Question

Peter has been offered the position of property manager for a large apartment complex. These apartments are upscale with impeccable maintenance programs and beautiful amenities for its residents. His contract has a clause that states, "If at any time during our agreement the property has a vacancy rate of more than 12%, our agreement is cancelled." Should this clause give Peter pause in accepting the position? Does this type of clause have a name?A. Yes, Peter should be giving this position a second thought based on the clause. This type of clause is an Allowable Vacancy Rate.

B. No, Peter shouldn't worry about the clause. He needs to have faith in his abilities. The property is upscale and very desirable and shouldn't have a vacancy issue. This type of clause is an Allowable Vacancy Rate
C. No, Peter shouldn't worry about the clause. There are ways to work around such a statement. If necessary, he can rent to anyone, regardless of their qualifications, to fulfill the required vacancy rate. This type of clause is a Maximum Profit Clause.
D. Yes, Peter should be giving this position a second thought based on the clause. This type of clause is a Rate of Return for Owner Clause.

Answer 1

A) Yes, Peter should be giving this position a second thought based on the clause. This type of clause is an Allowable Vacancy Rate.

Step-by-step explanation:

The problem with this clause is that in order to keep his job Peter needs to keep the vacancy rate below 12%. In order to do so, he might rent the apartments to anyone regardless of credit rating, and that may result in other problems. Sometimes the vacancy rate can vary depending on external factors, not only how good or bad Peter performs his duties, that is why he should really think about whether to accept or not this job.