A property manager collects monthly rents and security deposits on behalf of several different owners. How must the manager handle those funds?
Correct Answer
B) They must be deposited in a trust account kept separate from the manager's own funds
Rents and deposits collected for an owner are other people's money, so the manager must place them in a trust or escrow account separate from the manager's own funds and keep records showing each owner's balance. Putting those funds through the manager's business account, even briefly, is commingling and is a standard ground for license discipline. The manager's own compensation comes out only after it is earned and is accounted for to the owner.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
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- → At move-in, the landlord collects money that may later be used for unpaid rent or damage beyond ordinary wear and tear. What is that payment called?
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- → A property manager of a 40-unit apartment complex budgets $75 per unit per month, or $3,000, into a dedicated account, and $36,000 accumulates over twelve months. The account is designated solely for foreseeable repair and upkeep needs such as exterior painting, roof patching and appliance repair, and not for the manager's compensation or for day-to-day operating costs. Which budget item does the dedicated account represent?
- → Which of the following is NOT normally part of a property manager's obligations to the owner?
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Previous Question
A property manager of a 40-unit apartment complex budgets $75 per unit per month, or $3,000, into a dedicated account, and $36,000 accumulates over twelve months. The account is designated solely for foreseeable repair and upkeep needs such as exterior painting, roof patching and appliance repair, and not for the manager's compensation or for day-to-day operating costs. Which budget item does the dedicated account represent?
Next Question
Which of the following is NOT normally part of a property manager's obligations to the owner?