Humber/Ontario Real Estate Course 3 Exam Practice

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When the phrase “included in” regarding HST is utilized in a purchase agreement, what is the implication?

  1. The seller assumes any HST-related risks

  2. The buyer assumes all potential HST risks

  3. The sale indicates no HST liability from the buyer

  4. All HST payment responsibilities are on the brokerage

  5. The agreement nullifies if HST is applicable

  6. The property is exempt from HST by default

The correct answer is: The seller assumes any HST-related risks

When the phrase “included in” regarding HST is utilized in a purchase agreement, it indicates that the seller assumes any HST-related risks. This means that the seller has factored in the Harmonized Sales Tax into the overall sale price of the property, and therefore is responsible for ensuring that any HST obligations associated with the transaction are managed appropriately. By stating that HST is included, it signifies that the total amount the buyer is paying covers both the sale price of the property and any applicable taxes, which alleviates the buyer from directly dealing with HST liabilities that arise from the transaction. In this context, the agreement clarifies that the buyer does not need to worry about potential unexpected HST costs that could arise after the transaction. This assurance is critical in real estate transactions as it provides clarity on financial obligations related to the property being sold.

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