Tom Blefko, profile picture
Uploaded byTom Blefko
PDF, PPTX80 views

LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised

This document discusses various aspects of leasing and property management. It begins by defining property management and describing how it involves leasing, managing, marketing, and maintaining real estate owned by others. It then discusses lease agreements, including how they work as a contract between an owner and tenant. Several key elements of lease agreements are outlined, such as requirements for a valid lease, drafting considerations, use and maintenance of premises, security deposits, and types of leases. Breach of lease situations and remedies are also summarized.

Embed presentation

Download as PDF, PPTX
The Real Estate School U N I T 2 2 LEASING AND PROPERTY MANAGEMENT 1 Page 445
OVERVIEW • Property Management – Involves the leasing, managing, marketing, and overall maintenance of real estate owned by others, usually rental property 2 Page 446
LEASE AGREEMENTS • Lease – Contract between an owner of real estate (Lessor) and a tenant (Lessee) LESSOR OWNER LESSEE TENANT 3 Page 446
LEASE AGREEMENTS • Lease – Contract to transfer the lessor’s rights to exclusive possession and use of the property to the tenant for a specified period of time 4 Page 446
LEASING REAL ESTATE • Lease agreement combines two contracts: 1. Conveyance of a possession of the real estate 2. Pay rent and assume other obligations • Landlord retains a Reversionary Right to possession after the lease term expires 5 Page 446
LEASING REAL ESTATE • Pennsylvania Statute of Frauds requires that leases for more than three years be in writing to enforce performance on the contract • The Real Estate Commission’s Rules and Regulations require licensees to use written contracts 6 Page 446
LEASE AGREEMENTS • Requirements of a valid lease: • Capacity to Contract – Legal capacity to contract • Legal Objectives • Offer and Acceptance – Reach mutual agreement on all terms • Consideration – Exchange of promises 7 Page 447 Figure 22.1 (page 448)
LEASE AGREEMENTS • Drafting of leases: • Residential Leases – Usually preprinted agreements • Commercial Leases – Generally more complex with different legal requirements and may include complicated calculations of rent and maintenance costs 8 Page 455 CAUTION - Legal counsel should be sought when drafting legal documents
LEASE AGREEMENTS • Possession of Premises • The Lessor is bound by the implied Covenant of Quiet Enjoyment • Lessee may occupy the leased premises without interference from landlord 9 Page 455
LEASE AGREEMENTS • Use of Premises – Lessor may restrict a Lessee’s use of the premises through provisions included in the lease 10 Page 106 Residential Restriction Office Restriction Retail Restriction
LEASE AGREEMENTS • Term of Lease – Should be stated precisely and include a beginning and ending date together with a statement of the total period of the lease 11 Page 455
LEASE AGREEMENTS • Security Deposits – Used as security in case tenant defaults on payment of rent or damages the premises 12 Page 455
LEASE AGREEMENTS • Security Deposits (cont’d) • Maximum security deposit in first year of lease = two month’s rent • Maximum security deposit after the first year = one month’s rent 13 Page 456
LEASE AGREEMENTS • Security Deposits (cont’d) • During years 2-5, the landlord may increase the amount of security deposit to keep pace with increasing rents • After year 5, the landlord may not increase the amount of security deposit 14 Page 456
LEASE AGREEMENTS • Security Deposits (cont’d) • Residential security deposits >$100 must be deposited in an approved banking or savings institution • Must be deposited in an interest bearing account starting on the 2nd anniversary • Must be returned to tenant, including interest, within 30 days of the termination of tenancy 15 Page 456
LEASE AGREEMENTS • Improvements – Tenant may make improvements with Landlord’s permission • Any alteration becomes Landlord’s property • In commercial leases, trade fixtures may be installed by Tenant and removed prior to end of lease, provided space is restored to prior condition 16 Page 457
LEASE AGREEMENTS • Accessibility – Tenant’s with disabilities must be permitted to make reasonable modifications to a property at their expense • Landlord may require premises be restored to its original condition at end of lease 17 Page 457
LEASE AGREEMENTS • Maintenance of Premises – Residential Lessor is required to maintain dwelling units in a habitable condition • Commercial and industrial leases usually maintain the Lessee is responsible for making own repairs 18 Page 457
LEASE AGREEMENTS • Recording a Lease – Anyone who inspects the property receives actual notice so recording is considered unnecessary • State laws vary as to the acceptability of recorded leases and under what circumstances 19 Page 457
LEASE AGREEMENTS • In Pennsylvania, a Memorandum of Lease may be filed to provide notice of the interest but does not disclose the terms of lease to the public • Only the names of the parties and a description of the property are included 20 Page 457
LEASE AGREEMENTS • Options – Clause in a lease that grants the Lessee a privilege of renewing or extending the lease • Lessee must give notice before a specific date of the intention to exercise option 21 Page 457
LEASE AGREEMENTS • Purchase Option – Gives Lessee the right to purchase the leased premises • Right of First Refusal – Allows Tenant the opportunity to buy the property before owner accepts another offer 22 Page 457
DISCHARGE OF LEASES • Leases are discharged when any of the following occur: • Parties have fully performed their obligations • Operation of law • Mutual agreement • Leases are NOT discharged if: • Either party dies • Property is sold (Certain exceptions apply) 23 Page 458
DISCHARGE OF LEASES • If leased real estate is SOLD, the new owner takes the property subject to existing leases • Exception: Sale Clause Language in a lease that permits the new owner (landlord) to terminate existing leases 24 Page 458
DISCHARGE OF LEASES • Federal and State laws allow military personnel to terminate leases without penalty in certain situations 25 Page 458
DISCHARGE OF LEASES • Destruction of Premises – Residential tenants are permitted to reduce their rent payments in proportion to the amount of space they are unable to use • Tenants who have constructed buildings on leased land are still obligated for the payment of rent 26 Page 459
DISCHARGE OF LEASES • Assignment and Subleasing – Only allowed when a lease specifically permits them • Assignment – Tenant transfers all leasehold interests to another person or entity • Subleasing – Tenant transfers less than all the leasehold interest by leasing them to a new tenant 27 Page 459
DISCHARGE OF LEASES 28 Page 459 Assignment Sublease Figure 22.2
DISCHARGE OF LEASES • Breach of Lease • Landlord Remedy – Suit for Possession (Actual Eviction) Legal process whereby Landlord may regain possession when Tenant breaches a lease or improperly retains possession 29 Page 460
