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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 the tenant's assets due to theft from their employees or third parties.
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 property's equity due to a change in market conditions or to a recession.

2. Asset sale and share sale are two different ways to sell a business. Which statement describes an asset sale?

A) The buyer replaces the seller as the owner of the corporation.
B) The buyer assumes all assets and accepts all liabilities of the business.
C) The buyer is eligible for tax deductions and benefits by claiming capital cost allowance on depreciable property.
D) The seller benefits from a tax standpoint since any gain to the seller on the sale will be considered under the capital gains tax exemption.

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 unobstructed vertical distance from the floor to the bottom of the lowest ceiling or roof component.
B) 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.
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 highest point of the ceiling or roof component.

4. 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?

A) The salesperson should tell the tenant that the Condominium Authority of Ontario regulates management fees charged by buildings as per their size.
B) 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.
C) 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.
D) The salesperson should identify the reasons for high management fees charged for a building and determine the relative value it provides.

5. 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?

A) Petroleum storage and distribution sites
B) Computer training institute
C) Power stations
D) Chemical manufacturers

Solutions: