PREX-1060A Exam 4: Invigilated Theory Exam Questions and Answers

A clause for the buyer to review the leases only after all conditions have been waived and accepted

A clause to confirm the remuneration payable to the brokerages will be as stated in the seller representation agreement

A clause for the seller to disclose all information verbally without providing supporting documents to verify that information; documents to be provided on closing

A clause for the buyer to have the right to negotiate for specialized restaurant equipment that is not included in the property purchase price

Verify if there are any non-competition provisions that need to be satisfied as set out in thecondominium rules or bylaws.

Ensure there is parking and repair space available for commercial trucks.

Confirm that the contract of the condominium property management company has been renewed for at least 10 years.

Obtain the existing status certificate from the brokerage to verify all restrictions, including shared premises with other businesses in the commercial condominium.

The salesperson should explain that clear span refers to the amount of floor area that is clear of interference from columns and walls.

The salesperson should explain that clear span refers to the unobstructed vertical distance from the floor to the bottom of the lowest ceiling or roof component.

The salesperson should explain that clear span refers to the unobstructed vertical distance from the floor to the bottom of the highest point of the ceiling or roof component.

The salesperson should explain that clear span refers to the total amount of floor area in the space, including the space that is occupied between columns and walls.

A stable internet connection

Sufficient lighting

A high voltage and ampere supply

A proper ventilation system

A list of customers who have purchased products in the last 60 months or since the business was acquired.

A statement of the expenses for the business for the past year or since the business was acquired.

A list of equipment, chattels, and fixtures that are included with the business.

An income statement for the past 12 months or since the business was acquired.

Pre-cast panels cost much more than tilt-up panels.

Both tilt-up panels and pre-cast panels can lower construction costs.

Pre-cast panels are more durable than tilt-up panels.

Both tilt-up panels and pre-cast panels are formed off-site.

Clay production is an example of light industrial use.

Light industrial use usually results in more noise and heavier traffic.

Heavy industrial use can produce more pollution than other commercial activities.

Heavy industrial use usually results in less traffic in and out of the heavy industrial zone.

The rent increase cannot be higher than the guideline set by the government.

The rent increase cannot be more than the Consumer Price Index (CPI).

The rent increase can be any amount.

The rent increase can be challenged by the Landlord and Tenant Board.

A landlord's commercial property insurance policy should cover the loss of the property's equity due to a change in market conditions or to a recession.

A landlord’s commercial property insurance policy should cover the loss of the tenant’s assets and income due to business interruption as the result of a fire or flood.

A landlord’s commercial property insurance policy should cover the loss of rental income in the event of a fire, for the period the premises is vacant while repairs are made.

A landlord's commercial property insurance policy should cover the loss of the tenant's assets due to theft from their employees or third parties.

The agreement may contain a clause forfeiting all of the deposit if the landlord has started work on the premises.

The parties may need to obtain a court order that clarifies how the deposit will be returned and distributed.

The tenant can have the deposit back without signing a mutual release as it is not their fault.

The landlord and tenant may agree to split the deposit.

The developer will be responsible for calling a general meeting within 21 days to appoint a new board of directors.

The developer will be responsible for registering the declaration and description and creating the plan and vision for the property.

The developer will be responsible for much of the day-to-day management of the condominium corporation's affairs after the turnover meeting.

The developer will be responsible for overseeing the business affairs of the condominium corporation after the turnover meeting.

An Ontario Land Surveyor can be hired to measure the space.

Space should be measured in accordance with BOMA standards.

An architect can be hired to measure the space.

The original plans should be used to determine the size of a unit.

The total area measurements

The maximum floor load of every unit

The number of sprinklers required in every unit

The total remuneration payable for a 20-year lease

Exchange of legal documents

Review of financial statements

Review of the Agreement of Purchase and Sale

Remedy of title issues

The farm is sold to a corporation and the HST is included in the selling price.

The farm has been used for personal use.

The farmer uses a smaller portion of the farm for a residence.

The farmer sells the farm to a relative.

Zoning bylaws specify the permitted land uses throughout a municipality.

Municipal zoning bylaws overrule all other laws with respect to land uses and issuance ofbuilding permits in Ontario.

New commercial construction and redevelopment must comply with zoning bylaws.

Municipalities have zoning bylaws that divide the city into different land uses or zones.

The salesperson should explain that to achieve capital growth, the client should be a long-term investor.

The salesperson should explain that a better return on investment will be achieved with rising interest rates.

The salesperson should explain that making a commercial property investment is an easy and smooth process that provides good short-term gains.

The salesperson should explain that the client should always consider being a short-term investor.

The salesperson should advise the buyer to consider the price of their products.

The salesperson should advise the buyer to consider the space they will need to allot for storage versus customer-facing product.

The salesperson should advise the buyer to consider their business's predicted monthly inventory.

The salesperson should advise the buyer to consider the size of their products.

The landlord must address their tenants' issues in a timely manner in general but more so when the issue can result in serious and costly consequences.

All commercial leases require that tenants keep everything in and about the property, including all points of entry and exit, in good repair at all times.

Tenants are obligated to ensure they have adequate tenant insurance for their property.

Not all commercial leases require the landlord to perform repairs and maintenance.

A description of the premises

The names of all the tenant's suppliers

The commencement date of the lease

The names of all parties to the lease

Quick turnaround time to free up capital when needed is an advantage of owning commercial real estate.

Limited equity investment while gaining leverage through financing is an advantage of owning commercial real estate.

Potential to recover capital through refinancing is an advantage of owning commercial real estate.

Potential for tax sheltering possibilities for the investor is an advantage of owning commercial real estate.

It is important for the tenant to know the total area of the accessory buildings as they will have to share the use of them with other tenants.

It is important for the tenant to know the total area of the accessory buildings as it will be considered within the tenant’s usable area.

It is important for the tenant to know the total area of the accessory buildings as it will contribute to their rentable area.

It is important for the tenant to know the total area of the accessory buildings as it will be deducted from their rentable area.

Net lease

Percentage lease

Gross lease

Triple net lease

In a lease agreement, the tenant provides a list of improvements to the landlord and the landlord always pays for these improvements.

The landlord may offer a "tenant improvement allowance" which provides funds to cover thecosts of tenant improvements.

The tenant takes the premises in an "as is" condition and can complete whatever improvements they wish without landlord approval.

Unless indicated in the lease agreement, improvements attached to the leased building generally become the tenant's property upon vacating the premises.

If the builder does not address this issue, the buyers can file a complaint with the provincial warranty authority for any outstanding work the builder did not complete.

The buyers should submit their concerns to the provincial warranty authority, as they are entitled to one-year warranty coverage from the occupancy date.

There is no provincial warranty coverage for commercial condominiums, but the buyers can inquire with the builder about any warranties that they may offer.

The buyers should draft a list of all their concerns and submit them to the municipality for appropriate coverage.

An owner who rehabilitates a brownfield property can receive tax incentives.

The contaminants in brownfields contain precious metals that can be sold to earn additional income.

Brownfield properties typically have the advantage of existing infrastructure such as roads, utilities, water/sewer servicing, schools, and transit facilities.

Brownfield properties can often be purchased at well below their potential market value.

Create a business plan

Gather, organize, and verify all pertinent information

Identify third-party professionals

Estimate time frames required for due diligence and other offer conditions

The cost approach is preferred for newer construction properties, as the appraiser would not need to make a subjective estimation of the accrued depreciation of the building.

The cost approach is typically used to appraise income-generating properties.

The cost approach is preferred for older construction properties, as calculating depreciation on them is fairly straightforward.

The cost approach is useful for the appraisal of property types for which sales and income data are scarce, such as industrial and special-purpose properties.

Operating cash flow can be positive or negative.

Operating cash flow is used when determining yield on an investment property, while sales proceeds cash flow is not used for this purpose.

Sales proceeds cash flow does not affect investor decisions.

Sales proceeds cash flow is used when determining yield on an investment property, while operating cash flow is not used for this purpose.

Unaudited financial statements are prepared by Chartered Professional Accountants; audited financial statements are prepared by senior Chartered Professional Accountants.

Audited financial statements provide an accurate picture of the financial status of a business; unaudited financial statements may only contain partially reviewed information.

Unaudited financial statements are prepared by accounting students; audited financial statements are completed by accountants who have received their professional designation.

Audited financial statements comply with Generally Accepted Accounting Principles (GAAP); unaudited financial statements do not comply with GAAP.

They are a good size for modern 18-hole golf courses.

They can be used for newly planned subdivisions.

They are normally less expensive than pieces of land smaller than two acres in the same neighborhood.

The developer cannot find a building lot to build a detached home.

The types of buildings that are permitted in a location, their height, and how they may be used

Lot dimensions and parking requirements

The amount of rent a building may generate

Where buildings and other structures may be located

A key consideration a salesperson must keep in mind when handling the sale of a business is operating licenses.

Depending on the business location, there are various municipal bylaws, zoning, permits, and other rules and regulations that could impact the sale of a business.

There are various municipal bylaws that could impact the sale of a business, depending on the business activity.

If a municipal license is associated with the business and it may be transferrable to the buyer, then it is of no concern to the sales representative.