Humber Real Estate - Course 4, Module 9: Completing Agreements of Purchase and Sale for Office and Retail Properties 100% Pass

Humber Real Estate - Course 4, Module 9: Completing Agreements of Purchase and Sale for Office and Retail Properties 100% Pass If after reviewing a commercial agreement of purchase and sale, your client still has areas they don't understand, what should you do? If you are unable to address these areas satisfactorily, you may need to conduct a further review with a lawyer or other third-party experts. Note: You may be asked to provide the lawyer (or third-party experts) with a verbal or written summary of the issue to address separately with the client. For irrevocability periods on Agreements of Purchase and Sale for commercial properties, you would typically adhere to what timeframe? Standard business hours rather than setting the time period over weekends or evenings. How are deposits in commercial deals handled differently than residential? Due to the high value of the deposit, there may be multiple deposits or stages of deposits. Further deposits can be required after conditions have been satisfied (inspections, etc.) or following another specified schedule. A buyer may require these stages in order to arrange appropriate funding. If the deposit will be handled in stages, how would you document the deposit on the agreement of purchase and sale? By using the wording "as otherwise described", and provide the details of multiple deposits and related timing/conditions in Schedule A. In commercial transactions, how are deposits usually paid? Via certified cheque or e-transfer in trust to the listing brokerage or to the seller's lawyer. The buyer may request the deposit be placed into an _____________________. This requirement would also be specified in the agreement. Interest-bearing trust account What are some chattels unique to commercial deals? - Cleaning equipment - Product displays or showcases - Garment racks - Shelving units - Flower planters - Workstations and chairs - Filing cabinets What are some fixtures unique to commercial deals? - Trade fixtures - Built-in cabinets and shelving - Industry-specific equipment, e.g. bartending taps, specialty ovens, etc. Rental items also need to be identified in the Agreement of Purchase and Sale. Any contracts or leases for rental items that will be ______________________ need to be included in the agreement, with the terms explained clearly. Assumed by the buyer In most situations, the seller of a commercial property is responsible for remitting ______. However, in special circumstances, the seller is not required to collect it provided certain __________________ are met. HST, conditions Commercial agreements basically have the same requirements for signatures from the parties as residential agreements. However, commercial agreements also include areas to add what? The company name before the signature of the authorized signing officer(s). The exact legal ___________________ is used to identify the buyer and seller as at the beginning of the APS. Company name(s) Individuals must be authorized to sign on behalf of an entity such as a corporation. When you complete your due diligence in verifying the identification of the entity, you would also verify what? The identification and authority of the individual signing for the entity. To sign for a corporation: Under the company name, the authorized individual would indicate they are signing for the company. To do this they add the word _______ before their signature; the corporate seal may also be included, if available, or the words added: __________________________________________. "Per:", "I have the authority to bind the corporation" When signing on behalf of a partnership, the individual signing for the partnership must be the ________________________. Authorized partner Note: Add "Per" before their signature and their title after it. Is a corporate seal required when a commercial agreement is signed? No. Only the following is required: The company name comes first, followed by the word "per:" in front of the signature of the authorized individual. Finally, the individual that signed would then write the words "I have the authority to bind the corporation" added below their signature. How can you verify the existence of a corporation? Conduct a corporate search. Legal analysis of a property involves what steps? - Searching title to the property and assessing major assets, existing mortgages and other encumbrances Financial due diligence focuses on the financial health of an income-producing property. This would involve a thorough analysis of what documents? - Income statements - Balance sheets - Rent rolls & leases - Bank statements - Tax bills & returns - Employee records - Detailed information regarding operating costs - Financial records - Lease documents - Inventory of equipment and other assets - Utility bills - Building service contracts - Insurance policies A ________________________________ between seller and buyer may also be required because of the proprietary and personal nature of the information provided in commercial transactions. Confidentiality agreement True or false? You would list chattels to be included in the sale on the APS in an attached schedule. False. Space to list chattels is already included on the agreement of purchase and sale and does not have to be included as part of a separate schedule. What is an Innocent Misrepresentation? A statement by one party of a material fact that is thought to be true, but is later shown to be false. As a general rule, a buyer would not be able to recover damages in the case of an __________________________________. Innocent misrepresentation Because a commercial agreement of purchase and sale can include several conditions, it's a good idea to maintain a ______________ during the conditional period, so you are aware of which conditions have been __________________________, and which ones are outstanding. Checklist, waived or fulfilled As a salesperson, you should confirm that the buyer's financing approval remains valid throughout the ________________. Interim period If a transaction fails to be complete and a mutual release is completed, you are are responsible for managing what documents for your client? - Lawyer's letter of release - Letter of explanation, including interest due calculations - Notice of termination - Request to return all original documents, such as leases, surveys and reports - Direction to the existing broker for the release of funds