Questions and Answers
Which of the following best describes the primary function of a property manager?
Which law requires landlords to provide habitable living conditions for tenants?
What is the minimum notice period a landlord must provide before terminating a month-to-month lease?
What is considered a breach of lease agreement by the tenant?
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Which of the following is NOT typically considered an essential service that is the landlord's responsibility?
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What factor is considered when determining if a lease agreement can be enforced in case of a violation?
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Which principle dictates that damages must be appropriate to the breach of lease terms?
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What is a potential consequence for a landlord who fails to maintain essential services as stipulated by law?
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Which condition can lead to the automatic renewal of a lease if not addressed?
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What is the consequence for a property manager who fails to renew their license by the annual renewal date?
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What is required when a substantial modification is made to a tenant's rental agreement?
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Which of the following is true regarding the return of a tenant’s security deposit?
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Which of the following need not be held in a trust account?
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What does the Department of Labor & Industry primarily do?
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Which is not a protected class for housing explicitly specified in the Montana statutes?
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What term describes the agreement created when two parties accept the written terms and conditions of a rental agreement?
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How much would the prorated rent be for an apartment if the monthly rent is $870 and the tenant moves in on the 11th of the month?
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What must a property manager do if their license lapses?
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A property manager supervising multiple properties is typically referred to as a:
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If a tenant who requires special accommodations requests a pet in a 'no pet' community, what must the property manager communicate?
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What happen if a property manager fails to actively renew their license?
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What term best describes the concept of both parties reaching a mutual agreement on a lease?
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Which action is NOT typically required after a property manager's license is renewed?
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What is the annual net operating income for the property at 321 Main St.?
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If a Landlord accepts a cleaning service instead of a security deposit, what is required upon the Tenant's move-out?
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What is the monthly rent for an office space measuring 30 ft x 45 ft at a rate of $7.50/sq.ft.?
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Which type of lease requires tenants to pay additional costs beyond rent, such as maintenance and insurance?
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In a fiduciary relationship concerning real estate, which parties are primarily involved?
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What is the term for a tenant who remains in a property after their lease has expired?
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How many continuing education hours must a professional complete each year before renewal?
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In a lease agreement, what is the primary benefit to the tenant of a Gross Lease?
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What action should a property manager take if a tenant acquires a new pet after previously complying with a notice to remove a pet?
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Under what conditions may a tenant terminate a lease if a unit is not available on the agreed date?
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What is the annual license renewal date for real estate licensees particularly linked to?
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Which scenario would NOT be exempt from the federal Fair Housing Act?
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If a commercial lease does not specify a length, what is the default term?
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Which definition best describes cash flow in a real estate context?
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How long must a landlord typically wait after a lease violation before they can terminate the contract?
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Which of the following actions does NOT typically require a written notice from a property manager?
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For rental units that are subject to discrimination under the Fair Housing Act, what is the potential liability for the landlord?
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What is the maximum amount of time that a landlord must provide notice to renters for rules that modify the tenant's agreement substantially?
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Which item is explicitly required to be kept in a trust account according to tenant security deposit regulations?
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Under what condition can a landlord keep a tenant's security deposit if the tenant does not provide a new address after moving out?
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Which statement about the Department of Labor & Industry's function is incorrect?
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What is the minimum notice period a property manager must provide to a tenant regarding the return of their security deposit?
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What could potentially occur if an unconscionable provision exists in a rental agreement?
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Under what condition can a landlord establish new rules for a building?
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Which statement about security deposits is accurate?
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What is the legal term for a tenant who remains in a property after their lease has expired?
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What amount can a landlord lawfully require as a maximum security deposit?
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When dealing with reasonable accommodations for tenants with disabilities, which is true?
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Which of the following statements about a trust account is accurate?
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Which circumstance does NOT exempt a landlord from security deposit regulations?
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What is the maximum amount of continuing education hours required before property manager renewal?
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What is the primary criterion for determining whether a tenant's request for a pet as a reasonable accommodation can be granted?
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What is the minimum notice period required before a rule modifying a tenant's agreement takes effect?
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Which of the following may be retained by a landlord if a tenant does not provide a new address upon moving out?
