ExamPassHow to study Course 4: commercial real estate
To study Course 4, group its 15 modules by property type and deal type: commercial foundations, office and retail, commercial condominiums, industrial, commercial leasing, and finally development land, farms and businesses. For each group, master three skills: reading the property (zoning, construction, environmental risk), valuing it (usually by its income), and contracting for it (the clauses and conditions a commercial buyer or tenant needs). Practise the calculations every week, because Simulation 2 expects you to value, lease and condition a deal without being told which tool to use.
Course 4 is where residential instincts start to cost marks. The buyer is often a corporation, the building earns rent, the Residential Tenancies Act, 2006 does not apply to the lease, and HST can apply to the sale. Yet every TRESA duty still applies: there is no commercial exemption from the Information Guide, from material facts disclosure, or from the rules on multiple representation.
So study Course 4 as two layers. The bottom layer is the conduct you learned in Courses 1 and 2. The top layer is commercial: income, use, environment and contract terms.
How should you split Course 4 into a study plan?
The modules repeat a pattern for each property type: identify the requirements, prepare to sell, view, then complete the agreement. Group them so each property type is studied as one unit.
| Group | Modules | What you must be able to do | The trap that costs marks |
|---|---|---|---|
| 1. Foundations | 1 to 2 | Apply TRESA and the Commercial Tenancies Act, read zoning and construction, understand financing, ownership structures and tax | Thinking a building permit approves a use |
| 2. Office and retail | 3, 4, 8 and 9 | Read market measures, verify income, view sites, complete an office or retail agreement | Deducting debt service before capitalizing net operating income |
| 3. Commercial condominiums | 5 and 10 | Read the declaration against the intended use, review the status certificate, complete the agreement | Assuming zoning permission beats a condominium restriction |
| 4. Industrial | 6, 7 and 11 | Assess site, building and environmental risk; draft environmental and financing conditions | Treating an empty registry search as a clean site history |
| 5. Commercial leasing | 12 to 13 | Compare gross, net and triple net leases; calculate rent and area; complete an agreement to lease | Treating a letter of intent as a binding contract |
| 6. Land, farms and businesses | 14 to 15 | Work development timelines, farm due diligence and the sale of a business | Delivering business financial statements after the agreement is signed |
Module 8 (viewing) covers office, retail and industrial together, so study it with Group 2 and return to its industrial lesson in Group 4.
Which Course 4 rules and figures should you know cold?
| Rule | What the law says | Source |
|---|---|---|
| Sale of a business | Before a binding agreement, the seller's registrant gives the buyer signed statements: profit and loss for the preceding 12 months (or since the seller acquired it), assets and liabilities, and a list of what is excluded | O. Reg. 567/05, s. 21(2) |
| Missing exclusions list | If it is not given and the agreement is silent, an item is deemed included in the sale | O. Reg. 567/05, s. 21(3) |
| Unpaid commercial rent | Unless otherwise agreed, the landlord may re-enter once rent is unpaid for fifteen days | Commercial Tenancies Act, s. 18(1) |
| Consent to assign or sublet | Unless the lease expressly says otherwise, consent is not to be unreasonably withheld | Commercial Tenancies Act, s. 23(1) |
| Local improvement charges | A tenant's covenant to pay taxes does not include them unless the lease specifically provides | Commercial Tenancies Act, s. 27(1) |
| HST on a sale of a business | Parties to a qualifying sale can jointly elect so that no tax is payable on most supplies; services the seller will still provide and leased property stay taxable, and the election is not available where the seller is a registrant and the buyer is not | Excise Tax Act, s. 167(1) and (1.1) |
For more on the tax side, see HST on commercial real estate in Ontario, and for a full walk through the business trade, selling a business in Ontario.
What are the traps that cost the most marks in Course 4?
Use against permission. Zoning, not a building permit, decides the use. A permit approves construction. A non-conforming use can continue but cannot expand at will, and a minor variance cannot split a lot. In a commercial condominium, the declaration can narrow what zoning allows, never widen it.
