PSI Real Estate Agency and Property Management Flashcards

Which of the following actions would constitute a breach of the agent's duty of disclosure?

Answer: Hiding a known structural problem from a buyer

An agent has a duty to disclose all known material facts that could affect a buyer's decision; concealing a structural defect is a breach of that duty.

What is the primary purpose of a property management agreement?

Answer: To define the scope of the manager's authority and responsibilities

A property management agreement outlines the duties, authority, compensation, and term of the relationship between the property owner and the property manager.

A property manager who collects rents and security deposits must keep these funds in a:

Answer: Trust account separate from operating funds

Property managers are legally required to maintain tenant funds in a separate trust (escrow) account to prevent commingling with personal or business funds.

Under a gross lease, who is responsible for paying most operating expenses of the property?

Answer: The landlord

Under a gross lease, the landlord pays most or all operating expenses (taxes, insurance, maintenance), while the tenant pays a fixed monthly rent.

Which type of lease requires the tenant to pay a base rent plus a percentage of their business sales?

Answer: Percentage lease

A percentage lease is common in retail properties, where the tenant pays a base rent plus a percentage of monthly or annual gross sales to the landlord.

When an agent's authority is terminated by operation of law, which of the following events would cause this?

Answer: The bankruptcy of the principal

Agency is terminated by operation of law upon events such as the death or bankruptcy of either party, destruction of the property, or the property becoming illegal.