DISCHARGE OF LEASES • Breach of Lease (cont’d) • Landlord Remedy – Suit for Possession (Actual Eviction) • If Tenant fails to leave, the Landlord can have the judgment enforced by a court officer who forcibly removes the Tenant 30 Page 460
DISCHARGE OF LEASES • Breach of Lease (cont’d) • Landlord Remedy in Pennsylvania • Landlord must give proper notice before filing suit • Landlord files a complaint • District Justice (DJ) issues summons for Tenant to appear and answer complaint • DJ enters judgment against the Tenant ordering the Tenant to deliver property (may also include costs) • If Tenant fails to leave, a constable is utilized 31 Page 460
DISCHARGE OF LEASES • Breach of Lease (cont’d) • Tenant Remedy – Constructive Eviction – If the leased premises become unusable, Tenant may have the right to abandon them and sue for damages • Tenant has to prove that there was conscious neglect by the Landlord • Tenant must leave the premises while the condition that made the premises uninhabitable exist 32 Page 460
DISCHARGE OF LEASES • Breach of Lease Remedies (cont’d) • Warranty of Habitability The Lessor who leases residential premises warrants that the premises are fit for habitation 33 Page 460
DISCHARGE OF LEASES • Breach of Lease (cont’d) • Pro-Tenant Legislation – The Uniform Residential Landlord and Tenant Act addresses the need for both parties to fulfill certain basic obligations • Landlord’s right to enter property • Use and maintenance of premises • Tenant’s protection against retaliation for complaints • Contact information for Tenant 34 Page 461
DISCHARGE OF LEASES • Fair Housing and Civil Rights Laws – Affect landlords and tenants just as they do sellers and purchasers 35 Page 461
DISCHARGE OF LEASES • Pennsylvania Human Relations Act – All persons must have access to the housing of their choice without regard to their race, color, religion, national origin, sex, age (40 years old or older), disability, use of guide or support animals due to a disability, or familial status. 36 Page 461
TYPES OF LEASES • Gross Lease – The Tenant pays a fixed rental and the landlord pays all operating expense (property charges or operating expenses) • Residential and commercial office leases are most common 37 Page 462
TYPES OF LEASES • Net Lease – The Tenant pays all or most of the operating expenses in addition to the rent • Typical in large commercial and industrial leases 38 Page 462
TYPES OF LEASES • Percentage Lease – Rent is based on a minimum fixed rental fee plus a percentage of the gross or net income received by the tenant • Typical in retail business leases 39 Page 462
TYPES OF LEASES • Percentage Lease Calculation – EXAMPLE 40 Page 462 A retail lease requires minimum rent of $1,300 per month plus 5% of the business’s sales over $160,000. On an annual sales volume of $250,000, calculate the annual rent. • Base Rent: $1,300/month x 12 months = $15,600 • Percentage Rent: $250,000 - $160,000 = $90,000 $90,000 x 0.05 = $4,500 • Total Rent: $15,600 + $4,500 = $20,100
TYPES OF LEASES • Variable Leases – Allow for increases in the fixed rental charge during the lease period • Graduated Lease – Provides for specific rent increases at set future dates • Index Lease – Allows rent to be increased or decreased periodically based on changes in an index 41 Page 463
TYPES OF LEASES • Ground Leases – Landowner leases unimproved land to a tenant who agrees to erect a building on it • Used in commercial and industrial property development • Separate ownership of land and building • Long-term (50-99 years) 42 Page 463
TYPES OF LEASES • Oil and Gas Leases – Landowner receives a cash payment for executing the lease and a royalty for oil or gas extracted from the ground 43 Page 463
TYPES OF LEASES • Lease Purchase – Used when a Tenant wants to purchase a property but is unable to do so • Part of the periodic rent is applied toward the purchase price until the Tenant can obtain financing 44 Page 463
TYPES OF LEASES • Sale and Leaseback – Owners of property sell the property and then lease it back for an agreed period and rental • Used to obtain extra working capital 45 Page 463
THE MANAGEMENT PLAN & AGREEMENT • The Management Plan – Outlines the details of the owner’s objectives with the property and what the property manager expects to accomplish and how, including all financial objectives 46 Page 463
THE MANAGEMENT PLAN & AGREEMENT • Property Manager analyzes three factors • Owner’s objectives • Regional and neighborhood market • Specific property • Critical indicators: • Occupancy • Absorption rates • New starts 47 Page 463
THE MANAGEMENT PLAN & AGREEMENT • The Management Agreement – A contract that creates a general agency relationship between the owner and the property manager and defines responsibilities 48 Page 464
THE MANAGEMENT PLAN & AGREEMENT • The Management Agreement (cont’d) • Management agreement should be in writing and include the following points: • Property description • Time period • Manager’s responsibilities • Owner’s purpose • Manager’s authority • Reporting 49 Page 464-465 • Compensation • Allocation of costs • Antitrust provisions • Equal opportunity statement
THE MANAGEMENT PLAN & AGREEMENT • Calculating Rental Commissions • If an apartment unit rents for $1,200 per month and the commission payable is 8%, the commission will be calculated as follows: $1,200/month x 12 months = $14,400/year $14,400 x 0.08 = $1,152 • Rental commissions are usually payable when the first month’s rent is received and the tenant moves in 50 Page 465
THE MANAGEMENT PLAN & AGREEMENT • Residential Property Management Agreement (Landlord Agency Contract) 51 Page 465 Figure 22.4 (page 466-471)
PROPERTY MANAGER’S RESPONSIBILITIES • The three principal responsibilities of the property manger: 1. Achieve the objectives of the owner 2. Generate income 3. Preserve and/or increase the value of the property 52 Page 472
PROPERTY MANAGER’S RESPONSIBILITIES • In Pennsylvania, a property manager who serves the public for a fee must be one of the following: • Licensed real estate broker • Real estate licensee affiliated with a property management company • Brokerage firm that has a property management department (NOTE: Property manager may also be an employee of the owner of real estate) 53 Page 472
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports – While there is no standard formats, there is similarity among reports and should be adapted to meet owner’s needs 54 Page 472
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports (cont’d) • Operating Budget – Projection of income and expense for the operation of a property over a one-year period 55 Page 473
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports (cont’d) • Cash Flow Report – Monthly statement that details the financial status of the property • Most important report because it provides a picture of the current financial status of a property 56 Page 473
