Test 1

Question 1

What is the meaning of designated agency in the context of the standard form listing agreement?

1. The licensee cannot act for both the buyer and seller.
2. The licensee can act for both the buyer and seller
3. The brokerage and its agents have been designated to act as a team for the buyer.
4. The brokerage appoints one or more specific licensees to act as the seller’s sole agent.

Answer 1

Option (4) is the correct answer because under designated agency, while the contracting party is still the brokerage, the seller agrees that the brokerage will appoint one or more specific licensees to act as the seller’s sole agent.

Options
(1) and (2) are incorrect because dual agency, not designated agency, relates to whether a licensee can or cannot act for both the buyer and seller. Option (3) is incorrect because a listing agreement involves the seller but not the buyer.
[Chapter 11]

Question 2

delete

Answer 2

delete

Question 3

Of the following methods, which one MUST be used to determine the market value of an unused vacant site?

1. Cost approach of appraisal
2. Comparative approach of appraisal
3. Income approach of appraisal
4. Depreciation approach of appraisal

Answer 3

Option (2) is the correct answer as vacant land can only be appraised using the comparative approach.

Question 4

Which of the following was created by Canada Mortgage and Housing Corporation (CMHC)?

1. Virtual banks
2. Ginnie Mae Mortgage-Backed Securities
3. Canada Housing Trust Bonds
4. Credit unions

Answer 4

Option (3) is correct because in 2001, CMC launched Canada Mortgage Bonds to increase the supply of low cost mortgage funds in Canada, and provide easy access to investment in Canadian residential mortgages. The Canada Mortgage Trust is the organization created by CMHC that issues these bonds.

Options (1), (2), and (4) are incorrect because the CMHC did not create virtual banks, Ginnie Mae Mortgage-Backed Securities, or credit unions.
[Chapter 13]

Question 5

As a marketing incentive to speed up the sale of newly completed but unsold condominiums, a developer agrees to provide the buyers with first mortgages written at 8% rather than the going market rate of 13%. if they pay the $45.000 asking price.
Under these circumstances, the developer would likely be equally satisfied (in cash equivalent terms) with an “all cash” offer:

1. less than $45,000.
2. more than $45,000.
3. equal to $45,000.
4. that includes an additional bonus in order to purchase the unity

Answer 5

Option (1) is correct. Since the market rate is higher than the contract rate, the market value of the mortgage is less than the face value of $45,000. The cash-equivalent value of the mortgage at 8% will be less than a $45,000 mortgage at 13%. Options (2), (3), and (4) are therefore incorrect. [Chapter 16]

Question 6

Owners have to live in the property as a principal residence for ____ months in order to avoid the Empty Homes Tax;

Answer 6

6 months

Question 7

Properties which are rented for at least ___ days in a row for a minimum of ___ months in aggregate over the course of a year are exempt from the EHT.

Answer 7

30 days in a row for 6 months

Question 8

Where an agent with authority enters into a contract with a third party and does not disclose that they are acting as an agent:

1. the third party may sue either the agent or the principal to enforce the contract.
2. the principal may sue the agent to enforce the contract.
3. only the agent may sue the thing patro enforce the contract
4. there is no contract in existence because there is no disclosure

Answer 8

Option (1) is correct because, at common law, where an agent does not disclose to a third party that he or she is acting as an agent, the agent may be held liable as a principal. This rule is justified because the third party was led to believe that it was making a contract with the agent personally, and might not have chosen to enter a contract with the principal had they been aware of the principal’s existence and/or identity. Option (2) is incorrect because the contract is not between the agent and the principal, but is instead between the principal and the third party (though the agent may be held liable as a principal, as mentioned previously). Option (3) is incorrect because the contract remains between the principal and the third party, and therefore, the principal may sue the third party to enforce it. Option (4) is incorrect because an agent’s failure to disclose their status as an agent does not render a contract void. [Chapter 12]

Question 9

An option to purchase the mortgaged property given by the mortgagor to the mortgagee at the time the mortgage is negotiated is:

1. enforceable if the mortgagor has independent legal advice.
2. void.
3. entorceable in all cases.
4. called the equity of redemption.

Answer 9

Option (2) is correct because there is a fundamental principle of mortgage law which prohibits “clogging” on “the equity of redemption”. The equity of redemption refers to a borrower’s right to repay the mortgage and, upon doing so, to redeem his or her legal title to the property free of all encumbrances. In other words, a borrower (or the mortgagor) cannot be prevented by the terms of the mortgage from eventually redeeming his or her property free from the conditions contained in the mortgage. An option to purchase a mortgaged property given by the mortgagor (the borrower) to the mortgagee (the lender) at the time the mortgage is negotiated, if exercised, would prevent the mortgagor from redeeming his or her property upon repayment, and is therefore void.

Option (1) is incorrect because the prohibition against clogging does not disappear even where the mortgagor has independent legal advice.
Option (3) is incorrect because a void option cannot be enforceable in any case. Option (4) is incorrect because the equity of redemption refers to a mortgagor’s right to repay the mortgage, and is not a term for an option to repurchase a mortgaged property. [Chapter 15]

Question 10

Given that all other factors are identical, the longer the term of the contract on a bonused, partially amortized mortgage (where the bonus is paid by the borrower):

1. the lower the effective interest rate paid by the borrower.
2. the higher the effective interest rate paid by the borrower.
3. the higher the required monthly payment
4. the higher the outstanding balance at the terms end

Answer 10

Option (1) is correct because all things being equal, a longer term on a bonused partially amortized loan will result in a lower effective interest rate paid by the borrower. This is because the value of the bonus is paid off over a longer term, thus decreasing the annual cost of borrowing. Options (2), (3), and (4) are incorrect for this reason. [Chapter 16]

*Think about buying a couch at Leon’s, if you push your term to be longer…your interest will be lower but you will be stuck in a longer contract.

Question 11

Two mortgages requiring constant blended payments are identical in all respects except that one has a five-year term and the other has a two-year term. The monthly payments on the five-year term mortgage would be:

1. higher than those required on the two-year term mortgage.
2. lower than those required on the two-year term mortgage.
3. the same as those required on the two-year term mortgage.
4. impossible to compare given the information presented.

reason. [Chapter 13]

Answer 11

Option (3) is correct because the difference in term has no impact on the monthly payments. Since the loan amount, interest rate, and amortization period are all the same, the monthly payments will be the same. Options (1),
(2), and (4) are incorrect for this reason

Question 12

The practice of recognizing expenses as they are incurred, rather than when they are paid for, is a characteristic of which generally accepted accounting principle?
1. The cost principle
2. The recognition principle
3. The matching principle
4. The conservation principle

Answer 12

Option (3) is correct because the matching principle states that expenses must be recorded when they are incurred, not when they are paid. Option (1) is incorrect because the cost principle states that assets must be recorded for the purchase price on the date of acquisition. Option (2) is incorrect because the recognition principle is not an accounting principle, although the revenue recognition principle states that revenues must be recorded when they are earned, not when money is received. Option (4) is incorrect because the conservation principle is not a generally accepted accounting principle.

[chapter 8]

Question 13

Which one of the following statements is FALSE?

1. A deposit is held by the brokerage as a stakeholder until the real estate transaction is completed.
2. Unless a deposit is paid when an offer to purchase is made, there is no binding contract for purchase and sale.
3. If a deposit is made by uncertified cheque, the brokerage should issue a cheque on its trust account when the brokerage knows that the deposit cheque has been honoured.
4. Once an offer has been accepted, the brokerage may return the deposit if all parties to the contract consent in writing to the release of the deposit.

Answer 13

Option (2) is correct (false) because a binding contract of purchase and sale can be created if there is an offer, acceptance, and consideration. The exchange of promises to convey title to the property in return for the purchase price is valid consideration, even without a deposit. Options (1), (3), and (4) are incorrect because they are true statements. [Chapter 11]

Question 14

Which of the following statements concerning the equitable jurisdiction of the court is TRUE?

1. Where the rules of equity and common law conflict the court will apply the common law rule.
2. Equitable remedies are available to parties in a court action as of right, regardless of their conduct.
3. “The rules of equity developed as a remedy for the rigidity of the common law in England.
4. Specific performance, injunctions, and legal damages are three types of equitable remedies.

Answer 14

Option (3) is correct. Option (1) is incorrect because where the rules of equity and common law conflict, equitable principles take priority. Option (2) is incorrect because equitable remedies are awarded at the discretion of the court. Option (4) is incorrect because damages are a common law remedy. [Chapter 1]

Question 15

Which one of the following is the generally accepted accounting principle that determines what amount will be recorded on the company’s balance sheet as the value of a building at the time of purchase?

1. The objectivity principle
2. The consistency principle
3. The revenue recognition principle
4. The cost principle

Answer 15

Option (4) is correct because the cost principle states that a company must record the value of an asset as the price paid at the time of acquisition. Option
(1) is incorrect because the objectivity principle states that all values must be objective and verifiable. Option (2) is incorrect because the consistency principle states that once a company adopts a certain accounting policy, they should continue to use that same policy. Option (3) is incorrect because the revenue recognition principle states that revenue must be recorded when it is earned, not when cash is received. [Chapter 8]

Question 16

Jennifer Joseph has lived alone in an apartment since the death of her husband 10 years ago. She has just turned 60 years of age, retired from her job as a bus driver, and wants to begin gardening as a hobby to fill in her retirement years. She has found a small house that is selling at a price she can afford because it is the only residential property in an area of commercial development. The present owners, who are anxious to sell, have lived in the house for about 20 years and have developed a magnificent garden, which appeals very much to Mrs. Joseph; however, she is worried about having enough retirement income to meet the mortgage payments and the property tax payments if she uses all of her savings as a down payment. Which one of the following statements is TRUE?

1. Mrs. Joseph should apply for a reverse annuity mortgage (RAM) because a RAM will require lower mortgage payments than a conventional mortgage.
2. After Mrs. Joseph’s purchase, the property will continue to have an assessed value for real property tax purposes, which is based on its value as a residential property.
3. Mrs. Joseph may make an application to defer payment of the net property tax under the regular program for as many years as she owns and resides in the house.
4. If Mrs. Joseph becomes an owner-occupier, the home owner grants will allow reduction of her taxes to no more than $350.

Answer 16

Option (3) is correct because British Columbia’s regular tax deferral program will allow Mrs. Joseph to make an application to defer up to 100% of the net property taxes payable on the property, since it will be her principal place of residence. Assuming that Mrs. Joseph is either a Canadian citizen or a permanent resident, and that she would have a minimum equity of 25% in the property if she purchased it, she would likely qualify for the regular program given that she is both 55 and a widow.

Option (1) is incorrect because a reverse annuity mortgage is a type of mortgage that can function to supplement the income of aged persons who already own their home, not as a way to reduce mortgage payments where a new home is being purchased.

Option (2) is incorrect because the property is the only residential property in an area of commercial development. While section 19(8) of the Assessment Act permits certain residential properties to be assessed according to the value based solely on their current residential use, Mrs. Joseph would not qualify for this special assessment because she has not lived continuously in the residence for ten years.

Option (4) is incorrect because Mrs. Joseph would only qualify for the basic home owner grant, which cannot be used to reduce total property taxes below $350.00.

[Chapter 19]

Question 17

DCR =

Answer 17

= NOI/PMT

• What is left over from your income / payment to ensure you can pay your mortgage. Ex. 1.0 is breaking evenly into the income. The higher the DCR the more you can afford to pay, and the more likely you are to get a loan.

Mem: DR. NOI/P 👨‍⚕️

Question 18

• Commercial

PMT =

Answer 18

= NOI/DCR

Question 19

Which of the following statements about the fee simple estate is TRUE?

1. The term “fee” means that the rights exercisable by the holder of a fee simple estate have been acquired by a payment of money.
2. Where the owner of a fee simple estate dies without a will, the property will “escheat” to the Crown.
3. An owner of a fee simple estate has the right to sell, rent, or lease the estate.
4. A fee simple estate is an estate that is held for a limited period of time.

Answer 19

Option (3) is correct because an owner of a fee simple estate has the greatest bundle of rights over his or her land that can be held in Canada, which includes the right to sell, rent, or lease the estate.

Option (1) is incorrect because the term “fee” means that the estate can be inherited.

Option (2) is incorrect because if the owner of a fee simple estate dies without a will, the owner’s heirs will inherit the estate in fee simple with the priority of the heirs being determined by the laws of intestate succession.

Option (4) is incorrect because a fee simple estate has rights to the land for so long as he or she has heirs. [Chapter 3]

Question 20

Many anti-virus and malware protection programs include an auto-update feature that does which of the following?

1. Instructs the program to download profiles of new viruses and malware from the manufacturer’s website
2. Instructs the user to save their work because a virus threat or malware is imminent
3. Instructs the user to purchase the newest version of “automatic update” so that they can install new profiles
4. Instructs the program to erase all definitions of new viruses or malware so that your computer will be protected

Answer 20

Option (1) is correct because anti-virus and malware protection programs include an auto-update feature (automatic update) that instructs the program to download profiles (also called definitions) of new viruses and malware from the manufacturer’s website.

Options (2), (3), and (4) do not describe typical auto-update features. [Chapter 26]

Question 21

Under the law of contract, which of the following is NOT an element of a misrepresentation by a seller that will entitle a buyer to rescind the contract of purchase and sale and claim damages?

1. The statement must be one of opinion.
2. The statement must have induced the buyer to enter the contract.
3. The statement must have been one on which a reasonable person would have relied.
4. The statement must have been made by the seller knowing it to be false, or recklessly as to its truth or falsehood.

Answer 21

Option (1) is correct because a misrepresentation is a false statement of fact, not of opinion.

Option (2) is incorrect because in order to be a misrepresentation that would entitle the buyer to rescind the contract, the statement must have induced the other party to enter into the contract.

Option (3) is incorrect because the statement must also be one which would have induced a reasonable person to enter into the contract.

Option (4) is incorrect because in order to claim damages, the seller must have known it was false, or have been reckless as to its truth or falsehood.

[Chapter 10]

Question 22

An appraiser is using the market approach for an appraisal of a single-family house. By proper adjustment, the appraiser can use sale prices of all the following properties for comparison purposes, EXCEPT:

1. houses in different neighbourhoods.
2. houses with different square footage.
3. houses recently sold between related parties.

Answer 22

Option (3) is correct because appraisers cannot use sale prices for houses recently sold between related parties for comparison purposes. Market value is determined by analyzing market transactions where the buyer and seller have no special relationship (i.e., the sale occurred at arm’s length) and the properties sold are similar (or comparable) to the subject property. Options

(1), (2), and (4) are incorrect because with appropriate adjustment, the sale prices of all of these properties can be used for comparison purposes. [Chapter 22]

Question 23

Which of the following statements regarding strata properties is TRUE?

1. Each strata lot is entitled to one vote, which is given a proportionate decision making value by the strata council in accordance with the unit entitlement of the particular lot.
2. A strata corporation for a residential strata complex that passes a bylaw severely restricting the number of lots that may be leased may restrict any renewals of existing leases until the total number of leased lots in the complex complies with the bylaw.
3. A bylaw that is passed by a strata corporation cannot be enforced against a strata lot owner unless or until it has been filed in the appropriate land title office.
4. The owners of the strata lots that are on the top floor of a residential strata complex also own the airspace above their individual lots; however, the Strata Property Act restricts the use of the airspace to only those uses that are approved by a special resolution of the strata corporation.

Answer 23

Option (3) is correct because a strata corporation may amend the Standard Bylaws in the Strata Property Act by creating a new custom-made bylaw, but they may not enforce such a bylaw until it has been filed at the land title office.

Option (1) is incorrect because a vote’s decision making value is not determined by the lot’s unit entitlement – rather, one vote per lot is given regardless of the size of the lot.

Option (2) is incorrect because rental restriction bylaws do not apply to strata units for one full year following their passage or, if there is a tenant in a strata lot on the day the new bylaw is passed, the one-year grace period only begins on the day the tenant vacates the strata lot.

Option (4) is incorrect because the strata lot is restricted to its description in the strata plan, and everything outside of that parcel is considered to be common property. [Chapter 7]

Question 24

Which of the following is FALSE with respect to strata lot ownership?

1. The sole purpose of creating a strata corporation is to limit the liability of the corporation members.
2. The concept of ownership of part of a building is an ancient one, now recognized by provincial legislation.
3. A strata development is a special way of subdividing land and buildings into parts for separate ownership with common features.
4. A strata corporation is only permitted to pass a bylaw restricting the rental of strata lots if it is limiting rental to tenants over the age of 55.

Answer 24

Option (1) is correct because strata corporations are created so that property can be subdivided into separate parts for private ownership. The sole purpose is not to limit the liability of the corporation members.

Options (2), (3), and (4) are incorrect because these are true statements relating to strata lot ownership.

[Chapter 7]

Question 25

In British Columbia, a lender who holds a mortgage registered as a charge on an otherwise clear title to a borrower’s land has: 1. the equitable right to redeem the mortgage. 2. an interest in land created by contract. 3. priority over every other subsequent creditor and lienholder in respect of the mortgaged land. 4. the right to retain the mortgagor’s duplicate certificate of title to the mortgaged land until the loan is repaid in full.

Answer 25

Option (2) is correct because it describes a mortgage. A mortgage is not a loan itself; it is an interest in land that provides security for the loan. Option (1) is incorrect because the first registered mortgage provides the lender with a legal (rather than an equitable) right of redemption. This is subject to the borrower’s equity of redemption, which allows the borrower to repay the mortgage after the contractual date for payment. Option (3) is incorrect because a mortgage lender can lose its priority over certain charges even though the mortgage was registered first. Examples of these include builders liens, Strata Property Act judgments, property tax liens, wage claim certificates and workers compensation claims. Option (4) is incorrect because retaining the mortgagor’s duplicate certificate of title to the land creates an equitable mortgage. The lender cannot register this equitable mortgage as a charge at the land title office. [Chapter 15]

Question 26

The general property transfer tax rate is: ___% of the fair market value up to and including $200,000. ___% of the fair market value greater than $200,000 and up to and including $2,000,000. ___% of the fair market value greater than $2,000,000.

Answer 26

1% of the fair market value up to and including $200,000. 2% of the fair market value greater than $200,000 and up to and including $2,000,000. 3% of the fair market value greater than $2,000,000.

Question 27

A board of variance is: 1. a provincial board charged with the responsibility of seeing that actions by municipalities comply with the Local Government Act. 2. a board established by municipalities with the power to amend property assessments. 3. a board established by municipalities to determine whether a zoning bylaw creates undue hardships on property owners. 4. a board established by municipalities to settle boundary line disputes between private parties.

Answer 27

Option (3) is correct because a board of variance is a local government board that determines whether a zoning bylaw creates undue hardships on property owners. It can grant a minor variance, provided it does not conflict with the local government’s policies. Option (1) is incorrect because a board of variance is not a provincial board. Option (2) is incorrect because a board of variance does not have the power to amend property assessments. Option (4) is incorrect because while a board of variance may grant minor variances to zoning bylaws, it does not settle property line disputes between private parties. [Chapter 18]

Question 28

Julie is acting as the listing licensee for a property owned by her client, George. Julie also represents a client, Ahmed, whom she is helping find a suitable property to buy. Ahmed becomes interested in purchasing George’s property. Julie would like to continue to represent George as a client in the sale of his property, while releasing Ahmed as a client. To do this, Julie must enter into an Agreement Regarding Conflict of Interest Between Clients with: 1. George, the continuing client, only 2. Ahmed, the released client, only 3. Both George and Ahmed 4. Neither George nor Ahmed, as the Agreement Regarding Conflict of Interest Between Clients must only be agreed to by Julie’s managing broker

Answer 28

Option (3) is correct because when a licensee is faced with a conflict of interest between multiple clients, the licensee must enter into an Agreement Regarding Conflict of Interest Between Clients with all clients. Options (1), (2), and (4) are incorrect for this reason. [Chapter 12]

Question 29

In which of the following situations will the agency authority continue to exist? 1. Lorne lists his house for sale with Steve. The house burns down. 2. Lorne enters into an exclusive listing agreement with his agent Mark. Lorne then sells the property himself without Mark’s assistance. 3. Lorne tells his agent over the phone that he no longer has the authority to sell his house. 4. None of the above.

Answer 29

Option (4) is correct because each of the scenarios laid out in Options (1), (2), and (3) would terminate the agency authority. Option (1) is incorrect because the doctrine of frustration appears to apply to the agency relationship, meaning that if a house listed for sale burns down, the agency would probably be terminated. Option (2) is incorrect because, the moment the principal sells his or her property, he or she terminates the authority of all listing brokers, no matter what kind of listing agreement they have. The principal may, however, still be liable to pay commission. Option (3) is incorrect because either party to an agency agreement can terminate the authority (orally or by conduct) at will. [Chapter 12]

Question 30

Which of the following topics would NOT be found on an official community plan? 1. Restrictions on the use of land that is subject to hazardous conditions. 2. The location and phasing of major highways, sewers, and water lines. 3. The location, amount, type, and density of residential development required to meet anticipated housing needs over the next year. 4. The location and type of present and proposed public facilities.

Answer 30

Option (3) is correct because an official community plan contains information on residential development required to meet housing needs for at least the next five years. Options (1), (2), and (4) would all be found on an official community plan. [Chapter 18]

Question 31

Joan was considering putting in an offer on a farm in Peachland, British Columbia for $130,000, subject to arranging suitable financing. She approached Peachy Credit Union for pre-approval of a mortgage loan, and Peachy hired A & A Appraisers to determine the value of the farm for mortgage purposes. A & A appraised the property at $135,000 and Peachy Credit Union approved a mortgage loan of $101,250 to Joan, who then went ahead with the purchase. Eleven months later the bank was forced to foreclose on the property and upon obtaining another appraisal, found that the market value of the property was only $70,000. It is found that A & A was negligent in its appraisal report. What remedies, if any, are available to Joan and Peachy Credit Union? 1. Peachy Credit Union can sue A & A for breach of contract, but Joan has no case against A & A. 2. Peachy Credit Union can sue Joan for their loss under her personal covenant but cannot sue A & A Appraisers. 3. Peachy Credit Union can sue A & A for breach of contract and Joan can sue A & A under tort law. 4. No remedies are available to either Joan or Peachy Credit Union.

Answer 31

Option (3) is the correct answer. A & A Appraisers will be responsible to Peach Credit Union under contract law, and will be responsible to Joan under tort law. The appraisal contract is between A & A and Peachy Credit Union, and an implied term in the contract is the appraisal report be carefully prepared according to accepted appraisal practices. Due to the unacceptable error, it is clear that this contract has been breached by A & A. There is no contract between A & A and Joan, but it is reasonable that Joan may rely on this appraisal report. Given the unacceptable error, A & A may be liable to Joan for the tort of negligence. Options (1), (2), and (4) are therefore incorrect. [Chapter 21] Question 80

Question 32

Which of the following BEST describes the MLS®? 1. A site that allows the user to create written documents in MLS® format 2. A site that is used to register domain names for real estate offices 3. A software program that allows you to conduct an appraisal 4. A site that pulls together information on real estate related topics with a focus on real estate listings

Answer 32

Option (4) is correct because the MLS® serves many functions, including computing listing searches, producing automated hot sheets, and generating Comparative Market Analysis (CMA) presentations and other client prospecting tools. Options (1), (2), and (3) are incorrect because none of these statements correctly describes a primary function of the MLS®. [Chapter 26]

Question 33

Which of the following is a FALSE statement regarding the duties licensees owe to their clients under the Real Estate Services Rules? 1. The duty to act in the client’s best interests does not include taking actions that are unlawful. 2. The duty to act within the scope of authority given by the client does not include signing agreements for the client unless written permission is received. 3. The duty of confidentiality is terminated when the relationship between the licensee and the client ends. 4. The duty of full disclosure can include disclosing information a licensee may see as trivial.

Answer 33

Option (3) is correct because it is false. The duty of confidentiality to a client lasts forever. Option (1) is incorrect because actions that are unlawful would be against the duty of acting in the client’s best interest. Option (2) is incorrect because section 45 of the Real Estate Services Rules requires licensees to obtain written authorization to sign agreements on behalf of their clients. Option (4) is incorrect because full disclosure requires licensees disclose to their clients all known material information, no matter how trivial. [Chapter 9]

Question 34

Which of the following statements about the law in British Columbia governing occupier's liability is FALSE? 1. Under the statute, there can be more than one occupier of land at the same time. 2. An occupier’s liability does not extend to risks willingly assumed by a visitor at their own risks. 3. The language of the Occupiers Liability Act expressly preserves the common law distinction between the different types of visitors. 4. The language of the Occupiers Liability Act would probably allow for the imposition of a lesser standard of care to be owed to a trespasser than to a person with permission to be on the premises.

Answer 34

Option (3) is correct because the Occupiers Liability Act (OLA) has removed the common law distinction between different types of visitors. Option (1) is incorrect because section 1 of the OLA specifies that there may be more than one occupier of the same premises. Option (2) is incorrect because section 3 of the OLA states that an occupier has no duty of care in respect of risks willingly assumed by a visitor, other than a duty not to create a danger with intent to do harm to the person or damage to the person’s property, or to act with reckless disregard to the safety of the person or the integrity of the person’s property. Option (4) is incorrect because the legislation specifies that the duty of care imposed on an occupier is to take such care as is reasonable in the circumstances, so it is likely that the standard owed in the circumstances of someone trespassing on the property would be lower than that owed to an invited guest. [Chapter 5]

Question 35

Which one of the following statements is FALSE? 1. In an entirely residential condominium complex, a bylaw must be amended by a ¾ vote of the strata corporation. 2. If a rule conflicts with a bylaw, the bylaw prevails. 3. Strata corporations are prohibited from enacting rental restriction bylaws. 4. Assuming the standard bylaws have not been amended, the strata council may pass rules with respect to the safety and cleanliness of individually owned strata lots.

Answer 35

Option (4) is correct (false) because the standard bylaws do not allow the strata council to pass rules with respect to the safety and cleanliness of individually owned strata lots – they can only do so with respect to the common property. Options (1), (2), and (3) are all incorrect because they are true statements. [Chapter 7]

Question 36

When an Order Absolute of Foreclosure is obtained by a petitioner who is in the position of second mortgagee, which of the following is FALSE? 1. The second mortgagee can no longer exercise its right to sue the borrower on their personal covenant. 2. The order forecloses the registered owner’s interest in the mortgaged land and permits the petitioner to transfer title into their own name. 3. All other charges, liens, encumbrances, and interests registered on the borrower’s title are foreclosed or “wiped” off the title. 4. The petitioner may sell the property after taking title to it and does not have to account to the borrower for any profit that might be realized in excess of the mortgage debt.

Answer 36

Option (3) is correct because an order absolute of foreclosure does not wipe all other charges, liens, encumbrances, and interests off the title. Option (1) is incorrect because once the petitioner has been granted the order absolute of foreclosure, he or she may not then sue the borrower on the borrower’s personal covenant. Option (2) is incorrect because the order absolute of foreclosure declares that the respondents are foreclosed of any right, title, or interest in the mortgaged property and it directs them to deliver up possession of the property to the petitioner. Option (4) is incorrect because if the petitioner sells the land, there is no requirement to account to the borrower for any money received or any profit which might be realized in excess of the mortgaged debt. [Chapter 15]

Question 37

On June 1, Jem offered to buy Boo’s summer cottage for $230,000, and Boo accepted. Since the cottage was on a secluded island, neither party was aware that on May 30, the cottage was struck by lightning and completely destroyed by fire. Boo has no insurance and is seeking to enforce the contract. Which of the following statements is TRUE? 1. This is an example of mutual mistake and Jem can rescind the contract. 2. The doctrine of frustration applies here and both parties are relieved of their future obligations under the contract. 3. A court will set aside the contract based on “non est factum” (it is not my deed) or unilateral mistake since Jem did not know the nature of the document he was signing and could not have known the cottage was no longer standing. 4. This is an example of common mistake and the contract is void.

Answer 37

Option (4) is correct because a common mistake occurs when both parties to a contract make the same mistake about a fundamental term of the contract, such as the existence of what is being sold. In this case, the fact that the cottage had been destroyed prior to the formation of the contract was unknown to both parties. The existence of a common mistake such as this renders a contract void. Option (1) is incorrect because a mutual mistake occurs when both parties make a fundamental mistake about the contract but each makes a different mistake. Here, the mistake was the same (the assumption that the cottage still existed). Option (2) is incorrect because frustration occurs where a specific thing that is necessary for the performance of the contract is no longer in existence at the time for performance. In this case, the cottage was destroyed before the contract was entered into, meaning that frustration does not apply. Option (3) is incorrect because (a) there is no indication that Jem did not understand the nature of the contract of sale; and (b) the mistake regarding the existence of the cottage was a common mistake, not a unilateral mistake since both Jem and Boo were mistaken. [Chapter 10]

Question 38

Which of the following statements concerning mortgages is FALSE? 1. A mortgage is a loan. 2. A mortgage is an interest in land created by contract. 3. The relationship of the parties to a mortgage is that of debtor and creditor. 4. In British Columbia, mortgages are registered on title as a charge.

