Property Management
A Virginia commercial property manager is responsible for a building with a chiller HVAC system. Routine preventive maintenance of the chiller is best characterized as a:
ACapital expenditure
BOperating expense✓ Correct
CBelow-the-line expense
DOwner's personal expense
Explanation
Routine preventive maintenance costs are operating expenses (above-the-line) that reduce effective gross income. Capital expenditures involve major replacements or improvements that extend the useful life of a system (below-the-line).
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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.
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