Question 1
Jack owns a semi-commercial building, 25% of which is commercial space, the remainder being six (6) apartment units. Jack would like to retain your services as a real estate broker to sell it. John, who rents the commercial space, recently signed a commercial lease with Jack. The lease contains a clause that prohibits publication of the commercial lease in the land register in any form. Despite this clause, John nonetheless published his lease in the land register to protect his rights.
Will publication of the lease in the land register be binding on a new buyer?
No, Jack, the lessor, should have published the lease if he changed his mind about the clause added to the lease; John’s publication was prohibited and is therefore not binding on a new buyer.
Yes, the lessor cannot fully prohibit publication of the commercial lease in any form, and the clause is deemed null and void. Any publication by John will be binding on a new buyer.
Yes, but only if John and Jack agree to change the clause in the lease and allow publication; then, the change will render John’s publication acceptable and binding on a new buyer.
No, the commercial lease is legally binding on the parties. John was prohibited from publishing the lease, so the publication will not be binding on a new buyer.
Yes, the lessor cannot fully prohibit publication of the commercial lease in any form, and the clause is deemed null and void. Any publication by John will be binding on a new buyer.
Question 2
Your client, Thomas, wishes to sign a brokerage contract for the sale of his company’s assets, including a commercial immovable representing 60% of the value of the assets.
To properly complete the sales price clause of the brokerage contract for the sale of an immovable (BCG), is this sale subject to GST and QST?
Only the commercial immovable portion of the sale is subject to GST and QST.
Only the company portion of the sale is subject to GST and QST.
The entire sale is subject to GST and QST.
The sale is not subject to GST or QST.
The entire sale is subject to GST and QST.
Question 3
Sophia wants to buy a commercial building to operate her business there. She plans to open a Mexican restaurant. You think you have found the perfect building located in the ideal neighbourhood for your client and within her budget.
What is your advice regarding Sophia’s need to open a restaurant there?
Be sure to confirm that a restaurant is an authorized use according to municipal by-laws; the promise to purchase must be conditional on the seller’s broker obtaining this confirmation.
Be sure to confirm that a restaurant is an authorized use according to municipal by-laws; the promise to purchase must be conditional on Sophia obtaining this confirmation.
Be sure to confirm that a restaurant is an authorized use according to municipal by-laws; the promise to purchase must be conditional on you, as Sophia’s broker, obtaining this confirmation.
Be sure to confirm that a restaurant is an authorized use according to municipal by-laws; the promise to purchase must be conditional on the seller obtaining this confirmation.
Be sure to confirm that a restaurant is an authorized use according to municipal by-laws; the promise to purchase must be conditional on Sophia obtaining this confirmation.
Question 4
Your client, Martine Lamoureux, signed a promise to lease a commercial space with a 48-hour acceptance period. The promise to lease was accepted by the lessor, Philip D’amour, and all conditions were met. Seven days later, Martine calls you and tells you that she wants to revoke her promise to lease because she found another commercial space that better suits her needs.
Which of the following is true?
Martine can revoke the promise to lease because the lease has not yet been signed.
Martine cannot revoke her promise to lease because the acceptance period has expired.
Martine cannot unilaterally revoke the promise to lease because the contract is bilateral.
Martine can revoke the promise to lease pursuant to her right to cancel provided she exercises this right within 3 days of signing the intent to lease.
Martine cannot unilaterally revoke the promise to lease because the contract is bilateral.
Question 5
The commercial real estate broker must be able to explain and draft the usual clauses found in commercial leases in order to be able to negotiate them and include them in the promise to lease so that they will be included in any future lease.
True
False
True
Question 6
Paul wants to sign a brokerage contract with you to lease five thousand square feet (5,000 ft2) of commercial space in his 12-thousand-square-foot (12,000 ft2) commercial building. He would like the lease to include variable rent payments made up of a basic rent portion and an additional rent portion. To complete clause 4.2 Additional Rent of the brokerage contract, he discloses to you that the current year’s property taxes are twenty-four thousand dollars ($24,000).