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports (cont’d) • Cash Flow Report – Formula for arriving at cash flow 57 Page 473 Gross Rental Income + Other Income - Losses Incurred Total Adjusted Income - Operating Expenses NOI Before Debt Service - Debt Service - Reserves Cash Flow
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports (cont’d) • Profit and Loss Statement – A financial picture of the revenues and expenses used to determine whether the business made money 58 Page 473 (+)
PROPERTY MANAGER’S RESPONSIBILITIES • Financial Reports (cont’d) • Budget Comparison Statement – Compares the actual results with the original budget • Usually given in percentages or numerical variances 59 Page 474
PROPERTY MANAGER’S RESPONSIBILITIES • Renting the Property – Effective rental of the property is essential to ensure the long-term financial health of the property • Licensees must use the Consumer Notice for the lease of residential or commercial property 60 Page 474
PROPERTY MANAGER’S RESPONSIBILITIES • Renting the Property (cont’d) • Setting Rental Rates – Influenced primarily by supply and demand • Property manager should conduct a survey of competitive spaces 61 Page 474
PROPERTY MANAGER’S RESPONSIBILITIES • Renting the Property (cont’d) • Setting Rental Rates (cont’d) • Residential Space – Stated as a monthly rate • Commercial Space – Stated as an annual or monthly rate per square foot 62 Page 474
PROPERTY MANAGER’S RESPONSIBILITIES • Marketing – Must take into consideration the property itself, the supply and demand in the area, and the amount of money available for advertising 63 Page 474
PROPERTY MANAGER’S RESPONSIBILITIES • Advertising – Property managers must attract the best tenants by considering various methods of advertising • Newspaper • Brochures • Direct-mail • Web sites 64 Page 475 • Radio • Television • Billboards
PROPERTY MANAGER’S RESPONSIBILITIES • Selecting Tenants – Proper selection is the 1st step in establishing and maintaining sound, long-term relationships 65 Page 475
PROPERTY MANAGER’S RESPONSIBILITIES • Selecting Tenants (cont’d) • Property managers should make sure premises are suitable for tenant in terms of size, location, and amenities • Commercial tenant’s business should be compatible with the building and other tenants • Property managers need to be aware of how fair housing laws affect and impact their business 66 Page 475
PROPERTY MANAGER’S RESPONSIBILITIES • Selecting Tenants (cont’d) • Collecting Rents – Terms of rental payments should be spelled out in the lease agreement: • Time and place of payments • Provisions and penalties for late payments • Provisions for cancellation and damages in case of nonpayment 67 Page 475
PROPERTY MANAGER’S RESPONSIBILITIES • Selecting Tenants (cont’d) • Collecting Rents (cont’d) • Property manager should establish a firm and consistent collection plan with a system of notices and records that comply with state and local law • Property manager must be prepared to initiate and follow through with the necessary legal steps to evict tenants 68 Page 475-476
PROPERTY MANAGER’S RESPONSIBILITIES • Maintaining Good Tenant Relations • Regular newsletters or posted memos help keep tenants informed • Maintenance and service requests should be attended to promptly • Treat all tenants the same in terms of rent collection and enforcement 69 Page 476
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Americans with Disabilities Act (ADA) • Title I – Provides for the employment of qualified job applicants regardless of their disability • Any employer with 15 or more employees must adopt nondiscriminatory employment procedures • Employers must make reasonable accommodations to enable individuals with disabilities to perform essential job functions 70 Page 476
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Americans with Disabilities Act (ADA) (cont’d) • Title III – Prohibits discrimination in commercial properties and public accommodations • Ensures that people with disabilities have full and equal access to facilities and services 71 Page 476
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Americans with Disabilities Act (ADA) (cont’d) • Property manager is responsible for determining whether a building meets ADA’s accessibility requirements • Existing Buildings – ADA recommends reasonably achievable accommodations • New Buildings – Must meet higher standards 72 Page 477
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Equal Credit Opportunity Act (ECOA) – Prohibits lender from denying a loan based on a person’s race, color, religion, national origin, sex, marital status, age, and receipt of public assistance 73 Page 499
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Equal Credit Opportunity Act (ECOA) (cont’d) • Should use the same lease application for every applicant • If checking credit for one; check credit for all • Be consistent in evaluating income and debt of applicants 74 Page 499
FEDERAL LAWS AFFECTING PROPERTY MANAGEMENT • Fair Housing Act – Prohibit discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, or disability 75 Page 478
PROPERTY MAINTENANCE & RISK MANAGEMENT • Property Maintenance – Keeping the property in good condition involves four types of maintenance: 1. Preventive Maintenance – Preserves the long-range value and physical integrity of the building 2. Corrective Maintenance – Actual repairs that keep the building functioning 76 Page 479
• Property Maintenance (cont’d) 3. Routine Maintenance – Day-to-day duties such as cleaning and performing minor adjustments 4. Tenant Improvements – Construction alterations made to the interior of the building to meet the tenant’s needs 77 Page 479 PROPERTY MAINTENANCE & RISK MANAGEMENT
• Risk Management • Security of Tenants – Property managers and owners should evaluate measures to protect tenants from unauthorized entry to buildings and to secure apartments from intruders 78 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
• Risk Management Techniques – The perils of any risk must be evaluated in terms of options • Control it through preventative measures • Avoid it by removing the risk • Retain it by insuring it with large deductible • Transfer it by taking out an insurance policy 79 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
• Types of Insurance – First line of defense in risk management for property owners and managers • Tenant’s Insurance – Property manager should notify tenants that they should obtain renter’s insurance to protect their personal belongings 80 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
• Types of Insurance (cont’d) • Commercial Insurance – An insurance audit should be performed which will indicate areas in which greater or lesser coverage is recommended 81 Page 481 PROPERTY MAINTENANCE & RISK MANAGEMENT
• Types of Insurance (cont’d) • Commercial Insurance (cont’d) • Multiperil Policies – Insurance package that includes standard types of coverage for fire, hazard, public liability, and casualty • Condominium associations carry insurance on common elements and buildings 82 Page 481 PROPERTY MAINTENANCE & RISK MANAGEMENT

