Humber/Ontario Real Estate Course 4 Exam Practice

What should the purchase price in the agreement of purchase and sale include?

1. Cannot be based on total acreage in farms.

2. Must be based on total working hectares in the case of a farm.

3. A deposit but no additional payments.

4. Cannot include partial payments or incentives.

5. Only the net price after deposit deductions.

6. Deposit

The correct answer is: Cannot be based on total acreage in farms.

The correct understanding of what the purchase price in the agreement of purchase and sale should include focuses on the essential components that make up the price. The purchase price typically reflects the total amount that the buyer agrees to pay for the property. In the context of real estate transactions, this amount should include specific aspects such as the main purchase price itself, any applicable deposits, and considerations for the property's value. When discussing farms, the purchase price generally takes into account factors like total working hectares, which provide a more accurate valuation than total acreage, since not all land may be usable for farming purposes. Therefore, a well-structured purchase price in the case of farm transactions would ideally be reflective of productive land, rather than simply the total area, thus making the consideration of total working hectares critical. Including a deposit is a standard practice, as it demonstrates the buyer's commitment, but the overall purchase price encompasses more than just the deposit; it usually includes all contractual commitments and payments associated with the sale. Therefore, emphasizing the requirement for the purchase price to accurately reflect these factors is key. Thus, a comprehensive view into how the purchase price is formulated should always consider these elements for clarity and fairness in real estate dealings.