Construction Cost


A maintenance employee assaulted one of the tenants in a building that Clive manages. Clive hired and supervised the employee. Regarding Clive’s potential liability in connection with this incident, which of the following is correct?

a.Clive can’t be held liable because he didn’t authorize the employee’s action

b.Clive’s liability is likely to depend on whether he was negligent in his hiring, supervision, or retention of the employee

c.Clive can be held liable only if he failed to do a criminal background check when the employee was hired

d.Clive can be held liable only if he participated in the incident, benefited from it in some way, or assisted the employee after the fact


A maintenance request form for tenants to fill out should include: estimate of how long the work is likely to take

b.a hold harmless clause, protecting the manager against liability for work negligently performed order and purchase order numbers, if applicable authorization for entry into the tenant’s rental space or unit, to be signed by the tenant


  A new client who just inherited a commercial building has told her property manager that she doesn’t plan to sell the property, but her primary financial goal is a quick, high return. In this situation, the manager should:

a.persuade the client to sell the property, even if that isn’t in the manager’s self-interest

b.realize that the client will probably be reluctant to authorize any expenditures unless they’re necessary to maintain or increase the property’s net income in the short term

c.explain the income tax consequences of that choice to the client

d.tell the client that his fiduciary duties do not allow him to represent her on those terms


A new commercial tenant is requesting build-out work that will cost more than the agreed improvement allowance. The property manager should:

a.notify the tenant that the requested improvements will have to be scaled back

b.remind the tenant that any construction costs in excess of the allowance will be the tenant’s responsibility

c.increase the allowance to cover the additional work, as long as the changes will increase the value of the property as a whole

d.consult with the client before agreeing to increase the tenant’s improvement allowance

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