Humber/Ontario Real Estate Course 2 Exam Practice

Concerning the use of a home for producing illegal substances, what can the agreement of purchase and sale state?

1. A clause can be included that, if the house has been used for illegal production, the seller makes no representations about repairs and is selling as is.

2. A pre-printed clause stating that the seller represents that the home has not been used for illegal substance production while they occupied it.

3. A statement that the property has or has not been used for such purposes, with initials of the buyer and seller as applicable.

4. A written disclosure regarding present use in the Title Search clause if the house was used for illegal production.

The correct answer is: A clause can be included that, if the house has been used for illegal production, the seller makes no representations about repairs and is selling as is.

In this case, Option A is correct because it allows the seller to protect themselves by stating in the agreement of purchase and sale that if the house has been used for illegal production, they are selling it "as is" without making any representations about repairs. This clause helps to limit the seller's liability regarding any potential issues or damages resulting from the illegal activities that may have taken place in the property. Options B, C, and D are not as suitable. Option B involves the seller making a representation that may not be true, putting them at risk if it is later discovered that the property was used for illegal substance production. Option C may not provide sufficient protection for either party as simply initialing a statement does not carry the same weight as a clear clause. Option D mentions the Title Search clause, which is not typically the section of the agreement where this type of disclosure would be included. Therefore, Option A is the most appropriate choice in this scenario.