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Humber College Exam 4: Invigilated Theory Sample Questions:

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

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

2. A land developer is interested in purchasing a piece of vacant land. Which of the following statements about evaluating the highest and best use of the real property is correct?

A) A property's highest and best use is the use that, at the time the building was built, was most likely to produce the greatest net return.
B) The land developer can identify the use of the property that is anticipated to produce the highest overall return so the appraiser can complete the appraisal.
C) The estimate of value is related to how a typical buyer, with a reasonable knowledge of the market and property, wants to use the property.
D) A designated appraiser will use all factual sales data to determine the value of the current highest and best use of the property.

3. 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?

A) $80,000
B) $130,000
C) $60,000
D) $120,000

4. A buyer should consider the record of site condition (RSC) document when purchasing a commercial property. Which of the following statements regarding an RSC is correct?

A) With other documents, it will inform the buyer of any legal issues attached to the title.
B) It contains records pertaining to a property's financial condition.
C) It is not a material fact; thus, it is a formality for the buyer to get it.
D) Requesting an RSC is mandatory in all real estate transactions.

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

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