Exam (elaborations)
Commercial Real Estate Exam Questions And Accurate Answers (A+)
- Course
- Institution
Commercial Real Estate Exam Questions And Accurate Answers (A+)...
[Show more]
Content preview
Commercial Real Estate Exam Questions AndAccurate Answers (A+)
What is a Letter of Intent? - Answer Letters of Intent are not legally binding like a
contract to purchase. Instead, they spell out the general guidelines of your intent to
purchase their property. Letters of Intent are standard in the purchase of commercial
property where contracts are not standardized like residential real estate. They allow
you to communicate the most critical features of your offer and not be charged for a
contact before you know if the Seller will ultimately accept your offer.
What does a Letter of Intent contain? - Answer o Financing
o Closing date
o Due diligence period
o Earnest money deposit
o Broker fees
o Period of acceptance
o Signatures
o Conditions
What are the Advantages of a LOI? - Answer Getting deal points nailed down before you
spend the time / money in drafting purchase / sale agreement.
What are the Disadvantages of a LOI? - Answer You may create a duty to negotiate. May
have a no shop clause.
What is a No shop agreement? - Answer A clause in an agreement between a seller and
a potential buyer that bars the seller from soliciting a purchase proposal from any other
party. This is binding.
,What is a broker? -Answer a person who acts as intermediary between sellers and
buyers of real estate/real property and attempts to locate: a) sellers who desire to sell b)
buyers who desire to buy.
What are the types of brokers? - Answer Most brokers insist on "exclusive agency." It
entitles the broker to a commission if he or any other broker sells the property, but not if
the property is sold through the efforts of the owner
Broker's commission - Answer Earned by closing of the deal.
Representations / warranties of the seller - Answer Marketable title and to provide any
information required of buyer.
What is marketable title? - Answer titles are evidences of ownership. Transferring real
estate-land and whatever is attached to it-means transferring its title. A marketable title
is one that can be transferred to a new owner without the likelihood that claims will be
made on it by another party.
Marketability of title is dealt with in the contract for sale. Unless a contract for sale
provides otherwise, there is an implied provision that the seller has a good or
marketable title, or at least will pass such title to the buyer.
What is the most important document of the transaction? - Answer Purchase Agreement
What is a Purchase Agreement - Answer A purchase agreement is a form of a legal
document that details the various conditions and terms related to the sale of goods. It
creates, thereby, a legally binding contract between buyer and seller.
What about buying an interest in LLC that owns a property? - Answer Advantages-
• Seller has valuable franchise / service Ks and if buyer buys membership interest in LLC
it would retain all those as Ks as well i.e. good will.
• Seller may want to retain an interest in the property. Purchaser will just buy a
membership interest, not all of it, in the LLC.
, Disadvantages-
• LLC may have bad stuff too. Maybe its no good will, debt, or other issues.
Terms of Purchase Agreement - Answer • Parties
• Legal description
• Purchase price
• Down payment.
• Inspection period
• Closing adjustments
• Taxes, insurances.
• Conditions
• Certificate of members of LLCo standard reps and warranties.
o These are heavily negotiated.
• Closing documents
• Default
• Title commitments
Legal Description-Answer This may also have to describe the type of land. For instance,
is it a wetland? This may reduce the purchase price base on the amount of wetland.
Purchase Price - Answer Usually has downpayment which is put into an escrow account
where a third party holds it until either transaction fails or is consummated.
Inspection Period - Response Buyer wants to be sure it can use the property for the
intended purpose. Takes a long time. Need zoning, permits, etc. Purchaser wants a long
period of time to conduct inspections.
60 days customary, but the purchaser wants an increased good faith deposit to extend
period of time for inspection.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Easton. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79202 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now