner's legal exposure would most likely stem from an accusation of:

Accepted Answer

Negligence

Answer

Breach of Contract

Answer

Strict Liability

Answer

Vicarious Liability

A property manager is negotiating a lease with a new retail tenant.To protect the landlord from liability claims arising from the tenant's operations or customer incidents within the leased space, which lease provision is most critical for risk transference?

A property manager is negotiating a lease with a new retail tenant.
To protect the landlord from liability claims arising from the tenant's operations or customer incidents within the leased space, which lease provision is most critical for risk transference?