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Humber College Exam 4: Invigilated Theory Sample Questions:

1. If a retail unit has a usable area of 3,482 sq. ft. with a conversion rate of 1.1235, what would the tenant's rentable area be?

A) The retail tenant's rentable area would be 3,073 sq.ft.
B) The retail tenant's rentable area would be 3,605 sq. ft.
C) The retail tenant's rentable area would be 3,482 sq. ft.
D) The retail tenant's rentable area would be 3,912 sq.ft.

2. A seller provides you with architectural drawings of their building. Which statement is NOT correct?

A) Architectural drawings are source documents.
B) A photocopy of a source document can be used to verify information.
C) Other types of source documents include surveys and tax records.
D) If changes are made to source documents, they are still valid if you have the original document.

3. A salesperson sells an office building using the Commercial Agreement of Purchase and Sale along with a schedule that lists all the fixtures, chattels, and rental items of the office building. After closing the real estate transaction, a dispute arises between the seller and the buyer about which chattels, fixtures, and rental items of the office building were to be included and which were to be excluded. Which of the following is NOT an accurate statement regarding the salesperson's actions related to negotiating chattels, fixtures, and rental items?

A) 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.
B) 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.
C) 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.
D) 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.

4. A landlord and a tenant have signed an agreement to lease an office space. Prior to the transaction closing, an unforeseeable event occurs that is not the fault of either party. Which statement about the return of the tenant's deposit is NOT correct?

A) The agreement may contain a clause forfeiting all of the deposit if the landlord has started work on the premises.
B) The parties may need to obtain a court order that clarifies how the deposit will be returned and distributed.
C) The landlord and tenant may agree to split the deposit.
D) The tenant can have the deposit back without signing a mutual release as it is not their fault.

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

A) Sales proceeds cash flow does not affect investor decisions.
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 is used when determining yield on an investment property, while operating cash flow is not used for this purpose.
D) Operating cash flow can be positive or negative.

Solutions: