Humber/Ontario Real Estate Course 4 Exam Practice

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Prepare for the Humber/Ontario Real Estate Course 4 Exam. Test your knowledge with quizzes and gain valuable insights into real estate concepts, regulations, and practices essential for your success in the industry.

Practice this question and more.

What should be included in a properly drafted "pay the balance" clause for real estate transactions?

The balance amount in numbers and adjusting for contingencies.
The payment terms specified in simple language.
The phrase "subject to adjustments" for any balance payments.
The amount stated both in words and numbers.
The details of the financial transactions if over $100,000.
The closing date clearly specified with financial specifics.

The correct answer is: The phrase "subject to adjustments" for any balance payments.

Including the phrase "subject to adjustments" in a properly drafted "pay the balance" clause is essential because real estate transactions often involve various financial adjustments that may arise before the deal is finalized. These adjustments can include factors like property taxes, utilities, or other prorated expenses that could affect the final balance owed by the buyer at closing. By incorporating this phrase, it clarifies to both parties that the balance amount indicated may change and will be finalized based on these adjustments. This helps prevent misunderstandings regarding the amount payable at closing and ensures that both the buyer and seller are aware of the possibility of modifications to the total balance due.