mock 7 Flashcards by Edward Powell

Which of the following statements is TRUE?

Subject to some exemptions, a bylaw may prohibit the rental of strata lots on the condominium complex.
In an entirely residential condominium complex, a bylaw must be amended by a ½ vote of the strata corporation.
A bylaw may contravene the Strata Property Act and Regulations, but only if it has been passed unanimously be the members.
An amended bylaw becomes enforceable once it is passed by the members.

Subject to some exemptions, a bylaw may prohibit the rental of strata lots on the condominium complex.

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Ryan entered into a contract with Erin to sell his sports car. Ryan had previously crashed the car multiple times and had it rebuilt. When Erin asked about whether the car had been involved in any accidents, Ryan replied by saying that it was in excellent condition and had never been in an accident. This is an example of:

Innocent misrepresentation
Fraudulent misrepresentation
Negligent misrepresentation
Undue influence

Fraudulent misrepresentation

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Which of the following acts would engage a category a category of law that is “public law”:

Breaching a warranty in a contract
Negligence
Evading taxes
Filing for divorce.

Evading taxes

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The acts of discouraging the reduction of prices, placing upwards pressure on prices and discriminating against someone because of their low pricing policy (by means of threat, promise or agreement) are offences under the:

Mortgage Broker Act
Competition Act
Business Practices and Consumer Protection Act
Price Maintenance Act.

Competition Act

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The buyer of a property has arranged for a $275,000 mortgage loan at 8% per annum, compounded semi-annually. Payments are to be made monthly commencing July 1. Full funds are advanced May 17. Calculate the size of the interest adjustment payment due on June 1. Assume that it is NOT a leap year.

$825.45
$852.14
$887.93
$885.06

$887.93

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Which of the following statements regarding the stress test borrower qualification rule for uninsured mortgages is FALSE?

The mortgage qualifying rate is based on the greater of the Bank of Canada’s 5-year benchmark rate and 2% above the mortgage‘s negotiated contract rate.
The Financial Institutions Commission of BC established the stress test requirements for all new mortgages from federally charted institutions.
The stress test mortgage qualifying rate is also known as the benchmark interest rate.
The stress test qualification rules only apply to mortgages from federally charted institutions.

The Financial Institutions Commission of BC established the stress test requirements for all new mortgages from federally charted institutions.

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Your friend took out an interest only loan at the bank. She borrowed $178,000 at an interest rate of 4.75% per annum, compounded semi-annually. She makes quarterly payments and the loan has a term of 5 years. What is the amount of her 13th quarterly interest only payment?

$2,825.09
$2,101.35
$697.72
$10,044.17

$2,101.35

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Which of the following is NOT a remedy for private nuisance?

A notice of civil claim
Injunctive relief
Abatement
Damages

A notice of civil claim

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Alex, Ray and Lisa each own a residential lot. Alex owns a lot at the bottom of the hill, Ray owns the lot directly above him and Lisa owns the lot directly above Ray. Lisa has valid restrictive covenant with both Alex and Ray preventing them from building homes above two stories tall. Eventually, Alex sells his lot to Mike, who builds a three story home. At the same time, Lisa sells her lot to Don. Who may enforce the restrictive covenant against Mike.

Only Don
Only Lisa
Only Don or Lisa
Only Lisa or Ray

Only Don

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Changes in mortgage interest rates tend to lag behind changes in bond yields in both upward and downward movements. One reason for this “stickiness” is:

the short-term nature of a mortgage loan contract.
Mortgages are highly liquid investments.
The wide use of advance commitments for a rate of interest before a loan is advanced.
Mortgage rates do not change during fluctuations in the national economy.

The wide use of advance commitments for a rate of interest before a loan is advanced.

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A mortgage for $200,000 is written at 6% per annum, compounded semi-annually. The mortgage calls for

monthly payments rounded up to the next higher dollar, a 5-year term, and a 20-year amortization. The mortgage contract permits the borrower to prepay the full amount of the loan at any time subject to the payment of a three months’ interest penalty. At the time of prepayment, the current comparable interest rate is 4% per annum, compounded semi-annually.

If the borrower wishes to prepay this loan at the end of the first year (with the 12th payment), calculate the

amount of the three months’ interest penalty.

$969.01
$15,504.15
$5,687.99
$2,883.28

$2,883.28

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Which of the following is NOT an appraisal approach to value?

The income approach
The redevelopment approach
The direct comparison approach
The cost approach

The redevelopment approach

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Which of the following statements comparing condominiums and cooperatives is FALSE?

A cooperative’s board of directors will normally be required to approve a prospective buyer whereas generally, a strata lot owner may sell his or her lot to whoever he or she wishes.
Both stratas and cooperatives are created by depositing an incorporation agreement to the Land title office.
The owner of strata lot holds a fee simple interest while the owner in a cooperative possess a share in a company or cooperative association.
Where an existing rental building is being converted to either a strata or a non-profit cooperative, the existing tenants are covered by the protections afforded by the B.C. Residential Tenancy Act.

Both stratas and cooperatives are created by depositing an incorporation agreement to the Land title office.

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You are thinking of purchasing undeveloped land to use for development purposes. As a sophisticated investor, you will determine the value of undeveloped land by:

Applying the appropriate replacement reserves to the selling price
Consulting with the owner of the undeveloped land as to his estimate of the land’s value.
By calculating the net operating income the property produces.
Determining the value of the improved land and subtracting the development costs.

Determining the value of the improved land and subtracting the development costs.

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Which of the following criteria are used be negotiation experts in determining the effectiveness of negotiations?

Efficiency, preservation of the relationship, a zero-sum game
Distributive results, preservation of the relationship, minimal wasted resources
False authority, efficiency, a zero-sum game
Efficiency, satisfaction of both parties, minimal wasted resources

Efficiency, satisfaction of both parties, minimal wasted resources

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In appraisal, physical wear and tear that can be corrected economically is best known as:

functional incurable depreciation
physical incurable depreciation
functional curable depreciation
physical curable depreciation

physical curable depreciation

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Your friend mentioned to you that the value of his house was $655,000 While you understand what he means , you know that the true subject of an appraisal is :

known as the value to the owner because it is subjective in nature
a combined value that considers personal property , public property and private simulations
the market value of the physical property
the value of the legal rights of the ownership vested in a particular piece of real estate.

the value of the legal rights of the ownership vested in a particular piece of real estate.

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How much should an investor be willing to pay for a property that she expects to sell for $525,000 in six years if she desires a yield of J2= 5%?

$391,763.08
$512,195.12
$390,366.84
$452,705.85

$390,366.84

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A potential borrower has inquired as to how large a mortgage loan she can afford with monthly payments of $550. If mortgage interest rates are currently 14% per annum, compounded monthly, with amortization period of 25 years, calculate the maximum loan allowable.

$46,857.20
$45,690.13
$45,693.67
$46,853.31

$45,690.13

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Which of the following actions does NOT facilitate the exchange process in a negotiation?

Emphasizing the underlying interests and needs of each party.
Determining both parties’ priorities.
Considering as many solutions as possible.
Focusing on, and dedication significant time to, asserting and defending the positions of each party.

Focusing on, and dedication significant time to, asserting and defending the positions of each party.

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In mortgage lending, the interest adjustment period is:

The process of paying off a loan by periodic payments of blended principal and interest.
The period of time between the date that funds are advanced and the beginning of the first payment period.
The period of time agreed to by both parties to a real estate transaction for the adjustment of property taxes, rent, and other items.
Any period of twelve consecutive months chosen be a business as its accounting period.

The period of time between the date that funds are advanced and the beginning of the first payment period.

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Which of the following statements made during a recent discussion about corporations are TRUE?

A. A corporation is subject to income tax, unlike a partnership.

B. Only shareholders are entitled to manage a corporation in accordance with the Business Corporation Act.

C. A corporation whose shares are traded on a stock exchange is referred to as a private company

D. Individuals who acquire shares in a company do not own the assess of the company

Only A and D are true
Only A, B and C are true
Only B and D are true
A, B, C or D are true

Only A and D are true

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Which of the following is a TRUE statement regarding the Code of Ethics ?

The Code stresses that a REALTOR’s highest duty of care is owed to his or her client regardless of the nature of the client’s instructions.
The Code is a document that each REALTOR may or may not choose to adopt in his or her practice.
The Code acts as an alternative to the Canadian Real Estate Association’s Standards of Business Practice.
The Code includes the Golden Rule “Do unto others as you would have them do unto you”.

The Code includes the Golden Rule “Do unto others as you would have them do unto you”.

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The term in the mortgage agreement that brings the maturity date of the loan forward in the borrower defaults, so that the outstanding balance is immediately due and payable in 3 months known as:

Acceleration clause
Time clause
Omnibus clause
Sales Clause

Acceleration clause

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Consider the following four properties: A. a concrete plant in Squamish B. a small single-family house in the central business district of Langley C. a residential condominium in Richmond D. a multi-unit apartment complex in Burnaby Which appraisal method would be most suitable to appraise each of these properties? A) market comparison; B) income; C) cost; D) residual A) cost; B) market comparison; C) residual; D) income A) income; B) residual; C) market comparison; D) cost A) cost; B) residual; C) market comparison; D) income

A) cost; B) residual; C) market comparison; D) income

Which of the following statements regarding the stress test borrower qualification rule for uninsured mortgage is TRUE? The mortgage qualifying rate is based on the greater of the Bank of Canada’s 5-year benchmark rate and 2% above the mortgage’s negotiated contract rate The stress test qualification rules only apply to mortgages from credit unions Application of the stress test borrower qualification rule results in the borrower qualifying for a larger mortgage The Financial Institutions Commissions of BC established the stress test requirements for all new mortgages from federally chartered institutions.

The mortgage qualifying rate is based on the greater of the Bank of Canada’s 5-year benchmark rate and 2% above the mortgage’s negotiated contract rate

Which of the following statements regarding property appraisal is FALSE? The courts provide some guidelines as to an appraiser’s legal responsibilities, which are outlined in the law of contract and the law of tort. A licensed real estate agent can give an appraisal of real property. A large over valuation of property by an appraiser, by itself, always establishes liability on the part of the appraiser. The courts have recognized that there is a reasonable margin of error when calculating damages resulting from a negligent appraisal.

A large over valuation of property by an appraiser, by itself, always establishes liability on the part of the appraiser.

Three years ago your client bought a house at which time she arranged a mortgage in the amount of $320,000. The loan was written at a rate of 5.75% per annum, compounded quarterly, with 5 year term, and 25 year amortization period and monthly payments. Your client has just received an offer to buy her house which provides $55,000 cash and assumption of the existing financing for the remainder of the term of current interest landing rates for 2 year term mortgages are 7.5% per annum, compounded quarterly, what is the market value of the offer? $352,990.78 $347,047.13 $346,681.34 $292,047.13

$346,681.34

Your client plans to pay $400,000 for a vacant lot, which he feels will sell in the end of 4 years for $545,000. Assuming that these are the only cash flows for this investment, what yield expressed as a nominal rate with monthly compounding will your client earn? 11. 660105% 7. 884476% 7. 758001% 8. 039889%

7.758001%

A mortgage loan with a face value of $475,000 is arranged through a mortgage broker. A commission of $7,250, appraisal fees of $425, as well as survey and legal fees of $600 will be deducted from the face value before the funds are advanced to the borrower. Calculate the cost of funds advanced to the borrower, expressed as an effective annual rate, if the loan is written at 5% per annum, compounded semi-annually, with monthly payments over a 25 -year amortization and a 5 year term. 5. 344991% 5. 368395% 5. 502478% 6. 954952%

5.502478%

By extending the amortization period of a loan to 30 years: Results in large mortgage payments for borrowers Means that borrowers will make payments every two weeks in order to reduce their interest cost. Results in less interest paid by the borrower. Means the repayment of principal is spread over a greater number of payments, making each payment smaller.

Means the repayment of principal is spread over a greater number of payments, making each payment smaller.

Amanda has decided that she wants to convert her apartment building to a condominium development. Amanda knows that the conversion must be approved by the municipal council. In making its decision, which of the following criteria in the municipal council required, by statue, to consider? A. Whether Amanda has complied with the disclosure statement requirements set out in the Real Estate Service Act B. The priority of rental accommodations over privately owned housing in the area. C. The life expectancy of the building D. Public option on the location of the building Only B, C and D Only B and C Only A, B and C All of the above

Only B and C

An offer of $625,000 is accepted, comprised of a cash down payment of $150,000 and a vendor supplied mortgage of $475,000 at J2=7.5%. The loan has an amortization period of 20 years, a term of 4 years and calls for monthly payments rounded up to the next higher dollar. Market rates for an equivalent mortgages are currently J2=8.5%. The market value of the offer is: $672,614.10 $591,903.13 $576,555.07 $610,108.94

$610,108.94

A mortgage loan with a face value of $160,000 is arranged through a mortgage broker. A commission of $7,000, appraisal fees of $250, as well as survey and legal fees totaling $1,000 will be deducted from the face value before the funds are advanced to the borrower. Calculate the cost of funds advanced to the borrower, expresses as an effective annual rate, if the loan is written at 4.75% per annum, compounded semi-annually with monthly payments over 15 year amortization and a 5 year term. 6. 058320% 9. 126070% 10. 935526% 6. 229407%

6.229407%

Jason is looking to sell his downtown apartment unit, enters into a multiple listing agreement with Pam, a licensee at S. Realty. Which one of the following statements is FALSE? Jason is free to sign multiple listing agreements with a number of licensees, and the licensee that effects the sale will be entitled to the commission as stated in his or her Multiple listing agreement. Other real estate licensees may assist Pam is selling Jason’s place. If a selling agent approaches Jason with a purchase and he completes a contract of Purchase and sale without Pam’s assistance or knowledge, Jason will still be liable for a commission to Pam. A multiple listing agreement is different from the ordinary exclusive listing because the contract requires that the listing be distributed to all of the members of the real estate board.

Jason is free to sign multiple listing agreements with a number of licensees, and the licensee that effects the sale will be entitled to the commission as stated in his or her Multiple listing agreement.

The anchoring effect is best described as: A sociological theory that predicts that the longer someone occupied a property, the higher the price he or she will seek upon deciding to sell it. A psychological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number. A market force that causes the median price of a good fall when there is a declining market for that good An economic factor that decreases demand for real estate services ds die to an-increase in interest rates.

A psychological phenomenon whereby the first number quoted in a negotiation causes the rest of the negotiation to be based on that number.

Which of the following statements are TRUE? The Supreme Court of BC may exercise common law, but not equitable jurisdiction. Small Claims court in BC does not have jurisdiction for claims exceeding $35,000 An appeal by the taxpayer to reduce a tax assessment would fall within the sphere of private law. The Supreme Court of Canada is required to hear all appeals.

Small Claims court in BC does not have jurisdiction for claims exceeding $35,000

Which of the following courses of action can a successful plaintiff pursue in order to enforce a judgment? Serve written pleadings on the defendant Appeal to the BC Court of Appeal Execution File a Notice of Civil Claim

Execution

Which of the following is a generally acceptable accounting principle? Calendar Year Principle Substitution Principle Income Principle Objectivity Principle

Objectivity Principle

A mortgage was written for $60,000 at an interest rate of J2=7.5% , 20 year amortization and monthly payments. Calculate the balance owning at the end of four years, rounded to the nearest dollar. $52,791 $51,619 $53,885 $53,946

$53,885

Trespass: Involves the use of one’s own property in a way that causes unreasonable ..with another’s use and enjoyment of his or her property. Cannot be committed by a person under 19 years of age. Has been replaced by the Occupiers Liability Act. Is an intentional tort, meaning that the act if trespassing must be voluntary.

Is an intentional tort, meaning that the act if trespassing must be voluntary.

``` Your client owns a small office building and has applied for a loan at the bank. The property has an annual net operating income of $117,000 and has a lending value of $500,000. The bank uses a 1.17 debt coverage ratio and will allow a maximum loan-to-value ratio of 70%. Mortgage rates are J1= 5% for fully amortized loans and a 4 year term and annual payments. What is the maximum 4 year loan your client will be entitled to from the bank, rounded to the next higher dollar? $350,000 $322,987 $354,596 $414,877 ```

$350,000

``` An investor has decided to established a bank account in order to accumulate sufficient funds at the end of 5 years to purchase a vacant lot. If the account pays interest at 6% per annum, compounded annually, and the investor makes deposits of $15,000 at the end of each year, how much capital will she have accumulated at the end of 5 years? $104,629.78 $84,556.39 $75,773.70 $63,185.46 ```

$84,556.39

Calculate the quarterly periodic rate of interest that is equivalent to 12 % per annum, compounded quarterly. 1%Calculate the quarterly periodic rate of interest that is equivalent to 12 % per annum, compounded quarterly. 1% 3% 12.550881% 4%

An offer is released or expires when one or more of the following occurs: A. The offeror decides to revoke his or her oral offer and mails a written revocation to the offeree before acceptance. B. No time limit is specified in the offer but a reasonable time has passed without an acceptance by the offeree. C. The offeror dies or becomes insane before the offeree accepts the offer. D. An offer is revoked by the offeror and the revocation is communicated to the offeree before acceptance. All of the above Only A, B and C Only A and B Only B, C and D

Only B, C and D

Which of the following items are found in the house are chattels? A. New laminate flooring in the downstairs rooms B. An ordinary fridge in the garage C. Wood for the fireplace D. A rose bush in the front garden A and C B and D B and C C and D

B and C

Your client plans to pay for a vacant lot $500,000 which he feel will sell at the end of 5 years for $650,000. Assuming that these are the only cash flows for this investment, what is the yield expressed as a nominal rate with monthly compounding, will your client earn? Your client plans to pay for a vacant lot $500,000 which he feel will sell at the end of 5 years for $650,000. Assuming that these are the only cash flows for this investment, what is the yield expressed as a nominal rate with monthly compounding, will your client earn? 5. 25877% 7. 88447% 6. 57706% 5. 38739%

5.25877%

Which of the following is FALSE ? Both arbitration and mediation can produce non-binding resolution The rules of evidence are relaxed for arbitration and mediation The neutral 3rd party in both arbitration and mediation may impose a biding solution on the two parties. Both arbitration and mediation are less formal than the Court.