How much additional rent should be entered in clause 4.2?
For the first year, the additional rent is estimated at twenty thousand dollars ($20,000) and includes property taxes.
For the first year, the additional rent is estimated at five thousand dollars ($5,000) and includes property taxes.
For the first year, the additional rent is estimated at twelve thousand dollars ($12,000) and includes property taxes.
For the first year, the additional rent is estimated at ten thousand dollars ($10,000) and includes property taxes.
(Tenant ft² ÷ Building ft²) × Total Taxes = Additional Rent → (5,000÷12,000)×24,000=10,000; Example: (2,500÷10,000)×40,000=10,000; Rule: always pro-rate—same fraction of space = same fraction of taxes (divide first, then multiply).
Question 7
Gaétan owns a semi-commercial immovable. The immovable includes a 4,000-square-foot commercial space and two 1,000-square-foot apartments. He called you yesterday because he is thinking of putting it up for sale. However, he would be open to keeping it if he can rent out the two apartments, which are currently vacant. You understand that Gaétan would therefore be open to signing a brokerage contract for the sale of the immovable or a brokerage contract for the rental of the apartments.
As a commercial real estate broker, what can you do for this client?
You can only sign a brokerage contract for the sale of an immovable (BCG) with this client, and you can refer the apartment rental file to a residential real estate broker.
You will start by signing a brokerage contract for the rental of the apartments and see later about signing a general brokerage contract for the sale of an immovable (BCG) if you cannot find tenants
You will insist on signing a brokerage contract for the sale of an immovable (BCG) because it will mean a higher commission for you.
You can sign both types of brokerage contracts and thus receive a commission for the first of the two brokerage transactions that take place.
You can only sign a brokerage contract for the sale of an immovable (BCG) with this client, and you can refer the apartment rental file to a residential real estate broker.
Question 8
1234-5678 Québec inc. owns a currently vacant industrial immovable. The company is ready to sign a brokerage contract for a commercial lease (BCC). You discuss your client’s needs and determine that the industrial immovable will have to be occupied by a single tenant whose rent will be your client’s only income.
What will you recommend to your client?
Wait until the tenant is in default to add a rent payment guarantee to the lease.
Wait until the tenant is in default to seize their equipment because a movable hypothec is an automatic rent payment guarantee.
Include a rent payment guarantee in the final lease that is to be determined specifically at the time of drafting the lease.
Include a rent payment guarantee in the BCC and in the PLC.
Include a rent payment guarantee in the BCC and in the PLC.
Question 9
Which of the following statements is false?
With a brokerage contract for a commercial lease (BCC), you can claim your commission when the lease is signed
With a brokerage contract for a commercial lease (BCC), you can claim your commission when the option to renew the lease is exercised.
With a brokerage contract for a commercial lease (BCC), you must claim your total commission only once the premises have been occupied.
With a brokerage contract for a commercial lease (BCC), you can claim your commission as soon as all the conditions of the promise to lease have been met.
With a brokerage contract for a commercial lease (BCC), you must claim your total commission only once the premises have been occupied.
Question 10
You represent a lessor for the rental of a commercial space. Given the lessor’s past experience, the latter insists on having the promise to lease and possibly the lease contain a tacit non-renewal clause.
What is the purpose of this clause?
To readjust the amount of the additional rent annually based on actual expenses.
To prevent the lease from automatically renewing if the tenant remains in possession of the leased premises after the expiry of the lease without having signed a new lease.
To allow the renewal option provided for in the lease to be used within 10 days before the expiry of the lease.
To prevent a tenant from leaving the space vacant during the term of the lease at the risk of being fined a penalty.
To prevent the lease from automatically renewing if the tenant remains in possession of the leased premises after the expiry of the lease without having signed a new lease.
Question 11
Gaston owns an office tower. His immovable is fully leased. He wants to retain your services to put it up for sale. You have obtained all the commercial leases currently in effect for the building, which are not published in the land register. You would like to highlight the immovable’s profitability by indicating that it is fully leased.
In fact, you also know that:
A commercial lease is binding on a new purchaser whether or not it is published in the land register because it is the law between the parties.
A commercial lease may be terminated at the sole request of one of the parties provided notice is given respecting the rent payment frequency.
A commercial lease that is not published in the land register is binding on the new purchaser who then secures the immovable’s profitability.
A commercial lease that is not published in the land register may be terminated by the new purchaser under certain conditions and by following a process.
A commercial lease that is not published in the land register may be terminated by the new purchaser under certain conditions and by following a process.
Question 12
9893-8983 Québec inc. is looking for a tenant for an industrial immovable. This tenant will be the immovable’s sole tenant. The company’s president, Mr. Dos Santos, wants to ensure that the rent for this space covers all the immovable’s operating expenses.
What type of rent will you recommend to Mr. Dos Santos?
Net net rent
Extra net rent
Net net net rent
Net rent
Net net net rent
Question 13
Troubadour Inc., a company operating a children’s games business, wishes to sell its assets. Based on your discussions with Pascal, the company’s president, the company owns a commercial immovable in which the business is operated that is worth $350,000, while the company’s other assets, including inventory, furniture, goodwill, identification and accounts receivable, have a value of $125,000. As a commercial real estate broker, can you sign a brokerage contract to sell the company’s assets?
No, you can only sign a brokerage contract for the sale of the immovable. The sale of the business is the exclusive right of a lawyer.
No, a company’s assets can only be sold through an accountant and a notary.
Yes, you have the exclusive right to sign such a brokerage contract for the combined sale of the business and the immovable.
Yes, but you will have to split the work with a lawyer by having you both sign the same brokerage contract; each of you will act as the intermediary for your respective area of expertise.
Yes, you have the exclusive right to sign such a brokerage contract for the combined sale of the business and the immovable.
Question 14
Best practice when you sign a brokerage contract for the sale of an immovable (BCG) involving the combined sale of an immovable and a company is to indicate the sale price of the immovable in the BCG and attach an Appendix G to indicate the sale price of the company’s assets.
True
False
False
Question 15
The sale of a company automatically terminates all employment contracts for that company’s employees.
True
False
False
Question 16
Your client is a lessor of a commercial immovable located on a large thoroughfare. The immovable is already 90% leased. Your client is looking for a tenant for a small space on the ground floor. Because its tenants provide professional services, your client believes that a tenant in the restaurant industry would be ideal for offering a complementary service to its existing tenants. Your client is prepared to rent to a company that is starting in the field but wants to ensure that the tenant undertakes to be open at least during the normal business hours of the other tenants, that is to say from Monday to Friday between 9:00 a.m. and 5:00 p.m., and that the tenant undertakes to remain open even if business is slow. Moreover, for greater impact, the lessor wants to be able to claim $500 a day in the event of a violation.
Write the clause that you will include in the brokerage contract for a commercial lease (BCC) and that must be included in the promise to lease.
Clause – Business Hours and Operation
The lessee must operate the business from Monday to Friday, 9 a.m. to 5 p.m. continuously. Failure to do so, except in cases of force majeure or written consent from the lessor, will result in liquidated damages of $500 per day of non-compliance. This clause must appear in the Promise to Lease and the final lease.
Clause – Heures d’exploitation
Le locataire doit exploiter son entreprise du lundi au vendredi, de 9 h à 17 h.
Tout manquement, sauf force majeure ou autorisation écrite du locateur, entraînera des dommages-intérêts liquidés de 500 $ par jour.
Cette clause doit figurer dans la promesse de location et le bail.
Question 17
Normand is the sole shareholder and director of Délices des glaces inc. This company owns a small commercial immovable in which a dairy bar is operated, of which the company is also the owner (we are here talking about equipment, inventories and other assets required to run the business). Normand wants to sign a brokerage contract with you for the sale of the business, including the immovable. Based on the data you have, the immovable is worth twice as much as the other assets. Normand informs you that he is also open to transferring the business itself. He would therefore also like to sign a brokerage contract with you for the sale of his company’s shares..