Answer 38

Option (1) is incorrect because a mortgage is not a loan, but instead is security for a loan. Options (2), (3), and (4) are incorrect because these are all true statements concerning mortgages. [Chapter 15]

Question 39

Which of the following options defines the term “amperage”? 1. A measure of electrical potential 2. A measure of electrical consumption 3. A measure of electrical flow 4. A measure of electrical power

Answer 39

Option (3) is correct because amperage is defined as a measure of electrical flow. Option (1) is incorrect because voltage is defined as a measure of electrical potential. Options (2) and (4) are incorrect because wattage is defined as a measure of electrical consumption or power. [Chapter 20] * Aunt Amperage taught me about my FLOW

Question 40

Which one of the following is NOT an activity of a Board of Variance? 1. To permit a structural alteration to a building used for a non-conforming use 2. To hear an appeal where the enforcement of a zoning bylaw will cause undue hardship 3. To amend a zoning bylaw 4. To establish a time limit within which construction of a minor variance must be completed

Answer 40

Option (3) is correct because a Board of Variance does not have the jurisdiction to amend zoning bylaws. Instead, the function of a Board of Variance is to permit minor exceptions, or “variances”, to existing bylaws, without altering the bylaws themselves. Amending zoning bylaws is the responsibility of municipal councils and regional districts. Options (1), (2), and (4) are incorrect because a Board of Variance is given the authority to hear appeals in situations where the enforcement of a bylaw would cause undue hardship. To achieve this purpose, the Board may permit a structural alteration to a building used for a non-conforming use, and may establish time limits within which construction of a variance must be completed. [Chapter 18]

Question 41

Which one of the following statements correctly describes the manner in which taxes are adjusted? 1. If the seller has already paid the current year’s taxes, the seller must be given a credit of the taxes from the adjustment date to December 31. 2. If the taxes are overdue and a penalty is owing, both the amount of the taxes and the penalty must be apportioned between the buyer and the seller. 3. If the taxes are not yet due, no adjustment is made until the tax bill arrives. 4. All of the above are correct.

Answer 41

Option (1) is correct because the seller has already paid all of the taxes for the current year and needs to be refunded the amount proportional to the time that the seller is no longer living in the property. Option (2) is incorrect because the seller is responsible for the full amount of any penalty. It is not adjusted because only the seller is liable to pay the taxes and failed to do so in a timely manner. Option (3) is incorrect because the seller must pay the buyer, in advance of the tax payment, for the portion of the year prior to the adjustment date. [Chapter 24]

Question 42

For which one of the following properties would an appraiser be MOST justified in employing the cost approach to determine market value? 1. A 40-year-old bungalow that represents the highest and best use 2. A newly-constructed church of contemporary design 3. A vacant lot that possesses latent value 4. A high rise office tower located in an outer suburb

Answer 42

Option (2) is correct. An appraiser who is asked to find the market value of a newly-constructed church would not be able to use the comparative or investment approaches due to the lack of data and would be justified in relying upon the cost approach. In addition, the appraiser can effectively determine the cost of constructing the improvements since the church is newly constructed and has not experienced any depreciation. Option (1) is incorrect because a 40-year old bungalow should be appraised using the direct comparison approach. Option (3) is incorrect because a vacant lot with latent value should be appraised using the residual method. Option (4) is incorrect because a high rise office tower in an outer suburb should be appraised using the income approach. [Chapter 21]

Question 43

If there is no listing contract in existence but the agent effects a sale of the principal’s property at the request of the principal, the courts will: 1. not imply an undertaking to pay the agent remuneration. 2. imply a promise to pay the agent remuneration. 3. allow the agent to collect only their out of pocket expenses. 4. hold the agent liable for any default of the buyer.

Answer 43

Option (2) is correct because in the case where there is no listing contract but the agent effects a sale of the seller’s property at the request of the seller, the courts can apply the principle of quantum meruit to imply a promise to pay a reasonable amount for the professional services provided. Option (1) is incorrect for the same reason. Option (3) is incorrect because the courts will give a reasonable remuneration based on what the service provided was worth, not just out of pocket expenses. Option (4) is incorrect because, even if there was a listing contract between the agent and the principal in this case, the agent is working on behalf of the seller and so they would not be held liable for the buyer’s default. [Chapter 12]

Question 44

Jacob hires Choo Choo Contracting (“Choo Choo”), a general contractor, to renovate his living room to better display his model train collection. Choo Choo subcontracts Jennifer, an electrician, to install the specialized electrical connections. After Jennifer completes the work, but before she has been paid, Choo Choo suddenly goes out of business. Which of the following statements is TRUE? 1. Jennifer can file a builders lien against Jacob’s property by submitting a Claim of Lien to the Land Title Office within the lien filing period. 2. If Jacob sells his property before Jennifer files a builders lien, then any lien she files will affect Jacob, but will not affect the interests of the purchaser. 3. Jennifer cannot file a builders lien because subcontractors who were not hired directly by the owner of a property cannot file builders liens, and can only pursue the general contractor directly. 4. If Jennifer files a builders lien against Jacob’s property, she must begin a lawsuit and file a Certificate of Pending Litigation against title to the property within 21 months from the date she registered the lien in order to enforce it.

Answer 44

Option (1) is correct because a builders lien must be filed at the Land Title Office within the lien filing period, which is 45 days after certain “trigger dates” specified in the Builders Lien Act (the “BLA”). Option (2) is incorrect because liens may still be filed after ownership of a property is transferred, as long as the lien filing deadline has not passed. The buyer may potentially be liable for any builders liens that are filed even after the completion of their purchase. Option (3) is incorrect because subcontractors engaged by a general contractor may file builders liens. Option (4) is incorrect because the BLA requires lien claimants to begin a lawsuit and file a CPL within one year, unless the owner serves a Form 6, in which case the lien claimant must begin a lawsuit and file a CPL within 21 days. [Chapter 4]

Question 45

Steve-Ann, a trading services licensee, has been asked by her friend Jean to find a house and, if successful, Jean has agreed to pay Steve-Ann the sum of $3,000, over and above any commission that Steve-Ann would earn on the sale of the property. When Steve-Ann finds a house acceptable to Jean, Steve-Ann shares the commission with the other licensees involved and receives $3,000 directly from Jean. Steve-Ann does not tell anyone of this $3,000 payment. Which of the following statements are TRUE? 1. Steve-Ann has breached the provisions of the Real Estate Services Act. 2. Steve-Ann has breached the common law principles of agency law. 3. Both (1) and (2) are true. 4. Neither (1) nor (2) is true

Answer 45

Option (1) is correct because section 56 of the Real Estate Services Rules requires a licensee to disclose to his or her brokerage the full amount of commission received or anticipated as a result of providing real estate services. Option (2) is incorrect because at common law, an agent is any person who contracts to act for or on behalf of another. Therefore, failing to tell anyone of this $3,000 payment does not breach the common law principles of agency law. Option (3) is incorrect because Option (2) is false. Option (4) is incorrect because Option (1) is true. [Chapter 12]

Question 46

A seller refuses to sign a subject removal form to strike out a condition precedent from a contract of purchase and sale. Assuming that the condition was made exclusively for the benefit of the buyer, the agreement is: 1. binding. 2. unenforceable. 3. voidable at the option of the seller. 4. void

Answer 46

Option (1) is correct because where a condition is for the sole benefit of the buyer, the buyer may waive it and thus the agreement would be binding. Because a binding agreement can be enforced and is not void, Options (2) and (4) are incorrect. Option (3) is incorrect because the condition was made for the benefit of the buyer, so it would only be voidable at the option of the buyer, not the seller. [Chapter 11]

Question 47

A pre-approved mortgage for a residential property: 1. will always guarantee the borrower’s interest rate for 365 days. 2. calculates the minimum loan that the borrower qualifies for. 3. is based on the borrower’s current financial situation and a satisfactory credit review. 4. is based on a formula provided by the Fair Isaac Corporation.

Answer 47

Option (3) is correct because mortgage lenders may pre-approve a potential borrower for a mortgage based on their current financial situation and a satisfactory credit review. Options (1), (2) and (4) are incorrect. [Chapter 17]

Question 48

Which one of the following is the BEST method of accounting for cyclical repairs in the appraisal of an income-producing property? 1. Increase the capitalization rate 2. Deduct the amount of the repair in the year it is expected to be incurred 3. Apportion the amount of the repair to an annual allowance 4. Reduce the eventual sale price of the property to reflect depreciation

Answer 48

Option (3) is correct because when using the income approach, an appropriate annual allowance or reserve should be made to cover the total cost of periodic repairs. For example, to cover the cost of painting every three years, one-third of the total painting cost could be allocated as an expense each year. Options (1), (2), and (4) are therefore incorrect. [Chapter 23]

Question 49

The market value of a vacant site can be determined using: 1. the cost approach of appraisal. 2. the comparative approach of appraisal. 3. the accrual approach of appraisal. 4. the capitalization approach of appraisal.

Answer 49

Option (2) is correct because a vacant site can only be valued using the comparative approach of appraisal. Options (1), (3), and (4) are therefore incorrect. [Chapter 21]

Question 50

Elly, a licensed real estate representative, entered into a written exclusive listing contract with Laura to list Laura’s house for sale for $300,800. Shortly after entering into this agreement, Elly’s licence expired. Unaware of the expiration of her licence, Elly proceeded to hold three open houses and several other showings of the house, eventually finding a buyer who offered $300,800 for the house. Laura accepted the offer, but when she learned about Elly’s licence expiry, she refused to pay any commission to Elly. Which of the following statements is TRUE? 1. A court will not award Elly any form of remuneration in this situation. 2. The Real Estate Services Act permits Elly to sue Laura for commission in this situation whether or not the listing contract specified the amount Elly was to receive. 3. A lawsuit to recover damages against Laura for breach of the listing contract will probably succeed even if Laura later refuses to complete the sale of her house. 4. Based on the limited facts in this situation, the listing contract likely violates the statutory requirements of the Real Estate Services Act.

Answer 50

Option (1) is correct because section 4 of the Real Estate Services Act stipulates that if an agent is unlicensed at the time real estate services were provided, he or she cannot bring a court action to collect commission. Options (2) and (3) are incorrect for the same reason. Option (4) is incorrect because there is no indication, based on the facts presented in this situation, that the listing contract violates the statutory requirements of the Real Estate Services Act. [Chapter 12]

Question 51

From the point of view of the lender, the interest charged on a mortgage does NOT represent: 1. a payment for a portion of the general overhead and operating costs of the lender. 2. the cost of financing the lender’s debt. 3. an incentive to accept uncertainty or risk. 4. a return on capital invested.

Answer 51

Option (2) is the correct answer as it is the only option that is not represented by interest received by a lender. Interest due or paid represents the cost of financing debt, not interest received. Options (1), (3), and (4) all represent interest charged on a mortgage and are therefore incorrect. [Chapter 13]

Question 52

A property owner is making an application to the municipal council to amend a zoning bylaw. Which of the following steps is NOT a part of the rezoning process? 1. The municipal council must vote in favour of the amendment on four different occasions (readings). 2. According to the Local Government Act, the municipal council must wait at least six months before approving the amendment. 3. The applicant may be required to donate a portion of their land to the municipality to be used as a park or pay to widen an existing road. 4. The applicant may be required to give a presentation about the amendment and answer questions from the municipal council at a public hearing.

Answer 52

Option (2) is correct because the municipal council is not required to wait at least six months before approving an amendment to a zoning bylaw. Option (1) is incorrect because any rezoning bylaw must be given four readings by the municipal council, meaning that the council must vote in favour of the bylaw four separate times. Option (3) is incorrect because subdivision bylaws, made under the Local Government Act, may require that an owner dedicate up to five percent of their land for park purposes. In addition, sometimes an applicant will be required to pay for the widening of roads. Option (4) is incorrect because after a proposed rezoning bylaw receives a favourable first (or sometimes second) reading, a public hearing is usually held. At the hearing, the applicant may be required to give a short presentation, and will be asked questions about the proposal by the municipal council. [Chapter 18]

Question 53

Which of the following statements about the principles that apply to all strata developments in British Columbia is TRUE? 1. The Strata Property Act generally does not apply on First Nation reserve land, subject to some exceptions. 2. The strata division of the Civil Resolution Tribunal conducts random audits to verify the compliance of strata corporations with strata legislation. 3. Residential strata developments that consist of 3 or fewer units are not required to hold annual general meetings. 4. Commercial and industrial strata developments are subject to a separate and enhanced subset of compliance requirements under the Strata Property Act.

Answer 53

Option (1) is correct because First Nation reserve land constitutes an exclusively federal undertaking under the Constitution Act, 1867, and therefore, provincial legislation such as the Strata Property Act (“SPA”) generally does not apply on such lands, subject to the leasehold landlord provisions in the SPA. Option (2) is incorrect because while the owners may apply to the Civil Resolution Tribunal (CRT) to make binding decisions when a dispute arises, the CRT’s role does not involve proactive efforts such as random audits to ensure compliance. Option (3) is incorrect because all strata corporations are required to hold annual general meetings to comply with the SPA, regardless of their size. There are, however, options for strata corporations to waive the requirement to hold an annual general meeting. Option (4) is incorrect because the same fundamental legal principles apply to all strata developments, and commercial and industrial strata developments are not subject to enhanced compliance requirements under the SPA. [Chapter 4]

Question 54

Which appraisal approach/method would be MOST suitable to appraise a new pulp mill in Squamish? 1. Market comparison 2. Residual 3. Income 4. Cost

Answer 54

Option (4) is correct because a pulp mill in Squamish is likely very unique without any comparable properties, so the cost approach must be used. Options (1), (2), and (3) are incorrect because these are likely inappropriate methods to appraise such a property, given its unique character. [Chapter 21]

Question 55

Helen is the owner and occupier of a detached 2-bedroom house in Vancouver. Which of the following statements regarding property taxes on Helen’s property is FALSE? 1. The Assessment Act is the sole source of statute law governing taxation of real property in British Columbia. 2. If Helen moves to Toronto but keeps her home in Vancouver for her mother to live in, Helen may have higher annual net property tax liability. 3. The municipality can appeal the assessment on Helen’s home if they believe the original assessed value is too low. 4. Helen has lived in her home for the last 11 years and in that time her neighbourhood has been rezoned to multi-family strata buildings. Each strata lot has a higher assessment value than Helen’s current detached home. Helen may apply for a special assessment for her home to be assessed based on its current residential use.

Answer 55

Option (1) is correct (false) because there is no single statute law governing the real property tax system in BC. The Assessment Act is one of the sources of property law, but not the only source. Option (2) is incorrect (true) since Helen, as the registered owner, is no longer living in the Vancouver property, she is not eligible for the basic home owner grant. Option (3) is incorrect (true); if a property has been incorrectly assessed, anyone, including a municipal council, can file an appeal to the Property Assessment Review Panels under the Assessment Act. Option (4) is incorrect (true); Helen is qualified for a special assessment on her property because she has lived continuously in that home for more than 10 years, and the property was zoned for a higher use. [Chapter 19]

Question 56

In a single-storey house, joists are horizontal framing members that support which of the following? 1. Rafters 2. The foundation only 3. Floors 4. The foundation and ceilings

Answer 56

Option (3) is correct because joists are the horizontal framing members that support the floors. Option (1) is incorrect because joists do not support rafters. Options (2) and (4) are incorrect as the foundation is the poured concrete footprint that supports the superstructure above. [Chapter 20]

Question 57

What is an assessment notice? 1. A demand for payment of a specified amount of property taxes 2. A notice issued by the municipality stating the date on which the assessor will appraise your property 3. A notice that informs the property owner of the actual value of their property 4. A notice of the cost to the property owner of a local improvement project

Answer 57

Option (3) is correct because an assessment notice is a notice informing a property owner of the value of the property as of July 1 of the previous year. Option (1) is incorrect because a separate statement called a “tax notice” is sent to property owners requesting payment of taxes. Option (2) is incorrect because notice is not issued prior to an appraisal. Option (4) is incorrect because an assessment notice does not deal with costs of local improvement projects to property owners. [Chapter 19]

Question 58

Tina had a listing on a house that she wanted to sell to Tom. Tom didn’t want to make an offer on Tina’s listing because his own house had not sold. Tina offered to buy Tom’s present house if it did not sell in time to close on her listing. Tina signed a statement containing the details of her promise and gave it to Tom. Tom then signed an offer on Tina’s listing, which was accepted. Tom, now suffering from buyer’s remorse, is unhappy with the arrangement, and has reported Tina to the British Columbia Financial Services Authority (BCFSA) Which of the following statements is/are TRUE? 1. Tina did nothing wrong in making this promise because she provided all the terms of the promise in writing, to Tom, prior to his entering the contract of purchase and sale. 2. Tina is in breach of the Real Estate Services Act, because it prohibits licensees from promising to purchase property in order to induce a buyer to enter a contract. 3. Tina is liable to be disciplined by BCFSA since her behaviour qualifies as misconduct as a licensee. 4. Both (2) and (3) are true.

Answer 58

Option (1) is correct because although section 49 of the Real Estate Services Rules places limitations on when licensees can make promises to purchase property to induce a buyer to enter a contract, Tina complied with these limitations because she provided all the terms of the promise in writing to Tom before he entered into the contract of purchase and sale. Option (2) is incorrect because Tina did not breach the Real Estate Services Act. Option (3) is incorrect because Tina did not engage in misconduct and is not liable to be disciplined by the British Columbia Financial Services Authority. Option (4) is incorrect because neither Options (2) nor (3) are correct. [Chapter 5]

Question 59

Where a principal adopts a contract that their agent entered into without any authority: 1. the third party is not obligated to honour the contract if they do not wish to. 2. the principal can sue the agent for breach of warranty of authority. 3. the agent is given authority retroactively to enter into that contract. 4. the agent becomes a party to that contract.

Answer 59

Option (3) is correct because a principal can retroactively ratify a contract which was entered into by his agent without the necessary authority. Ratification expresses the principal’s consent to be bound just as if the agent had been authorized to make the contract in the first place. Option (1) is incorrect because, if the principal ratifies the contract, the contract is valid and the third party is obligated to honour the contract. Option (2) is incorrect because a warranty of authority is an agent’s promise to third parties (not the principal) that his or her actions fall within the scope of authority given by the principal. Therefore, only third parties to whom the warranty of authority is made can sue the agent for breaching the warranty. Option (4) is incorrect because, where a principal adopts a contract which his agent entered into without any authority, the principal (not the agent) becomes a party to that contract. [Chapter 12]

Question 61

Which of the following is NOT one of the obligations imposed on a strata corporation under the Strata Property Act? 1. The obligation to keep the common property in a state of good and serviceable repair 2. The obligation to maintain liability insurance of no less than $5,000,000 on the strata project 3. The obligation to establish a contingency reserve fund for unusual or extraordinary expenses 4. The obligation to establish a fund for payment of administrative expenses of the strata corporation

Answer 61

Option (2) is correct because the Strata Property Act does not require a minimum of $5,000,000 liability insurance on the strata project. Option (1) is incorrect because the Strata Property Act imposes an obligation on the strata corporation to repair and maintain the common property and common assets. Option (3) is incorrect because the Strata Property Act requires a contingency reserve fund to be established for unusual or extraordinary expenses. Option (4) is incorrect because the Strata Property Act requires the strata corporation to maintain an operating fund for common expenses. [Chapter 7]

Question 62

Which of the following items would appear on the buyer’s statement of adjustments as debits? 1. Purchase price, conveyancing fees, and balance due to complete 2. Deposit paid, buyer’s share of taxes paid, and cash proceeds of sale 3. Assumption of first mortgage, deposit paid, and balance due to complete 4. Buyer’s share of taxes paid, purchase price, and conveyancing fees

Answer 62

Option (4) is correct because these are all amounts owed by the buyer. Option (1) is incorrect because the balance due to complete is a credit on the buyer’s statement of adjustments. Option (2) is incorrect because the deposit paid and the balance due to complete are credits on the buyer’s statement of adjustments. Option (3) is incorrect because these are all credits on the buyer’s statement of adjustments. [Chapter 24]

Question 63

Misleading advertising is a criminal offence, prohibited by section 52 of the Competition Act. Which of the following statements concerning this offence is FALSE? 1. A person or company can be found guilty under section 52 when the general impression conveyed by an advertisement is misleading, even though every part of their advertisement is true in a literal sense. 2. To constitute an offence under this section, the representation must be false or misleading in a material respect. 3. The standard applicable in determining whether a statement is misleading or not is whether a consumer was actually mislead or deceived. 4. Someone accused under section 52 can avoid conviction if they show that they honestly believed that the representation was not false or misleading and that they exercised due diligence in making sure that was the case.

Answer 63

Option (3) is correct because the courts will consider whether the representation would have a real effect upon an ordinary consumer’s buying decision. There is no need to prove that an individual consumer or group of consumers was actually misled. Option (1) is incorrect because the general impression test is considered where the oral or written statements in the representation are literally true but the visual portion may create a false impression. Option (2) is incorrect because the representation must be false or misleading in a material respect to constitute an offence under section 52. Option (4) is incorrect because the accused may escape liability under section 52 if they honestly believed that the representations or advertisements were not false or misleading and that they exercised due diligence in making sure that was the case. [Chapter 11]

Question 64

Velma has just accepted Patricia’s written offer to purchase Velma’s home, which contains the following clause: “This offer is subject to the buyer selling her home at (address) by December 31”. Which one of the following statements is TRUE? 1. If Patricia cannot sell her home by December 31, there is no contract and Velma retains the deposit. 2. Patricia must complete even if she cannot sell her home. 3. Patricia may waive this requirement at any time before completion. 4. This requirement may be waived by Patricia on or before December 31.

Answer 64

Option (4) is correct because the party benefiting from the subject clause (in this case, Patricia) may remove the clause by declaring it fulfilled by written notice or by waiving it on or before the specified date for the condition. Option (1) is incorrect because in a standard form contract of purchase and sale, unless each condition is waived or declared fulfilled, the contract will be terminated and the deposit would be returned (i.e., Velma would not retain the deposit). Option (2) is incorrect because the contract will be cancelled if Patricia does not fulfill the subject clause by selling her home and she does not waive it, so Patricia will not be forced to complete. Option (3) is incorrect because Patricia must waive the requirement on or before the date specified in the clause (December 31) rather than any time before completion. [Chapter 11]

Question 65

In addition to carrying out the functions of a trading services representative, a validly licensed representative is entitled to: 1. carry out trading services for an unlicensed real estate brokerage. 2. be the managing broker of their own proprietorship. 3. carry out trading services for close personal friends and business associates although not employed by a brokerage. 4. Do none of the above.

Answer 65

Option (4) is correct because, under the Real Estate Services Act, a licensed representative is not entitled to carry out trading services for an unlicensed brokerage, to be the managing broker of their own proprietorship, or to carry out trading services without being employed by a brokerage. [Chapter 2]

Question 66

An owner would have to live in the property as a principal residence for ____ months in order to avoid the Empty Homes Tax

Answer 66

An owner would have to live in the property as a principal residence for 6 months in order to avoid the Empty Homes Tax

Question 67

Properties which are rented for at least ___ days in a row for a minimum of ____ months in aggregate over the course of a year are exempt from the EHT.

Answer 67

An owner would have to live in the property as a principal residence for 6 months in order to avoid the Empty Homes Tax

Question 68

A seller refuses to acknowledge the waiver of a condition precedent from a contract of purchase and sale. Assuming that the condition was made exclusively for the benefit of the buyer and the waiver was made prior to the expiry of the condition precedent, the agreement is: 1. one that is not binding on either party. 2. voidable at the option of the seller. 3. binding. 4. voidable at the option of the buyer.

Answer 68

Option (3) is correct because section 54 of the Law and Equity Act provides that where a condition precedent is for the sole benefit of the buyer, the buyer is allowed to unilaterally waive the condition prior to its expiration. Section 54 overrides the common law rule preventing the unilateral waiver of a true condition precedent. Option (1) is incorrect because the agreement remains valid and enforceable in this situation. Options (2) and (4) are incorrect because, in this situation, the agreement does not become voidable at either the option of the seller or the buyer. [Chapter 11]

Question 69

Which appraisal approach/method would be MOST suitable to appraise a new pulp mill in Squamish? 1. Market comparison 2. Residual 3. Income 4. Cost

Answer 69

Option (4) is correct because a pulp mill in Squamish is likely very unique without any comparable properties, so the cost approach must be used. Options (1), (2), and (3) are incorrect because these are likely inappropriate methods to appraise such a property, given its unique character. [Chapter 21]

Question 70

The transfer by the borrower of the equity of redemption to a subsequent buyer does not always relieve the borrower of the covenant to repay the debt. However, there are circumstances where the borrower may be relieved of liability on the personal covenant. Which one of the following events would NOT relieve the borrower from this liability? 1. The borrower has received a release from the lender. 2. The borrower has sold the property with the knowledge of the lender. 3. The Property Law Act releases the borrower. 4. The original contract between the lender and the vendor is replaced by a new contract between a lender and the purchaser.

Answer 70

Option (2) is correct because the lender’s knowledge that the property has been sold will not relieve the borrower from liability on his or her personal covenant. Options (1), (3), and (4) are incorrect because these events will relieve the borrower from this liability. [Chapter 15]

Question 71

Vanna has agreed to sell her cottage to Pat. Vanna and Pat used a standard contract of purchase and sale, in which they agreed to the following dates: Completion Date: August 31, 2018 Adjustment Date: January 1, 2019 Based on this information, which of the following statements is TRUE? 1. There will be no adjustment for property taxes on the buyer’s statement of adjustments. 2. The property taxes will appear as a credit on the buyer’s statement of adjustments. 3. The property taxes will appear as a credit on the seller’s statement of adjustments. 4. The property taxes will appear as a debit on the seller’s statement of adjustments.

Answer 71

Option (1) is correct because the buyer in a real estate transaction assumes responsibility for the taxes from the adjustment date onwards. Since Pat is assuming responsibility for the taxes on January 1, the first day of the year, no adjustment is necessary. Remember that property taxes are paid for a calendar year, even though they are usually due on July 1. Options (2), (3), and (4) are incorrect, because no adjustment is necessary for property taxes in this scenario, and therefore property taxes will not appear as a debit or credit on either the buyer’s or seller’s statement of adjustments. [Chapter 24]

Question 72

A owes B $1,000. B assigns the debt to C. For this to be a statutory assignment, three requirements are necessary. Which one of the following is NOT one of them? 1. The assignment from B to C must be for the entire amount. 2. The assignment from B to C must be in writing. 3. The notification from C to A must be in writing. 4. The notification from A to B must be in writing.

Answer 72

Option (4) is correct and Options (1), (2), and (3) are incorrect because the three requirements for a statutory assignment are that it is in writing, it is absolute and unconditional, and notice of the assignment is given to the original promisor. [Chapter 10]

Question 73

“A contract respecting land or a disposition of land is not enforceable unless there is, in writing signed by the party to be charged or by his agent, both an indication that it has been made and a reasonable indication of the subject matter...” The preceding is an extract from which statute? 1. Real Estate Services Act 2. Statute of Frauds 3. Land Title Act 4. Law and Equity Act

Answer 73

Option (4) is correct because this extract is taken from section 59(3)(a) of the Law and Equity Act. Therefore, Options (1), (2), and (3) are incorrect. [Chapter 11]

Question 74

In which of the following circumstances will an agent NOT be personally liable for their actions? 1. The agent, identified as such, is mistakenly believed by a third party to be contracting as a principal. 2. The agent has no authority to act as an agent. 3. The agent commits a tort. 4. The agent fails to disclose that they are an agent.

