Humber/Ontario Real Estate Course 4 Exam Practice

What implication does the phrase included in regarding HST have in an agreement of purchase and sale?

1. Assigns the HST payment risk to the seller

2. Ends the agreement if the property is subject to HST

3. Indicates that HST is not applicable to the property

4. Places the HST payment risk on the buyer

5. Prevents either party from being liable for HST

6. Requires mutual consent between buyer and seller regarding HST

The correct answer is: Assigns the HST payment risk to the seller

The phrase "included in" regarding the Harmonized Sales Tax (HST) in an agreement of purchase and sale signifies that the seller assumes the responsibility for any HST obligations related to the transaction. This implies that if the property is subject to HST, the seller is accountable for ensuring that it is collected and paid, relieving the buyer from that specific risk. This could be particularly significant in real estate transactions where the applicability or exemption of HST may impact the overall cost of purchasing a property. By stipulating that HST is included, it clarifies the financial responsibilities associated with the tax, allowing the buyer to focus on other aspects of the transaction without worrying about unexpected HST liabilities. In this context, other options do not align with the meaning of "included in." The choice that indicates the end of an agreement if the property is subject to HST misrepresents the relationship between HST applicability and the continuance of the agreement. Similarly, options that suggest non-applicability of HST or mutual consent for payment misunderstand the implications of the phrase. Instead, recognizing that the seller retains the HST payment risk is the accurate interpretation.