Which description best fits a management contract in real estate practice?

• A. A contract by which one company supplies managerial expertise for a set period
• B. A lease agreement
• C. A mortgage agreement
• D. An option to purchase

Answer: (A)

The key idea is that a management contract is a professional services agreement where the owner hires a management company to provide expertise for operating and overseeing the property for a defined period. This fits the description of a contract by which one company supplies managerial expertise for a set period, covering tasks like tenant management, maintenance supervision, rent collection, and financial reporting.

It isn’t a lease because a lease transfers possession and use of the property to a tenant for a defined term, with tenancy rights. It isn’t a mortgage because a mortgage is a loan secured by the property. It isn’t an option to purchase because it merely gives a right to buy in the future.