Answer 74

Option (1) is correct because an agent is not personally liable if they are mistakenly believed by a third party to be contracting as a principal. Options (2), (3), and (4) are incorrect because these are the three situations at common law in which an agent is personally liable to a third party. [Chapter 12]

Question 75

Under the Canadian Electrical Code, houses of more than 80 m2 must have an electrical service capacity of not less than which of the following options? 1. 100 amps 2. 125 amps 3. 150 amps 4. There is no minimum requirement of electrical service capacity; it is up to the discretion of the builder

Answer 75

Option (1) is correct; the Canadian Electrical Code requires minimum electrical service capacity of 100 amps for houses at least 80 square meters. Most houses of this size will have greater electrical service capacity of 125, 150, or 200 amps. Options (2), (3), and (4) are therefore incorrect. [Chapter 20]

Question 76

Jake has owned an industrial toxic waste disposal plant in Vancouver for a number of years. The area in which the plant is located was rezoned one year ago and the applicable zoning bylaws do not permit a waste disposal land use. The residents of Vancouver are lobbying the city council to close down the plant. Which of the following statements is TRUE? 1. The plant is a legal non-conforming use of the land that may continue indefinitely. 2. The plant is a legal non-conforming use of the land that may continue until Jake sells the property. 3. The Planning Act establishes the circumstances under which non-conforming uses may continue. 4. If Jake wants to sell the plant, most buyers will require him to take steps to make the use a legal one by obtaining a bylaw amendment called a land use contract for the site.

Answer 76

Option (1) is correct because the plant was conforming to the bylaw prior to the rezoning, and so it will be “grandfathered” as a legal non-conforming use. Option (2) is incorrect because a non-conforming use may continue through successive changes of ownership. Option (3) is incorrect because the Local Government Act, not the Planning Act, establishes the circumstances under which non-conforming uses may continue. Option (4) is incorrect because land use contracts can no longer be created; rather, the use could continue as a legal non-conforming use or the property owner could apply to have the area rezoned. [Chapter 18]

Question 77

RE/LAX Realty Inc. has ended the current year with a net income of $234,000. During the year, RE/LAX issued $14,000 in dividends, incurred $112,000 of operating expenses, and paid $15,000 in taxes. Which of the following MOST likely occurred on RE/LAX’s balance sheet? 1. Owners’ equity increased by $234,000. 2. Revenue decreased by $14,000. 3. Net income increased by $234,000. 4. Retained earnings increased by $220,000.

Answer 77

Option (4) is correct because changes to retained earnings are calculated by taking the amount of net income less any dividends paid to shareholders. RE/LAX earned a net income of $234,000 and paid $14,000 in dividends; therefore, the retained earnings account on their balance sheet should increase by $220,000. Option (1) is therefore incorrect. Options (2) and (3) are also incorrect because net income and revenue comes from the income statement rather than the balance sheet. [Chapter 8]

Question 78

There are many reasons why a property might sell for a price that is different from its current appraised value. Which of the following could be a reason? 1. The property is in a state of long-term disrepair. 2. The property is located beside a fertilizer plant. 3. The appraisal was done by the cost approach. 4. The property is located next to a school.

Answer 78

Option (3) is the correct answer as the cost approach is most likely to result in an appraisal value that is significantly different from the price a property might sell for. The reason for this is because the replacement cost of a property may not be representative of the value in the market. Options (1), (2), and (4) are incorrect because these factors would likely be accounted for in the appraised value. [Chapter 22]

Question 79

An acquaintance of yours is about to purchase an income-producing property and asks your opinion of the property value. You wisely recommend that she have an appraisal done, but she counters by saying: “since appraisers in British Columbia are not required to be licensed, it must be a straight-forward process that could be done by anyone. Why should I pay someone for an appraisal?” Which of the following is NOT a reason for hiring a professional appraiser? 1. Income-producing properties have low turnover rates. 2. The heterogeneity of property means that knowledge concerning one property cannot necessarily be applied to another property. 3. Real property markets are local. 4. Real property is short-lived; it is easy to account for changes over time.

Answer 79

Option (4) is correct because it is the only option listed that is not a valid reason to hire a professional appraiser. Real property typically has relatively long physical and economic lifespans, and it is not very easy to account for changes over these long time frames. Options (1), (2), and (3) are incorrect because they are all reasons to hire a professional appraiser. [Chapter 21]

Question 80

Which of the following statements regarding the income approach of appraisal is TRUE? 1. Net operating income is a measure of return on the equity portion of a property’s value. 2. Items specific to an owner or investor are included in the calculation of net operating income. 3. Net operating income does not consider depreciation, income tax, or debt service. 4. The income approach is only used for apartment buildings.

Answer 80

Option (3) is correct because it is true. Option (1) is incorrect because the net operating income represents a return on the entire value of the property; it is not a return only on the equity portion of the property’s value. Option (2) is incorrect because items specific to an owner or investor are NOT included in the calculation of net operating income. Option (4) is incorrect because the income approach can be used in appraising most types of property, although it is more appropriate for properties that produce rental income, e.g., apartment buildings, office buildings, industrial space. [Chapter 23]

Question 81

The flow of information concerning real property is limited and difficult to collect because: 1. the turnover rate for real property is high. 2. every parcel of real property is homogeneous. 3. real property is short-lived and quick to respond to market pressures. 4. real property markets are local, with real estate fixed in location.

Answer 81

Option (4) is correct because it is true. Option (1) is incorrect because the turnover rate for real property is low, meaning there are limited data sources and information available upon which to base an opinion of an value. Option (2) is incorrect because every parcel of real property is distinct, unique, and heterogenous, meaning property values cannot be easily standardized or generalized. Option (3) is incorrect because real property is durable and long-lasting, meaning it may not be quick to respond to market pressures. [Chapter 21]

Question 82

A tenancy agreement, as statutorily defined: 1. entitles a landlord to exercise the right to distrain a tenant’s goods for arrears of rent. 2. requires a tenant to carry out all repairs and maintenance of the leased premises. 3. must always be registered in the Land Title Office to secure a tenant’s rights against subsequent owners of the leased premises. 4. will be terminated if a residential tenant abandons the rental unit.

Answer 82

Option (4) is correct because section 44 of the Residential Tenancy Act states that a tenant vacating or abandoning the rental unit will result in the end of a tenancy agreement. Option (1) is incorrect because a residential landlord cannot distrain a tenant’s goods for arrears of rent. Option (2) is incorrect because section 32 of the Residential Tenancy Act imposes an obligation on the landlord to repair all types of residential premises. Option (3) is incorrect because there is no obligation to register a lease of three years or less to secure a tenant’s rights against subsequent owners of the leased premises. [Chapter 6]

Question 83

Which of the following is NOT subject to the provisions of the Residential Tenancy Act? 1. A residential condominium rented out by the offshore owner 2. An apartment attached to a warehouse rented under a separate lease 3. A basement suite in a private residence 4. A house leased for a 29-year term

Answer 83

Option (4) is correct because leases dealing with residential property for a period of over 20 years are not “residential tenancies” and must be dealt with as commercial tenancies. Commercial tenancies are not subject to the provisions of the Residential Tenancy Act. Options (1), (2), and (3) are incorrect because they are all situations that are subject to the provision of the Residential Tenancy Act. [Chapter 6]

Question 84

On January 1, Abdul placed an advertisement on CQXR radio station offering squash lessons for $30 per hour. Lois heard the ad and phoned Abdul on January 3 and said “I want to take squash lessons but I’m a student, do you give a lower rate to students?” Abdul said that he only had one rate of $30 per hour. Lois said she would phone back. On January 5, Lois phoned Abdul and said she accepted Abdul’s offer. Which of the following statements concerning Abdul and Lois is true? 1. The January 1 advertisement was an offer, which Lois accepted on January 5. 2. The January 1 advertisement was an offer and Lois’ telephone call on January 3 was a counter-offer. 3. Lois’ January 3 call was a request for information and Abdul’s response on January 3 was an offer. 4. Lois’ January 3 call was a counter-offer and Abdul’s response on January 3 was a second counter-offer.

Answer 84

Option (3) is correct because, in the context of Lois’ inquiry regarding the possibility of a lower rate, Abdul statement that his rate was $30 per hour was an offer. This was a valid offer because it contained the necessary terms for a contract to be entered into; in this case, price ($30 per hour) and subject matter (squash lessons). Option (1) is incorrect because the advertisement was most likely an invitation to treat, used by Abdul to induce radio listeners to pursue a contract for tennis lessons with him. Option (2) is incorrect for the same reason, and for the reason that Lois’ call was merely an inquiry regarding the possibility of a lower rate for students. Lois did not propose a new rate, therefore, he did not make a counter-offer. Option (4) is incorrect for the same reason. [Chapter 10]

Question 85

In residential building construction, the term “truss” refers to which of the following options? 1. Roof extensions used to provide extra floor area and windows for the upper level 2. The structural member, usually wood, placed at the top of window openings 3. A prefabricated frame component supporting the roof 4. Part of a septic tank water disposal field

Answer 85

Option (3) is correct because a truss is a prefabricated frame component that supports the roof. Option (1) refers to a dormer, Option (2) refers to a header, and Option (4) refers to one of the many components of a septic tank. [Chapter 20]

Question 86

(i) is a document evidencing a debt owed by the mortgagor to the mortgagee, which carries with it the (ii) equitable right to redeem the property on payment of the debt, even after default. 1. (i) A mortgage; (ii) mortgagee’s 2. (i) An agreement for sale; (ii) buyer’s 3. (i) A mortgage; (ii) mortgagor’s 4. (i) A deposit of the duplicate certificate of title; (ii) borrower’s

Answer 86

Option (3) is correct because a mortgage is a document evidencing a debt, which carries with the mortgagor’s (or borrower’s) equitable right to redeem the property on payment of the debt. Options (1), (2), and (4) are therefore incorrect. [Chapter 15]

Question 87

Adel is a trading services licensee acting for a developer who is purchasing large blocks of land in Vancouver for a large development. Adel purchases some lots in the area for himself and discloses his identity to the sellers as required by the Real Estate Services Act on those purchases. He does not mention the purchases to his principal, the developer. Shortly thereafter, Adel makes a profit on the resale of his lots due to the effects of his principal’s development on the real estate market. What is this an example of? 1. A good business deal that is perfectly acceptable at law 2. A use of information that will always, even with disclosure to the principal, be prohibited 3. A profit for which Adel must account to his principal 4. Adel’s activities are examples of both (2) and (3)

Answer 87

Option (3) is correct because there is a duty on the real estate licensee to tell his or her client everything relevant to the transaction within the agent’s knowledge. In this case, because the licensee has a personal interest in the transaction, he must disclose it to the client, but the transaction is not automatically prohibited. Options (1), (2), and (4) are therefore incorrect. [Chapter 12]

Question 88

Which of the following is NOT a power or duty of the British Columbia Financial Services Authority? 1. Issuance of real estate services licences 2. Conduct formal disciplinary processes 3. Require the licensees to pay part or all of the expenses incurred in relation to an investigation to which an order relates 4. Undertaking and carrying out real estate law reform

Answer 88

Option (4) is correct because the undertaking and carrying out of real estate law reform is a purpose of the Real Estate Foundation, not the British Columbia Financial Services Authority (BCFSA). Option (1) is incorrect because the Real Estate Services Act (“RESA”) states that BCFSA is responsible for issuing real estate licences. Option (2) is incorrect because BCFSA may conduct investigations and hold formal disciplinary processes. Option (3) is incorrect because according to section 44 of RESA, BCFSA may require the licensee to pay the expenses, or part of the expenses, incurred in relation to either or both of the investigation and the discipline hearing to which the order relates. [Chapter 2]

Question 89

Which of the following most correctly completes the phrase: “A mortgage is …? 1. a contract, evidence of a loan, and required to be registered to be effective between the parties. 2. a contract, evidence of a loan, and security for a loan. 3. a contract, and a loan. 4. a contract, evidence of a loan, security for a loan, and required to be registered to be effective between the parties.

Answer 89

Option (2) is correct as it describes a mortgage. Options (1) and (4) are incorrect because a mortgage does not necessarily need to be registered to be effective between the parties. This principle is embodied in section 20(1) of the Land Title Act. Option (3) is incorrect because a mortgage is not a loan. It is an interest in land created by contract as security for a loan made by a lender to the borrower. [Chapter 15]

Question 90

Which of the following will NOT serve to discharge a contract? 1. An agreement between the parties 2. The concept of frustration 3. Performance of the parties’ mutual obligations 4. A patent defect

Answer 90

Option (4) is correct because a patent defect will not discharge a contract as the principle of “caveat emptor” (let the buyer beware) applies, and so the purchaser must take the risk of these patent defects. Option (1) is incorrect because a contract can be discharged by an agreement between the parties to waive full compliance with the terms of the contract. Option (2) is incorrect because a contract can be discharged by frustration. Option (3) is incorrect because once the final act of performance occurs, the contract is discharged. [Chapter 10]

Question 91

In which of the following scenarios would the City of Vancouver’s Empty Homes Tax MOST likely apply? 1. The owner spends the summer (from June to August) living in the property as a principal residence. For the remainder of the year, she lists the property on Airbnb, exclusively for weekend trips. She does not have a hotel or B&B licence. 2. The owner lives abroad, but he rents the property for six 30-day terms throughout the year in order to avoid paying the Empty Homes Tax. 3. The owner uses the property as a principal residence, but spends up to six months of the year abroad on business trips. 4. The owners initially purchased the property as an investment, but now that their daughter has started attending university in Vancouver, she uses the property as a principal residence from September to April of the same year.

Answer 91

Option (1) is correct because the owner would have to live in the property as a principal residence for 6 months in order to avoid the Empty Homes Tax; 3 months is not sufficient. In addition, investors who use their property as a short term rental without a hotel or B&B license are subject to the EHT where the rental periods are shorter than 30 days. Option (2) is incorrect because properties which are rented for at least 30 days in a row for a minimum of six months in aggregate over the course of a year are exempt from the EHT. Options (3) and (4) are incorrect because the EHT does not apply to properties being used as a principal residence by the owner, a family member, or a friend for at least six months of the year. [Chapter 19]

Question 92

What is the purpose of restating many of the common law fiduciary duties owed by a licensee to a client in the Real Estate Services Rules? 1. In the case of a breach of fiduciary duty, the client will be able to receive twice the amount of damages. 2. It allows a client to also bring action against the licensee for a breach of the Rules. 3. A breach of a fiduciary duty may also result in disciplinary proceedings by the British Columbia Financial Services Authority. 4. It tends to be easier to prove a violation of the Rules, allowing judges to rule in favour of the client more often with the Rules than with the common law fiduciary duties.

Answer 92

Option (3) is correct because the Real Estate Services Rules (the “Rules”) restate these duties so that the British Columbia Financial Services Authority can initiate disciplinary proceedings against the licensee independently of any common law action that a client may bring against the licensee. Option (1) is incorrect because the client will not be able to receive additional damages under the Rules. Option (2) is incorrect because a client can only bring action against a licensee for breaching his or her common law duties, not for a breach of the Rules. Option (4) is incorrect because when the Rules simply restate a common law fiduciary duty, it will not be easier (or more difficult) to prove a breach of either. [Chapter 12]

Question 93

A licensee is representing a client who is not wanting to put their name on any document that would connect them with the property. In addition, the client is continually over-justifying and over-explaining the purchase. Which of the following with respect to this transaction is TRUE? 1. These facts would result in errors in the draft of an agreement. 2. These facts are known as ML/TF indicators. 3. These facts would indicate a business relationship. 4. These facts would raise a simple suspicion.

Answer 93

Option (2) is correct because these facts are ML/TF indicators, or potential red flags that money laundering is being attempted. Option (1) is incorrect because there is no indication that an error is being made. Option (3) is incorrect because while the client may be in a business relationship, their attempted use of another party in the transaction is best described as an ML/TF indicator. Option (4) is incorrect because a simple suspicion is a “hunch” or intuition without much more, whereas in this case, the licensee could identify multiple ML/TF indicators, which would likely raise a reasonable suspicion. [Chapter 5]

Question 94

“A contract respecting land or a disposition of land is not enforceable unless there is, in writing signed by the party to be charged or by his agent, both an indication that it has been made and a reasonable indication of the subject matter...” The preceding is an extract from which statute? 1. Real Estate Services Act 2. Statute of Frauds 3. Land Title Act 4. Law and Equity Act

Answer 94

Option (4) is correct because this extract is taken from section 59(3)(a) of the Law and Equity Act. Therefore, Options (1), (2), and (3) are incorrect. [Chapter 11]

Question 95

Which one of the following is NOT an implied term of a mortgage? 1. The borrower is entitled to redeem the mortgage within a reasonable time. 2. The borrower is entitled to redeem the mortgage free from all conditions or terms of the mortgage contract. 3. The borrower is entitled to assign the mortgage. 4. The borrower is free from any unreasonable collateral advantage required by the lender.

Answer 95

Option (3) is correct because the borrower’s entitlement to assign the mortgage is not an implied term. Options (1), (2), and (4) are incorrect because redeeming the mortgage within a reasonable time, redeeming the mortgage free from all conditions or terms of the mortgage contract, and freedom from any unreasonable collateral advantage required by the lender are all implied terms of a mortgage. [Chapter 15]

Question 96

In order for a licensee to be liable for damages caused by a negligent misstatement, certain facts must be proved. Which of the following does NOT need to be proved? 1. The licensee making the statement did so in the course of business. 2. The licensee making the statement had a contractual relationship with the person to whom they gave the advice. 3. The licensee making the statement did not qualify or disclaim the statement. 4. The licensee making the statement knows, or should have known, that the advice was relied upon.

Answer 96

Option (2) is correct because a licensee may be held liable for damages caused by a negligent misstatement made to a person with whom they do not have a contractual relationship. For example, a licensee acting for a seller could be held liable for negligent misrepresentation for a statement made to a buyer despite having no contractual relationship with the buyer. Options (1) and (4) are incorrect because the special relationship giving rise to a duty to take care (not to make negligent misstatements) will be created where a skilled person, such as a real estate licensee, gives advice in the course of his or her business to a person who is reasonable going to rely on that advice. Option (3) is incorrect because a skilled person, such as a real estate licensee, can avoid liability for negligent misstatements by giving their advice or opinion with a clear qualification that he or she accepts no responsibility for the accuracy or reliability of the advice. [Chapter 5]

Question 97

Under the law of contract, which of the following is NOT an element of a misrepresentation by a seller that will entitle a buyer to rescind the contract of purchase and sale and claim damages? 1. The statement must be one of opinion. 2. The statement must have induced the buyer to enter the contract. 3. The statement must have been one on which a reasonable person would have relied. 4. The statement must have been made by the seller knowing it to be false, or recklessly as to its truth or falsehood.

Answer 97

Option (1) is correct because a misrepresentation is a false statement of fact, not of opinion. Option (2) is incorrect because in order to be a misrepresentation that would entitle the buyer to rescind the contract, the statement must have induced the other party to enter into the contract. Option (3) is incorrect because the statement must also be one which would have induced a reasonable person to enter into the contract. Option (4) is incorrect because in order to claim damages, the seller must have known it was false, or have been reckless as to its truth or falsehood. [Chapter 10]

Question 98

Which of the following is a current asset on the financial statement of a business? 1. Owner’s initial investment 2. Rents payable 3. Marketable securities 4. Sales revenue

Answer 98

Option (3) is correct because marketable securities is the only account listed that is classified as a current asset. Option (1) represents an owner’s equity account, Option (2) represents a current liability account, and Option (4) represents a revenue account. [Chapter 8]

Question 99

Which of the following is a current asset on the financial statement of a business? 1. Owner’s initial investment 2. Rents payable 3. Marketable securities 4. Sales revenue

Answer 99

Option (3) is correct because marketable securities is the only account listed that is classified as a current asset. Option (1) represents an owner’s equity account, Option (2) represents a current liability account, and Option (4) represents a revenue account. [Chapter 8]

Question 100

In which one of the following situations is the residual method of appraisal the MOST suitable method to use? 1. Where the market supply and demand forces are fairly constant 2. Where there is a large volume of available market data and the subject property represents the highest and best use of the site 3. Where the value to be measured is market value expressed as an income flow 4. Where the subject property possesses development potential

Answer 100

Option (4) is correct because the residual method is most appropriate for properties with latent value or (re)development potential. Options (1), (2), and (3) are incorrect. [Chapter 21]

Question 101

Which of the following is an example of an action that a criminal may take during the placement stage of the money-laundering process? 1. Arranging for multiple people to deposit small amounts of cash at different financial institutions 2. Transferring money through a succession of bank accounts in different jurisdictions 3. Selling real estate that was originally purchased using illicit cash to an unsuspecting buyer 4. Frequently transferring ownership of a particular property between multiple acquaintances

Answer 101

Option (1) is correct because it is an action taken during the placement stage, meant to avoid drawing the attention of financial institutions which would take note of unusually large cash deposits. Options (2) and (4) are incorrect because they are actions taken during the layering stage of the money-laundering process, meant to increase complexity and conceal the criminal origins of the proceeds. Option (3) is incorrect because it is an action taken during the integration stage. The sale of real estate will provide proceeds which appear to have been legally earned from investment. [Chapter 5]

Question 102

As a western platform wood-frame house is being constructed, a polyethylene vapour barrier is used immediately under which of the following options? 1. Exterior brick veneer 2. Interior wood panelling on perimeter walls 3. Cedar shingles 4. Sub-floors

Answer 102

Option (2) is correct because a polyethylene vapour barrier must be used immediately under the interior wood panelling on the perimeter walls of a western platform wood-frame house in order to ensure proper function of the vapour barrier. Options (1), (3), and (4) are incorrect because a polyethylene vapour barrier would not be used under those surfaces. [Chapter 20]

Question 103

Which of the following statements concerning government regulations of privately owned land is TRUE? 1. The provincial government and the federal government together have legislative authority over most privately owned land in Canada. 2. The provincial governments have delegated their authority over privately owned land to local governments, and at present they retain no authority for regulating uses of privately owned land within the provinces. 3. Local governments derive their powers to regulate privately owned land use from the provincial government and may only exercise the specific powers delegated to them. 4. In British Columbia, all local governments derive their authority to control privately owned land use from the Local Government Act.

Answer 103

Option (3) is correct because under the Constitution Act, 1867, the provincial governments were given jurisdiction over matters affecting private property and were also empowered to delegate some provincial powers to local governments. Option (1) is incorrect because the Constitution Act, 1867 gave the provincial government jurisdiction over matters affecting private property, not the federal government. Option (2) is incorrect because although the province has delegated most authority to regulate land use to local governments, the provincial government has maintained certain power such as through the Agricultural Land Commission Act. Option (4) is incorrect because the Heritage Conservation Act also gives local governments the authority to impose restrictions on a private landowner’s use of their land. [Chapter 18]

Question 104

The term “fee simple”: 1. indicates something less than absolute ownership of land. 2. describes an unencumbered or clear title to land. was abolished by the Land Title Act. 3. refers to an interest in land that does not amount to an estate.

Answer 104

Option (1) is correct because while a fee simple estate is the greatest estate in land, the owner of the estate in fee simple is not the absolute owner. This is because underlying title in all land in British Columbia is held by the Crown. Option (2) is incorrect because a fee simple estate does not always have clear title. Option (3) is incorrect because the term “fee simple” is still used today to describe the greatest interest in land, and has not been abolished. Option (4) is incorrect because fee simple is a form of estate in land. [Chapter 3]

Question 105

Which of the following would NOT be included in a statement of profit and loss? 1. Depreciation 2. Rental revenue 3. Current liabilities 4. Interest on mortgage

Answer 105

Option (3) is correct because current liabilities are only listed on the balance sheet. They would not show up on the statement of profit and loss, which is also known as the income statement. Options (1), (2), and (4) are incorrect because the income statement shows revenues and expenses, such as depreciation, rental revenue, and interest expense on a mortgage. [Chapter 8]

Question 106

Hurston, an employee of XYZ Preservatives Ltd., is in the habit of venting a cloud of highly toxic gas into the air at dusk every evening. Once it escapes, the cloud usually drifts over Ralph’s apple orchard. Hurston’s actions are strictly against company policy but by venting the gas Hurston saves time. Hurston is aware that the gas is highly toxic. Ralph has discovered that the emissions have destroyed his apple crop. Which one of the following statements is TRUE? 1. XYZ will not be liable for Hurston’s acts because Hurston was acting contrary to XYZ’s rules. 2. Ralph may be successful in a claim against XYZ based on the principle of private nuisance. 3. While Ralph will probably succeed in a claim against XYZ based on negligence, he will not have any remedy against Hurston. 4. Ralph would probably have a successful claim against XYZ based on the provisions of the Occupiers Liability Act.

Answer 106

Option (2) is correct because private nuisance occurs when an owner or occupier of land unreasonably and substantially interferes with the reasonable use and enjoyment of a neighbouring property, which includes activities which product noxious fumes. Hurston’s venting highly toxic gas over Ralph’s apple orchard, destroying his crop, would classify as an unreasonable and substantial interference with Ralph’s ability to use and enjoy his land. Option (1) is incorrect because XYZ could be vicariously liable for Hurston’s activities as their employee or negligent for failing to prevent Hurston from creating the nuisance. Option (3) is incorrect because Ralph would have a remedy against Hurston, as the person who created the nuisance is liable for doing so. Option (4) is incorrect because the Occupiers Liability Act would only apply if Ralph and/or his property had been harmed while on XYZ’s property. [Chapter 5]

Question 107

Of the following methods, which one MUST be used to determine the market value of an unused vacant site? 1. Cost approach of appraisal 2. Comparative approach of appraisal 3. Income approach of appraisal 4. Depreciation approach of appraisal

Answer 107

Option (2) is the correct answer as vacant land can only be appraised using the comparative approach. Therefore, Options (1), (3), and (4) are incorrect. [Chapter 22]

Question 108

Yang was the owner of an office building in downtown Vancouver. She recently sold the building to Ashley for $100 million. Ashley did not pay the GST on the sale and Yang has just received an assessment for the GST due on the sale of the property from the Canada Revenue Agency (“CRA”) worth $5 million. Which of the following statements is FALSE? 1. The $5 million is collectible immediately by the CRA. 2. Yang will have 90 days from the date of the assessment to file an objection with the CRA if she wishes to dispute it. 3. If Yang files an objection and it is affirmed by an appeals officer at the CRA, Yang has exhausted her options in terms of appealing the assessment. 4. Yang may pursue Ashley for the uncollected GST that she has been assessed for.

Answer 108

Option (3) is correct (false) because if Yang files an objection and an appeals officer at the CRA confirms the assessment, Yang would have 90 days to appeal to the Tax Court of Canada. She could also potentially appeal the decision to the Federal Court of Appeal and then possibly to the Supreme Court of Canada. Options (1), (2), and (4) are incorrect because they are all true statements. [Chapter 19]

Question 109

What is a “time clause” or “72 hour clause”? 1. It refers to the fact that the offer is only open for a stipulated time. 2. It refers to the period in which either the seller or buyer can change their mind. 3. It refers to the length of time that a condition subsequent is in force. 4. It refers to the length of time the other party has to remove a condition precedent once the clause is invoked.

Answer 109

Option (4) is correct because a “time clause” or “72 hour clause” is a clause contained in a contract for purchase or resale of land which allows a seller to invoke a time period in which a condition precedent must be removed. If invoked, failure to remove the condition precedent within the time period would result in termination of the contract. Option (1) is incorrect because a time clause does not, in and of itself, mean that the offer is only open for a stipulated time period. Rather, the right to invoke a time clause arises only where a seller receives a subsequent offer after entering the original contract of purchase and sale. Option (2) is incorrect because this is a right given to the seller only. Option (3) is incorrect because time clauses relate to conditions precedent, not conditions subsequent. [Chapter 11]

Question 110

Which of the following statements about false or misleading advertising as prohibited by section 52 of the Competition Act is FALSE? 1. It is not an offence under the Competition Act for the visual advertisement to create a false impression as long as the written statements are true. 2. For a misrepresentation to be contrary to the Act, it must be false or misleading in a material respect. 3. The Competition Act applies to both oral and written representations. 4. To avoid liability under section 52, the person accused of the offence must show that they honestly believed that the representation was not false or misleading and exercised due diligence in making sure that was the case.

Answer 110

Option (1) is correct (false) because the general impression test is used in this situation, which can still result in a conviction under section 52. Option (2) is incorrect (true) because a misrepresentation will only be contrary to section 52 of the Competition Act if it is false or misleading in a material respect. Option (3) is incorrect (true) because section 52 applies to both oral and written misrepresentations. Option (4) is incorrect (true) because the accused may escape liability under section 52 if they honestly believed that the representations or advertisements were not false or misleading and that they exercised due diligence in making sure that was the case. [Chapter 11]

Question 111

When using the cost approach of appraisal, cost of the improvements is more commonly determined by utilizing: 1. current replacement cost. 2. current reproduction cost. 3. current value based on historic cost. 4. actual cost.

Answer 111

Option (1) is correct because when using the cost approach of appraisal, cost of the improvements is normally determined by utilizing the current replacement cost. Options (2), (3), and (4) are incorrect for this reason. [Chapter 22]

Question 112

Operating expenses for appraisal purposes include: 1. income taxes. 2. property taxes. 3. mortgage payments. 4. capital cost allowance.

