Property Management an Overview (2018) Classroom.pptx

3 Hours Property Management
CE Course
CE.5058002-RE (Classroom)
©Copyright 2018, Real Estate School of Nevada, Inc. All Rights Reserved. 1

Property Management: An Overview
Course Objectives
 to present an overview of property management for the Nevada
real estate licensee
 to understand the importance of understanding property
management and become a better professional
 to meet the educational requirements for the property
management continuing education course for license renewal
 to address property management topics concerning residential,
commercial, industrial, and Common Interest Communities

Course Overview
 Introduction and general information (15 minutes)
 Education (15 Minutes)
 Residential Property Management
 Role and duties - 30 minutes
 Contracts - 10 minutes
 Lease application - 10 minutes
 The Uniform Residential Landlord and Tenant Act - 15 minutes
 Disclosures - 15 minutes
 Fair Housing - 15 minutes
 Record keeping - 15 minutes
 Brokers’ fiduciary duty and Agency - 5 minutes
 Commercial/Industrial Property Management - 15 minutes
 Common Interest Community Property Management - 30 Minutes

 Property Manager permit application and instructions (4)
 Copy of a Residential Rental application (3)
 Notice of Change of Terms of Rental Agreement (1)
 Duties Owed (1)
 Common Terms (10)
Attachments

Introduction and General Information
 Types of property ownership which need Property Management:
 Residential property
 can include large multifamily apartment communities
 single family homes
 high rise and mid rise buildings
 manufactured home sites
 condominiums, townhouses, and cooperatives
 Commercial/Industrial properties
 can include multi-story office buildings
 shopping malls
 strip centers
 mini storage facilities
 industrial parks
 distribution facilities
 heavy and light manufacturing facilities
 large warehouses
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©Copyright 2018, Real Estate School of Nevada, Inc. All Rights Reserved.

 Special purpose property
 can include nursing homes
 hotels, motels, clubs, and resorts
 theaters
 schools
 places of worship
 government institutions
 Common Interest Community
 a specialized area of management and the manager must be aware of the laws,
rules and regulations specific to the Home Owner Association and the CIC
commission.
 The property management professional must know the laws, rules, and
regulations of each type of property that is going to be managed.
 All property has a central requirement of responsibility to the tenant and
also specialized aspects of the management process.
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Introduction and General Information

Definition of a Property Manager
 Property Manager - the person who will manage a property for a
client and is a licensee affiliated with a licensed real estate broker
who has obtained the Property Manager Permit.
 The Manager has an AGENCY relationship with the owner and
therefore has an added responsibility for discretion over
management decisions and disclosures.
 When representing the client in a leasing transaction, a licensee may
perform all activities necessary to represent that client, however
once an agreement to rent or lease has been concluded, an un-
permitted licensee may not be involved further in the management
for either the renter or landlord.

 The Permitted Property Manager:
 must enter into a written Property Management Agreement with the client
before commencing the management of any real estate.
 This agreement must be approved and signed by all parties including the
permitted broker.
 is required to complete many tasks, all at the same time.
 carries out the goals of the property owner.
 is responsible for maintaining the owner’s investment and to make sure the
property earns income. These goals can be achieved in many ways.
 The physical property must be maintained in good condition.
 Suitable tenants must be found and rent collected.
 employees hired and supervised
 maintain financial records
 operate and maintain the physical property in such a way as to preserve and enhance
the owner’s capital investment
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Definition of a Property Manager

Education
 obtain a Property Management Permit in order to comply with
the law for management of real property
 The Nevada Real Estate Division and your local real estate
associations require certain educational requirements in order
to become a licensed Real Estate Property Manager.
 These educational requirements are spelled out in the Nevada
Administrative Code (NAC) 116 and 645 and are noted as
follows:
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PM Permit Application and Requirements
 General requirements to obtain a Property Management permit (NRS
645.190, 645.6052):
 completed application on NRED form 545
 fee of $40
 proof of passing the 24 hour property manager course (original
certificate)
 original real estate license
 All must be submitted to the Nevada Real Estate Division by mail or in
person.
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The 24 Hour Permit Course
 4 hours: contracts for management services, Fair Credit Reporting Act ,
leases, rental applications, Fair Debt Collection Practices Act;
 2 hours: maintenance of records of trust funds, requirements for reporting
to the Division;
 1 hour: use of a computerized system for bookkeeping;
 2 hours: Nevada law governing property management;
 2 hours: disclosures in real estate transactions and disclosures related to
environmental issues as governed by state and federal law ;
 5 hours: Americans with Disabilities Act of 1990, Residential Landlord and
Tenant Act, Nevada Fair Housing Law, state and federal laws governing
unlawful discrimination (NRS Chapter 118);
 3 hours: property management for a common-interest community (NRS
Chapter 116);
 1 hour: duties and responsibilities of a real estate broker including the
supervision of employees and real state salespersons;
 2 hours: Risk management, maintenance of real property, health and
safety of a tenant, Fire, rental and disability insurance;
 2 hours: management of commercial property
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Renewal and Continuing Education of Permit
 Property Manager Permit is renewed at the same time as your real estate
license
 application for the renewal of property management permit, with
application to renew real estate license
 a permit renewal fee of $40.00
 documentation of successful completion of 24 hours of continuing education
courses which includes:
 3 hours agency
 3 hours law
 3 hours ethics
 3 hours contracts
 3 hours of property management- including instruction relating to any
amendments to the laws of Nevada governing property management
 8 hours general continuing education courses
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 If the holder of the permit is a manager of a CIC, pursuant to
NAC 116, additional classes include:
 3 hours of instruction relating to the laws of this state which are
applicable to the responsibilities and duties involved in the
management of a common-interest community
 The renewal of a permit is effective on the date on which the
application for renewal of a license is submitted to the Division
or on the date on which the renewal fees for the license and
the permit are paid, whichever occurs later.
 A permit expires on the same date as the holder’s license
expires.
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Renewal and Continuing Education of Permit

 NAC 645 and NRS 118, 645 are enacted in order to delineate
the code of conduct and the rules that the manager must
adhere to.
 These codes and statutes are formulated to protect the public
from unlicensed management of property in Nevada.
 Guidelines for Property Management for Common Interest
Communities are outlined in NRS and NAC 116.
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Nevada Laws and Regulations

License and Experience Requirement
 A person designated to engage in property management on behalf
of a partnership, corporation, limited-liability company, or sole
proprietor must be a broker or a broker-salesman with 2 years of
full-time active experience within the 4 years immediately preceding
the date the person applies for a permit.

 supervise the physical, administrative, and financial maintenance
of real property for a commission or a fee
 a Property Management Agreement is a contract between a client
and a broker in which the broker will receive valuable
consideration from the client in exchange for managing the
property
 the manager may be responsible for:
 Marketing the property:
 must understand and know the laws regarding fair housing and
advertising
 unethical tactics will not be tolerated
 steering, blockbusting, making false statements, bait and switch, and high
pressure tactics
Duties of a Property Manager

 Physical maintenance:
 balance the services provided with the budget allowed to
maintain a property
 assess the building’s needs and how to best meet them
 The owner and manager usually agree in advance on the
maintenance objectives and the budget.
 A well maintained property can command premium rental rates.
 make decisions on hiring employees and contractors that will be
the most cost effective for the owner and the budget

 Maintenance Types:
 Preventive Maintenance
 regularly scheduled activities such as painting and seasonal servicing of appliances and
systems
 preserves the long range value and physical integrity of the building
 failure to perform preventative maintenance will lead to increased expense for future
corrective repairs
 Corrective Maintenance
 actual repairs that keep the buildings and systems functioning
 such as fixing a leaking faucet, mending a broken air conditioner, or repairing a cracked tile
floor
 Routine Maintenance
 day to day duties such as cleaning, minor carpentry, plumbing adjustments, and providing
regularly scheduled upkeep of common elements of the property
 Construction
 making changes to a property in order to meet the tenant’s needs
 Tenant improvements may include re-carpeting, redesigning space by erecting new
walls or partitions, installing a wheelchair ramp

 Selecting Suitable Tenants
 assure the tenant is able to pay the rent
 run credit report
 interview prospect about work and rental history
 ascertain the number of occupants, pets, if business will be conducted out of the home
 fair housing must be adhered to
 Completing the lease and explaining all the terms to the tenant
 review the lease and its terms to the prospect
 leases must be signed and dated by all parties of the rental agreement
 Collecting the rent
 establish a firm and consistent collection plan which includes a system of notices and records
that complies with state law
 accept only those tenants who will meet the financial obligations necessary to afford the
monthly rent
 terms should be spelled out in the lease agreement including the time and place of the
payment, the penalties for late payments or bounced checks and the provisions for
cancellation and damages in the case of non payment
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 Advertising
 must conform to the Fairness in Housing Act which ensures that protected
classes are not discriminated against
 methods may include: newspaper ads, brochures, direct mail, internet,
television, billboards and the MLS
 method will depend on the budget and the market
 Maintaining good relations with the owners, prospects, tenants,
employees, contractors, cooperative brokers, and the community
 maintain good relationships with tenants
 have good communication responding to requests in a timely manner and
by treating all tenants equally
 newsletters, emails, phone calls, etc. are good ways to communicate and to
keep tenants informed and involved
 A good manager is tactful and decisive and acts for the benefit of both the
owner and the tenant.

 Providing an accounting of all monies involved with the property for
each owner: The manager must provide several reports to the owner:
 The Operating Budget
 gives the owner the guideline of what is to be expected from the rental
property
 guide for the property’s financial performance in the present and future
 formulated before attempting to rent the property based on the results
of the profit and loss statement in comparison to the original budget
 Cash Flow Report
 monthly statement that details the financial status of the property
 sources of income and expenditures as well as net operating income and
net cash flow
 provides an overview of current financial status of a property

 Providing an accounting of all monies involved with the property for
each owner: The manager must provide several reports to the owner:
 Expense Report
 states the fixed and variable expenses involved with the
management of a property
 includes fixed expenses, operating expenses, and maintenance
costs.
 Profit and loss statement
 prepared monthly, quarterly, semiannually or annually
 provides a general financial overview based on the monthly cash
flow reports
 Adhering to all state laws as written by the Nevada Real Estate
Commission, and codes as established by NAR

Contracts
 PM must know and understand any contracts used in a property
management situation
 The manager and the owner need to agree to a management plan:
 highly detailed
 include the owner’s objectives
 the neighborhood market and the specific property
 will include a budget section on sources of revenue and anticipated
expenses, reports concerning occupancy and absorption rates, as well as
future goals of the owner.
 There are 2 major contracts needed when managing and then leasing a
property:
 Property Management Agreement
 Lease
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 a mutual agreement between the Property Management
brokerage and the property owner
 signed by all parties
 gives the property manager the authority to effectively manage the
property
 establishes an AGENCY relationship between the owner and the
manager
 At this point, the manager now has the fiduciary relationship with the
owner.
 Care
 Obedience
 Accounting
 Loyalty
 Disclosure
 the manager handles the property the same way the owner would
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Property Management Agreement

 This agreement must include:
 description of the property- the legal address and APN number
 identification of the parties and the property
 owners’ legal names or the name of the corporation the property
is deeded
 contact person and contact information if not the owner
 period over which the contract is to run
 specific dates and any provisions for termination
 provisions to show if the agreement is subject to renewal
 definition of the manager and the extent the broker may act as
the agent of the client

 property manager’s duties should be specifically stated in the contract
 any limitations or restrictions should be included
 responsibilities of the owner
 owner must clearly delineate expectations
 manager’s decisions depends on the owner’s long term goals for the property
 agreement needs to list the owner’s responsibilities for management expenses such as:
 insurance
 advertising
 cooperative commissions
 should state which of the costs, such as office rent, help, advertising, association
fees and contractors will be paid by the management company or the owner
 fee or compensation to be paid to the broker; may be based on:
 percentage of the gross or net income
 a fixed fee
 or a combination
 should include a base fee as well as any leasing fees, supervision fees or other
compensation or commissions
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 manager must be included as an additional insured on the property liability
insurance policy
 a provision for the retention and disposition of deposits of the tenants during the
term of the agreement
 a statement as to where and how the fees will be delivered to the owner when the
rent is paid and the manager’s fees are deducted
 Antitrust Provisions: fees are subject to the same considerations as commissions
 cannot be standardized in the market place, which would be viewed as price fixing
 must be negotiated between the agent and the owner
 manager may be entitled to a commission on new rentals and renewed leases
 Equal Opportunity Statement: agreements should include a statement that the
property will be shown, rented and made available to all persons regardless of race,
color, religion, sex, handicap, national origin, or familial status
 provisions outlining the circumstances under which the agreement may be
cancelled
 signatures of all parties and the date signed
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Lease/Rental Agreement with the Tenant
 rental agreement is both a contract and a conveyance of an interest in real
estate
 a lease must contain the following:
 complete and legal name of all parties
 description of the property (street address, unit number, city, state, zip)
and or the legal description in the case of Ground Leases
 terms of the lease:
 beginning date
 termination date
 penalties if there is a breach of contract
 Remedies for breach
 consideration (amount of the rent)
 security deposits
 clear directive stating the amount of deposits
 whether they will be refunded and the conditions under which they will be refunded
 time and method of payment and any penalties for late payments or
insufficient funds
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 Use of the premises; rules concerning
 availability and use of common areas
 parking spaces
 guests
 pets
 noise and other regulative issues
 Rights and obligations of all parties; what can and cannot happen in the property,
for example:
 only 4 people will have residence
 only 2 cars may be parked on the property
 availability for the owner/agent to inspect the property
 Possession
 owner is obligated to give the tenant actual occupancy as described in the lease in a
habitable condition
 Tenant Alterations allowed/disallowed
 identify the nature and cost of the alterations and identify the party responsible for
payment
 perhaps an allowance for repairs/paint
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Lease/Rental Agreement

 Condemnation
 in case the tenant is denied use of the property in the event of a disaster, foreclosure or
condemnation
 Insurance
 who is responsible for what kind of insurance
 the tenant is responsible for insurance on personal property
 the owner can only insure the building
 All parties must receive a copy of the lease and the agreed upon terms.
(NRS 645.6056)
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Lease/Rental Agreement

Lease Application
 All interested tenants should be required to complete a
written Lease Application.
 should be clear, concise and consistent
 cover as may topics as necessary for the owner/manager to make an
informed decision to accept or reject the applicant
 should also have a provision giving the owner/manager permission to
verify the tenant’s:
 identity
 rental history
 credit history
 court and criminal records

Fair Credit Reporting Act
 This law is intended to assure the data contained in credit reports are correct.
 regulates consumer reporting agencies and those who provide information to the
consumer reporting agencies
 Property owners and managers use this information and often contribute to the
consumer files.
 Consumers have a right to obtain a copy of their reports and should do so on a regular
basis.
 This law also entitles consumers to challenge the accuracy of any information in their
reports.
 In the event the owner/manager rejects a lease application because of poor credit, the
notification must include the following:
 name, address and phone number of the credit reporting agencies that provided their
information
 notice that the credit agencies only provide information about their credit history and take
no part in the decision process
 explain the applicant’s right to obtain a free copy of the credit report, dispute its
accuracy, and to provide a consumer statement describing his/her position

Fair Debt Collection Practices Act
 a federal act to protect the consumer from abusive
conduct from debt collectors
 regulates the actions of debt collectors
 stop misrepresentation, deception and abusive conduct by debt
collectors to a consumer
 has standards and guidelines for the debt collector to complete
his/her job
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Uniform Residential Landlord and Tenant Act
 drafted in 1972, designed to standardize and regulate the relationship between
property owners and their tenants
 the tenant may not sign away his or her rights -NRS 118
 Tenant obligations and rights; a tenant shall:
 comply with the terms of the rental agreement;
 keep that part of the premises which is occupied and used as clean and safe;
 dispose of all ashes, garbage, rubbish and other waste from the dwelling unit in a clean
and safe manner;
 keep all plumbing fixtures in the dwelling unit clean;
 use, in a reasonable manner, all electrical, plumbing, sanitary, heating, ventilating, air-
conditioning, and other facilities and appliances, including elevators, in the premises;
 not deliberately or negligently render the premises uninhabitable or destroy, deface,
damage, impair or remove any part of the premises or knowingly permit any person to do
so; and
 conduct himself and require other persons on the premises with his consent to conduct
themselves in a manner that will not disturb a neighbor’s peaceful enjoyment of the
premises NRS 118A.310
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 Owners obligations and rights:
 may not demand or receive security, including the last month’s rent, whose total
amount or value exceeds 3 months’ periodic rent
 upon termination by either party for any reason, the landlord may claim of the security
only such amounts as are reasonably necessary to remedy any default of the tenant:
 in the payment of rent
 to repair damages to the premises caused by the tenant other than normal wear
 to pay the reasonable costs of cleaning the premises
 landlord shall provide the tenant with an itemized written accounting of the disposition
of the security and return any remaining portion of the security to the tenant no later
than 30 days after the termination of the tenancy by handing it to him personally at the
place where the rent is paid, or by mailing it to him at his present address, or if that
address is unknown, at the tenant’s last known address
 If the landlord fails or refuses to return the remainder of a security deposit within 30
days after the end of a tenancy, he is liable to the tenant for damages equal to the
entire deposit or an amount set by the court of not more than the amount of the entire
deposit.
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 Except for an agreement which provides for a nonrefundable charge for
cleaning in a reasonable amount, no rental agreement may contain any
provision characterizing any security under this section as nonrefundable
or any provision waiving or modifying a tenant’s rights under this section.
 Any such provision is void as contrary to public policy.
 The claim of a tenant to security to which he is entitled under this chapter
takes precedence over the claim of any creditor of the landlord. NRS
118A.242
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 The landlord, or any person authorized to enter into a rental agreement on
his behalf, shall disclose to the tenant, in writing, at or before the
commencement of the tenancy:
 the name and address of:
 the persons authorized to manage the premises;
 a person within this state authorized to act for and on behalf of the landlord for the purpose of
service of process and receiving notices and demands; and
 the principal or corporate owner
 a telephone number at which a responsible person who resides in the county or within 60
miles of where the premises are located may be called in case of emergency
 The information required to be furnished by this section must be kept current, and
this section is enforceable against any successor landlord or manager of the premises.
 A party who enters into a rental agreement on behalf of the landlord and fails to
comply with this section is an agent of the landlord for purposes of:
 Service of process and receiving notices and demands; and
 Performing the obligations of the landlord under law and under the rental agreement

 In any action against a landlord which involves his rental property, service of process
upon the manager of the property or a person described in paragraph (a) of subsection
1 shall be deemed to be service upon the landlord. The obligations of the landlord
devolve upon the persons authorized to enter into a rental agreement on his behalf.
 This section does not limit or remove the liability of an undisclosed landlord. NRS
118A.260
 The landlord may not increase the rent payable by a tenant unless it serves the tenant
with a written notice, 45 days or, in the case of any periodic tenancy of less than 1
month, 15 days in advance of the first rental payment to be increased, advising him of
the increase. NRS 118A.300
 Security deposit and other fees Receipts for security, rent and other payments. The
landlord shall deliver to the tenant upon his request a signed written receipt for security
and any other payments, deposits or fees, including rent, paid by the tenant and
received by the landlord. The tenant may refuse to make rent payments until the
landlord tenders the requested receipt. NRS 118A.250
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Disclosures
 Required Disclosures: NAC 116.310 Required disclosures. (NRS
116.615, 116A.200, 116A.400)
 Before entering into a management agreement, a community
manager shall disclose in writing to the prospective client any material
and relevant information that he knows or should know relates to the
performance of the management agreement, including any matters
which may affect his ability to comply with the provisions of this
chapter or chapter 116 of NRS. Such disclosure must include, without
limitation:
 whether he expects to receive any direct or indirect compensation
or profits from any person who will perform services for the client
and, if so, the identity of the person;
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 His affiliation with or financial interest in any person who
furnishes any goods or services to the client; and
 His personal relationships with any unit’s owner, member
of the executive board or officer of the association.
 When completing the Lease Agreement, the
owner/property manager is required to disclose to the
tenant, the following;
 Material facts and defects concerning the property
 Environmental issues concerning the property
 Known latent facts concerning the property
 Responsibilities of the tenant/manager and owner in the
Maintenance of the property

Fair Housing
 The property manager has the responsibility to ensure that there
is not discrimination involved in the renting of any property.
 The lease application form must be the same for all applicants as
is the procedure for obtaining the credit report.
 Consistency of the process is very important. Below are
references concerning the federal laws and guidelines:
 Americans with Disabilities Act: (ADA) is an act that was formulated in 1994
in order to provide equal opportunities to those people with disabilities.
The act further states that no person may be discriminated against on the
basis of disability in employment, transportation, public accommodations,
tele-communications and in state and local government services.
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Fair Housing
 From a property management standpoint, the property being
rented or leased, must comply with the standards for the ADA.
 For commercial property, this may include:
 building a ramp to the front porch for access by a person in a wheel chair;
 adding grab bars to the bathroom facilities;
 widening the doors throughout the property for wheelchair access.
 Rules are complex and the property manager will need to consult
with an attorney, architect, or engineer in order to be in
compliance of the law.
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 Federal Fair Housing Laws: These laws are designed to guarantee
everyone has an equal opportunity to live wherever they can afford
and choose to live. The Federal Fair Housing Act prohibits
discrimination in the sale, rental or financing of housing based on Race,
Color, Religion, National origin, Sex, Familial Status or Handicap. Today
these categories are referred to as “Protected Classes.”
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 Concerning the Fair Housing laws, the property manager or his/her employees
may never do any of the following:
 refuse to show, rent or negotiate with a person for housing;
 discriminate on the terms or conditions of a lease;
 engage in discriminatory advertising;
 tell potential renters that a home is not for rent, when in fact it is;
 interfere with, coerce, threaten or intimidate a person to keep him or her
from taking advantage of the full benefits of the Fair Housing Act.
44

Equal Credit Opportunity Act
 This act prohibits denying a person a loan simply because of:
 Color
 Race
 Religion
 national origin
 Sex
 marital status
 Age
 or receipt of income from public assistance
 This also applies to applications to rent a dwelling, inasmuch as the lease is
considered an extension of credit.
 The property manager must evaluate each lease application on the same terms,
and base the decision to lease on sound financial reasons.
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Maintenance of Real Property and Health and
Safety of the Tenant
 It is the obligation of the owner to insure the safety of the tenant by
maintaining the property.
 If there are any mechanical, environmental, or hazardous waste issues, the
owner must remedy the situation.
 The requirements of a habitable dwelling are:
 effective waterproofing and weather protection of the roof and exterior
walls, including windows and doors.
 plumbing facilities which conformed to applicable law when installed and
which are maintained in good working order.
 a water supply approved under applicable law, which is capable of
producing hot and cold running water.
 furnished with appropriate fixtures: working light fixtures, plumbing
fixtures, air conditioner and heating controls.
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 connected to a sewage disposal system approved under applicable law and
maintained in good working order to the extent that the system can be controlled by
the landlord.
 adequate heating facilities which conformed to applicable law when installed and
are maintained in good working order.
 electrical lighting, outlets, wiring and electrical equipment which conformed to
applicable law when installed and are maintained in good working order.
 an adequate number of appropriate receptacles for garbage and rubbish in clean
condition and good repair at the commencement of the tenancy. The landlord shall
arrange for the removal of garbage and rubbish from the premises unless the parties
by written agreement provide otherwise.
 building, grounds, appurtenances and all other areas under the landlord’s control at
the time of the commencement of the tenancy in every part clean, sanitary and
reasonably free from all accumulations of debris, filth, rubbish, garbage, rodents,
insects and vermin.
 floors, walls, ceilings, stairways and railings maintained in good repair.
 ventilating, air-conditioning and other facilities and appliances, including elevators,
maintained in good repair if supplied or required to be supplied by the landlord.
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 The landlord and tenant may agree that the tenant is to perform
specified repairs, maintenance tasks and minor remodeling only if:
 the agreement of the parties is entered into in good faith; and
 the agreement does not diminish the obligations of the landlord to other
tenants in the premises.
 An agreement pursuant to subsection 2 is not entered into in good faith if
the landlord has a duty under subsection 1 to perform the specified
repairs, maintenance tasks or minor remodeling and the tenant enters
into the agreement because the landlord or his agent has refused to
perform them.
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Maintenance of Real Property and Health and
Safety of the Tenant

Insurance
 The owner must provide hazard insurance to cover as many risks as
possible. The risks may include:
 loss of income following damage to a rental property;
 property insurance which includes fire, lightning, wind, vandalism and
malicious mischief;
 flood insurance;
 disability insurance to cover any employees who may be hurt on the job;
 liability insurance to cover any injuries to tenants, guests, workers who may
be injured on the property.
 The renter must provide their own rental insurance.
 This will be spelled out in the lease agreement: that the renter must provide his/her
own insurance to protect their personal belongings.
 The owner of the property is not permitted to provide this coverage.
49