Income against cash flow. Net operating income is income after vacancy and operating expenses, before any mortgage payment. The cap rate is net operating income divided by price. A gross rent multiplier uses gross income, so it ignores expenses. The cap rate guide works through the math.
Rent against total cost. A gross lease folds operating costs into one rent. A net lease adds the tenant's share of taxes, maintenance and insurance as additional rent. Roof and structure move to the tenant only under a triple net lease. A low base rent can be the more expensive space once additional rent and escalations are added. See net vs gross leases.
Paper against promise. A letter of intent is a framework, not a contract; an accepted agreement to lease binds. There is no standard commercial lease form in Ontario, and the landlord's lawyer usually drafts the lease. A guarantee falls with the tenant's obligation; an indemnity stands on its own.
Environment. A Phase One environmental site assessment reviews records and the site; it does not sample soil. An empty registry search is not a clean history, and a salesperson never vouches that a site is clean. The guide to environmental site assessments covers the phases.
What does a worked Course 4 example look like?
Teodora Vasquez is buying Harbourview Plaza, a six-unit retail plaza in Owen Sound. The rent roll shows potential gross income of $312,000. Comparable plazas trade at a 6.5 per cent cap rate.
Her salesperson allows 5 per cent for vacancy and credit loss: $312,000 × 95% = $296,400 effective gross income. Verified operating expenses are $88,900, leaving net operating income of $207,500. At a 6.5 per cent cap rate, the indicated value is $207,500 ÷ 0.065, about $3,192,300.
Teodora's mortgage payments of $14,000 a month are not deducted. Students who subtract them get a much lower figure, and it will usually be one of the options. Debt service is about her financing, not the property's income.
One tenant, a pharmacy, pays base rent of $54,000 plus 6 per cent of gross sales above a natural breakpoint. The breakpoint is $54,000 ÷ 6% = $900,000. With sales of $1,050,000, percentage rent is 6% × $150,000 = $9,000, on top of the base rent, never in place of it.
How does Course 4 feed Simulation 2?
Simulation 2 is the commercial simulation, and it draws on the whole of Course 4. It follows a registrant through commercial files: the basics of a commercial trade (corporate buyers, signing authority, HST), learning each buyer's needs and verifying property facts, choosing and drafting conditions, valuing by the income and cost approaches, spotting contamination and condominium restrictions, amending or waiving after acceptance, leasing for a landlord and for a tenant, then farms, development land and a business sale, and finally a conduct review.
The shift is from knowing to choosing. A Course 4 question may ask what a triple net lease is. A Simulation 2 question gives you a tenant's quote and asks what the tenant will really pay, or gives you a buyer's plans and asks which condition protects them. Study Course 4 with a pencil: calculate, draft a condition in your own words, and explain why each clause is in or out. The Simulation 2 preparation guide covers the format.
Where does the course differ from current law?
The course teaches that any person who objects to a zoning by-law can appeal it. That is out of date. Under the Planning Act, s. 34(19), as amended in 2024, the appeal is limited to the applicant, specified persons and public bodies that made submissions before the by-law passed, registered owners of land the by-law applies to who made submissions, and the Minister. A neighbour who simply objects generally cannot appeal. For the exam, follow the course; for a real development file, follow current law and send the question to the client's lawyer.
How does ExamPass help you practise this?
ExamPass Course 4 prep gives you hundreds of original scenario questions across all 15 modules, with every option explained, including worked solutions for the income and lease calculations. The Study notes group each module's traps and figures, the Mock Exam gives you a timed run, Drill Wrong Answers brings back your misses, and the AI Tutor helps when a commercial concept will not click. See courses and pricing.
Frequently asked questions
Is Course 4 harder than the residential courses? It often feels harder because the vocabulary, statutes and math are new. The conduct rules are the same ones you already know.
How much math is in Course 4? More than in earlier courses: net operating income, cap rates, gross rent multipliers, breakpoints, additional rent and rentable versus usable area.
Does TRESA apply to commercial trades? Yes. Every TRESA duty applies, including the Information Guide, material facts disclosure and the rules on multiple representation.
Do I need to study farms and businesses in detail? Yes. Module 14 covers development land and farms, Module 15 covers business sales, and both return in Simulation 2.