The neutral 3rd party in both arbitration and mediation may impose a biding solution on the two parties.

``` A loan of $350,000 is accepted, comprised of a cash down payment of $75,000 and a mortgage loan of $275,000 at 5%, per annum, compounded semiannually. The mortgage has an amortization of 25 years, 3 year term and calls for monthly payments rounded up to the next higher dollar. Market rates for similar mortgages are currently 7.5% per annum, compounded semi-annually. $330,090.87 $334,493.08 $331,690.44 $332,554.99 ```

$332,554.99

Which of the following is TRUE where a comparable is sold subject to vendor-supplied mortgage at an interest rate lower than the current market value? The comparable property may never be used as evidence of market value. The comparable sale price must be adjusted downward The comparable price may only be used as evidence of market value The comparable sale price must be adjusted upward.

The comparable sale price must be adjusted downward

H gave J an exclusive listing to sell her condo with an expiry date of Aug 1st. J brought A, a prospective purchaser to see the condo. A expressed an interest in purchasing the property and went home to prepare an offer. H emailed A and asked her to wait until after Aug 1st to make her offer so that H could avoid paying J the agreed upon completion. A agreed and waited until Aug 4th to submit her offer. After completion, J heard about the transaction, telephoned H, and demanded her commission. Which of the following statements is TRUE? If J can show that H and A got together and agreed to wait out the listing period in order to avoid payment of commission, she can successfully sue H for damages. J is not entitled to commission after the listing contract has expired. J may be given reasonable remuneration for her work based on the principle of Quantum meruit. H’s conduct terminated the agency relationship and therefore J has no claim for commission.

If J can show that H and A got together and agreed to wait out the listing period in order to avoid payment of commission, she can successfully sue H for damages.

The marketing mix consists of: place, publicity, place and public relations product, price, publicity and promotion price, place, publicity and promotion product, place, price and promotion

product, place, price and promotion

The “omnibus clause” of a mortgage agreement: Gives the lender the right to accelerate mortgage loan in the event of borrower default. Allows the lender, in the event of a borrower default, to add the defaulted amount to the principal of the mortgage, subject to the interest stated in the mortgage. Requires the borrower to keep the property in a state of good condition and repair. Requires the borrower to obtain insurance on the property for its full replacement cost.

Allows the lender, in the event of a borrower default, to add the defaulted amount to the principal of the mortgage, subject to the interest stated in the mortgage.

A company recently purchased $12,000 worth of new construction equipment. The company expects to sell the construction equipment at the end of it’s 5 year life for $1,000. What is the annual depreciation expense if the company uses straight-line depreciation method? $2,000 $2,600 $2,400 $2,200

$2,200

An Anchoring effect is best described as: An economic trend that prevents the value of any one property in a neighborhood from rising too far above the value of the least valuable property in that neighborhood. physiological phenomenon whereby the first number quoted in a negotiation causes the rest of negotiation to be based on that number. A sociological theory that predicts that the longer someone occupies a property the higher the price he or she will seek upon deciding to sell it. A market force that causes all commission rates in an area to fall uniformly in proportion when one licensee in the area reduces his commission rate.

physiological phenomenon whereby the first number quoted in a negotiation causes the rest of negotiation to be based on that number.

BC statute regulates the way private sector organizations to disclose personal information? Private information and Disclosure Act Private Sector Secure Protection Act Private Privacy Collection Act Private Information Protection Act

Private Information Protection Act

Eric and Mandy own a unit in Poppyland Place, a beautiful strata development. They bought the unit 5 years ago and have rented it out to Ms. Johnson, who continues to occupy the unit. Mandy has recently passed away, and her will gifted her interest in the unit to her son Melvin. Melvin has now contacted Eric and is demanding that he be paid one half of the unit price. Which of the following statements are FALSE? A. Upon Mandy’s death, the entire interest remains with the surviving joint tenant Eric. B. By gifting her interest in the unit to Melvin, Mandy severed the joint tenancy. C. Melvin and Eric now own the unit as tenants in common. D. Melvin and Eric own the unit as joint tenants. Only A is false Only D is false Only A and D are false Only B, C and D are false.

Only B, C and D are false.

Alex, desperate to pay for her husband’s loan. They find Sharky’s Loans LTD. . She becomes concerned that the amount of the loan is to harsh and unreasonable. Which statue can Alex look to for relief? The business Practices and Consumer Protection Act The Real Estate Service Act The Mortgage Broker Act The Interest Act

The business Practices and Consumer Protection Act

Your client wants to purchase a home that is on the market for $650,000. She has gone to her bank and asked about the maximum loan available to her. The lending of value of her house has been determined to be $630,000. She earns $110,000 per year and annual taxes on the property are $3,200. Subject to a loan-to-value ratio of 80% and a gross debt ration of 32%, the bank is willing to lend your client money at J12=4% with 25 amortization and monthly payments. What is the maximum loan (rounded to the nearest dollar) that your client will be able to arrange? $505,207 $504,000 $497,605 $520,000

$504,000

Which of the following is NOT a unity required to create a joint tenancy? Title Interest Possession Disposal

Disposal

A breach of a condition of a contract: Disentitles the injured party to monetary damages. Concerns only a minor term of the contract. Allows the innocent party to terminate the contract. Is not as serious as a breach of a warranty.

Allows the innocent party to terminate the contract.

Which of the following statements is FALSE? Unlike a licence, an easement is an interest in land. A restrictive covenant must benefit a dominant tenement and burden a servient tenement. An easement always grants exclusive possession of the easement land. A lease creates an interest in land.

An easement always grants exclusive possession of the easement land.

Which of the following statements comparing stratas and cooperatives is FALSE? Unlike strata ownership, cooperative ownership does not bestow any Fee Simple title to the cooperative’s owner’s unit. The requirement for a disclosure statement may apply to both stratas and cooperatives. Cooperatives are generally easier to sell than stratas. Where an existing building is being converted to either strata or a not-profit cooperative, the existing tenants covered by the protections afforded by the Residential Tenancy Act.

Cooperatives are generally easier to sell than stratas.

An investor is willing to sell his house for $296,000. He demands 24 monthly payments and payment of the outstanding balance in the amount of $275,000 with the 24th payment. He wishes to earn an effective annual rate of 10% on his money. What is the monthly payment required? $3,157.76 $3,166.37 $3,212.42 $3,260.71

$3,157.76

Common property in a strata title development is: owned equally by all members of the strata corporation . owned by the strata council property designated for the exclusive use of the owners of one of more strata lots subject to strata council rules regulating its use, safety, and condition.

subject to strata council rules regulating its use, safety, and condition.

Using the cost method of appraisal, determine the market value of a property with a 40,000 square foot building if construction costs new are $60 per square foot, land value is estimated to be $1,200,000 and total depreciation on the building to date is to be 6%. $3,456,000 $3,310,480 $3,408,000 $3,481,600

$3,456,000

You come across a property that possesses latent value. What would be the most appropriate method to appraise it? The cost method The comparison method The income method The residual method

The residual method

The purpose of a Code of Ethics is to: A. Provide a number of legal remedies that can be exercised by those wronged be a member of a given profession. B. Set a standard of conduct reasonably expected of members of a certain profession. C. Provide guidelines to ensure that a given professional’s actions are both lawful and morally fair. D. Ensure that the reputation of a given profession is upheld in the public’s eyes. D only B only B, C and D only All of the above

B, C and D only

The flow of information concerning real property is limited and difficult to collect because: Real property depreciates at a relatively constant rate over time. Every parcel of real property is homogenous and comparables are easy to find and evaluate. The turnover rate for real property is low. real property markets are national and even international in scope.

The turnover rate for real property is low.

Consider the following interests in land. Which of he above interests in land require a dominant and a servient tenement? A. Life estates B. Easements C. Freehold estates D. Profits a prendre B only A and C only B, C and D only All of the above

B only

Your client borrowed $460,000 by the way of an interest accruing loan written at J12=3 %. How much will your client owe at the end of ten months? $471,630.24 $473,800.00 $470,454.11 $448,656.56

$471,630.24

Which of the following statements is/are FALSE with respect to statements of adjustments? A,. The practice is to hold the seller responsible for the taxes on the adjustment date itself. B. The adjustment date and the possession date do not have to be on the same day. C. The total of the debit column on the seller’s statement must be identical to the total of the credit column on the buyer’s statement. D. On the completion date of the sale of real property, the buyer is usually entitled to the transfer of title. Only A and B are false Only A and C are false Only B and C are false All of the statements are false

Only A and C are false

Your friend just purchased a new condominium. She financed the purchase with the mortgage of $375,000 that calls for monthly payments of $2,250 over 20 year amortization period. What is a nominal rate, compounded semi-annually? 3.9177% 3.8861% 3.1420% the interest rate cannot be determined

3.9177%

Elvin is purchasing Jim’s beach house in Tofino. Elvin having a difficult time getting enough financing, so he decided to give Jim his boat, valued at $21,000. Furthermore, he will be assuming Jim’s existing mortgage on the property. Elvin just paid deposit of $30,000 directly to Jim. Which of the following items will appear as EITHER a debit or a credit on Jim’s statement of adjustment? Purchase price, property transfer tax, cash proceeds of sale Real Estate licensee’s commission, sale price, conveyance fees Deposit, assumption of the first mortgage, real estate commission Boat trade, deposit, property transfer tax

Deposit, assumption of the first mortgage, real estate commission

A promotional mix is a blend of: Personal selling, advertising, place, price and promotion. Product, price, personal appearance, public relationships and sales promotions Personal selling, advertising, public relations, sales promotions and publicity Product, price, place and personal selling.

Personal selling, advertising, public relations, sales promotions and publicity

Which of the following statements regarding generally accounting principles are TRUE? A. The materiality principle holds that changes to accounting principles should only be made when the change results in providing more relevant and useful information then user of the financial statements. B. The consistency principle is closely aligned to the cost principle because the best way to ensure objectivity in accounting transactions is to record the amount of consideration given up at the date of the transaction. C. To conform with the cost principle, it is not appropriate to record the assets as what it might be considered its fair market value, the asset should be recorded at the time that the enterprise paid for it. D. The matching principle requires the accrual basis of accounting, that is, expenses are always recorded when incurred, which is not necessarily when they are paid. Only statements A and D are true Only statements C and D are true Only statements A and B are true Only statements B and C are true.

Only statements C and D are true

The key purpose of a foreclosure action is to: Extinguish the borrowers equitable right to redeem the property Obtain judicial recognition that the lender has a valid mortgage on the particular property. Register a mortgage with the Land Title Office. Obtain a quitclaim deed in the property whereby the borrower agrees to forfeit his or her title to the lender.

Extinguish the borrowers equitable right to redeem the property

Which of the following is NOT one of the four key aspects of the Torrens System of the registration? The assurance principle The void deed The effect of registration The indefeasibility principle

The void deed

When a property is taken in trade by the seller as part payment of the purchase price: The value of the traded property is listed as a debit to the buyer and a credit to the seller. The value of the property will appear as a credit on the buyer’s statement of adjustments. The value of the traded property will appear on the buyer’s statement of adjustment only. No entry to either statement of adjustments is needed to reflect the trade.

The value of the property will appear as a credit on the buyer’s statement of adjustments.

Which one of the following items will NOT be found on the Balance Sheet of a corporation? Retained earnings to date Names of the corporation shareholders Original cost of the property owned by the corporation Number of the shares issued

