Humber College PREX-1060A Exam 4: Invigilated Theory Exam Exam Practice Test

The relative lack of liquidity

The relative lack of capital growth during the holdover period

The fact that rent, leased space, and building size are fixed

The insufficiency of cash flow during the holding period

Telephone bills

Private mortgage form

Income verification documents

Environmental site assessments

The number of animals based on type, gender, and health; if the number is not the same at closing, the price will be adjusted.

A condition requiring a check-up of each animal by a predetermined veterinarian during due diligence.

State that the buyer is assuming all animals on an "as is" basis.

State that the seller will continue the day-to-day farm operations until closing.

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

Is there any easement on the property?

Is the ownership of the building a corporation or a partnership?

What is the construction cost of the building?

Is inventory included in the sale of this business?

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.

Storage

Kitchens/lunchrooms

Fitting rooms

Boardrooms, private offices, and workstations

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.

Ensuring inspections are being carried out as required

Contacting contractors for quotes for repairing or replacing equipment

Reviewing whether the technical components have been recently replaced or upgraded

Learning what types of equipment are in the building and having a general understanding of theirage and condition

The retail tenant's rentable area would be 3,482 sq. ft.

The retail tenant's rentable area would be 3,073 sq.ft.

The retail tenant's rentable area would be 3,912 sq.ft.

The retail tenant's rentable area would be 3,605 sq. ft.

Businesses need to transport materials to and from the site.

Outgoing trucks could have difficulty if there is a lack of on-site trailer storage.

Some trucks may need to park on the property overnight.

Incoming trucks could have difficulty if there is a lack of on-site trailer storage.

A company’s adjusted book value should be equal to the actual market value of the business.

The adjusted book value method should not be used when the sale of a business is being implemented or is under consideration.

A company’s adjusted book value is entirely unrelated to its net worth.

The adjusted book value method takes goodwill into account when establishing the value of a business.

Net lease

Percentage lease

Gross lease

Triple net lease

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 tenant's signage must be approved by the municipality and the landlord, and all associated costs shall be paid by the landlord.

The tenant's signage is considered a trade fixture and shall remain the tenant's property.

The tenant's signage shall be immediately removed at the end of their lease term(s) at the tenant’s expense.

The tenant's signage, from approvals to installation and ongoing maintenance, shall be at thetenant's own expense.

Ensuring inspections are being carried out as required.

Contacting contractors for quotes for repairing or replacing equipment.

Reviewing whether the technical components have been recently replaced or upgraded.

Learning what types of equipment are in the building and having a general understanding of their age and condition.

Contact the seller's representative prior to the showing to gain awareness of safety and compliance requirements.

Ensure they are informed as to whether the equipment shown will be relevant for the buyer's intended use.

Ensure chattels or fixtures are not included in the sale or negotiated for in the agreement.

Obtain clarification as to which equipment seen during the showing will be included in the purchase price of the property.

A clause to obtain the necessary mortgage amount

A clause to test the quality of the underground water source

A clause to check the condition of the trucks and vans

A clause to ensure the truck parking spaces and turning radius are sufficient

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

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.

The salesperson must verify the zoning information for the industrial property.

The salesperson must verify the previous tenant's lease rates and terms.

The salesperson must verify whether the tenant's intended use for the industrial property is permitted under the zoning bylaw.

The salesperson must verify the rates and terms of lease for the property.

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 salesperson is responsible for negotiating the tenant's stock delivery window.

Should a delivery truck arrive during an emergency, the property manager must be available.

Stock delivery cannot be restricted in a commercial agreement to lease.

The salesperson is responsible for addressing site access and exit in the tenant's agreement to lease.

Yes, the property will be suitable if the client states they will change the zoning to allow their type and classification of business to operate at this location.

Yes, the property is suitable since the client is already in the metal fabrication business, and does not need to get any permits from the municipality prior to moving in and using the property.

Yes, the property is suitable, as the listing says the property is light industrial and multi-uses are permitted.

No, the property is not suitable, as the client's business type and classification require heavy industrial zoning.

The buyer replaces the seller as the owner of the corporation.

The buyer assumes all assets and accepts all liabilities of the business.

The buyer is eligible for tax deductions and benefits by claiming capital cost allowance on depreciable property.

The seller benefits from a tax standpoint since any gain to the seller on the sale will be considered under the capital gains tax exemption.

Meet with the property manager, review the lease, and determine a course of action.

Repair the damage and deduct the cost from the rent.

Contact a lawyer and immediately start a legal action for damages.

Terminate the lease and start looking for a new space.

The salesperson should clearly list all rental items and service contracts, as these will not be included in the purchase price of the real property being purchased.

The salesperson should specifically exclude all fixtures that are not a part of the transaction since fixtures are considered a part of the property and are normally included in the purchase price.

The salesperson should clearly describe and list the fixtures and chattels in the Agreement of Purchase and Sale and mark each item as an exclusion or inclusion.

The salesperson should specifically exclude all chattels that are not a part of the transaction since chattels are considered a part of the property and are normally included in the purchase price.

There may be minimum width and depth requirements for parking spaces.

Parking may be impacted by zoning requirements.

Parking may be impacted by the municipality’s parking bylaw.

Required parking for persons with disabilities is usually fixed as a ratio based on the number of disabled persons in the community.

The tenant may be required to pay the deficiency between the contracted amount in the tenant representation agreement and the amount actually paid by the landlord.

Salespersons are prohibited from indicating directly that remuneration is fixed by any association but can indicate it indirectly.

Remuneration can be calculated based on the difference between the listing price and the actual rental price.

Remuneration can be an agreed amount or a percentage of the rental price, but not a combination of both.

The office building next door has an overflow parking lot.

The neighboring property includes a restaurant, a dental clinic, and a law office.

There is vacant land nearby with a small pond with discolored standing water.

There is a residential neighborhood and playground nearby.

Amount of advertising and publicity

Proximity to museums and historical sites

Price trend for detached homes in nearby neighborhoods

Access to raw materials used in the region

The appraiser will research similar buildings, as commercial properties are usually bought and sold on a dollar value per square foot.

The appraiser will assess how convenient it is to access the building and whether customers would be required to walk a significant distance within the mixed-use commercial complex to find a retailer.

The appraiser will assess the layout of the complex, as it will directly establish the utility of the mixed-use building.

The appraiser will research the layout of other types of commercial buildings to establish the utility of the mixed-use building.

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.

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.

Shareholder’s equity

Assets

Liabilities

Net operating income

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.