Free practice
Property management and the management agreement
Finish →Question 1 of 40
In a property management relationship, who is the principal?
Reveal answer
Correct answer: The owner who delegates management authority
The owner is the principal who delegates authority to the manager, the agent.
Question 2 of 40
Which management agreement provision most directly answers whether the manager may execute leases for the owner?
Reveal answer
Correct answer: The grant of authority to sign leases
Authority to sign leases should be specified in the management agreement's delegation of powers.
Question 3 of 40
A management agreement requires owner approval for each nonemergency repair over $900. A routine repair will cost $1,200. What should the manager do before ordering it?
Reveal answer
Correct answer: Obtain the owner's approval under the agreement
The $1,200 routine repair exceeds the $900 limit, so advance owner approval is required by the agreement.
Question 4 of 40
Under New York's 19 NYCRR § 175.1, within what period must a broker deposit the principal's money into the required separate, special bank account?
Reveal answer
Correct answer: Within three business days
Section 175.1 requires deposit within three business days.
Question 5 of 40
A New York managing broker is offered a personal rebate by a contractor on work paid for by the owner. What must precede acceptance under 19 NYCRR § 175.3(a)?
Reveal answer
Correct answer: The client's full knowledge and consent
The client's full knowledge and consent are required for the broker to accept a rebate on client expenditures.
Question 6 of 40
A manager earns 5% of monthly rent actually collected. Scheduled rent is $24,000, but collections total $21,000. There are no other fees. What is the management fee?
Reveal answer
Correct answer: $1,050
Use collected rent: $21,000 × 0.05 = $1,050. Scheduled rent and uncollected balances are excluded by the fee formula.
Question 7 of 40
A New York broker proposes to hold client operating funds in a separate investment fund because it pays more than a bank account. How does 19 NYCRR § 175.1 apply?
Reveal answer
Correct answer: The funds must be held in a federally insured bank account
Section 175.1 restricts the depository to a federally insured bank account; separation or client benefit does not substitute for that requirement.
Question 8 of 40
A management agreement authorizes tenant negotiations but reserves lease signing to the owner. A tenant accepts the negotiated terms and asks the manager to sign. What should the manager do?
Reveal answer
Correct answer: Refer execution to the owner under the agreement
The agreement distinguishes negotiating authority from signing authority; the owner retained execution.
Question 9 of 40
Which agreement term most directly reduces uncertainty about what happens to leases, accounting records, and client funds when a manager is replaced?
Reveal answer
Correct answer: The termination and handover procedure
Termination and handover provisions should address transfer of records and funds when management ends.
Question 10 of 40
A New York broker sends a client a complete account of rent collected but indefinitely retains the unexpended balance without justification. What is missing under 19 NYCRR § 175.2?
Reveal answer
Correct answer: Remittance of the unexpended client money within a reasonable time
Section 175.2 requires both an account and remittance within a reasonable time. Providing the account alone is insufficient.
Question 11 of 40
What is the main function of the compensation provision in a management agreement?
Reveal answer
Correct answer: To specify how the manager's fees are determined
Compensation provisions establish the manager's fee structure and calculation base.
Question 12 of 40
Before depositing client money, a New York broker leaves it in an unlocked area accessible to visitors. The planned deposit is within three business days. Which assessment is correct?
Reveal answer
Correct answer: The broker must safeguard the money securely pending deposit
Section 175.1 independently requires secure safeguarding before deposit; meeting the deposit deadline does not excuse insecure storage.
Question 13 of 40
An agreement permits immediate emergency repairs needed to prevent further damage, with prompt notice afterward. A burst pipe is actively flooding the property. What action best follows the agreement?
Reveal answer
Correct answer: Arrange the authorized emergency response, document it, and notify the owner promptly
The agreement expressly permits the emergency response and requires prompt notice; that authority does not extend to unrelated work or future routine spending.
Question 14 of 40
A New York broker managing a landlord's rental receives a vendor profit on the landlord's expenditures. The landlord knew the amount but expressly refused consent. May the broker accept it under 19 NYCRR § 175.3(a)?
Reveal answer
Correct answer: No; full knowledge and consent are both required
Section 175.3(a) requires both full knowledge and consent and covers profit as well as commissions and rebates.
