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Humber College Exam 4: Invigilated Theory Sample Questions:

1. Both the landlord and the tenant have responsibilities in the management of their relationship as per the commercial lease agreement. Which of the following is NOT an accurate statement regarding the roles and responsibilities of landlords and tenants as per the Commercial Agreement to Lease?

A) The landlord must address their tenants' issues in a timely manner in general but more so when the issue can result in serious and costly consequences.
B) All commercial leases require that tenants keep everything in and about the property, including all points of entry and exit, in good repair at all times.
C) Tenants are obligated to ensure they have adequate tenant insurance for their property.
D) Not all commercial leases require the landlord to perform repairs and maintenance.

2. A tenant is interested in leasing a property; however, the tenant would like to make improvements to the property. Which of the following statements about tenant improvements is correct?

A) Unless indicated in the lease agreement, improvements attached to the leased building generally become the tenant's property upon vacating the premises.
B) The landlord may offer a "tenant improvement allowance" which provides funds to cover thecosts of tenant improvements.
C) In a lease agreement, the tenant provides a list of improvements to the landlord and the landlord always pays for these improvements.
D) The tenant takes the premises in an "as is" condition and can complete whatever improvements they wish without landlord approval.

3. In regard to cash flow into and out of a business, which of the following is correct?

A) Sales proceeds cash flow is used when determining yield on an investment property, while operating cash flow is not used for this purpose.
B) Operating cash flow is used when determining yield on an investment property, while sales proceeds cash flow is not used for this purpose.
C) Sales proceeds cash flow does not affect investor decisions.
D) Operating cash flow can be positive or negative.

4. The operating costs of a commercial building are usually higher than those of buildings that do not have any common areas. Common area maintenance (CAM) is referred to as the landlord's operating costs attributable to factors that affect the common areas. Which of the following is NOT one of those factors?

A) Repairs
B) Depreciation
C) Operations
D) Supervision

5. Which of the following practices maintains the stability and durability of a commercial property?

A) Delaying improvements to the property to save costs
B) Increasing the base rent and additional rent in a slow economy
C) Replacing old tenants with new tenants that pay much higher rent
D) Keeping good tenants

Solutions: