Affiliate Broker Tennessee (TN PSI) National Practice Exam `

In property management, what document outlines the responsibilities and expectations between the property owner and manager?

1. Management plan

2. Lease agreement

3. Property management agreement

4. Service contract

The correct answer is: Property management agreement

The property management agreement is the essential document that clearly defines the roles, responsibilities, and expectations of both the property owner and the property manager. This agreement serves as a formal contract that outlines the scope of the property manager's duties, compensation structures, length of the management term, and specific conditions under which the property manager operates. It also can cover areas like rent collection, maintenance responsibilities, and the management of tenant relationships. This agreement is critical in establishing a professional relationship, ensuring that both parties have a clear understanding of their obligations and what is expected of them in managing the property. Without this document, there can be ambiguity regarding authority and responsibilities, which could lead to disputes or misunderstandings. The other documents mentioned have different purposes or contexts; for instance, a lease agreement pertains specifically to the relationship between a landlord and tenant regarding the rental of a property, while a management plan may detail strategies or actions regarding property management but does not serve as the binding contract between owner and manager. A service contract could pertain to specific services provided to the property but does not encapsulate the broader management relationship as comprehensively as a property management agreement does.