What will you tell Normand regarding these two potential brokerage contracts in relation to your scope of work as a commercial real estate broker?
You can sign a brokerage contract for the sale of the immovable and the business assets, but you cannot sign a brokerage contract for the sale of the company’s shares, since that activity is outside your scope of practice as a real estate broker.
Question 18 *****
9778-8778 Québec Inc. owns a 12,000-square-foot commercial building. A 5,000-square-foot commercial space is vacant there, so Yvon, the company’s president, wants to sign a brokerage contract for a commercial lease (BCC) with you. Yvon informs you that he wishes to obtain a basic rent of $5 per square foot. Yvon also wants the tenant to pay their share of property taxes, which are $15,000 annually, and property and casualty insurance, which is $9,000 annually.
What is the additional rent amount that you will indicate in section 4.2 of the BCC? Please show your calculation.
**Clause 4.2 – Additional Rent (Completed)
4.2 ADDITIONAL RENT – The additional rent is estimated, for the first year, at ten thousand dollars dollars
and includes:
Property taxes.
This amount shall be adjusted at the end of each year for the term of the lease.
For the first year, the additional rent is estimated at ten thousand dollars ($10,000) and includes the tenant’s proportionate share of property taxes and property and casualty insurance.
Step-by-step (no fluff)
Determine tenant’s share of the building
Tenant space = 5,000 ft²
Total building = 12,000 ft²
5,000 ÷ 12,000 = 0.4167 (41.67%)
Add up the expenses included in additional rent
Property taxes = $15,000
Property & casualty insurance = $9,000
15,000 + 9,000 = 24,000
Pro-rate the expenses
0.4167 × 24,000 = 10,000
Final Answer (Clause 4.2)
The additional rent is estimated, for the first year, at ten thousand dollars ($10,000)
Includes property taxes and property and casualty insurance
Adjusted at the end of each year for the term of the lease
Question 19
You represent Toilettage Animazoo inc., a company specializing in dog grooming. This company is looking for a commercial space to rent. You have found the perfect space, which is offered for rent for an initial period of 5 years, but the lessor is prepared to rent the space for up to 10 years. Given that your client has just gone into business, it is wary about renting a space for 10 years.
What clause should you recommend that your client include in its promise to lease and why?
“exam reflex” version (optional card)
Option to renew: protects a new business by avoiding a long initial commitment while keeping the right to stay longer.
Clause to include in the Promise to Lease (PLC):
Option to Renew
The lessee shall have the option to renew the lease for an additional term of five (5) years under the same conditions, except for the rent, which shall be renegotiated between the parties at the time of renewal. The lessee must give written notice to the lessor of its intention to exercise this option at least six (6) monthsprior to the expiry of the initial term.
Question 20
You are a commercial real estate broker. You are preparing a brokerage contract with Jean-Claude, who wants to sell his commercial immovable and a business he operates there. He is seeking five hundred thousand dollars ($500,000) for the immovable and fifty thousand dollars ($50,000) for the business.
What price will you enter in clause 4 of the brokerage contract? (N.B. Assume that you can add appendices to your brokerage contract)
**4. PRICE AND TERMS OF SALE (PLUS TAXES, IF APPLICABLE)
4.1 The asking sale price is: dollars
($ ).
4.2 The IMMOVABLE ☐ is not OR ☐ is subject to the Goods and Services Tax and the Québec Sales Tax. Consequently, any tax that may be imposed as a result of the sale and to be collected by the SELLER, under applicable tax laws shall, upon the signing of the deed of sale, be remitted by the buyer to the SELLER for this purpose.
The SELLER shall inform the AGENCY or the BROKER without delay of the proportion in which the IMMOVABLE is subject to the Goods and Services Tax and the Québec Sales Tax.
4.1 the asking sale price is : five hundred fifty thousand dollars ($550,000)
4.2 check box : is subject to the goods and services and Quebec Sales tax.
