Property Management
Reserves for replacement in a property management budget are funds set aside for:
AEmergency property tax payments
BFuture replacement of major building components like roofs, HVAC, and appliances✓ Correct
CTenant improvement allowances
DCommission payments to real estate agents
Explanation
Reserves for replacement are funds accumulated to pay for the future replacement of major capital items (roof, HVAC, parking lot) that wear out over time, preventing large unexpected expenses.
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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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