© 2013 All rights reserved. Chapter 8 Property Management New York Real Estate for Brokers, 5 th e By Marcia Darvin Spada Cengage Learning

© 2013 All rights reserved. Chapter 8 Property Management Chapter 8 Property Management2

© 2013 All rights reserved. Chapter 8 Key terms  Actual eviction  Anchor stores  Capital expense  Capital reserve budget  Constructive eviction  Corrective maintenance  Eviction  Fixed expense  Lessee  Lessor  Management agreement  Management proposal  Operating budget  Planned unit development (PUD)  Preventative maintenance Chapter 8 Property Management3

© 2013 All rights reserved. Chapter 8 Key Terms (continued) Property management Property management report Property manager Resident manager Risk management Stabilized budget Tenancy for years Variable expense Chapter 8 Property Management4

© 2013 All rights reserved. Chapter 8 Property Management5 Leasehold Estates Possession of Leased Property Estate for Years a fixed term Periodic Estate renews after a period of time Estate at Will terminated by informal agreement Estate at Sufferance possession after agreement has terminated

© 2013 All rights reserved. Definition of a Lease A lease is a contract For a consideration (usually rent), a landlord transfers to the tenant a property interest, or possession, for a prescribed time The landlord is the lessor The tenant is the lessee Chapter 8 Property Management6

© 2013 All rights reserved. Chapter 8 Property Management7 Standard Residential Lease Provisions The Lease Capacity to contract Competent, sane adults Demising clause Transfer of possession Description of premises Term of lease No required limit Specification of rent/payment In writing Statute of Frauds Quiet enjoyment

© 2013 All rights reserved. Lease Requirements Security Deposit Possession and Habitability Improvement Assignment and Subletting Apartment Sharing Chapter 8 Property Management8

© 2013 All rights reserved. Chapter 8 Property Management9 Termination of a Lease ReasonExplanation AbandonmentTenant leaves Death of property owner Lease stays in effect Actual eviction (Self-help) Illegal forced eviction Constructive eviction Withholding of rent if services not provided EvictionLegal proceeding to evict Lease ExpirationPeriodic or estate for years Mutual agreement Both parties agree

© 2013 All rights reserved. Death of Landlord or Sale of Property DDeath or Sale by the Landlord AA lease agreement does not terminate upon the death of the landlord or the tenant DDeath of the Tenant SSuccession Rights to an Apartment  Succession Rights for Other Types of Properties  Generally, there is no “succession” in cooperatives and condominiums Chapter 8 Property Management10

© 2013 All rights reserved. Functions of the Property Manager Greatest possible return for owner Agent and fiduciary Protect and increase value of investment Managing, leasing, renting, and selling Chapter 8 Property Management11

© 2013 All rights reserved. When is a license required?  A company or an individual who works for more than one owner should have a real estate license Chapter 8 Property Management12

© 2013 All rights reserved. Duties of the Property Manager Reporting Marketing Operating Statement Budget Rental Schedule Chapter 8 Property Management13

© 2013 All rights reserved. Management Proposal and Agreement Proposal Sets forth the commitments of manager if employed Property manager is the agent for the purposes specified in the agreement Agreement Creates an agency relationship between owner and manager Chapter 8 Property Management14

© 2013 All rights reserved. Property Insurance Coverage Prevents financial loss from Fire, winds, hail, tornado, vandalism, etc. Theft of personal property Someone injured on property from negligence Damage by insured to someone else’s property due to negligence Chapter 8 Property Management15

© 2013 All rights reserved. Obligations to the Owner Goals of property manager Create a budget Define maintenance criteria Track Income and expense Create a Marketing plan Report to owner Chapter 8 Property Management16

© 2013 All rights reserved. Maintenance Criteria Preventive maintenance Periodic check of mechanical systems Corrective maintenance Fix a nonfunctioning item One of the most important functions is to supervise physical maintenance Chapter 8 Property Management17

© 2013 All rights reserved. Budget Stabilized budgetCapital reserve budget Operating budgetVariable expenseCapital expenses Chapter 8 Property Management18

© 2013 All rights reserved. Reporting Property Management Report The property manager should provide a periodic (usually monthly) accounting of all funds received and disbursed Chapter 8 Property Management19

© 2013 All rights reserved. Differences Between the Markets  Office building management  Retail property management  Residential property management  Condominium, Cooperative, Townhouse, and PUD management Chapter 8 Property Management20

© 2013 All rights reserved. Operation of a Property Management Office  New property acquisition  Servicing existing clients  Negotiating agreements  Owner-tenant relations  Public relations Chapter 8 Property Management21

© 2013 All rights reserved. Future of the Project-Business Trends Building types and amenities available Number of occupants per unit Transportation volume Local industrial growth Population growth National economic indices Community growth Property taxes Zoning Chapter 8 Property Management22

© 2013 All rights reserved. How does one become a Property Manager? Education and certification for Property Managers The Institute of Real Estate Management Chapter 8 Property Management23