More Related Content

PDF
LCAR Unit 14 - Real Estate Brokerage - 14th Edition Revised
byTom Blefko
 
PDF
LCAR Unit 18 - Sales Contracts - 14th Edition Revised Revised
byTom Blefko
 
PDF
LCAR Unit 17 - Listing Agreements and Buyer Representation Contracts - 14th E...
byTom Blefko
 
PDF
LCAR Unit 13 - The Real Estate Business - 14th Edition Revised.pdf
byTom Blefko
 
PDF
LCAR Unit 20 - Appraising Real Estate - 14th Edition Revised
byTom Blefko
 
PDF
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
byTom Blefko
 
PPT
First Time Home Buyer Class Sacramento California
byHomeBoom.com
 
PPT
First time home buyer
byLacy Williams
 
LCAR Unit 14 - Real Estate Brokerage - 14th Edition Revised
byTom Blefko
 
LCAR Unit 18 - Sales Contracts - 14th Edition Revised Revised
byTom Blefko
 
LCAR Unit 17 - Listing Agreements and Buyer Representation Contracts - 14th E...
byTom Blefko
 
LCAR Unit 13 - The Real Estate Business - 14th Edition Revised.pdf
byTom Blefko
 
LCAR Unit 20 - Appraising Real Estate - 14th Edition Revised
byTom Blefko
 
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
byTom Blefko
 
First Time Home Buyer Class Sacramento California
byHomeBoom.com
 
First time home buyer
byLacy Williams
 

What's hot

PDF
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised
byTom Blefko
 
PPTX
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised.pptx
byTom Blefko
 
PDF
LCAR Unit 21 - Closing the Real Estate Transaction - 14th Edition Revised
byTom Blefko
 
PDF
LCAR Unit 13 - The Real Estate Business - 14th Edition
byTom Blefko
 
PPTX
LCAR Unit 20 - Appraising Real Estate - 14th Edition Revised
byTom Blefko
 
PDF
LCAR Unit 19 - Financing the Real Estate Transaction - 14th Edition Revised.pdf
byTom Blefko
 
PDF
LCAR Unit 14 - Real Estate Brokerage - 14th Edition Revised.pdf
byTom Blefko
 
PDF
LCAR Unit 19 - Financing the Real Estate Transaction - 14th Edition Revised
byTom Blefko
 
PPTX
LCAR Unit 17 - Listing Agreements and Buyer Representation Contracts - 14th E...
byTom Blefko
 
PPTX
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
byTom Blefko
 
PPT
Measuring the Cost of Living
byChris Thomas
 
PPTX
LCAR Unit 13 - The Real Estate Business - 14th Edition Revised
byTom Blefko
 
PDF
Real Estate Math Concepts II
byTom Blefko
 
PPTX
Week 9 slides
byLj Wicks
 
PDF
Real Estate Math Concepts
byTom Blefko
 
PPTX
Introduction to commercial property valuation b w (1)
byLj Wicks
 
PPT
2017 Buyer Presentation
byGreg Eskritt
 
PDF
Luxury Real Estate Listing Presentation
byGary Grimes
 
PPT
Public Goods and Common Resources
byChris Thomas
 
PPT
Sección 20 arrendamientos
byJhonalex14
 
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised
byTom Blefko
 
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised.pptx
byTom Blefko
 
LCAR Unit 21 - Closing the Real Estate Transaction - 14th Edition Revised
byTom Blefko
 
LCAR Unit 13 - The Real Estate Business - 14th Edition
byTom Blefko
 
LCAR Unit 20 - Appraising Real Estate - 14th Edition Revised
byTom Blefko
 
LCAR Unit 19 - Financing the Real Estate Transaction - 14th Edition Revised.pdf
byTom Blefko
 
LCAR Unit 14 - Real Estate Brokerage - 14th Edition Revised.pdf
byTom Blefko
 
LCAR Unit 19 - Financing the Real Estate Transaction - 14th Edition Revised
byTom Blefko
 
LCAR Unit 17 - Listing Agreements and Buyer Representation Contracts - 14th E...
byTom Blefko
 
LCAR Unit 15 - Agency in Real Estate - 14th Edition Revised
byTom Blefko
 
Measuring the Cost of Living
byChris Thomas
 
LCAR Unit 13 - The Real Estate Business - 14th Edition Revised
byTom Blefko
 
Real Estate Math Concepts II
byTom Blefko
 
Week 9 slides
byLj Wicks
 
Real Estate Math Concepts
byTom Blefko
 
Introduction to commercial property valuation b w (1)
byLj Wicks
 
2017 Buyer Presentation
byGreg Eskritt
 
Luxury Real Estate Listing Presentation
byGary Grimes
 
Public Goods and Common Resources
byChris Thomas
 
Sección 20 arrendamientos
byJhonalex14
 

Similar to LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised

PPT
Commercial lease analysis
byD Scott Smith,CCIM
 
PPT
Property management
byD Scott Smith,CCIM
 
PPTX
Re broker-5e - 6
byalliedccd
 
PDF
Negotiating The Commercial Lease(Slides)
byPeter_Collins
 
PDF
REAL ESTATE LAW DUMBED DOWN 2022 - Representing the Commercial Landlord
byFinancial Poise
 
PPTX
Residential Lease Deed
byLegalDelight
 
PPT
Commercial leasing
bykscheufele26
 
PDF
Difference between a lease and a rent
byVikash Kumar
 
PPT
Crc section three 9 9-14
byTroy Pennington
 
PDF
Common Mistakes to Avoid When Signing a Rental Lease.pdf
byRestEasyPropertyMana
 
PPTX
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised
byTom Blefko
 
PPT
Hinkel Chapter 18
byTiffany Johnson
 
PDF
REAL ESTATE LAW DUMBED DOWN 2022 - Representing the Commercial Tenant
byFinancial Poise
 
PDF
Commercial Leases, Their Provisions and Pitfalls to Avoid (Series: Real Estat...
byFinancial Poise
 
PPT
Itm.leasing
byAshish Tiwari
 
PDF
MARCH EDITION ISSUE-47
byNeltah Mosimanegape
 
PPT
Prac pp chp 13
byCyrus Helf
 
PDF
The Commercial Landlord's Perspective (Series: Real Estate Leasing Dumbed Down)
byFinancial Poise
 
PPTX
English prestige - commercial leasing tenant & landlord representation
byEnglish Prestige
 
PDF
Lecture 4 (managing leases)
bySITI HASNIZA ROSMAN
 
Commercial lease analysis
byD Scott Smith,CCIM
 
Property management
byD Scott Smith,CCIM
 
Re broker-5e - 6
byalliedccd
 
Negotiating The Commercial Lease(Slides)
byPeter_Collins
 
REAL ESTATE LAW DUMBED DOWN 2022 - Representing the Commercial Landlord
byFinancial Poise
 