Recordkeeping and Accounting
 A property manager is required to keep accurate and complete up-to-date
financial records.
 Any money regarding the property is to be in a separate “trust” account.
 Each property must have a detailed accounting of the income and expenses.
 Record keeping requirements:
 A broker who engages in property management or who associates with a
property manager shall maintain complete accounting records of each trust
account related to property management that he maintains for at least 5
years after the last activity by the broker which involved the trust account.
 If the records are maintained by computer, the broker shall maintain an
additional copy of the records on computer disc for at least 5 years after the
last activity by the broker which involved the trust account. (NRS 645.050,
645.190, 645.310)
50

Recordkeeping and Accounting
 Reporting requirements:
 On or before the date of expiration of his license as a real estate broker, a
broker who engages in property management or who associates with a
property manager shall provide to the Division, on a form provided by
the Division, an annual accounting which shows an annual reconciliation
of each trust account related to property management that he
maintains.
 The reconciliation required pursuant to subsection 1 must include the 30
days immediately preceding the expiration date of his license as a real
estate broker.
NRS 645.310
51

Brokers’ Fiduciary Duties and Agency
 The property manager has certain duties imposed by law.
 An agent has a fiduciary relationship with the client marked by trust and
confidence that requires the highest degree of loyalty, care, obedience and
accountability on the part of the agent. This relationship is called an
AGENCY relationship.
 This is further demonstrated through the completion of the management
contract and the Duties Owed form. All duties performed for the client will
be for the client’s best interest within the law.
 The owner also has responsibilities to the agent which is also spelled out in
the management contract. The owner must cooperate with the agent and
broker in order for the property manager to complete the duties expected
in the management contract.
52

Commercial/Industrial Property Management
 The property manager must understand the various federal laws
dealing with the rental of property and or the operation of buildings
open to the public. Refer to the:
 fair housing laws
 Americans with Disabilities Act
 Equal Credit opportunity Act
 The commercial property manager is involved with the lease and
management of properties such as shopping centers, warehouses,
land, office buildings, mini storage centers, or possibly
apartment/condo complexes.
 There are several types of leases in the commercial/industrial
property management as noted below.
53

 Gross Lease: The tenant pays a fixed rental and from those funds
the landlord pays the operating expenses of the property.
 Net Lease: The tenant pays a “base” rent and in addition to the base
rent, pays some or all of the operating expenses of the property.
 Percentage Lease: The tenant pays a “base” rent and in addition to
the base, he pays a percentage of the gross business income,
normally less any payment for returned goods.
 Graduated Lease: The tenant and landlord have agreed that with
the passage of time, the leased space will become more valuable
and that the tenant’s lease payment should increase. The lease
provides the dates on which the tenant’s lease payment will
increase and the amount of the increase.
54

 Indexed Lease. The landlord ties the lease payment to an index
for inflation (such as consumer price index) and as the index
increases annually, so will the tenant’s lease payment.
 Escalation Lease: Similar to indexed lease, except that the
tenant’s lease payment is increased by the actual increases in
the operating expenses of the property and not directly tied to
an inflation index.
 Appraisal Index: The landlord and tenant agree that at a
certain time in the life of the lease, an appraiser will be hired
to determine what the comparable lease space is leasing in
the market. The lease payment may be adjusted accordingly.
55

Common Interest Communities (CIC) Management
 By law, CIC’s must be managed in a strict manner in order to safeguard the
consumers from unlawful business practices.
 “Common-Interest Community” means real estate which is owned by an
individual or corporation paid for through association fee such as:
 community pools
 exercise rooms
 common play areas
 gates to the property
 maintenance of parking facilities/roads
 Examples of a common interest community are:
 condominiums
 townhouses
 cooperatives
 Planned Unit Developments
56

Common Interest Communities (CIC) Management
 Master planned communities may also have common interest
communities. All are subject to common elements in the community
and may have fees and governing documents.
 Management of a common-interest community means the physical,
administrative or financial maintenance and management of a
common-interest community, or the supervision of those activities, for
a fee, commission or other valuable consideration. NRS 116.615
 A community manager for a CIC means a person who holds a
certificate and who provides for and engages in the management of a
CIC. (NRS 116.615) The CIC property manager has additional duties
related to the management of the community and must complete the
education in order to receive a certificate.
57

