Free Course 4 Practice Questions (Ontario Real Estate)

Course 4 is the commercial course: office, retail and industrial property, commercial condominiums, development land and farms, commercial leasing and the sale of a business. It asks you to read leases, run income and value figures, and spot the due diligence a commercial buyer or tenant needs. The 10 questions below are original scenario questions written for the Ontario salesperson program. Each has four plausible options, and every option is explained, so you see why the wrong answers are tempting and where they go wrong. Try each question before you look at the answer.

How to use these questions

Answer each question first, without peeking. Then read every explanation, including on the ones you got right, because the wrong options are built around real misconceptions and the calculations show each step. If you want your answers tracked, open the same 10 questions in the app, where your progress is kept.

Question 1

A landlord client changed the locks on an industrial unit for two months of unpaid rent and now, a week later, wants to seize and sell the tenant's forklifts and inventory still inside to recover those arrears. Which statement best describes the position the salesperson should relay before the landlord sees a lawyer?

aChanging the locks was a step in the distress, and the Act allows a landlord to combine re-entry and distress for the same arrears, so the landlord may seize and sell the goods now provided the tenant is given notice of the cause.bChanging the locks suspended the tenancy, and distress remains available for fifteen days after re-entry, so the landlord may seize and sell the goods now provided the five-day replevin period and the two appraisals are observed.cChanging the locks ended the tenancy, and distress is available only while a tenancy subsists, so the landlord has elected to terminate and can pursue the arrears by action rather than by seizing and selling the goods.dChanging the locks was ineffective because distress must come first, and the Act requires a landlord to distrain before re-entering, so the landlord may seize and sell the goods now and then treat the lock change as valid once the sale is complete.

Question 2

An investor client is considering a small retail plaza. The salesperson's income analysis shows potential gross income of $400,000, a vacancy and credit loss allowance of 5 per cent, operating expenses of $114,000 and, if the investor finances the purchase as planned, annual debt service of $120,000. The investor says comparable plazas in the submarket have sold at capitalization rates of about 7 per cent and asks what value direct capitalization indicates. Which answer is correct?

aAbout $5,428,571, because the effective gross income of $380,000 after vacancy, divided by 7 per cent, gives the value before any financing.bAbout $2,085,714, because the cash flow of $146,000 after debt service, divided by 7 per cent, gives the value to this financed buyer.cAbout $4,085,714, because the income of $286,000 after expenses, divided by 7 per cent, gives the value before any financing.dAbout $3,800,000, because the net operating income of $266,000 after vacancy and expenses, divided by 7 per cent, gives the value before any financing.

Question 3

Salesperson Dev represents the seller of an industrial condominium unit. A buyer who has no brokerage, but who has retained a lawyer, asks Dev to help her put an offer together on the unit. Which statement correctly describes what has to happen before Dev assists her?

aDev's brokerage must give her the prescribed information about its client relationship, the risks of taking its assistance and the assistance it may provide, explain it, and make best efforts to obtain her written acknowledgement.bDev may treat her as represented because her lawyer is acting for her, so he can give her the same pricing and strategy advice he would give a client as soon as she confirms in writing that the lawyer has been retained.cDev must have her sign a written waiver of representation, after which he may offer her his opinions on price and terms, provided that she confirms she will not rely on them and takes her lawyer's advice before signing.dDev's brokerage must sign her to a buyer representation agreement before anything else, because helping a person prepare and present an offer on a listing makes that person a client of the brokerage from that point onward.

Question 4

A buyer client's environmental condition on a former dry-cleaning unit expires at 6 p.m. tomorrow. The Phase I report will not be ready for another week. The buyer says, 'I will just waive it; the seller seems honest.' What should the buyer's salesperson advise?

aExplain that waiving leaves the buyer bound whatever the report later shows, recommend independent legal advice, note that any waiver must be delivered before the deadline, and offer an amendment extending the deadline as the alternative, which the seller may refuse.bExplain that waiving leaves the buyer bound whatever the report later shows, recommend independent legal advice, note that a notice of fulfilment should be delivered instead since the buyer is satisfied, and offer an amendment as the alternative.cExplain that waiving leaves the buyer bound whatever the report later shows, recommend independent legal advice, note that the salesperson can sign the waiver for the buyer before the deadline, and offer an amendment extending the deadline as the alternative.dExplain that waiving leaves the buyer bound whatever the report later shows, recommend independent legal advice, note that a waiver may be delivered after the deadline if the seller is cooperative, and offer an amendment extending the deadline as the alternative.

Question 5

Jasmine, a tenant's salesperson, is reviewing four proposals in which each landlord's representative has labelled the lease type. Building A, labelled a gross lease: the tenant pays base rent plus its proportionate share of realty taxes, building insurance and all operating costs, billed as additional rent. Building B, labelled a triple net lease: the tenant pays base rent plus taxes, insurance, maintenance and every other cost of the premises. Building C, labelled a gross lease: the tenant pays one fixed rent and the landlord carries the operating expenses. Building D, labelled a semi-gross lease: the tenant pays base rent plus utilities and in-suite janitorial as the only defined extras, with taxes, insurance and maintenance left to the landlord. Each of the following statements Jasmine makes is correct EXCEPT:

aBuilding B is correctly labelled a triple net lease, since the tenant carries taxes, insurance, maintenance and every other cost and the landlord is left carefree.bBuilding C is correctly labelled a gross lease, since the tenant pays one fixed rent and the landlord carries all of the operating expenses out of that rent.cBuilding D is correctly labelled a semi-gross lease, since the tenant pays rent plus certain defined extras while the landlord carries taxes, insurance and maintenance.dBuilding A is correctly labelled a gross lease, since the pass-through of taxes, insurance and operating costs is billed as additional rent rather than as base rent.

Question 6

A seller tells the listing salesperson that mould behind the finished basement walls was covered with new drywall last year without fixing the leak, and says: I am not obliged to say anything; let the buyer inspect. How should the salesperson explain the two sets of duties?

aAt common law a seller who knows of a latent defect that makes the premises unfit, or who conceals a defect, cannot rely on caveat emptor; separately, under O. Reg. 567/05 s. 22.2 the seller's salesperson must disclose to every interested buyer a fact the seller is legally obliged to disclose, and under s. 22.1 must advise the seller of the material fact.bAt common law caveat emptor applies to every defect the buyer could have found by hiring an inspector; separately, under O. Reg. 567/05 s. 22.2 the seller's salesperson must disclose every defect the salesperson knows about to interested buyers, whether or not the seller has any obligation to disclose it.cAt common law a seller has no disclosure duty for any defect in a commercial sale because commercial buyers are presumed sophisticated; separately, under O. Reg. 567/05 s. 22.2 the salesperson's duty to disclose is discharged by recommending that each buyer obtain a building inspection.dAt common law the cosmetic repair converts the mould into a patent defect that a reasonable inspection would reveal; separately, under O. Reg. 567/05 s. 22.1 the salesperson's material fact duty runs only to the client, so the seller may stay silent and the buyer bears the risk.

Question 7

A buyer's agreement for a $1,150,000 unit became firm three weeks ago with a $60,000 deposit. The corporation has now declared an 18 per cent increase in common expenses. The buyer tells the salesperson, 'I'm not closing on these numbers; they can keep the deposit if they want.' What must the salesperson make sure the buyer understands before the buyer declines to close?

aRefusing to complete is safe provided the buyer gives written notice before the completion date, since the status certificate condition revives whenever the corporation changes the budget after the certificate date.bRefusing to complete over a declared fee increase is permitted because the increase is a material change, so the buyer may rescind and the deposit must be returned within 10 days.cRefusing to complete a firm agreement is a default that risks forfeiture of the deposit and a damages claim that may exceed it, so the realistic alternative is to propose an amendment the seller may refuse.dRefusing to complete exposes the buyer to loss of the deposit at most, since the deposit is the agreed measure of the seller's damages under a commercial agreement of purchase and sale.

Question 8

Salesperson Lena represents the buyer of a gift shop. The seller's income and expense statement for the past year shows revenue by sales of $640,000, cost of goods sold of $352,000, operating expenses of $214,000 and income taxes paid of $18,500. The buyer's accountant asks Lena to confirm the net operating income the statement supports. Which figure is correct?

a$288,000, after deducting cost of goods sold from revenue by sales.b$74,000, after deducting both cost of goods sold and operating expenses from revenue.c$426,000, after deducting operating expenses from revenue by sales.d$55,500, after deducting cost of goods sold, operating expenses and income taxes.

Question 9

An offer on an industrial building is accepted on Monday, March 2. The buyer's consultant will deliver a phase one report within three weeks of engagement, and the lender has confirmed in writing that it needs 10 days with the report before it can issue an unconditional commitment. The salesperson reviews four approaches to the conditions. Each of the following is a sound approach EXCEPT:

aSet a single due diligence condition expiring April 17 that covers environmental, financing and inspection matters, engage the consultant on March 3 and have the buyer's lawyer confirm the wording, since one period of six weeks holds the report and the lender's 10 days.bSet the financing condition to expire on March 16 and waive it once the lender issues a commitment that still depends on the phase one result, since the environmental condition expiring April 17 still protects the buyer against a poor report.cSet the environmental condition to expire on April 3 and the financing condition to expire on April 17, engage the consultant on March 3 and send the report to the lender the day it arrives, since the two week gap covers the lender's 10 day review.dSet the financing condition and the environmental condition to expire together on April 17, engage the consultant on March 3 and send the report to the lender the day it arrives, since the lender then has well over its 10 days before either condition expires.

Question 10

A tenant's salesperson measures an L-shaped office suite: a main room 60 ft by 40 ft and a wing 20 ft by 15 ft. The landlord quotes a rentable to usable factor of 1.15 and a net rate of $22.00 per sq ft of rentable area per year. What is the annual net rent?

a$60,720b$59,400c$51,652d$68,310

What the full Course 4 practice includes

The full Course 4 practice has hundreds of original scenario questions across all fifteen modules, with every option explained. You also get Study notes for every module, a timed Mock Exam, Drill Wrong Answers to bring back the questions you missed, and an AI Tutor for questions about the material. Access lasts two months for a one-time price of $44.99.

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Topics in Course 4

Introducing commercial real estate: TRESA in commercial trades, financing, investing and HST on commercial property
Understanding commercial construction: office, retail, industrial and mixed-use buildings
Identifying requirements for office and retail properties: market analysis and buyer and seller needs
Preparing to sell office and retail properties: due diligence, material facts and latent defects, appraisal and cap rate
Preparing to sell commercial condominiums: governance, the status certificate and valuing a unit
Identifying requirements for industrial properties
Preparing to sell industrial properties: inspection, redevelopment, defects and pricing
Viewing office, retail or industrial properties with your client: environmental site assessments and other professionals
Completing agreements of purchase and sale for office and retail properties: conditions, waivers and notices of fulfilment
Completing agreements of purchase and sale for commercial condominiums
Completing agreements of purchase and sale for industrial properties
Preparing to lease office, retail and industrial properties: lease types, remedies and area measurement (net vs gross leases)
Transactions involving commercial leasing: offers to lease, lease clauses and amendments
Transactions involving development land and farms
Transactions involving brokering the sale of a business (selling a business)

For a study plan, see how to study Course 4.

Frequently asked questions

Are these real exam questions?

No. They are original questions written for the Ontario salesperson program. ExamPass is not affiliated with RECO, Meazure Learning or any education provider. The format and the judgment style mirror the real exam, so they are good practice for how the exam asks.

Which provider is this for?

All of them. All four approved providers teach the same program, and students write the same standardized exam, so these questions fit whichever provider you study with.

How many free questions are there?

Ten for Course 4, all on this page with full explanations. With a free account you can also Try For Free inside the app, where your answers are tracked.

What happens when I unlock Course 4?

You get the full Course 4 practice for two months: hundreds of questions, the Study notes, the Mock Exam, Drill Wrong Answers and the AI Tutor. Any answers you gave in Try For Free stay in your progress.