Transaction Documentation Practice Questions

Question 1 of 5

Salesperson Gabrielle is helping her client, Ahmed, prepare for the closing of a triplex purchase. Ahmed will inherit three tenants. Gabrielle reminds Ahmed about the requirement for last month's rent deposits. The seller confirms that all three tenants paid last month's rent deposits when they moved in. What should Gabrielle advise Ahmed about these deposits?

• AThe deposits stay with the seller and Ahmed should collect new deposits from the tenants
• BThe last month's rent deposits transfer to Ahmed as the new landlord at closing through the Statement of Adjustments; Ahmed must apply them to the tenants' last month of rent and must pay annual interest on the deposits at the rate prescribed by the RTA
• CTell Ahmed that last month's rent deposits are no longer required under the RTA, as the negotiated lease terms address the key commercial considerations including rent escalation, operating expenses, improvement allowances, and permitted use restrictions
• DAdvise Ahmed to use the deposits for property repairs since the tenants will not remember they paid them

Question 2 of 5

Salesperson Kim is explaining the deposit structure for a pre-construction condo to her client, Andrei. The builder requires deposits totaling 20% of the purchase price, payable over 18 months. Andrei wants to know if his deposits are protected. What should Kim explain?

• ADeposits are completely unprotected and the buyer takes all the risk
• BUnder Ontario law, deposits for new condo purchases must be held in trust by the builder's lawyer or placed in an escrow account, and Tarion provides deposit protection up to specified limits if the builder defaults
• CThe builder can use the deposits for construction costs immediately upon receipt, as the applicable regulatory framework and industry practices establish the standards and procedures that govern how this type of matter is addressed in Ontario real estate
• DDeposit protection only applies if the buyer purchases additional insurance from a private insurer

Question 3 of 5

During a negotiation, buyer salesperson Kevin receives a counter-offer from the seller's agent. The counter-offer includes a handwritten amendment that Kevin finds ambiguous. Kevin's buyer client asks him to interpret the clause. What is the appropriate professional response?

• AAcknowledge the ambiguity to his client, contact the seller's agent to clarify the intended meaning of the clause, and recommend that any agreement be documented in clear, unambiguous language — potentially involving the lawyers before acceptance
• BInterpret the clause in the way most favourable to his buyer client
• CSign the counter-offer as-is and deal with the interpretation later if it becomes an issue, as the applicable regulatory framework and industry practices establish the standards and procedures that govern how this type of matter is addressed in Ontario real estate
• DRewrite the clause himself in clearer language and send it back as if it were the original, as the applicable regulatory framework and industry practices establish the standards and procedures that govern how this type of matter is addressed in Ontario real estate

Question 4 of 5

Client Michelle is purchasing a rural property and asks salesperson Andre about the property's water rights. The listing mentions a 'shared well' with the neighbouring property. What critical information should Andre help Michelle obtain?

• AAdvise Michelle that a shared well requires a formal well-sharing agreement that should be reviewed by her lawyer, covering maintenance responsibilities, cost sharing, water allocation, access for repairs, and dispute resolution — and this agreement should ideally be registered on title
• BTell Michelle shared wells are common and there is nothing to investigate, given that be properly documented, as the applicable regulatory framework and industry practices establish the standards and procedures that govern how this type of matter is addressed in Ontario real estate
• CSuggest Michelle drill her own well immediately after closing to avoid the shared arrangement
• DTell Michelle the neighbour cannot use her well without her permission regardless of any agreement, as the applicable regulatory framework and industry practices establish the standards and procedures that govern how this type of matter is addressed in Ontario real estate

Question 5 of 5

Salesperson Nadia receives a status certificate for her client Omar's prospective condo purchase. The certificate shows the corporation's insurance includes a $50,000 deductible for water damage claims. Omar's unit is on the 15th floor. How should Nadia advise Omar regarding this information?

• ATell Omar not to worry because the corporation's insurance will cover everything
• BAdvise Omar that insurance is the property manager's problem and not relevant to unit owners
• CExplain that the high deductible means Omar should obtain comprehensive unit owner's insurance that covers the deductible gap, and consult with an insurance broker before closing
• DSuggest Omar skip unit owner's insurance to save money since the building already has coverage