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Humber College PREX-1060A Dumps

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Total 120 questions

Exam 4: Invigilated Theory Exam Questions and Answers

Question 1

A buyer client is discussing zoning bylaws of the municipality in relation to an industrial development site with their salesperson. Which of the following is NOT a correct statement with respect to zoning bylaws?

Options:

A.

Zoning bylaws specify the permitted land uses throughout a municipality.

B.

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

C.

New commercial construction and redevelopment must comply with zoning bylaws.

D.

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

Question 2

When a farm is sold, there are exemptions to the payment of harmonized sales tax (HST). In which of the following circumstances is a farmer responsible to pay HST to the Canada Revenue Agency (CRA)?

Options:

A.

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

B.

The farm has been used for personal use.

C.

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

D.

The farmer sells the farm to a relative.

Question 3

A salesperson representing a client who is selling an office property has received some documents from the seller and is trying to organize them. Which of the following documents is NOT needed by the salesperson or seller when selling the property?

Options:

A.

Telephone bills

B.

Private mortgage form

C.

Income verification documents

D.

Environmental site assessments

Question 4

A tenant is renting 4,000 square feet of space in a commercial shopping center under a net lease. The base rent is $20 per square foot per annum, and there is a percentage rent of 5% of gross sales over the base rent. The tenant has annual gross sales of $1,000,000. The annual expenses are $10 per square foot. How much annual base rent does the tenant have to pay?

Options:

A.

$80,000

B.

$60,000

C.

$120,000

D.

$130,000

Question 5

Which of the following is NOT relevant information a salesperson must verify when representing a landlord who is planning to lease their industrial property?

Options:

A.

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

B.

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

C.

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

D.

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

Question 6

A salesperson is assisting both the tenant and the landlord in a commercial property rentaltransaction. Which of the following statements about calculating the remuneration for this transaction is correct?

Options:

A.

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.

B.

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

C.

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

D.

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

Question 7

Many industrial users install one or more cranes on their properties to move heavy items. Which type of industrial crane has an arm attached at an angle to a rotating mast that permits 360-degree swiveling around that mast?

Options:

A.

Gantry crane

B.

Jib crane

C.

Bridge crane

D.

Overhead crane

Question 8

When a property assessment of a new commercial property has not been completed prior to its resale, what should a salesperson do to protect the buyer?

Options:

A.

Include the current tax assessment as a schedule of the agreement.

B.

Ensure the offer contains a clause requiring the seller and the buyer to share the property taxes to be assessed for the next three years.

C.

Ensure the offer contains a clause allowing for compensation for adjustments to the property taxes.

D.

Get a letter from the seller to guarantee a maximum amount of realty tax payment in the coming year.

Question 9

Which of the following is NOT determined by zoning bylaws?

Options:

A.

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

B.

Lot dimensions and parking requirements

C.

The amount of rent a building may generate

D.

Where buildings and other structures may be located

Question 10

Obtaining the size and boundaries of a commercial condominium unit is an important task for a salesperson. Which of the following statements regarding this task is NOT correct?

Options:

A.

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

B.

Space should be measured in accordance with BOMA standards.

C.

An architect can be hired to measure the space.

D.

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

Question 11

Examples of properties which would warrant a Phase 2 environmental assessment may include heavy industrial sites. Which of the following is NOT an example of a heavy industrial use?

Options:

A.

Power stations

B.

Petroleum storage and distribution sites

C.

Chemical manufacturers

D.

Computer training institute

Question 12

A salesperson, who is representing a tenant, has completed a comparative market analysis (CMA) of the management fees charged, assessed on a square footage basis, at the different office buildings that their client is interested in leasing. The management fees vary across the comparable office buildings, and the tenant is interested to know why there is a difference. Which of the following is an accurate statement the salesperson can make about the difference in management fees between the buildings?

Options:

A.

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.

B.

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.

C.

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

D.

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

Question 13

Which of the following statements regarding heavy industrial use and light industrial use is correct?

Options:

A.

Clay production is an example of light industrial use.

B.

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

C.

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

D.

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

Question 14

A first-time investor is looking to purchase a commercial property and asks their salesperson about the gains they can hope to achieve from this type of asset. What should the salesperson explain to their client regarding the purchase of commercial properties as a source of capital growth?

Options:

A.

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

B.

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

C.

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

D.

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

Question 15

When representing a client who is selling a business, a salesperson must be aware of concerns related to compliance. Which of the following is NOT a compliance concern?

Options:

A.

The condition of goods, chattels, and fixtures cannot be verified

B.

Income and expense statements contain misrepresentations

C.

The seller provides insufficient due diligence documents

D.

The seller discloses all liabilities of the business in writing

Question 16

There are three primary items that require attention when countering an offer from a seller. Which of the following items does NOT need to be checked?

Options:

A.

The date of the agreement of purchase and sale

B.

The balance due clause

C.

The irrevocability clause

D.

The purchase price

Question 17

Which of the following is most likely to be a factor in an appraisal for an industrial property?

Options:

A.

Amount of advertising and publicity

B.

Proximity to museums and historical sites

C.

Price trend for detached homes in nearby neighborhoods

D.

Access to raw materials used in the region

Question 18

Which of the following accurately describes a landlord's commercial property insurance coverage?

Options:

A.

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.

B.

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.

C.

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.

D.

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.

Question 19

A buyer client and their salesperson are doing a visual check of the industrial property that the buyer is planning to purchase. When they get to the rear of the property, the salesperson observes a potential source of contamination. Which of the following factors is likely the cause of concern for the salesperson?

Options:

A.

The office building next door has an overflow parking lot.

B.

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

C.

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

D.

There is a residential neighborhood and playground nearby.

Question 20

Utility requirements are different for retail, office, and industrial properties, and a salesperson should understand the utility needs of each client. Which of the following items is NOT required bya typical occupant of a retail space?

Options:

A.

A stable internet connection

B.

Sufficient lighting

C.

A high voltage and ampere supply

D.

A proper ventilation system

Question 21

In regard to Environmental Site Assessments (ESAs), which of the following is NOT accurate?

Options:

A.

An ESA is intended to determine if a property has been contaminated or is facing any environmental threats.

B.

Every new commercial property must undergo an ESA prior to construction.

C.

ESAs are regulated under the Canadian Environmental Protection Act.

D.

Local building departments use ESAs as the basis for changes to municipal zoning bylaws.

Question 22

A salesperson is discussing the advantages and disadvantages of owning commercial real estatewith their investor buyer client. Which of the following is NOT an advantage of owning commercial real estate?

Options:

A.

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

B.

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

C.

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

D.

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

Question 23

In regard to cash flow into and out of a business, which of the following is correct?

Options:

A.

Operating cash flow can be positive or negative.

B.

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

C.

Sales proceeds cash flow does not affect investor decisions.

D.

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

Question 24

All of the following aspects of a commercial property may affect its eligibility for Leadership in Energy and Environmental Design (LEED) certification, EXCEPT:

Options:

A.

Energy efficiency

B.

Innovative elements

C.

Sustainability

D.

Vacancy rate

Question 25

Established under the Farming and Food Production Protection Act, the Normal Farm PracticesBoard is composed of members appointed by the Minister of Agriculture, Food and Rural Affairs. Which statement is NOT accurate with regard to the Normal Farm Practices Board?

Options:

A.

The Board can order farmers to cease practices that cause disturbances if they are not considered to be normal farm practices.

B.

The Board can conduct hearings that are heard by a minimum of five board members.

C.

The Board can order farmers to modify practices for consistency with normal farm practices.

D.

The Board can dismiss complaints if the disturbances are the result of normal farm practices.

Question 26

Which of the following is a correct statement regarding a design-build arrangement in commercial real estate?

Options:

A.

A design-build arrangement is a sale/leaseback arrangement.

B.

A design-build arrangement requires the buyer to acquire suitable land and construct a building themselves.

C.

A design-build arrangement means the buyer will only buy the property if the landowner builds a building to the buyer’s specifications.

D.

A design-build arrangement is commonly associated with a seller's market.

Question 27

A retail property buyer must consider the parking requirements associated with the site. All of the statements below are considerations for parking, EXCEPT:

Options:

A.

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

B.

Parking may be impacted by zoning requirements.

C.

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

D.

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

Question 28

A salesperson is drafting an offer and discussing with the buyer the steps required for due diligencewhen purchasing a commercial condominium unit. All of the steps below are included in due diligence, EXCEPT:

Options:

A.

Create a business plan

B.

Gather, organize, and verify all pertinent information

C.

Identify third-party professionals

D.

Estimate time frames required for due diligence and other offer conditions

Question 29

A salesperson discusses with a buyer the potential advantages of purchasing brownfields for redevelopment. What is NOT an advantage for the buyer of a brownfield property?

Options:

A.

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

B.

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

C.

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

D.

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

Question 30

Which of the following is a reason why an owner might consider redeveloping an industrial property?

Options:

A.

The cost of relocating is low.

B.

A similar building can be bought at a low price.

C.

The existing building no longer provides the highest and best use of the site.

D.

A redevelopment will seriously disrupt the current operation.

Question 31

A salesperson is representing a buyer client in the purchase of a fully tenanted mixed-use building. The agreement of purchase and sale will be in the name of a corporation owned by the buyer and several other shareholders. Which of the following statements is correct regarding the signing of this agreement of purchase and sale?

Options:

A.

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

B.

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

C.

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.

D.

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

Question 32

Location preferences and accessibility are important when matching a potential buyer client with an appropriate commercial property. Which of the following is NOT a location preference consideration?

Options:

A.

Surrounding uses

B.

Financial health of the company

C.

Demographics

D.

Traffic counts

Question 33

Which of the following statements about industrial building components is correct?

Options:

A.

Bay depth is an important consideration when determining the layout of an industrial process.

B.

Loading docks are only used to off-load products or raw materials.

C.

Flat roofs are designed to be flat to hold water.

D.

Floor load refers to the weight of the building during construction.

Question 34

Sometimes, transactions do not close. When a transaction won't be completed, what should a salesperson try to do as soon as possible?

Options:

A.

Conduct an analysis of why the transaction will not be carried out.

B.

Pass the transaction to the broker of record so that the broker will take care of it.

C.

Obtain the remuneration owed.

D.

Terminate the transaction and disengage from it.

Question 35

A salesperson is negotiating a lease for a new retail tenant and reviewing the requirements and restrictions regarding the delivery of stock items. Which of the following is NOT a correct statement regarding stock delivery requirements and restrictions in a commercial lease?

Options:

A.

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

B.

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

C.

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

D.

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

Question 36

A salesperson is searching for properties on behalf of their retail buyer client for their designer eyewear and optical store. The buyer discusses their storage and product display needs with the salesperson. Which of the following is NOT a factor the buyer should consider regarding the product display and storage space of potential properties?

Options:

A.

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

B.

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

C.

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

D.

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

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Total 120 questions