Education for a CIC Manager
 An applicant must have successfully completed at least 60 hours of
instruction in courses in the management of a common-interest
community that have been approved by the Commission, including:
 at least 20 hours of instruction relating to federal, state and local laws
applicable to the management of a common-interest community:
 2 hours of instruction relating to federal laws applicable to common-interest
communities,
 18 hours of instruction relating to the Uniform Common-Interest Ownership
Act Chapter 116 of NRS.
58

 At least 40 cumulative hours of instruction in the following
subjects:
 understanding the legal basics of common-interest communities and
their governing documents;
 the management of facilities and the use of experts;
 accounting practices: the preparation and monitoring of budgets,
expenditures, and reserves and the use of financial statements;
 contracts with the common-interest community, including obtaining bids
and requests for proposals;
 parliamentary procedures, types and uses as may be required by law, or
the governing documents or bylaws of a common-interest community;
 the management of human resources, including, the ability to
communicate and interact effectively with other people;
59

 inspection and planning for property maintenance;
 risk management;
 the types of insurance that must be maintained by a common-
interest community pursuant to NRS 116.3113;
 governmental regulations that affect a common-interest community,
including without limitation, zoning and planning;
 The Nevada Fair Housing Law as set forth in chapter 118 of NRS;
 The Residential Landlord and Tenant Act as set forth in chapter 118A
of NRS;
60

 the disclosure of required information in real estate transactions;
 defects in construction;
 alternative dispute resolution for claims relating to residential property
within a common-interest community as set forth in NRS 38.300 to 38.360,
inclusive;
 corporation law;
 industrial insurance;
 health and safety;
 business ethics
61

 EXPERIENCE: An applicant must provide evidence that he has
been engaged in the management of a common-interest
community or has held a management position in a related
area for:
 the 12 months immediately preceding the date of his application; or
 at least 2 of the 4 years immediately preceding the date of his
application.
 An applicant may provide evidence of any other combination of
education and experience that the Division may deem to be equivalent
to the requirements set forth in this section.
62

Duties Of A CIC Manager
 The duties of a CIC manager are to manage and be responsible
for the financial and the administrative aspects of the
community which may include:
 Billing and collecting assessments: The manager should establish a
firm and consistent collection plan which includes a system of notices
and records that complies with state law. The terms of the
assessment payment should be spelled out in the Rules and
Regulations of the community, including the time and place of the
payment, the penalties for late payments or bounced checks and the
provisions for fines in the case of non payment.
63

 Keeping accounting records: The operating budget gives the
community the guideline of what is to be expected in the maintenance
of the common areas.
 Cash Flow Report: a monthly statement that details the financial status of
the community. Sources of income and expenditures as well as net operating
income and net cash flow. It provides an overview of current financial status
of a community.
 Expenses: A report stating the fixed and variable expenses involved with the
management of a community. This will include fixed expenses, operating
expenses, and maintenance costs.
 Profit and loss statement: This is prepared monthly, quarterly,
semiannually, or annually. It provides a general financial overview based on
the monthly cash flow reports.
64

 Maintains the common areas: manager must be able to balance
the services provided with the budget allowed to maintain the
common areas. The manager must be able to assess the
community’s needs and how to best meet them. The CIC board of
directors and manager usually agree in advance on the
maintenance objectives and the budget
 Maintaining Administrative Records and Governing Documents:
maintaining the CC&R’s and other records of the Home Owners
Association, providing the CC&R’s to members and potential
buyers when requested, advising the HOA board and members,
attending the board meetings and setting agendas and budgets
65

 Communicating with the property owners regarding disputes: The
success of a property manager is maintaining a good relationship with
the property owners. This is accomplished by having good
communication skills, responding to requests in a timely manner and by
treating all owners equally. The use of newsletters, emails, phone calls
etc. are a good way to communicate and to keep the owners well
informed and involved. A good manager is tactful and decisive and acts
for the benefit of the community.
 Understanding the local laws and governing documents: The Office of
the Ombudsman for Owners in Common-Interest Communities and
Condominium Hotels has been created within the Division in order to
have a centrally located clearing house for disputes and questions
regarding the Common Interest Community.
 The CIC manager must be knowledgeable in all aspects of the state
laws concerning the Common Interest Communities.
66

 You are now ready to take the end-of-course quiz.
67
End-of-course Quiz

Property Management an Overview (2018) Classroom.pptx

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