Names of the corporation shareholders

which of the following statements is TRUE with respect to advertising? advertising agencies should only be used in the final design phase of the advertisement. Adverting should always be confined to local papers and magazines. Persuasive advertising is aimed at providing information and creating awareness about a product or service. Reminder oriented advertising focuses on keeping the product and service around the client’s mind.

Reminder oriented advertising focuses on keeping the product and service around the client’s mind.

George and Andrew who are the fest friends, are drafting a contract to document the facts that G with purchase Andrew’s house. The house is worth approximately $100,000. Consider the following amounts, items and services. A. $1 in American currency B. G’s vintage car, which A has always wanted, worth $90,000 C. A case of beer G. gave Andrew last week D. A promise from G. to repair Andrew’s computer next week. Which of the above amounts, items and services could G. use as consideration to make the contract enforceable? B only A and B only A, B and D only All of the above.

A, B and D only

When preparing an appraisal using the income method, which of the following items is deducted from gross realized revenue to arrive at net operating income? Vacancy and bad debt allowance. Depreciation and cost capital allowance Income tax Operation expenses (paid by landlord)

Operation expenses (paid by landlord)

Your client applied for a commercial loan at the bank. The property has an annual operating income of $117,000 and has a lending value of $500,000. The bank uses a 1.17 debt coverage ratio and will allow a maximum loan to value ratio of 70%. Mortgage rates J2=5% for fully amortized loan over a 4 year term with annual payments. What is the maximum 4 year loan your client will be entitled from the bank rounded to the next higher dollar? $350,000 $322,987 $354,596 $414,877

$350,000

Which of the following would likely NOT be considered an occupier under the Occupiers Liability Act of BC? The owners of a summer home, in which they reside only four weeks a year. With respect to a rental property, the property manager who rarely visits the building. The tenants of a small home in Vancouver, who are in year 1 of a two year lease. A maintenance person who is hired by a business to clean the windows of their building each day.

A maintenance person who is hired by a business to clean the windows of their building each day.

In a comparative method of appraisal, it is MOST important that the building and the comparable buildings be: similar with respect to factors that have a major influence on buyers and sellers. free from any mortgages on title of the same general architectural style constructed by either average or above average workmanship

similar with respect to factors that have a major influence on buyers and sellers.

When estimating the market value of an interest in real property, an appraiser should: Determine the purchasers’ ceiling price and the vendors’ floor price and calculate the average 2. Determine the price that can be reasonably expected given willing purchasers and vendors, adequate time and exposure to the market. 3. Determine the highest price that can be justified as reasonable by purchasers, given the property’s future economic prospects and purchasers’ investment needs. Both 2 and 3 options

Determine the price that can be reasonably expected given willing purchasers and vendors, adequate time and exposure to the market.

At lunch one Sunday afternoon, Frank and Stefanie orally agreed that Sstegamie will lease Frank’s ski cabin for 4 years. With respect to section 59 if the Law and Equity Act which states the general requirement that contracts dealing with real estate should be in writing. Which one of the fallowing is TRUE? Section 59 of the Law and Equity Act exempts leases with a term less then 5 years from the writing requirement. Section 59 of the Law and Equity Act is inapplicable because it deals with transfers of real estate rather than the leasing of real estate. Since there is no written record of the lease, the lease is void. If Frank pays to help S. move his belongings and attends S.’s house-warming party on the property, it is likely that the lease, despite not being in writing, will be enforceable against Frank’s conduct is consistent with a contract being made.

If Frank pays to help S. move his belongings and attends S.’s house-warming party on the property, it is likely that the lease, despite not being in writing, will be enforceable against Frank’s conduct is consistent with a contract being made.

A $190,000 mortgage loan, written at a nominal rate of 5% per annum, compounded semi-annually, has a 3 year contractual term. Payments are made monthly and are based on a 20 year amortization period. Payments are rounded up to the next higher dollar. What is the size of the required payments? $1,297 $1,249 $1,157 $2,093

$1,249

Upon satisfactory completion of the initial registration of a manufactured home in BC, the registrar issues a decal which must be affixed to the manufactured home. The decal: Must be renewed every year. Must be replaced whenever the manufactured home changes ownership. Is issued as a proof of registration under the Manufactured Home Act. If lost, stolen, or damaged, can only be replaced through a lengthy and costly application process with the registrar.

Is issued as a proof of registration under the Manufactured Home Act.

What is the yield on a property that sold for $875,000 and had a stabilized annual net operation income of $64,000? 12. 1093% 8. 25806% 13. 6718% 7. 31429%

7.31429%

Eric and Mandy own a unit in Poppyland Place, a beautiful strata development. They bought the unit 5 years ago and have rented it out to Ms. Johnson, who continues to occupy the unit. Mandy has recently passed away, and her will gifted her interest in the unit to her son Melvin. Melvin has now contacted Eric and is demanding that he be paid one half of the unit price. Which of the following statements are FALSE? A. Upon Mandy’s death, the entire interest remainS with the surviving joint tenant Eric. B. By gifting her interest in the unit to Melvin, Mandy severed the joint tenancy. C. Melvin and Eric now own the unit as tenants in common. D. Melvin and Eric own the unit as joint tenants. Only A is false Only D is false Only A and D are false Only B, C and D are false.

Only B, C and D are false.

A $225,000 variable rate mortgage was written at 3.5% per annum, compounded semi-annually, to be amortized over 20 years with monthly payments rounded to the next higher dollar. The mortgage contract specified that the interest rate is to be adjusted on each anniversary of the mortgage to the current market rate. One year later, the market rate increased to 4.5% per annum, compounded semi-annually. Calculate the required payments, rounded to the next higher dollar, after the first year, assuming the amortization period is not to be extended and that the contract specified variable payments are allowed. $2,116 $1,302 $1,967 $1,414

$1,414

``` D. has an agency contract with W. that allows W to buy cars on D.’s behalf. Specifically the contract only authorized W to buy collector cars that were made before 1960. One day, W. finds a rare car made in the 1980’s that D. mentioning he would like to own, so W. buys the car on D’s behalf. The Vendor agrees and the sale and a contract is signed. D’s so pleased with the purchase that he immediately elects to complete the contract upon hearing the news from W. In this situation, W.’s authority to buy the car was created by: Ratification Implication An express contract Estoppel ```

Ratification

Scott grants RBC Bank a mortgage over his summer cottage on a lake. RBC, at law, has a contractual interest in Scott’s cottage. What is the legal name given to Scott’s remaining interest? An equitable priority A collateral advantage The equity of redemption An equitable mortgage

The equity of redemption

Which of the following types of conduct does the Competition Act NOT explicitly address? Spam (i.e , mass distributed junk mail) Agreements in restraint of trade Price maintenance Misleading advertising

Spam (i.e , mass distributed junk mail)

You have a partially completed appraisal report that you need to fill in. The subject property has 5 bedroom and 4 bathrooms. The house next door is similar in all respects except for the number of bedrooms. The comparable sold for $650,000 and had 4 bedrooms and 4 bathrooms. If the market value of a bedroom is $4,500 and the market value of a bathroom is $5,000, the adjusted sale price for this comparable is: $640,500 $645,500 $654,500 $659,500

$654,500

With a partially amortized loan: The regular payments of principal and interest are calculated based on an amortization period which is longer than the loan term. The entire amount of principal is repaid by periodic payments and the final regular payment will be smaller than the others. The regular payments made by the borrower are calculated based on the term of the loan. The entire amount of principal is repaid by a balloon payment at the end of the amortization period.

The regular payments of principal and interest are calculated based on an amortization period which is longer than the loan term.

A loan in the amount of $275,000 is to be fully amortized by level monthly payments over 20 years. Interest on the loan is 3.75% per annum, compounded semi-annually and the monthly payments are to be rounded up to the next higher dollar. Calculate the required final payment to fully amortize the loan. $1,627.00 $1,378.31 $1,374.05 $1,493.25  

$1,378.31

In the comparative method of appraisal, it is MOST important that the subject building and the comparable buildings be: similar with respect to factors that have a major influence on buyers and sellers. free from ant mortgages on title. of the same general architectural style. constructed by either average or above average work workmanship.

similar with respect to factors that have a major influence on buyers and sellers.