📝 PCRE · Documents, Offers, Negotiation and Closing

1. In a commercial offer to lease for a new retail unit, which schedule usually describes who will build the demising walls, washrooms and storefront before the tenant opens?

1. The site plan that shows where the premises sit in the centre.
2. The schedule of landlord's work and tenant's work for the unit.
3. The rules and regulations for using the centre's common areas.
4. The legal description of the land on which the centre stands.

In a commercial offer to lease, the schedule of landlord's work and tenant's work allocates each improvement, such as demising walls, washrooms and storefront, to the party who builds or pays for it before the tenant opens. A site plan shows where the premises sit in the property, the rules and regulations govern the use of the common areas, and the legal description identifies the land; none of them allocates construction work. (PCRE blueprint 5.1.1.1)

2. In commercial practice, what does a fee agreement usually record?

1. The rent, term and renewal rights that a landlord and a tenant have negotiated for the premises.
2. The reports a buyer must receive before the buyer can waive its conditions in an accepted offer.
3. The price a buyer will pay for a business, split between the land, the building and the equipment.
4. The amount or method of calculating the brokerage's remuneration and when it becomes payable.

(Real Estate Act Rules current as of July 17, 2023) A fee agreement sets out what the brokerage will be paid, how that amount is calculated and when it becomes payable, which matches the remuneration term that Rule 43(2) of the Real Estate Act Rules expects in a written service agreement. Rent, term and renewal rights belong in the offer to lease or lease. The allocation of a purchase price is a feature of the purchase contract, and the reports a buyer needs are conditions in the offer. (PCRE blueprint 5.1.1.5 and 5.1.1.8)

3. A landlord's licensee is reviewing the balance sheet included in a prospective tenant's financial statements. What does a balance sheet show?

1. The business's revenue, expenses and net income over a period of time.
2. The cash that the business received and paid out during a period.
3. The business's record of paying its suppliers, from a credit report.
4. The business's assets, liabilities and equity as of a specific date.

A balance sheet is a snapshot of what the business owns (assets), what it owes (liabilities) and the owners' equity at a specific date. Revenue, expenses and net income over a period appear in the income statement, cash received and paid out appears in the cash flow statement, and a payment record comes from a credit report rather than from the financial statements. The licensee uses the statements to explain the tenant's covenant and leaves detailed analysis to the client's accountant. (PCRE blueprint 5.2.3.3)

4. Under Rule 43(1.1) of the Real Estate Act Rules, what is expected of a licensee who establishes a client relationship in a commercial trade?

1. The licensee should enter into a written service agreement with the prospective client.
2. The licensee must use a service agreement form prescribed by RECA for commercial trades.
3. The licensee needs a service agreement when the client is a corporation, not an individual.
4. The licensee must obtain a signed service agreement before the first conversation with the client.

(Real Estate Act Rules current as of July 17, 2023) Rule 43(1.1) says that a licensee who establishes a client relationship when trading in commercial real estate should enter into a written service agreement with the prospective client. The word must belongs to Rule 43(1), which covers residential trading, property management, mortgages and condominium management services, and nothing in Rule 43 requires a signature before the first conversation. Rule 43(2) lists what a written service agreement must contain but prescribes no RECA form, and Rule 43 does not turn on whether the client is a corporation.

5. A landlord signs a written service agreement with a commercial brokerage to lease space in its strip centre. Under Rule 43(2) of the Real Estate Act Rules, which term must the agreement contain?

1. A guaranteed minimum rent for the leased premises.
2. Provisions for the termination of the agreement.
3. A copy of the landlord's credit history report.
4. A refund of the fee if no tenant signs a lease.

(Real Estate Act Rules current as of July 17, 2023) Rule 43(2)(b)(ix) requires provisions for the termination of the agreement, along with the parties, the duration, the services, the responsibilities of each party, the use of personal or confidential information and the remuneration. Rule 43(2) applies to every written service agreement, so it governs this commercial agreement even though Rule 43(1.1) says a commercial licensee should use one. A guaranteed minimum rent and the landlord's credit history are not listed terms, and a refund of the fee when no lease is signed is a point the parties may negotiate, not a term that Rule 43(2) requires.

6. A brokerage wants to sue a former landlord client to recover a leasing commission. Under section 22 of the Real Estate Act, what must exist for the action to be brought?

1. An oral agreement on the commission that was confirmed by two witnesses who heard the terms.
2. A service agreement, or a note or memorandum of it, in writing signed by the party to be charged.
3. A service agreement signed by the brokerage's broker alone and then filed with the Registrar.
4. A written statement from the tenant confirming that the brokerage negotiated the lease with the landlord.

(Real Estate Act current as of September 1, 2026) Section 22(a) of the Real Estate Act bars an action for commission unless the service agreement, or a note or memorandum of it, is in writing and signed by the party to be charged or that party's authorized agent. For a lease, section 22(b) also expects the lease to be signed by all necessary parties and delivered. Witnesses to an oral deal do not satisfy the writing requirement, the brokerage's own signature alone does not bind the client, and the tenant's statement does not replace the client's signature.

7. Under section 354 of the Municipal Government Act, how does a council set the tax rates for the different kinds of property in its municipality?

1. It sets a rate for each assessment class or sub-class, and the rates may differ between classes.
2. The Minister of Municipal Affairs sets the non-residential rate for the municipality each year.
3. It sets one rate that applies to residential and non-residential property alike in the municipality.
4. It may change a rate by resolution after the tax notices have gone out to the taxpayers.

(MGA current as of September 1, 2026) Section 354(2) and (3) of the Municipal Government Act require the property tax bylaw to set a tax rate for each assessment class or sub-class and allow the rate to be different for each. A single rate for all classes is not required, the council rather than the Minister sets the rates in its bylaw, and section 354(4) bars amending the rates after tax notices are sent unless an error or omission is being corrected.

8. Leila's brokerage is engaged by an owner to sell a strip centre. Under section 24 of the Real Estate Act, which fee arrangement must the brokerage NOT request or enter into?

1. A fee equal to the amount by which the sale price exceeds the listed price.
2. A flat fee that is agreed in writing and becomes payable when the sale completes.
3. A fee that is shared with a cooperating brokerage under a written agreement.
4. A fee calculated as a percentage of the final sale price of the strip centre.

(Real Estate Act current as of September 1, 2026) Section 24(1) of the Real Estate Act forbids a real estate broker, which includes a brokerage that trades in real estate for others for consideration, to request, enter into or retain a commission or other remuneration based on the difference between the listed price and the actual sale price. A percentage of the sale price, a flat fee agreed in writing and a fee shared with a cooperating brokerage are ordinary methods that the section does not prohibit.

9. For the purposes of this question, a commercial building has an assessment of $3,200,000 and the municipality's non-residential tax rate is 1.25% (0.0125). Using the assessment and the tax rate, what is the annual property tax on the building?

1. The tax is $40,000 for the year.
2. The tax is $3,333 for the year.
3. The tax is $400,000 for the year.
4. The tax is $3,240,000 for the year.

(MGA current as of September 1, 2026) Under section 356 of the Municipal Government Act, the tax on a property is the assessment multiplied by the tax rate, so $3,200,000 x 0.0125 = $40,000. The $3,333 result wrongly divides the correct tax by 12, the $400,000 result moves the decimal point one place, and the $3,240,000 result adds the tax to the assessment instead of calculating it.

10. For the purposes of this question, the annual property tax on a commercial building is $36,500, prorated on a 365-day year, and the seller has paid the full year's tax. Under the purchase contract, the seller bears the tax up to and including day 90 of the year and the buyer bears it from day 91 to day 365. What adjustment does the buyer owe the seller at closing?

1. The buyer owes the seller $27,500.
2. The buyer owes the seller $27,400.
3. The buyer owes the seller $9,000.
4. The buyer owes the seller $36,500.

