PREX-1060A Questions and Answers

Change the completion date by using a waiver.

Change the completion date by using a notice of fulfillment.

Change the completion date by using an amendment to the agreement of purchase and sale.

A change is not necessary because the damage is out of the control of the buyer or the seller.

The salesperson should tell their client that higher management fees charged for a building always indicates that the tenant is getting superior service and value.

The salesperson should explain that a tenant occupying a smaller rentable area in a building pays higher management fees per square foot compared to a tenant with an average or larger rentable area.

The salesperson should identify the reasons for high management fees charged for a building and determine the relative value it provides.

The salesperson should tell the tenant that the Condominium Authority of Ontario regulates management fees charged by buildings as per their size.

Shareholder’s equity

Assets

Liabilities

Net operating income

The general partner of the company must sign and date below the printed name of the limited company.

The buyer must sign and date below the printed name of the corporation.

An authorized signing officer of the company must sign and date over the words: "I haveauthority to bind the corporation" and below the printed registered name.

A major shareholder of the company must sign and date over their printed name.

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 options for late payments are the same for every lender.

Each lender has their own method for dealing with late payments.

There are no penalties for late payments in a commercial mortgage.

Penalties for late payments will be added to the monthly rent.

Use the R/U factor to calculate the figures

Use a laser measuring tool to take the measurements and use the R/U factor to calculate the figures

Recommend that the landlord obtain the professional services of a measuring company to obtain the figures

Use a laser measuring tool to take the measurements

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.

Architectural drawings are source documents.

A photocopy of a source document can be used to verify information.

If changes are made to source documents, they are still valid if you have the original document.

Other types of source documents include surveys and tax records.

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.

A list of fixtures included in the sale

A profit and loss statement for the real estate brokerage for the preceding 12 months

A list of chattels excluded in the sale

A statement of the assets and liabilities of the brokerage

A consultant in a financial institution

A zoning specialist in the city's planning department

An appraiser with Accredited Appraiser Canadian Institute (AACI) designation

A legal consultant who specializes in evicting residential tenants

The salesperson should not disclose latent defects that are known to the seller as they could affect the seller's ability to obtain a high price for the property.

The salesperson should discuss patent defects known to the seller of the office building with the seller and disclose them to a buyer.

The salesperson should not disclose material latent defects that are known to the seller that could reduce the price or the marketability of the property.

The salesperson should discuss latent defects known to the seller of the office building with the seller and disclose them to a buyer.

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 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

If the information on the building's utilities is not available, the salesperson can determine it by finding out the specifications of the utilities of the neighbors.

If the information on the subject building’s utilities is available, then a potential buyer will not put a condition in the offer.

The salesperson should conduct a visual inspection of the building to determine the specifications of the utilities.

The seller may have up-to-date documentation about the utilities but, in some situations, a third-party professional assessment is still needed.

Specifies the terms of a business partnership agreement.

Regulates matters involving ownership of a business.

Regulates trade names.

Protects the rights of workers of a business that is being sold.

Exchange of legal documents

Review of financial statements

Review of the Agreement of Purchase and Sale

Remedy of title issues

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.

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.

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

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.

A surveyor’s certificate for the unit

An opinion from the seller's lawyer

A sketch of the seller’s floor layout

An opinion from the property manager

Liens and encumbrances that are registered against the property

The property's use doesn't comply with municipal zoning bylaws

A registered right of way that blocks the buyer's intended use of the property

The seller is not entitled to transfer title to the property for some reason

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.

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.

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

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.

Use a laser measuring device to take the measurements.

Recommend the services of third-party professionals to measure it.

Tell the seller the usable size is 80 percent of the rentable size.

Add a disclaimer to protect the seller from any discrepancy.

The absorption rate, net absorption rate, and rising rental rates

When tenants have lots of options because of the amount of available space at favorable rates

Low rental rates and many concessions

The number of free months given to new and renewing tenants by landlords in the office marketplace