Residential Lease Deed
byLegalDelight
 
Commercial leasing
bykscheufele26
 
Difference between a lease and a rent
byVikash Kumar
 
Crc section three 9 9-14
byTroy Pennington
 
Common Mistakes to Avoid When Signing a Rental Lease.pdf
byRestEasyPropertyMana
 
LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised
byTom Blefko
 
Hinkel Chapter 18
byTiffany Johnson
 
REAL ESTATE LAW DUMBED DOWN 2022 - Representing the Commercial Tenant
byFinancial Poise
 
Commercial Leases, Their Provisions and Pitfalls to Avoid (Series: Real Estat...
byFinancial Poise
 
Itm.leasing
byAshish Tiwari
 
MARCH EDITION ISSUE-47
byNeltah Mosimanegape
 
Prac pp chp 13
byCyrus Helf
 
The Commercial Landlord's Perspective (Series: Real Estate Leasing Dumbed Down)
byFinancial Poise
 
English prestige - commercial leasing tenant & landlord representation
byEnglish Prestige
 
Lecture 4 (managing leases)
bySITI HASNIZA ROSMAN
 

Recently uploaded

PDF
Keystone Dombivali Thane - An iconic address for global champions
bypremsingh19kk
 
PDF
AI-Driven Asset Management and Private Equity Platform by Leni Analyst
byLeni Analyst
 
PDF
ICHS TOWN Islamabad Cooperative Housing Society .pdf
byICHS TOWN ISLAMABAD
 
PPTX
Elevate Your Productivity in 2026 - December '25 Sales Meeting
byTom Blefko
 
PDF
ICHS TOWN Islamabad Cooperative Housing Society 2 .pdf
byICHS TOWN ISLAMABAD
 
PDF
ALAND Successfully Acquires Key Cherrybrook Metro Precinct Site via Landcom T...
byAndrew Hrsto
 
PDF
M3M The Line Sector 72 Noida | Invest in Retail Shops & Food Court
byRajeev Gupta
 
PDF
The Silent Power of Property_ Why Real Estate Still Reigns by Anthony Blumber...
byAnthony Blumberg
 
PDF
Satya-Levante-Sector-104-Dwarka-Expressway-Brochure-8700819674.pdf
byComplete Investment Solutions
 
PPTX
Things to Consider When Buying a Home - Winter '26 Edition
byTom Blefko
 
PDF
Avrupa-Residence-Sisli-2-Katalog English - Listing Turkey
byListing Turkey
 
PDF
Oscar Engelbert - A Real Estate Innovator
byOscar Engelbert
 
DOCX
How Startups Can Avoid Financial Mistakes While Scaling.docx
bymailevaspaces
 
PDF
The 2026 Guide to Choosing the Right Ohio Community for Your Family
byJill Team
 
PDF
ebunking Myths in 3D Concrete Printing: MiCoB’s Journey from Bunkers to Home
byMiCoB
 
PDF
ATAŞEHİR 173 - EN KATALOG - Listing Turkey
byListing Turkey
 
PDF
Discourses-of-Affordable-Housing-in-India.pdf
byRAGHU RAM
 
PDF
Avrupa-Konutlari-Gunesli-Katalog EN - Listing Turkey
byListing Turkey
 
PDF
Know 3D Concrete Printing (3DCP): How It Works and Its Advantages
byMiCoB
 
PDF
Inside Dholera Smart City A Year-By-Year Growth Timeline (2009–2026).pdf
byShivgan Infratech
 
Keystone Dombivali Thane - An iconic address for global champions
bypremsingh19kk
 
AI-Driven Asset Management and Private Equity Platform by Leni Analyst
byLeni Analyst
 
ICHS TOWN Islamabad Cooperative Housing Society .pdf
byICHS TOWN ISLAMABAD
 
Elevate Your Productivity in 2026 - December '25 Sales Meeting
byTom Blefko
 
ICHS TOWN Islamabad Cooperative Housing Society 2 .pdf
byICHS TOWN ISLAMABAD
 
ALAND Successfully Acquires Key Cherrybrook Metro Precinct Site via Landcom T...
byAndrew Hrsto
 
M3M The Line Sector 72 Noida | Invest in Retail Shops & Food Court
byRajeev Gupta
 
The Silent Power of Property_ Why Real Estate Still Reigns by Anthony Blumber...
byAnthony Blumberg
 
Satya-Levante-Sector-104-Dwarka-Expressway-Brochure-8700819674.pdf
byComplete Investment Solutions
 
Things to Consider When Buying a Home - Winter '26 Edition
byTom Blefko
 
Avrupa-Residence-Sisli-2-Katalog English - Listing Turkey
byListing Turkey
 
Oscar Engelbert - A Real Estate Innovator
byOscar Engelbert
 
How Startups Can Avoid Financial Mistakes While Scaling.docx
bymailevaspaces
 
The 2026 Guide to Choosing the Right Ohio Community for Your Family
byJill Team
 
ebunking Myths in 3D Concrete Printing: MiCoB’s Journey from Bunkers to Home
byMiCoB
 
ATAŞEHİR 173 - EN KATALOG - Listing Turkey
byListing Turkey
 
Discourses-of-Affordable-Housing-in-India.pdf
byRAGHU RAM
 
Avrupa-Konutlari-Gunesli-Katalog EN - Listing Turkey
byListing Turkey
 
Know 3D Concrete Printing (3DCP): How It Works and Its Advantages
byMiCoB
 
Inside Dholera Smart City A Year-By-Year Growth Timeline (2009–2026).pdf
byShivgan Infratech
 

LCAR Unit 22 - Leasing and Property Management - 14th Edition Revised

  • 1.
    The Real EstateSchool U N I T 2 2 LEASING AND PROPERTY MANAGEMENT 1 Page 445
  • 2.
    OVERVIEW • Property Management– Involves the leasing, managing, marketing, and overall maintenance of real estate owned by others, usually rental property 2 Page 446
  • 3.
    LEASE AGREEMENTS • Lease– Contract between an owner of real estate (Lessor) and a tenant (Lessee) LESSOR OWNER LESSEE TENANT 3 Page 446
  • 4.
    LEASE AGREEMENTS • Lease– Contract to transfer the lessor’s rights to exclusive possession and use of the property to the tenant for a specified period of time 4 Page 446
  • 5.
    LEASING REAL ESTATE •Lease agreement combines two contracts: 1. Conveyance of a possession of the real estate 2. Pay rent and assume other obligations • Landlord retains a Reversionary Right to possession after the lease term expires 5 Page 446
  • 6.
    LEASING REAL ESTATE •Pennsylvania Statute of Frauds requires that leases for more than three years be in writing to enforce performance on the contract • The Real Estate Commission’s Rules and Regulations require licensees to use written contracts 6 Page 446
  • 7.
    LEASE AGREEMENTS • Requirementsof a valid lease: • Capacity to Contract – Legal capacity to contract • Legal Objectives • Offer and Acceptance – Reach mutual agreement on all terms • Consideration – Exchange of promises 7 Page 447 Figure 22.1 (page 448)
  • 8.
    LEASE AGREEMENTS • Draftingof leases: • Residential Leases – Usually preprinted agreements • Commercial Leases – Generally more complex with different legal requirements and may include complicated calculations of rent and maintenance costs 8 Page 455 CAUTION - Legal counsel should be sought when drafting legal documents
  • 9.
    LEASE AGREEMENTS • Possessionof Premises • The Lessor is bound by the implied Covenant of Quiet Enjoyment • Lessee may occupy the leased premises without interference from landlord 9 Page 455
  • 10.
    LEASE AGREEMENTS • Useof Premises – Lessor may restrict a Lessee’s use of the premises through provisions included in the lease 10 Page 106 Residential Restriction Office Restriction Retail Restriction
  • 11.
    LEASE AGREEMENTS • Termof Lease – Should be stated precisely and include a beginning and ending date together with a statement of the total period of the lease 11 Page 455
  • 12.
    LEASE AGREEMENTS • SecurityDeposits – Used as security in case tenant defaults on payment of rent or damages the premises 12 Page 455
  • 13.
    LEASE AGREEMENTS • SecurityDeposits (cont’d) • Maximum security deposit in first year of lease = two month’s rent • Maximum security deposit after the first year = one month’s rent 13 Page 456
  • 14.
    LEASE AGREEMENTS • SecurityDeposits (cont’d) • During years 2-5, the landlord may increase the amount of security deposit to keep pace with increasing rents • After year 5, the landlord may not increase the amount of security deposit 14 Page 456
  • 15.
    LEASE AGREEMENTS • SecurityDeposits (cont’d) • Residential security deposits >$100 must be deposited in an approved banking or savings institution • Must be deposited in an interest bearing account starting on the 2nd anniversary • Must be returned to tenant, including interest, within 30 days of the termination of tenancy 15 Page 456
  • 16.
    LEASE AGREEMENTS • Improvements– Tenant may make improvements with Landlord’s permission • Any alteration becomes Landlord’s property • In commercial leases, trade fixtures may be installed by Tenant and removed prior to end of lease, provided space is restored to prior condition 16 Page 457
  • 17.
    LEASE AGREEMENTS • Accessibility– Tenant’s with disabilities must be permitted to make reasonable modifications to a property at their expense • Landlord may require premises be restored to its original condition at end of lease 17 Page 457
  • 18.
    LEASE AGREEMENTS • Maintenanceof Premises – Residential Lessor is required to maintain dwelling units in a habitable condition • Commercial and industrial leases usually maintain the Lessee is responsible for making own repairs 18 Page 457
  • 19.
    LEASE AGREEMENTS • Recordinga Lease – Anyone who inspects the property receives actual notice so recording is considered unnecessary • State laws vary as to the acceptability of recorded leases and under what circumstances 19 Page 457
  • 20.
    LEASE AGREEMENTS • InPennsylvania, a Memorandum of Lease may be filed to provide notice of the interest but does not disclose the terms of lease to the public • Only the names of the parties and a description of the property are included 20 Page 457
  • 21.
    LEASE AGREEMENTS • Options– Clause in a lease that grants the Lessee a privilege of renewing or extending the lease • Lessee must give notice before a specific date of the intention to exercise option 21 Page 457
  • 22.
    LEASE AGREEMENTS • PurchaseOption – Gives Lessee the right to purchase the leased premises • Right of First Refusal – Allows Tenant the opportunity to buy the property before owner accepts another offer 22 Page 457
  • 23.
    DISCHARGE OF LEASES •Leases are discharged when any of the following occur: • Parties have fully performed their obligations • Operation of law • Mutual agreement • Leases are NOT discharged if: • Either party dies • Property is sold (Certain exceptions apply) 23 Page 458
  • 24.
    DISCHARGE OF LEASES •If leased real estate is SOLD, the new owner takes the property subject to existing leases • Exception: Sale Clause Language in a lease that permits the new owner (landlord) to terminate existing leases 24 Page 458
  • 25.
    DISCHARGE OF LEASES •Federal and State laws allow military personnel to terminate leases without penalty in certain situations 25 Page 458
  • 26.
    DISCHARGE OF LEASES •Destruction of Premises – Residential tenants are permitted to reduce their rent payments in proportion to the amount of space they are unable to use • Tenants who have constructed buildings on leased land are still obligated for the payment of rent 26 Page 459
  • 27.
    DISCHARGE OF LEASES •Assignment and Subleasing – Only allowed when a lease specifically permits them • Assignment – Tenant transfers all leasehold interests to another person or entity • Subleasing – Tenant transfers less than all the leasehold interest by leasing them to a new tenant 27 Page 459
  • 28.
    DISCHARGE OF LEASES 28 Page459 Assignment Sublease Figure 22.2
  • 29.
    DISCHARGE OF LEASES •Breach of Lease • Landlord Remedy – Suit for Possession (Actual Eviction) Legal process whereby Landlord may regain possession when Tenant breaches a lease or improperly retains possession 29 Page 460
  • 30.
    DISCHARGE OF LEASES •Breach of Lease (cont’d) • Landlord Remedy – Suit for Possession (Actual Eviction) • If Tenant fails to leave, the Landlord can have the judgment enforced by a court officer who forcibly removes the Tenant 30 Page 460
  • 31.
    DISCHARGE OF LEASES •Breach of Lease (cont’d) • Landlord Remedy in Pennsylvania • Landlord must give proper notice before filing suit • Landlord files a complaint • District Justice (DJ) issues summons for Tenant to appear and answer complaint • DJ enters judgment against the Tenant ordering the Tenant to deliver property (may also include costs) • If Tenant fails to leave, a constable is utilized 31 Page 460
  • 32.
    DISCHARGE OF LEASES •Breach of Lease (cont’d) • Tenant Remedy – Constructive Eviction – If the leased premises become unusable, Tenant may have the right to abandon them and sue for damages • Tenant has to prove that there was conscious neglect by the Landlord • Tenant must leave the premises while the condition that made the premises uninhabitable exist 32 Page 460
  • 33.
    DISCHARGE OF LEASES •Breach of Lease Remedies (cont’d) • Warranty of Habitability The Lessor who leases residential premises warrants that the premises are fit for habitation 33 Page 460
  • 34.
    DISCHARGE OF LEASES •Breach of Lease (cont’d) • Pro-Tenant Legislation – The Uniform Residential Landlord and Tenant Act addresses the need for both parties to fulfill certain basic obligations • Landlord’s right to enter property • Use and maintenance of premises • Tenant’s protection against retaliation for complaints • Contact information for Tenant 34 Page 461
  • 35.
    DISCHARGE OF LEASES •Fair Housing and Civil Rights Laws – Affect landlords and tenants just as they do sellers and purchasers 35 Page 461
  • 36.
    DISCHARGE OF LEASES •Pennsylvania Human Relations Act – All persons must have access to the housing of their choice without regard to their race, color, religion, national origin, sex, age (40 years old or older), disability, use of guide or support animals due to a disability, or familial status. 36 Page 461
  • 37.
    TYPES OF LEASES •Gross Lease – The Tenant pays a fixed rental and the landlord pays all operating expense (property charges or operating expenses) • Residential and commercial office leases are most common 37 Page 462
  • 38.
    TYPES OF LEASES •Net Lease – The Tenant pays all or most of the operating expenses in addition to the rent • Typical in large commercial and industrial leases 38 Page 462
  • 39.
    TYPES OF LEASES •Percentage Lease – Rent is based on a minimum fixed rental fee plus a percentage of the gross or net income received by the tenant • Typical in retail business leases 39 Page 462
  • 40.
    TYPES OF LEASES •Percentage Lease Calculation – EXAMPLE 40 Page 462 A retail lease requires minimum rent of $1,300 per month plus 5% of the business’s sales over $160,000. On an annual sales volume of $250,000, calculate the annual rent. • Base Rent: $1,300/month x 12 months = $15,600 • Percentage Rent: $250,000 - $160,000 = $90,000 $90,000 x 0.05 = $4,500 • Total Rent: $15,600 + $4,500 = $20,100
  • 41.
    TYPES OF LEASES •Variable Leases – Allow for increases in the fixed rental charge during the lease period • Graduated Lease – Provides for specific rent increases at set future dates • Index Lease – Allows rent to be increased or decreased periodically based on changes in an index 41 Page 463
  • 42.
    TYPES OF LEASES •Ground Leases – Landowner leases unimproved land to a tenant who agrees to erect a building on it • Used in commercial and industrial property development • Separate ownership of land and building • Long-term (50-99 years) 42 Page 463
  • 43.
    TYPES OF LEASES •Oil and Gas Leases – Landowner receives a cash payment for executing the lease and a royalty for oil or gas extracted from the ground 43 Page 463
  • 44.
    TYPES OF LEASES •Lease Purchase – Used when a Tenant wants to purchase a property but is unable to do so • Part of the periodic rent is applied toward the purchase price until the Tenant can obtain financing 44 Page 463
  • 45.
    TYPES OF LEASES •Sale and Leaseback – Owners of property sell the property and then lease it back for an agreed period and rental • Used to obtain extra working capital 45 Page 463
  • 46.
    THE MANAGEMENT PLAN& AGREEMENT • The Management Plan – Outlines the details of the owner’s objectives with the property and what the property manager expects to accomplish and how, including all financial objectives 46 Page 463
  • 47.
    THE MANAGEMENT PLAN& AGREEMENT • Property Manager analyzes three factors • Owner’s objectives • Regional and neighborhood market • Specific property • Critical indicators: • Occupancy • Absorption rates • New starts 47 Page 463
  • 48.
    THE MANAGEMENT PLAN& AGREEMENT • The Management Agreement – A contract that creates a general agency relationship between the owner and the property manager and defines responsibilities 48 Page 464
  • 49.
    THE MANAGEMENT PLAN& AGREEMENT • The Management Agreement (cont’d) • Management agreement should be in writing and include the following points: • Property description • Time period • Manager’s responsibilities • Owner’s purpose • Manager’s authority • Reporting 49 Page 464-465 • Compensation • Allocation of costs • Antitrust provisions • Equal opportunity statement
  • 50.
    THE MANAGEMENT PLAN& AGREEMENT • Calculating Rental Commissions • If an apartment unit rents for $1,200 per month and the commission payable is 8%, the commission will be calculated as follows: $1,200/month x 12 months = $14,400/year $14,400 x 0.08 = $1,152 • Rental commissions are usually payable when the first month’s rent is received and the tenant moves in 50 Page 465
  • 51.
    THE MANAGEMENT PLAN& AGREEMENT • Residential Property Management Agreement (Landlord Agency Contract) 51 Page 465 Figure 22.4 (page 466-471)
  • 52.
    PROPERTY MANAGER’S RESPONSIBILITIES •The three principal responsibilities of the property manger: 1. Achieve the objectives of the owner 2. Generate income 3. Preserve and/or increase the value of the property 52 Page 472
  • 53.
    PROPERTY MANAGER’S RESPONSIBILITIES •In Pennsylvania, a property manager who serves the public for a fee must be one of the following: • Licensed real estate broker • Real estate licensee affiliated with a property management company • Brokerage firm that has a property management department (NOTE: Property manager may also be an employee of the owner of real estate) 53 Page 472
  • 54.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports – While there is no standard formats, there is similarity among reports and should be adapted to meet owner’s needs 54 Page 472
  • 55.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports (cont’d) • Operating Budget – Projection of income and expense for the operation of a property over a one-year period 55 Page 473
  • 56.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports (cont’d) • Cash Flow Report – Monthly statement that details the financial status of the property • Most important report because it provides a picture of the current financial status of a property 56 Page 473
  • 57.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports (cont’d) • Cash Flow Report – Formula for arriving at cash flow 57 Page 473 Gross Rental Income + Other Income - Losses Incurred Total Adjusted Income - Operating Expenses NOI Before Debt Service - Debt Service - Reserves Cash Flow