Question 15 of 40
A New York landlord's agent in a covered residential rental transaction deals with an unrepresented tenant. Which obligation does the agent owe the tenant?
Reveal answer
Correct answer: Honest, fair, and good-faith dealing
Real Property Law § 443 distinguishes fiduciary duties to the landlord from honest, fair, good-faith dealings with the tenant.
Question 16 of 40
A management agreement requires monthly reports. The manager supplies complete reports once each quarter. The owner has not changed the agreement. What is the best assessment?
Reveal answer
Correct answer: The manager is not following the agreed reporting schedule
A monthly reporting commitment governs unless changed; complete quarterly reports do not meet that frequency.
Question 17 of 40
Under New York's 19 NYCRR § 175.1, when may accrued interest on principal funds benefit the broker?
Reveal answer
Correct answer: When it is applied to and deducted from earned commission with all parties' consent
The exception requires application to earned commission and the consent of all parties.
Question 18 of 40
An owner and manager agree on a $700 monthly flat management fee, with no percentage component. Monthly collections rise from $10,000 to $12,000. What fee follows the agreement?
Reveal answer
Correct answer: $700
The agreement sets a flat $700 monthly fee. No percentage adjustment applies, so the fee remains $700.
Question 19 of 40
A New York broker deposits rent belonging to a client into the broker's business operating account but maintains a detailed client ledger. Which conclusion follows under 19 NYCRR § 175.1?
Reveal answer
Correct answer: The ledger does not cure commingling with the broker's own money
Separate records do not replace the separate, special bank account required for principal funds.
Question 20 of 40
A management agreement's annual repair budget has $15,000 remaining, but the agreement separately requires approval for each routine project over $2,000. A proposed routine project costs $4,000. Which interpretation is correct?
Reveal answer
Correct answer: The project still requires approval under the per-project limit
Available budget and delegated spending authority are different. The $4,000 project exceeds the $2,000 approval threshold.
Question 21 of 40
Which duty requires a landlord's agent to protect the landlord's private negotiating information in a New York residential transaction covered by Real Property Law § 443?
Reveal answer
Correct answer: Confidentiality
Confidentiality is the duty directed to protecting the client's confidential information.
Question 22 of 40
A broker handling tenant security in New York fails to credit interest that is required. What consequence is identified in 19 NYCRR § 175.3(b)?
Reveal answer
Correct answer: The failure is grounds for disciplinary or other appropriate action by the Secretary of State
Section 175.3(b) expressly makes failure to comply, including failure to pay, apply, or credit required interest, grounds for action by the Secretary of State.
Question 23 of 40
An owner wants to ensure there is money available for ordinary bills before rent receipts arrive. Which management agreement provision most directly addresses that concern?
Reveal answer
Correct answer: The required operating reserve and replenishment arrangement
An operating reserve provision addresses funds available for authorized expenses and how that reserve is maintained.
Question 24 of 40
Which description best distinguishes a management agreement from an agency disclosure?
Reveal answer
Correct answer: The agreement sets operational authority and terms; the disclosure explains representation
The two documents serve different functions: contractual management terms versus explanation of agency relationships.
Question 25 of 40
Which group of provisions defines how long a management relationship lasts and how it may end?
Reveal answer
Correct answer: Term, renewal, and termination
The term defines duration; renewal and termination provisions address continuation and ending the relationship.
Question 26 of 40
A New York broker timely remits a client's unexpended collections but refuses to provide an account of receipts and expenses. Has the broker fulfilled 19 NYCRR § 175.2?
Reveal answer
Correct answer: No, because rendering an account is also required
Section 175.2 requires an account as well as remittance within a reasonable time.
Question 27 of 40
A management agreement authorizes advertising and rent collection but is silent about signing leases. Before signing for the owner, what is the most appropriate step?
Reveal answer
Correct answer: Clarify and obtain the owner's delegation of signing authority
The manager should clarify the authority to execute leases rather than infer it from distinct services or compensation terms.
Question 28 of 40
A New York managing broker tells the client that a contractor will pay the broker a rebate but conceals its substantial amount and conditions. The client says yes without those details. What is the defect under 19 NYCRR § 175.3(a)?
Reveal answer
Correct answer: The client has not received the full knowledge required for consent
Concealing material details fails the requirement of the client's full knowledge and consent.