The daily tax is $36,500 / 365 = $100. The seller prepaid the whole year but bears only days 1 to 90, so the buyer reimburses the days it bears, day 91 to day 365 inclusive: 365 - 90 = 275 days x $100 = $27,500. The $9,000 result is the seller's own 90-day share, which the seller does not recover; the $27,400 result counts the buyer's days as 365 - 91 = 274 and leaves out day 91; the $36,500 result reimburses the full year, including the seller's share. (figures posed for this question) (PCRE blueprint 5.2.1.1)

11. A landlord and a tenant sign a letter of intent stating that its rent and term provisions are not binding, but that its confidentiality clause is binding on both parties. Before any lease is signed, the tenant gives the landlord's financial information to a competitor. What is the result?

1. The landlord may enforce the rent and term provisions, since the tenant's breach made them binding.
2. Nothing is enforceable, because a letter of intent cannot contain a clause that binds the parties.
3. The whole letter becomes a binding lease once either party discloses information about its terms.
4. The landlord may enforce the confidentiality clause, while rent and term remain non-binding.

A letter of intent can mix non-binding business terms with clauses that are expressly binding, and here the confidentiality clause says it binds both parties. The rent and term provisions stay non-binding until a lease or an accepted offer to lease is signed, and one party's breach of a binding clause does not convert the rest into a lease. A licensee explains the structure but sends questions about legal remedies to a lawyer. (PCRE blueprint 5.1.1.7)

12. Tomas, a licensee, receives a signed written offer to purchase a warehouse from a prospective buyer. What does Rule 61 of the Real Estate Act Rules require him to do?

1. Deliver a true copy to the seller after the buyer's deposit has cleared the trust account.
2. Give the seller a summary of the main terms and keep the signed original in the brokerage file.
3. Hold the offer until the brokerage's broker decides whether the seller should see its terms.
4. Give the buyer a true copy and deliver a true copy to the other parties in a timely manner.

(Real Estate Act Rules current as of July 17, 2023) Rule 61 requires a licensee who receives an offer in writing to provide the party with a true copy and to deliver a true copy to the other parties, in a timely manner. Waiting for a deposit to clear, passing on a summary instead of a true copy, or holding the offer for a decision by the broker all conflict with that duty to deliver true copies promptly.

13. An accepted offer to purchase a commercial building has a condition, for the buyer's sole benefit, that a Phase I environmental site assessment be satisfactory to the buyer. The report arrives and the buyer is satisfied before the condition date. What should the buyer's licensee do?

1. Prepare a written notice that the condition is satisfied or waived and deliver it as the contract requires.
2. Wait for the seller's licensee to ask about the report, because the condition lapses on its own at the end of the date.
3. Tell the buyer that no notice is needed once the report is received, since the buyer alone holds the condition.
4. Have the buyer submit a new offer without the condition so that the accepted contract is replaced.

A condition for one party's sole benefit is satisfied or waived by that party through a written notice delivered in the manner and by the date the contract sets out. Waiting for a request risks missing the date, assuming that no notice is needed leaves the other party uninformed, and a new offer is not needed because the existing contract can be fulfilled by a notice. (PCRE blueprint 5.1.4)

14. Marcus, a tenant's licensee, is asked by his client whether a personal guarantee in the landlord's offer to lease could make the client personally liable for rent after the lease ends. What should Marcus do?

1. Explain what the clause says and recommend that the client get a lawyer's opinion on its effect.
2. Tell the client the guarantee is standard and ends automatically when the first lease year is over.
3. Give a firm opinion on the guarantee's legal effect, because the licensee completed the form.
4. Strike the guarantee from the draft so that the client does not face any personal exposure.

A licensee may point out a clause and describe what it says, but a licensee does not give legal advice on its effect, so the client is directed to a lawyer. Calling the clause standard or telling the client when it ends is an unqualified legal opinion, and completing a form does not make the licensee a lawyer. Striking the clause without the client's instruction would also put the licensee's judgment in place of the client's. (PCRE blueprint 5.1.3)