Humber/Ontario Real Estate Course 4 Exam Practice

If a seller fills a 195-gallon oil tank a day before closing, how is the credit to the seller calculated?

1. Per gallon price for remaining oil

2. Cost difference from purchase to filling date

3. Pro-rated daily fuel usage

4. Total fuel cost filled minus previously existing oil

5. Average fuel consumption in a week

6. Manufacturer suggested fuel fill rate

The correct answer is: Total fuel cost filled minus previously existing oil

The correct approach to calculating the credit to the seller when they fill a 195-gallon oil tank a day before closing involves subtracting the amount of oil that was already in the tank from the total amount of oil filled. This means that the credit is based on the total fuel cost of the newly filled oil minus the value of the oil that was already in the tank prior to filling. This method ensures that the buyer only compensates the seller for the fuel that is actually transferred to them with the property. It reflects a fair transaction because it accounts for both the cost of the new oil and the value of existing oil, preventing the seller from receiving credit for oil that the buyer was never meant to acquire. Other options do not accurately capture the essence of how credits should be calculated in this scenario and may lead to unfair or inaccurate outcomes. For example, simply taking the per-gallon price or average consumption does not account for the specific circumstances of the fill and prior fuel levels.