  • 58.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports (cont’d) • Profit and Loss Statement – A financial picture of the revenues and expenses used to determine whether the business made money 58 Page 473 (+)
  • 59.
    PROPERTY MANAGER’S RESPONSIBILITIES •Financial Reports (cont’d) • Budget Comparison Statement – Compares the actual results with the original budget • Usually given in percentages or numerical variances 59 Page 474
  • 60.
    PROPERTY MANAGER’S RESPONSIBILITIES •Renting the Property – Effective rental of the property is essential to ensure the long-term financial health of the property • Licensees must use the Consumer Notice for the lease of residential or commercial property 60 Page 474
  • 61.
    PROPERTY MANAGER’S RESPONSIBILITIES •Renting the Property (cont’d) • Setting Rental Rates – Influenced primarily by supply and demand • Property manager should conduct a survey of competitive spaces 61 Page 474
  • 62.
    PROPERTY MANAGER’S RESPONSIBILITIES •Renting the Property (cont’d) • Setting Rental Rates (cont’d) • Residential Space – Stated as a monthly rate • Commercial Space – Stated as an annual or monthly rate per square foot 62 Page 474
  • 63.
    PROPERTY MANAGER’S RESPONSIBILITIES •Marketing – Must take into consideration the property itself, the supply and demand in the area, and the amount of money available for advertising 63 Page 474
  • 64.
    PROPERTY MANAGER’S RESPONSIBILITIES •Advertising – Property managers must attract the best tenants by considering various methods of advertising • Newspaper • Brochures • Direct-mail • Web sites 64 Page 475 • Radio • Television • Billboards
  • 65.
    PROPERTY MANAGER’S RESPONSIBILITIES •Selecting Tenants – Proper selection is the 1st step in establishing and maintaining sound, long-term relationships 65 Page 475
  • 66.
    PROPERTY MANAGER’S RESPONSIBILITIES •Selecting Tenants (cont’d) • Property managers should make sure premises are suitable for tenant in terms of size, location, and amenities • Commercial tenant’s business should be compatible with the building and other tenants • Property managers need to be aware of how fair housing laws affect and impact their business 66 Page 475
  • 67.
    PROPERTY MANAGER’S RESPONSIBILITIES •Selecting Tenants (cont’d) • Collecting Rents – Terms of rental payments should be spelled out in the lease agreement: • Time and place of payments • Provisions and penalties for late payments • Provisions for cancellation and damages in case of nonpayment 67 Page 475
  • 68.
    PROPERTY MANAGER’S RESPONSIBILITIES •Selecting Tenants (cont’d) • Collecting Rents (cont’d) • Property manager should establish a firm and consistent collection plan with a system of notices and records that comply with state and local law • Property manager must be prepared to initiate and follow through with the necessary legal steps to evict tenants 68 Page 475-476
  • 69.
    PROPERTY MANAGER’S RESPONSIBILITIES •Maintaining Good Tenant Relations • Regular newsletters or posted memos help keep tenants informed • Maintenance and service requests should be attended to promptly • Treat all tenants the same in terms of rent collection and enforcement 69 Page 476
  • 70.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Americans with Disabilities Act (ADA) • Title I – Provides for the employment of qualified job applicants regardless of their disability • Any employer with 15 or more employees must adopt nondiscriminatory employment procedures • Employers must make reasonable accommodations to enable individuals with disabilities to perform essential job functions 70 Page 476
  • 71.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Americans with Disabilities Act (ADA) (cont’d) • Title III – Prohibits discrimination in commercial properties and public accommodations • Ensures that people with disabilities have full and equal access to facilities and services 71 Page 476
  • 72.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Americans with Disabilities Act (ADA) (cont’d) • Property manager is responsible for determining whether a building meets ADA’s accessibility requirements • Existing Buildings – ADA recommends reasonably achievable accommodations • New Buildings – Must meet higher standards 72 Page 477
  • 73.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Equal Credit Opportunity Act (ECOA) – Prohibits lender from denying a loan based on a person’s race, color, religion, national origin, sex, marital status, age, and receipt of public assistance 73 Page 499
  • 74.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Equal Credit Opportunity Act (ECOA) (cont’d) • Should use the same lease application for every applicant • If checking credit for one; check credit for all • Be consistent in evaluating income and debt of applicants 74 Page 499
  • 75.
    FEDERAL LAWS AFFECTING PROPERTYMANAGEMENT • Fair Housing Act – Prohibit discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, or disability 75 Page 478
  • 76.
    PROPERTY MAINTENANCE &RISK MANAGEMENT • Property Maintenance – Keeping the property in good condition involves four types of maintenance: 1. Preventive Maintenance – Preserves the long-range value and physical integrity of the building 2. Corrective Maintenance – Actual repairs that keep the building functioning 76 Page 479
  • 77.
    • Property Maintenance(cont’d) 3. Routine Maintenance – Day-to-day duties such as cleaning and performing minor adjustments 4. Tenant Improvements – Construction alterations made to the interior of the building to meet the tenant’s needs 77 Page 479 PROPERTY MAINTENANCE & RISK MANAGEMENT
  • 78.
    • Risk Management •Security of Tenants – Property managers and owners should evaluate measures to protect tenants from unauthorized entry to buildings and to secure apartments from intruders 78 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
  • 79.
    • Risk ManagementTechniques – The perils of any risk must be evaluated in terms of options • Control it through preventative measures • Avoid it by removing the risk • Retain it by insuring it with large deductible • Transfer it by taking out an insurance policy 79 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
  • 80.
    • Types ofInsurance – First line of defense in risk management for property owners and managers • Tenant’s Insurance – Property manager should notify tenants that they should obtain renter’s insurance to protect their personal belongings 80 Page 480 PROPERTY MAINTENANCE & RISK MANAGEMENT
  • 81.
    • Types ofInsurance (cont’d) • Commercial Insurance – An insurance audit should be performed which will indicate areas in which greater or lesser coverage is recommended 81 Page 481 PROPERTY MAINTENANCE & RISK MANAGEMENT
  • 82.
    • Types ofInsurance (cont’d) • Commercial Insurance (cont’d) • Multiperil Policies – Insurance package that includes standard types of coverage for fire, hazard, public liability, and casualty • Condominium associations carry insurance on common elements and buildings 82 Page 481 PROPERTY MAINTENANCE & RISK MANAGEMENT