Question 29 of 40
A manager's agreement provides a fee of 6% of collected rent plus $400 for each newly executed lease. This month rent collections are $18,000 and two new leases are executed. What total fee is due?
Reveal answer
Correct answer: $1,880
Management fee: $18,000 × 0.06 = $1,080. Leasing fees: 2 × $400 = $800. Total: $1,080 + $800 = $1,880.
Question 30 of 40
Under New York's 19 NYCRR § 175.2, what timing standard governs a broker's accounting and remittance of collected, unexpended client money?
Reveal answer
Correct answer: Within a reasonable time
Section 175.2 uses a reasonable-time standard. The three-business-day requirement concerns deposits under § 175.1.
Question 31 of 40
An owner says, 'We agreed you would collect rent, so you must also provide full maintenance coordination.' The agreement lists rent collection but does not settle maintenance services. Which issue should the parties resolve?
Reveal answer
Correct answer: The scope of services and allocation of maintenance responsibilities
The disagreement concerns what services were delegated and who is responsible for maintenance, which should be clarified in the agreement.
Question 32 of 40
A New York broker's principal directs the broker to mix client rents with the broker's own business funds for convenience. What should the broker do under 19 NYCRR § 175.1?
Reveal answer
Correct answer: Maintain the required separation despite the instruction
The rule prohibits commingling. An owner's instruction or additional reporting does not remove that requirement.
Question 33 of 40
A New York managing broker wants to use accrued interest on client funds as a credit against an earned commission. The client agrees, but another party whose consent is required has not agreed. What is the result under 19 NYCRR § 175.1?
Reveal answer
Correct answer: The broker may not use the interest this way without all parties' consent
Earned commission and all parties' consent are cumulative conditions; the proposal lacks the required consent.
Question 34 of 40
Which activity best illustrates the operating role of a property manager?
Reveal answer
Correct answer: Coordinating authorized repairs and reporting their costs to the owner
A manager carries out authorized operations and reports to the owner; the role does not confer unilateral control over the owner's objectives or contract terms.
Question 35 of 40
A manager's agreement pays 4% of rent collected. Monthly scheduled rent stays at $30,000, while actual collections increase from $25,000 to $28,000. By how much does the monthly management fee increase?
Reveal answer
Correct answer: $120
Old fee: $25,000 × 0.04 = $1,000. New fee: $28,000 × 0.04 = $1,120. Increase: $1,120 − $1,000 = $120.
Question 36 of 40
A manager acting as the landlord's agent in a covered New York residential rental is asked to negotiate solely for the tenant while continuing the existing landlord-only representation. Which statement correctly describes the existing relationship?
Reveal answer
Correct answer: The agent represents the landlord and must still deal fairly with the tenant
Under § 443, a landlord's agent represents the landlord; honest and fair dealings with the tenant do not themselves create tenant representation.
Question 37 of 40
An owner wants to avoid disagreement about whether tenant placement is included in the monthly fee or earns a separate charge. Which clarification belongs in the management agreement?
Reveal answer
Correct answer: The services covered by the base fee and any separately payable leasing fee
The agreement should connect included services to the base fee and specify any separately agreed leasing compensation.
Question 38 of 40
A New York broker keeps principal funds separate, deposits them on time, and uses a federally insured account. The broker nevertheless retains accrued interest as an extra personal fee, without applying it to earned commission or obtaining consent. Which requirement remains unmet?
Reveal answer
Correct answer: The restriction on retaining accrued interest for the broker's benefit
The broker meets the stated deposit and account conditions but violates § 175.1's independent restriction on personal benefit from accrued interest.
Question 39 of 40
A management agreement allows emergency work without advance approval but requires approval for routine work over $1,500. A manager labels a planned $3,000 cosmetic repainting an emergency solely to avoid seeking approval. Which assessment is best?
Reveal answer
Correct answer: The routine project remains subject to the approval limit
Emergency authority depends on the situation, not a label selected to evade a routine spending limit. The planned routine project needs approval.
Question 40 of 40
A New York managing broker asks whether the client-benefit rule in 19 NYCRR § 175.3(a) covers a vendor's profit-sharing payment rather than a payment called a rebate. What is the correct answer?
Reveal answer
Correct answer: A profit on client expenditures requires the client's full knowledge and consent
Section 175.3(a) expressly covers any commission, rebate, or profit on expenditures made for the client.
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