PSI New Jersey Real Estate State Practice Exam

What term describes the relationship between a property manager and an owner?

1. Agency relationship

2. Brokerage relationship

3. Buyer relationship

4. Advisory relationship

The correct answer is: Agency relationship

The correct term that describes the relationship between a property manager and an owner is the agency relationship. In this context, an agency relationship is established when one party (the property manager) acts on behalf of another party (the property owner) to manage and oversee the property. This relationship is based on trust, loyalty, and the duty to act in the best interests of the property owner. The property manager is tasked with making decisions regarding the management of the property, which may include finding and screening tenants, maintaining the property, and handling financial matters related to the property. Because the property manager has the authority to make these decisions, the owner effectively delegates certain responsibilities and has a fiduciary relationship with the manager. This legal and ethical obligation ensures that the property manager acts diligently and responsibly, prioritizing the owner's interests and objectives in all management activities. The other terms do not accurately define this relationship. A brokerage relationship typically pertains to interactions between real estate brokers and buyers or sellers, while a buyer relationship focuses specifically on transactions involving purchasers of property. An advisory relationship suggests a more consultative role, which may not encompass the full range of operational responsibilities a property manager has toward the owner.