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If a property manager fails to renew their license within 30 days of the expiration date, what can they no longer do?
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In a rental agreement specifying a percentage of gross sales as rent, how is the minimum monthly rent determined if gross sales exceed a certain amount?
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What is required of landlords when adopting a rule unrelated to their obligations?
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What is the maximum number of days for a landlord to correct an emergency maintenance issue?
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What is the minimum notice requirement a landlord must provide if the tenant is not properly cleaning their premises?
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In the event of a tenant's minor maintenance issue, what may the tenant do if the landlord does not address the issue after 7 days?
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How many days does the court have to schedule a hearing following a tenant’s answer in an action for possession?
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Which of the following statements regarding guide dogs in a 'no pets' apartment building is accurate?
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What is the primary characteristic of a fiduciary relationship in real estate between a property manager and their client?
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What is the typical consequence for a landlord who fails to provide necessary essential services as mandated by law?
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Under what circumstances can a landlord retain a tenant's security deposit after the tenant moves out?
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In a gross lease agreement, what is the primary financial responsibility of the landlord?
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What may occur if a rental agreement contains an unconscionable provision?
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Study Notes
Effective Gross Income and Net Operating Income
- Effective gross income is calculated after accounting for vacancy loss.
- To find annual net operating income, consider all income and expenses from property management.
Rental Income Calculation
- 19 units rented at 525/monthtotals525/month totals 525/monthtotals11,175/month.
- A 5% vacancy rate results in a loss of approximately $558.75/month.
- Monthly expenses include maintenance (1,500),utilities(1,500), utilities (1,500),utilities(400), management fee (5% of income), insurance (300),andpropertytaxes(300), and property taxes (300),andpropertytaxes(250), totaling $3,898.75.
- Monthly debt service is $3,000.
Security Deposit Scenarios
- If no security deposit is taken, there is no obligation to refund anything upon move-out.
- If a tenant cleans a unit instead of paying a deposit, a landlord is not required to return any deposit as none was collected.
Commercial Lease Rent Calculation
- An office space measuring 30 ft x 45 ft has an area of 1,350 sq. ft.
- At a yearly rent of 7.50/sq.ft.,thetotalrentis7.50/sq. ft., the total rent is 7.50/sq.ft.,thetotalrentis10,125 annually. Monthly rent is $843.75.
Types of Leases
- A net lease involves tenants paying additional costs beyond just rent, such as maintenance and insurance, unlike a gross lease which includes everything in the rent.
Fiduciary Relationships
- A fiduciary relationship exists between principals (owners) and agents (property managers), where one party acts on behalf of another.
Tenant Definitions
- A holdover tenant remains in a rented property after their lease expires, creating potential legal issues.
Continuing Education Requirements
- Real estate professionals typically need to complete a specified number of continuing education hours yearly for license renewal, often set at 12 hours.
Notice Requirements for Tenants
- Tenants may issue a specified notice if a rental unit isn’t available as agreed upon, usually 5 days or more, depending on local laws.
Protecting Classes under Fair Housing Act
- Various groups are protected under the federal Fair Housing Act, although some exemptions exist for religious and private organizations.
Default Lease Length
- For commercial properties, if no lease length is specified, the default duration is usually 1 year.
Cash Flow Definition
- Cash flow is defined as net operating income (NOI) minus debt service, indicating the actual cash generated from the property after expenses.
Prorated Rent Calculation
- If rent is 870/monthandatenantmovesinonthe11th,proratedrentfora30−daymonthisroughly870/month and a tenant moves in on the 11th, prorated rent for a 30-day month is roughly 870/monthandatenantmovesinonthe11th,proratedrentfora30−daymonthisroughly580.
License Management and Renewal
- If a property manager's license lapses, they must generally pay fees or retake exams to reinstate it to active status.
Responsibilities for Special Accommodations
- Property managers must inform tenants requiring accommodations that only certified service animals may be allowed in no-pet communities.
Financial Obligations
- Landlords usually incur the costs associated with reasonable modifications for tenants requiring special accommodations.
Trust Account Management
- Not all funds need to be kept in a trust account (e.g., manager commissions may not need to be).
Rental Agreements
- A rental agreement may stipulate rent as either a flat fee or a percentage of sales, requiring careful calculation based on which is greater.
Compliance with Labor and Industry Systems
- The Department of Labor & Industry protects the public and addresses issues related to licensing in the real estate sector.
Tenant Rights and Responsibilities
- Substantial modification rules for tenants require a 7-day notice, particularly for week-to-week tenants.
- Landlords can impose rules requiring tenants to fulfill landlord obligations, such as installing smoke detectors.
- All rules must be in writing and provided to renters with at least 30 days notice.
Financial Management in Property Management
- Security deposits must be kept in a trust account, ensuring proper management of tenant funds.
- Manager commissions and owner reserves do not require trust account handling.
- For a rental agreement tied to gross sales (e.g., 4% of sales or $500), calculate the minimum rent from annual gross sales.
Labor and Industry Regulations
- The Department of Labor & Industry is tasked with protecting the public and taking action against unlicensed individuals.
- A property manager must forward their license to the Department after failing to renew within 30 days.
Tenant Move-Out Procedures
- Landlords must return security deposits to tenants within ten days of move-out, if proper notice is given.
- Tenants must leave their rental in acceptable condition, often dictated by property manager standards.
- Landlords can withhold deposits if tenants fail to provide a forwarding address.
Rental Agreements
- A rental agreement is an official contract allowing tenants to occupy property for a specified time.
- Unconscionable provisions in a rental agreement may render the entire contract unenforceable.
Rule Adoption by Landlords
- Landlords can adopt new rules given 14 days notice for month-to-month tenants and must apply rules fairly to all occupants.
Owner-Manager Relationship
- Effective communication is essential in establishing a successful owner-manager relationship, rather than personal friendship.
Reporting Illegal Activity
- Suspected illegal activities (e.g., drug use or prostitution) should be reported to law enforcement rather than managed internally.
Mandatory Training for Property Managers
- New property managers are required to complete specific training hours, including trust accounts, fair housing, leasing principles, and state law updates.
Security Deposits Regulations
- Security deposits have maximum allowable limits and any interest earned must benefit tenants.
- A detailed condition report is required if the deposit is utilized.
Lease Types and Tenant Rights
- A tenancy at will allows either landlord or tenant to terminate the lease at any time with reasonable notice.
- If a tenant remains after lease expiration, it is categorized as tenancy at sufferance.
Trust Account Documentation
- Trust account documents must be maintained for a minimum of three years.
Handling Lease Violations
- Concern over activities like drug use may warrant a 30-day notice to vacate for month-to-month leases.
Security Deposit Return Timeline
- Landlords are required to return security deposits with any withholdings within 30 days.
Fair Housing Violations
- Conducting property showings based on family status, like showing only playgrounds to families with children, constitutes illegal steering.
Lead-Based Paint Disclosure
- Properties built before 1978 require lead-based paint disclosures to protect tenant health.
Lease and Tenancy Terms
- An acceleration clause allows landlords to demand full rent due if tenants violate lease terms.
- A tenant is known as the lessee within a lease agreement.
Guide Dogs and Tenant Rights
- Guide dogs may be considered a reasonable accommodation in "no pets" buildings and are exempt from pet policies.
- Landlords are not liable for damage caused by guide dogs.
Maintenance Responsibilities
- Landlords have 14 working days to fix non-emergency maintenance issues.
- Tenants must receive a 7-day notice to correct cleaning issues before further action is taken.
- Emergency maintenance must be addressed within 3 working days.
Legal Proceedings and Tenant Actions
- Courts must schedule a hearing within 10 days following a tenant's answer in possession actions.
- Tenants can terminate agreements with 7-day notice if minor maintenance issues are unresolved after 7 days.
Property Management and Regulatory Compliance
- Property management agreements must be communicated with 30 days notice if rules substantially modify tenant agreements.
- Landlords must keep security deposits in a trust account, while manager commissions and owner reserves need not be.
Rent Calculations
- For units with sales-based rent, the monthly rent is calculated as 4% of gross sales or a minimum of 500;withanannualgrossincomeof500; with an annual gross income of 500;withanannualgrossincomeof160,000, the monthly rent is $6,400.
Department of Labor & Industry
- The department protects the public and ensures compliance with licensing; actions are taken against unlicensed individuals.
- A property manager cannot utilize their license if it lapses without renewal.
Tenant Move-Out Procedures
- Security deposits must be returned within 10 days unless a new address isn't provided.
- Landlords may not retain security deposits for not receiving updated tenant addresses.
New Rule Adoption by Landlords
- New building rules can be adopted if fair notice (14 days for month-to-month tenants) is provided and apply equally to all occupants.
Importance of Communication
- Communication is essential in establishing a strong owner-manager relationship; it outvalues factors like friendship and creditworthiness.
Handling Illegal Activities
- If a tenant is suspected of illegal activities, landlords should report to law enforcement rather than attempt eviction or verbal requests.
Mandatory Training for Property Managers
- New property manager training requires hours in trust accounts, fair housing, leasing principles, and state law updates.
Security Deposit Regulations
- Security deposits are subject to limits; any interest earned must generally be returned to tenants, and usage requires a condition report.
Legal Agreements and Responsibilities
- Authorization to confess judgment can be included in agreements for clarity and enforcement.
- Indemnification clauses protect one party from liability or attorney fees incurred by the other.
- Written provisions detail rights and obligations of involved parties in agreements.
Housing Protection in Montana
- Credit Worthiness is not a protected class under Montana housing statutes.
- Familial Status, Religion, and Creed are explicitly protected classes.
Rental Agreements
- Written rental agreements establish a Meeting of the Minds between parties.
- Rental agreements that specify terms based on sales or fixed amounts dictate payment structures.
Prorated Rent Calculation
- For a monthly rent of 870,theproratedrentformovinginonthe11thdayina30−daymonthcalculatesto870, the prorated rent for moving in on the 11th day in a 30-day month calculates to 870,theproratedrentformovinginonthe11thdayina30−daymonthcalculatesto580.
Property Manager Licenses
- If a property manager's license lapses, they must retake the state exam or pay a reinstatement fee to reactivate it.
- Multiple properties under a manager qualify them as an Asset Manager.
Special Accommodations
- Property managers must inform tenants requiring special accommodations about pet policies, specifically that service animals may be permitted.
Cost Responsibilities
- Typically, landlords or property managers bear the cost for reasonable modifications for accessible housing.
Financial Operations
- Effective Gross Income is calculated by subtracting vacancy loss from potential income.
- Annual net operating income can be calculated based on monthly rent, occupancy rates, and operational costs.
Security Deposits and Refund Policies
- A landlord may not be obliged to return a security deposit if none was initially collected.
- Standard timeframes for returning security deposits are typically within 30 days, but can vary based on conditions.
Lease Types and Regulation
- Net leases commonly require tenants to cover additional costs alongside their base rent.
- Tenants continuing to occupy a property after lease expiration are termed Holdover tenants.
Continuing Education Requirements
- Real estate professionals must complete a minimum number of continuing education hours annually prior to license renewal.
Property Management Practices
- Rules affecting tenant agreements must be communicated in writing with a notice period, often 30 days, particularly regarding substantive changes.
- Trust accounts are used for holding security deposits and rent received; however, manager commissions and owner reserves may not require such treatment.
Illegal Practices in Rental Management
- Steering, or directing prospective tenants based on familial status or other protected classes, is illegal under fair housing laws.
Emergency Maintenance Protocols
- Landlords typically have specific timeframes to address maintenance issues, often categorized as emergencies (3-14 days based on jurisdiction).
Communication in Property Management
- Strong communication is key in establishing effective landlord-tenant relationships, impacting resolution of disputes.
Eviction Processes
- In situations where unlawful activities are suspected, property managers should contact law enforcement as the appropriate response.
Maintenance and Repair Notifications
- Landlords are required to address tenant-reported maintenance issues within designated timeframes or face potential tenant actions.
Properties and Leasehold Characteristics
- The leasehold agreement grants tenants rights to occupy property for agreed terms; unaddressed maintenance could influence tenant-leave decisions.
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