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Humber College Exam 4: Invigilated Theory Sample Questions:

1. 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?

A) The buyer must sign and date below the printed name of the corporation.
B) The general partner of the company must sign and date below the printed name of the limited company.
C) A major shareholder of the company must sign and date over their printed name.
D) 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.

2. A salesperson has a buyer client in the metal fabrication industry, which requires outdoor storage and involves substantial noise and smells. The salesperson sees a listing that says "24,000-square-foot light industrial property, multi-uses permitted." Is this a suitable property for their client? Why or why not?

A) No, the property is not suitable, as the client's business type and classification require heavy industrial zoning.
B) 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.
C) Yes, the property is suitable, as the listing says the property is light industrial and multi-uses are permitted.
D) 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.

3. A buyer client is interested in purchasing an industrial property for their manufacturing business. The buyer's salesperson informs them of the building criteria, along with the minimum requirements for clear height and clear span that would be suitable for the buyer's business. What should the salesperson explain to the buyer regarding clear span?

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

4. 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?

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) Remuneration can be calculated based on the difference between the listing price and the actual rental price.
C) Salespersons are prohibited from indicating directly that remuneration is fixed by any association but can indicate it indirectly.
D) Remuneration can be an agreed amount or a percentage of the rental price, but not a combination of both.

5. The cost approach is one method of real estate evaluation that an appraiser may use to estimate the value of a commercial property. Which of the following is NOT an accurate statement regarding the cost approach?

A) 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.
B) 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.
C) The cost approach is preferred for older construction properties, as calculating depreciation on them is fairly straightforward.
D) The cost approach is typically used to appraise income-generating properties.

Solutions: