Humber College Exam 4: Invigilated Theory Sample Questions:

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

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

2. A salesperson and their commercial seller client are discussing and preparing to list the seller's office building. The topic of defects comes up and the seller wants to know what the salesperson will have to disclose. Which of the following is an accurate statement regarding the disclosure of defects?

A) The salesperson should discuss latent defects known to the seller of the office building with the seller and disclose them to a buyer.
B) The salesperson should discuss patent defects known to the seller of the office building with the seller and disclose them to a buyer.
C) 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.
D) 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.

3. Which statement about an Environmental Site Assessment (ESA) is NOT correct?

A) All new commercial properties must undergo an ESA before construction begins.
B) The Environmental Protection Act establishes the procedures and requirements for the first two phases of an ESA.
C) No stipulations exist for the third and final phase of an ESA due to its vast and complex nature.
D) An ESA is not required if the buyer is purchasing the industrial property for their own use.

4. Audited and unaudited statements provide the financial status of a business to potential buyers. What is the main difference between audited and unaudited financial statements?

A) Unaudited financial statements are prepared by accounting students; audited financial statements are completed by accountants who have received their professional designation.
B) Unaudited financial statements are prepared by Chartered Professional Accountants; audited financial statements are prepared by senior Chartered Professional Accountants.
C) Audited financial statements comply with Generally Accepted Accounting Principles (GAAP); unaudited financial statements do not comply with GAAP.
D) Audited financial statements provide an accurate picture of the financial status of a business; unaudited financial statements may only contain partially reviewed information.

5. A buyer client is interested in purchasing a 30,000 sq. ft. industrial building in an industrial park. The buyer's salesperson drafts an agreement of purchase and sale that includes an environmental site assessment condition that must be met at the buyer's own expense, and to the buyer's satisfaction. Which of the following is NOT an accurate statement regarding the environmental site assessment condition?

A) The environmental site assessment condition makes the offer conditional upon the buyer determining that no limitations or restrictions affecting the continued use of the property exist.
B) The environmental site assessment condition makes the offer conditional upon the buyer determining that the property is free from hazardous conditions or substances.
C) The environmental site assessment condition makes the offer conditional upon the seller delivering documents, records, and reports relating to environmental matters to the buyer upon request.
D) The environmental site assessment condition makes the offer conditional upon all possible court actions regarding environmental matters being thought of and reported.

Solutions: