Property Management
What is a 'property management reserve fund' and why is it important?
AA. Funds reserved for future commission payments
BB. Money set aside to pay for major capital expenditures and unexpected repairs without disrupting cash flow✓ Correct
CC. A legal requirement under Hawaii landlord-tenant law
DD. Funds reserved for paying property taxes
Explanation
A reserve fund (capital reserve) is money set aside for major future expenditures such as roof replacement, HVAC systems, or major repairs. Adequate reserves prevent special assessments on owners and allow the property to maintain its value.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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