Humber/Ontario Real Estate Course 2 Exam Practice

What is a necessary step for a buyer interested in an equity co-op?

1. Board of directors' approval before the sale can be completed.

2. Sign only an agreement of purchase and sale.

3. Liability for mortgage limited to individual unit.

4. Paying property taxes separate from monthly charges.

5. Obtaining a financial assurance letter.

6. Board must provide a sale confirmation letter.

The correct answer is: Board of directors' approval before the sale can be completed.

For a buyer interested in an equity co-op, a necessary step is to obtain the board of directors' approval before the sale can be completed. In an equity co-op structure, the ownership is in the form of shares in the cooperative corporation, and the board of directors plays a crucial role in managing the affairs of the cooperative, including approving new buyers. This approval process helps the cooperative ensure that the new buyer is suitable for the cooperative community and meets any specific requirements or criteria set by the board. Option B is incorrect because in addition to signing an agreement of purchase and sale, the buyer would also need to obtain approval from the board of directors. Option C is incorrect because in an equity co-op, the liability for the mortgage is often shared collectively by all the members of the cooperative. Option D is incorrect because property taxes are usually included in the monthly charges paid by the co-op members. Option E is incorrect because while financial assurance may be required by some cooperatives, obtaining approval from the board of directors is typically a primary step in the process. Option F is incorrect because while a sale confirmation letter may be part of the process, obtaining the board of directors' approval is a more essential step for a buyer in an equity co-op.