Answer 112

Option (2) is correct because property taxes are an expense included in operating expenses for appraisal purposes. Options (1), (3), and (4) are incorrect because income taxes, mortgage payments, and capital cost allowance are not included in operating expenses. [Chapter 23]

Question 113

Sally, an appraiser, has been asked to provide an estimate of the market value of a farmhouse and the surrounding property. Which one of the following would NOT affect her estimate of market value? 1. One of the pastures on the property has been leased for two years to the owner of a racehorse. 2. The owner of the farmhouse is anxious to move and would like to sell as soon as possible. 3. The farmhouse and its surrounding property are located between the main road and the next door neighbour’s property. Therefore, the neighbour gets the benefit of access to his house by means of a road that runs through the farmhouse property. 4. Homehold Finance Company recently loaned some money, at a below-market interest rate, to the owner of the farmhouse and secured the debt with a mortgage on the farmhouse. This mortgage is assumable.

Answer 113

Option (2) is the correct answer as it is the only option listed that does not affect the legal rights of ownership of the property. Options (1), (3), and (4) represent legal interests or charges that will affect the appraiser’s estimate of market value. [Chapter 21]

Question 114

Under which one of the following conditions is the comparative approach of appraisal MOST applicable? 1. Where the volume of sales transactions is very low 2. Where buyers and sellers are well informed about current sales transactions 3. Where the property has redevelopment potential 4. Where the property is unique

Answer 114

Option (2) is correct because the comparative approach of appraisal is most appropriate where buyers and sellers are well informed about current sales transactions. Options (1) and (3) are incorrect because the comparative approach of appraisal is applicable when there is sufficient recent sales data of similar properties, and the property does not have redevelopment potential. Option (4) is incorrect because under the comparative approach, a property’s value should not exceed the cost of purchasing an alternative property that can provide similar utility. Therefore, it may not be appropriate if a property is unique. [Chapter 21]

Question 115

Which of the following statements about a commercial lease for a fixed term is/are TRUE? 1. It automatically terminates upon expiration of the term specified in the lease. 2. It may be for any specified length of time. 3. It must contain a description of the commencement date and duration of its term. 4. All of the above statements are true.

Answer 115

Option (4) is correct and Options (1), (2), and (3) are incorrect because all of the statements are true. A commercial lease for a fixed term terminates automatically upon expiration of the term specified in the lease. Commercial leases can be set for any length of time. Commercial leases must include the commencement date and duration of its term. [Chapter 6]

Question 116

Diana leased an apartment from Horst for 12 months commencing January 1. On April 1, Horst conveyed the building to Bing. On April 15, Bing gave Diana a notice to end the tenancy agreement effective May 15. The reason for the termination was that Bing wanted the apartment for his daughter, who had recently been married. Under the Residential Tenancy Act, what is the earliest date by which Bing can require Diana to leave? 1. May 31 2. May 15 3. December 31 4. June 30

Answer 116

Option (3) is correct because a fixed term tenancy cannot be terminated by the landlord before the end of the fixed term (i.e., December 31). The earliest that Bing can require Diana to leave is December 31, by serving Diana with a Two Month Notice to End Tenancy for Landlord’s Use of Property on October 31. Options (1), (2), and (4) are incorrect for this reason. [Chapter 6]

Question 117

With respect to bylaws in a strata development, which of the following statements is TRUE? 1. Bylaws are passed by special resolution of the strata council. 2. Bylaws may limit an owner’s right to lease a strata lot if it is a commercial condominium complex. 3. Bylaws provide for the control and management of the strata lots and common property. 4. Bylaws can be enforceable despite violating the Human Rights Code as long as they were unanimously passed by the members.

Answer 117

Option (3) is correct because a strata corporation may amend the Standard Bylaws in the Strata Property Act by creating a new custom-made bylaw, but they may not enforce such a bylaw until it has been filed at the land title office. Option (1) is incorrect because a vote’s decision-making value is not determined by the lot’s unit entitlement – rather, one vote per lot is given regardless of the size of the lot. Option (2) is incorrect because a strata corporation cannot pass bylaws to restrict the rental of strata units. Option (4) is incorrect because the strata lot is restricted to its description in the strata plan, and everything outside of that parcel is considered to be common property. [Chapter 7]

Question 118

Which of the following statements about fixtures and chattels is FALSE? 1. Where an item has been affixed for the enhancement of the use of the premises, that is evidence the item is a chattel. 2. Where an item is affixed slightly to the premises it will be considered, based on the first impression, to be a fixture. 3. A chattel is the personal property of the owner. You Answered 4. The test for fixtures and chattels examines the degree of affixation of an item and the purpose of affixation of the item.

Answer 118

Option (1) is correct because the “better use” test states that the affixation of an object for the purpose of improving the property will be taken as evidence that the object is a fixture, not a chattel (La Salle Recreations Ltd. v. Canadian Camdex Investments Ltd.). Option (2) is incorrect because part two of the test articulated in Stack v. T. Eaton Co. states that articles affixed to the land even slightly are presumed to be part of the land, unless the circumstances show that they were intended to remain as chattels. Option (3) is incorrect because the courts have developed the Stack v. Eaton test, a two part test for determining whether an item is a fixture or a chattel. Option (4) is incorrect because the Stack v. Eaton test examines both the degree of affixation and the purpose of affixation as factors which may overturn the presumption that articles affixed to the land are fixtures. [Chapter 3]

Question 119

The risk to a mortgagee can be reduced by: 1. increasing the amortization period. 2. reducing the monthly payments. 3. reducing the loan-to-value ratio. 4. reducing the debt coverage ratio.

Answer 119

Option (3) is correct because reducing the loan-to-value ratio is the only option listed that the mortgagee can ensure there is sufficient security against the loan. Options (1), (2), and (4) are incorrect because a longer amortization period, smaller monthly payment, or lower debt coverage ratio will not guarantee sufficient security against the loan or that the borrowers are in a financial position that will enable them to make the necessary payments. [Chapter 17] ** Consider LOAN to value, HOW MUCH I will pay of your loan ***

Question 120

Which of the following statements about duplicate certificates of title is TRUE? 1. Duplicate certificates of title cannot be issued if the property is subject to a mortgage. 2. Certain documents, including easements and builders liens, cannot be registered if a duplicate certificate of title has been taken out of the Land Title Office. 3. A duplicate certificate of title is automatically issued to each registered owner at the time when title is transferred. 4. The deposit of a duplicate title is considered to be the most preferable measure of security that a borrower can provide to a lender because it completely prevents the conveyance of a property.

Answer 120

Option (1) is correct because duplicate certificates of title cannot be issued if title is subject to a mortgage or an agreement for sale. Option (2) is incorrect because while transfers, mortgages, and long-term leases cannot be registered if a duplicate title is out of the land title office, some specific documents, including easements and builders liens, can still be registered. Option (3) is incorrect because a duplicate title will only be issued upon a written request of the registered owner. Option (4) is incorrect because most lenders prefer a registered mortgage as security. [Chapter 4]

Question 121

Which one of the following transactions does NOT affect the amount of owner’s equity? 1. Investments by the owner 2. Personal withdrawals from the business 3. Net income earned 4. Purchase of assets by the business

Answer 121

Option (4) is correct because purchasing assets will not affect owner’s equity. The purchase of the assets will either be funded by cash that will result in no net change in assets, or it will be funded by debt, which will increase both assets and liabilities. Option (1) is incorrect because Investment by the owner will increase the amount of equity. Option (2) is incorrect because personal withdrawals from the business will decrease the amount of equity. Option (3) is incorrect because earning net income will also increase the amount of equity. [Chapter 8]

Question 122

Mortgage interest rates are sometimes described as being “sticky”; that is, changes in mortgage rates tend to lag behind changes in bond yields. One reason for this “stickiness” is: 1. the short-term nature of a mortgage loan contract. 2. the weak secondary mortgage market. 3. mortgages are highly liquid investments. 4. all mortgage investments are identical.

Answer 122

Option (2) is correct because a weak secondary market for mortgages means that there are not a large amount of buyers and sellers of mortgages that already exist. Due to this, the investors’ funds are “locked in” to the interest rate written in their original contracts, and they cannot achieve the current rate until the end of the term, or until they recover enough capital to initiate a new mortgage at the new rate. Options (1), (3), and (4) are incorrect because they do not describe reasons for mortgage rates’ “stickiness”. [Chapter 13]

Question 123

Which of the following falls within the category of law called “public law”? 1. Breach of contract 2. Trespass 3. Constitutional law 4. None of the above

Answer 123

Option (3) is correct because “public law” deals with the Constitution and matters between private individuals and the state. Options (1) and (2) are incorrect because these fall under the category of “private law”. [Chapter 1]

Question 124

The cost approach of appraisal is NOT generally used to value: 1. airport hangars. 2. vacant lots. 3. condominiums. 4. single-family residences.

Answer 124

Option (2) is correct because the cost approach of appraisal is generally used for unique properties that do not have any comparable sales data, relying on a land value estimate from direct comparison, then valuing the improvements on the land with the cost approach. Since vacant land has no improvements the cost approach cannot be used on vacant land. Options (1), (3), and (4) could be valued using the cost approach in certain circumstances. [Chapter 22]

Question 125

Assume the net operating incomes of office buildings in your area have remained steady while the market capitalization rate has gradually fallen over the last year. This would mean: 1. the sale prices of office buildings have risen. 2. the sale prices of office buildings have fallen. 3. recent buyers anticipate an impending fall in net operating incomes. 4. the sale prices of office buildings have stayed the same.

Answer 125

Option (1) is correct and Options (2), (3), and (4) are incorrect because yields and market values are inversely related. If market capitalization rates (i.e., the required yields) decline while net operating income remains constant, market values will rise. [Chapter 23]

Question 126

As one lowers a discount (or expected yield) rate, the present value of a given series of future payments: 1. Decreases. 2. Could go up or down depending on the timing of the payments. 3. increases. 4. remains constant.

Answer 126

Option (3) is correct because the payments of a loan contract are calculated based on a contract yield rate. If the discount, or expected yield rate decreases, the present value of the given contracted payments increases. Options (1), (2), and (4) are incorrect for this reason. [Chapter 16]

Question 127

Which one of the following items is deducted from gross realized income to arrive at net operating income when preparing an appraisal using the income approach? 1. Income tax 2. Interest on the mortgage 3. Real property taxes 4. Depreciation expense

Answer 127

Option (3) is correct because real property taxes are a component of operating expenses, which are deducted from gross realized income to arrive at net operating income when preparing an appraisal using the income approach. Options (1), (2), and (4) are incorrect because income tax, interest on a mortgage, and depreciation expense are not included in operating expenses and do not factor into the calculation of net operating income. [Chapter 23]

Question 128

Which one of the following statements regarding 1. In order to appraise real property, one needs a minimum of a real estate trading services licence. 2. The complexity of real estate as a product requires the involvement of an expert appraiser. 3. Real estate can be classified as a homogeneous commodity. 4. Due to the low turnover of real estate, it is easy to collect information regarding recent transactions.

Answer 128

Option (2) is correct because real estate as a product is generally unique and complex, requiring expert skills and knowledge for an accurate appraisal. Option (1) is incorrect because no license is required to conduct an appraisal. Option (3) is incorrect because real estate is unique, and therefore cannot be classified as a homogenous commodity. Option (4) is incorrect because the low turnover of real estate makes it difficult to collect information regarding recent sales. [Chapter 21]

Question 129

For which one of the following properties would an appraiser be MOST justified in employing the cost approach to determine market value? 1. A 40-year-old bungalow that represents the highest and best use 2. A newly-constructed church of contemporary design 3. A vacant lot that possesses latent value 4. A high rise office tower located in an outer suburb

Answer 129

Option (2) is correct. An appraiser who is asked to find the market value of a newly-constructed church would not be able to use the comparative or investment approaches due to the lack of data and would be justified in relying upon the cost approach. In addition, the appraiser can effectively determine the cost of constructing the improvements since the church is newly constructed and has not experienced any depreciation. Option (1) is incorrect because a 40-year old bungalow should be appraised using the direct comparison approach, Option (3) is incorrect because a vacant lot with latent value should be appraised using the residual method. Option (4) is incorrect because a high rise office tower in an outer suburb should be appraised using the income approach. [Chapter 21]

Question 130

Constant payment repayment schemes developed in response to: 1. rapid inflation. 2. the federal government’s desire to stimulate the 3. demand for and supply of housing after World War II. 3. interest rate risk. 4. principal risk.

Answer 130

Option (4) is correct because constant payment loans were developed in response to the risk to the lender of default on principal. The constant payment reduces this risk as each periodic payment reduces the amount of principal at risk. Options (1), (2), and (3) are incorrect. [Chapter 13] **Easier to predict payments and not force people into payments they can't make, so the principal is less at risk.***

Question 131

Which of the following is TRUE? In a strata plan, the term “unit entitlement” refers to: 1. the value of each condominium unit relative to other units. 2. the share of the value upon demolition owned by each condominium unit owner. 3. the share of real property taxes payable by each condominium unit owner. 4. the number used to calculate a strata owner’s contribution to the common expenses of the strata corporation.

Answer 131

Option (4) is correct as it describes the term “unit entitlement”. Options (1), (2), and (3) are false because unit entitlement refers to determining each owner’s proportionate, undivided ownership share of the common property in the strata plan. It is used to determine the share of the strata corporation’s expenses and liabilities for which each strata lot owner is responsible. [Chapter 7]

Question 132

Which of the following is NOT a component of the British Columbia land title registration system? 1. The assurance principle 2. The doctrine of the void deed 3. Abolition of the doctrine of notice 4. Indefeasibility of registered fee simple titles

Answer 132

Option (2) is correct because the doctrine of the void deed was a component of the common law system, but is not a component of the British Columbia land title registration system. Options (1), (3), and (4) are incorrect because they are all components of the British Columbia land title registration system. [Chapter 4]

Question 133

When the licensee receives a deposit in a typical real estate transaction, the licensee’s brokerage holds it: 1. for the seller. 2. for the buyer. 3. as agent for both. 4. as a stakeholder.

Answer 133

Option (4) is correct because when a licensee takes a deposit from a buyer, section 28 of the Real Estate Services Act says that the brokerage must hold the deposit as a stakeholder (and not as an agent) on behalf of all the parties to the contract. Therefore, Options (1), (2), and (3) are incorrect. [Chapter 11]

Question 134

Which of the following is NOT a requirement under the Interest Act in order for a borrower to tender prepayment of their mortgage? 1. The borrower is an individual. 2. The mortgage is not payable until a time more than five years from the date of the mortgage. 3. The expiration of the five years from the date of the mortgage has occurred. 4. The lender is a financial institution.

Answer 134

Option (4) is correct because section 10 of the Interest Act does not require that the lender be a financial institution in order for the borrower to have the right to tender prepayment of their mortgage. Options (1), (2), and (3) are incorrect because these are all requirements under section 10 of the Interest Act in order for a borrower to tender prepayment. [Chapter 15]

Question 135

On May 3, Mary offered to buy Harvey’s house. The offer was stated to be open for acceptance by mail or telephone until 2:00 p.m. on May 4. Which one of the following statements is TRUE? 1. If Harvey mails his acceptance, Mary must receive it before 2:00 p.m. on May 4 for there to be a valid contract. 2. Mary cannot revoke her offer prior to 2:00 p.m. on May 4. 3. If Harvey makes any substantial changes to Mary’s offer prior to accepting it, Mary’s original offer is terminated. 4. If Harvey telephones Mary to ask whether she intends to live on the property herself, Mary’s original offer is terminated.

Answer 135

Option (3) is correct because making a substantial change to Mary’s offer would be considered a counter-offer. The counter-offer becomes the new offer, which terminates the original offer. Option (1) is incorrect because if acceptance by mail is appropriate, then the “postal acceptance rule” applies, making the acceptance effective as soon as it is put in the mailbox, rather than when it is actually received. Option (2) is incorrect because the party who made the offer can revoke it at any time before it is accepted. Option (4) is incorrect because while a counter-offer terminates the original offer, an offeree’s minor request for information does not terminate an offer. [Chapter 10]

Question 136

When a bidder’s ceiling price for a lot is $30,500 and the owner’s floor price is $32,500: 1. the parties could negotiate and produce a sale. 2. a sale cannot take place. 3. the sale price of the lot will be $31,500. 4. neither party is behaving reasonably.

Answer 136

Option (2) is correct because if a bidder’s ceiling price is $30,500, then this is the highest he will bid — he’s hit the ceiling. If an owner’s floor price is $32,500, then this is the lowest the owner will go. Therefore, a sale cannot take place because there is no price the bidder is willing pay that the owner will accept. Option (1) is incorrect because the ceiling and floor prices are the highest and lowest that the parties will go, respectively. A sale price cannot be negotiated outside of each party’s price range. Option (3) is incorrect for this reason. Option (4) is incorrect because there is no indication that the parties are behaving unreasonably. * Respect where they stand* [Chapter 21]

Question 137

In appraising an income-producing property using the income approach, gross potential rents must be estimated. How are gross potential rents BEST determined? 1. Based on long-term vacancy rates in the area in which the subject property is located 2. Based on published surveys of relevant real estate trends 3. Based on the relationship between money actually received and units actually rented 4. Based on current market rents of similar properties

Answer 137

Option (4) is correct because gross potential revenue is estimated using current market rents paid on similar properties. Even when the subject or comparable property is fully rented, the rents used in determining the property’s net operating income should be compared to current rental prices. Therefore, Options (1), (2), and (3) are incorrect. [Chapter 23]

Question 138

Which of the following statements is TRUE? 1. A listing contract is not a specialized form of agency contract. 2. Under the Designated Agency system, while the brokerage contracts with the seller or buyer, an individual licensee is appointed to act as the sole agent of that seller or buyer. 3. Real estate brokerages always work on behalf of the seller in respect of a real estate transaction. 4. An agent’s authority to bind their principal depends entirely on the express authority given by the principal, and not upon implied, usual, or customary authority.

Answer 138

Option (2) is correct because it is true. Option (1) is false because a listing contract is a specialized form of agency contract. It is a contract between the seller and a real estate brokerage. The brokerage promises to try to find a buyer and the seller promises to pay a stated amount of commission if the brokerage is successful. Option (2) is true. Designated Agency eliminates the conflict that previously arose when two licensees in the same brokerage represented both the seller and the buyer in a transaction. Option (3) is false because real estate brokerages can work on behalf of a seller or a buyer on a real estate transaction. Option (4) is false because an agent’s authority to bind his or her principal can arise: (1) expressly; (2) by implication; (3) as a result of the doctrine of estoppel; or, (4) by ratification by the principal of the agent’s acts done on the principal’s behalf. [Chapter 12]

Question 139

Mimi was house-sitting for her friends Tom and Lizzie while they were on a three month photo-safari in Africa. The front porch was damaged in a freak storm that caused a tree to fall and smash the bottom two steps. Mimi didn’t have the money to hire a carpenter to repair the stairs, so she attached a large sign to the bottom of the steps reading, “DANGER KEEP OFF”. Dave, an out of work handyman who could not read English, was walking from house to house in the neighbourhood looking for casual work. He entered Tom and Lizzie’s property, and not understanding the sign started up the steps to the front door. Dave landed on the damaged step, and the weight of his body was more than the step could stand. He broke his leg in two places, and having no insurance, has run up $3,750 in medical bills. Dave now intends to begin a lawsuit. Which of the following statements is FALSE? 1. Under the Occupiers Liability Act, both Mimi and the absent owners qualify as “occupiers.” 2. Dave will be unsuccessful in his lawsuit because he willingly accepted the risk of injury when he walked up the broken steps. 3. The duty of care owed by an occupier under the Occupiers Liability Act applies in relation to the condition of the premises, activities on the premises, or the conduct of third parties on the premises. 4. A court will consider the reasonableness of the occupier’s actions in order to establish liability in this case.

Answer 139

Option (2) is correct because Dave is not trespassing while committing or intending to commit a criminal act (as he was merely looking for casual work). Dave also does not fall under any of the other enumerated categories of visitors who are deemed to have willingly assumed all the risks of entering on a property under section 3 of the Occupiers Liability Act. Option (1) is incorrect because Mimi is an occupier since she is in “physical possession of the premises”, and the absent owners remain occupiers because they still have “responsibility for, and control over” the property. (There may be more than one occupier of the same premises as per section 1 of the Occupiers Liability Act.) Option (3) is incorrect because section 3(2) of the Occupiers Liability Act states that the duty of care imposed on occupiers applies in relation to the: (a) condition of the premises; (b) activities on the premises; or (c) conduct of third parties on the premises. Option (4) is incorrect because the duty of care imposed by the Occupiers Liability Act on an occupier is to take such care as in all the circumstances is reasonable to see that persons coming onto the property will be reasonably safe. [Chapter 5]

Question 140

Assume that a seller instructs his real estate licensee to make certain oral representations regarding a property that both the seller and the licensee know to be false. If the purchaser later sues the seller and the licensee on the basis of this misrepresentation, then: 1. the seller will be liable to the buyer because he explicitly authorized the tort. 2. the licensee can escape personal liability by arguing that he was authorized to commit the tort. 3. the seller and the licensee will not be liable if there is a clause in the contract of purchase and sale reading, “There are no representations, warranties, guarantees, promises, or collateral agreements other than those contained in this written agreement”. 4. the buyer’s only remedy will be a court order against the seller for damages.

Answer 140

Option (1) is correct because the seller will be liable because he, as the principal: (a) is responsible for the acts of his agent and (b) expressly authorized the tort. Option (2) is incorrect because an agent can never escape liability for torts committed by the agent on the basis that the agent was authorized by the principal to commit them. Option (3) is incorrect because the inclusion of this clause in the contract of purchase and sale gives the vendor protection against innocent misrepresentations; however, it will not protect the vendor in the case of fraudulent misrepresentation. Option (4) is incorrect because, as previously mentioned, the buyer can also bring an action for damages against the licensee. The buyer can also sue for rescission of the contract. [Chapter 12]

Question 141

A licensee is required to file a Suspicious Transaction Report when they think a transaction is related to a money laundering or terrorist financing offence and it meets which of the following thresholds of proof? 1. Reasonable grounds to believe 2. Reasonable grounds to suspect 3. Belief beyond a reasonable doubt 4. A simple suspicion

Answer 141

Option (2) is correct because the required threshold to submit a Suspicious Transaction Report (STR) to FINTRAC is reasonable grounds to suspect. Option (1) is incorrect because reasonable grounds to believe means that there are verified facts supporting a probability that an offence has occurred, and is a higher threshold than reasonable grounds to suspect. Option (3) is incorrect because it is the standard that needs to be met to secure a criminal conviction, and it is higher than reasonable grounds to suspect. Option (4) is incorrect because simple suspicion, described as a “hunch” or intuition with little more explanation, is not enough to meet the threshold requirement for filing an STR. [Chapter 5] * simple is for simps, I SUSPECT*

Question 142

Which of the following statements regarding mortgage default insurance is FALSE? 1 A lender may apply a higher loan-to-value ratio to an insured loan than an uninsured loan. 2. The insurance company guarantees borrowers will be able to continue to make their mortgage payments without interruption. 3. The insurance premium paid on an insured mortgage can be added to the loan amount. 4. Mortgage default insurance is insurance for the lender.

Answer 142

Option (2) is correct (false) because the insurance company guarantees that the lender can recover all of the funds loaned in case of default, but does not guarantee that borrowers will be able to make their mortgage payments without interruption. Option (1) is incorrect; lenders may apply a higher loan-to-value ratio to an insured loan because the insurance reduces risk to the lender. Option (3) is incorrect because the insurance premiums are typically added to the loan amount. Option (4) is incorrect, as it is the lender that benefits from the insurance. The borrower may also derive some indirect benefit such as a lower interest rate or higher loan amount. [Chapter 13]

Question 143

There were three categories of “waste” at common law with respect to real property. Which one of the following is NOT one of those categories? 1. Equitable 2. Voluntary 3. Permissive 4. Ameliorating

Answer 143

Option (1) is correct because equitable waste was created by the courts of equity, not common law. Options (2), (3), and (4) are incorrect because voluntary waste, permissive waste, and ameliorating waste are all categories of waste recognized by common law. ** If it's common, it's not EQUITABLE.** [Chapter 3]

Question 144

A Court has power to re-open a mortgage transaction where, having regard to the risk and to all the circumstances, it is of the opinion that the cost of borrowing is excessive or harsh and unconscionable. In which one of the following statutes is this power contained? 1. The Interest Act 2. The Mortgage Brokers Act 3. The Real Estate Services Act 4. The Business Practices and Consumer Protection Act

Answer 144

Option (4) is correct because the Business Practices and Consumer Protection Act allows the court to intervene and effectively rewrite the transaction where it considers the cost of the loan to be excessive or the transaction is harsh and unconscionable. Options (1), (2), and (3) are incorrect because the Interest Act, the Mortgage Brokers Act, and the Real Estate Services Act do not confer this power on the courts. [Chapter 15]

Question 145

When using the cost approach of appraisal, cost of the improvements is more commonly determined by utilizing: 1. current replacement cost. 2. current reproduction cost. 3. current value based on historic cost. 4. actual cost.

Answer 145

Option (1) is correct because when using the cost approach of appraisal, cost of the improvements is normally determined by utilizing the current replacement cost. Options (2), (3), and (4) are incorrect for this reason. [Chapter 22]

Question 146

Which one of the following would NOT be included in the operating expenses of a commercial property for purposes of determining its market value? 1. Reserve for replacement of equipment 2. Interest on the mortgage 3. Property taxes 4. Advertising of vacant suites

Answer 146

Option (2) is correct because interest paid on a mortgage is not considered an operating expense. Options (1), (3), and (4) are incorrect because these are all included in operating expenses, which are paid by the landlord. [Chapter 23]

Question 147

Which of the following statements regarding electrical service is FALSE? 1. If the home is less than 25 years old, the size of the main breaker usually determines the service. 2. The wires to most homes carry 120/240 volt, 3-wire electrical service. 3. The Canadian Electrical Code requires that new or substantially renovated houses of more than 80 square metres have a service capacity of at least 100 amps. 4. Voltage is a measure of power or consumption.

Answer 147

Option (4) is correct because voltage is a measure of electrical potential, not power or consumption. Options (1), (2), and (3) are true statements. [Chapter 20]

Question 148

Which one of the following statements is correct? 1. Contracts of purchase and sale can always be assigned. 2. Contracts of purchase and sale can never be assigned. 3. Contracts of purchase and sale can only be assigned with the permission of the buyer in writing. 4. Contracts of purchase and sale can be assigned if the contract includes the standard assignment terms, the assignment does not prejudice the seller, and the contract does not prohibit assignment.

Answer 148

Option (4) is correct because section 8.2 of the Real Estate Services Regulation requires licensees to include the standard assignment terms in the contract of purchase and sale (unless they have been advised otherwise by their client). If the requirements of section 8.2 are met, assignments are permissible provided that they do not prejudice the rights of the seller and the contract does not prohibit assignment. Option (1) is incorrect because contracts of purchase and sale can only be assigned if certain conditions are met. Option (2) is incorrect because contracts of purchase and sale can be assigned in some circumstances. Option (3) is incorrect because under the standard assignment terms, contracts of purchase and sale can be assigned with the written consent of the seller, not the buyer. [Chapter 11]

Question 149

In British Columbia there are three basic requirements for an easement. Which one of the following is NOT a requirement? 1. There must be a dominant and servient tenement. 2. The easement must accommodate the dominant tenement. 3. The dominant and servient tenements must be owned by different parties. 4. The easement must be capable of forming the subject matter of a grant.

Answer 149

Option (3) is correct because there is no requirement for the dominant and servient tenements to be owned by different parties in order for an easement to be valid. Options (1), (2), and (4) are incorrect because an easement requires that there be a dominant and servient tenement, that the easement accommodate the dominant tenement, and that the easement be capable of forming the subject matter of a grant in order to be valid. [Chapter 3]

Question 150

Which of the following statements about the fee simple estate is TRUE? 1. The term “fee” means that the rights exercisable by the holder of a fee simple estate have been acquired by a payment of money. 2. Where the owner of a fee simple estate dies without a will, the property will “escheat” to the Crown. 3. An owner of a fee simple estate has the right to sell, rent, or lease the estate. 4. A fee simple estate is an estate that is held for a limited period of time.

Answer 150

Option (3) is correct because an owner of a fee simple estate has the greatest bundle of rights over his or her land that can be held in Canada, which includes the right to sell, rent, or lease the estate. Option (1) is incorrect because the term “fee” means that the estate can be inherited. Option (2) is incorrect because if the owner of a fee simple estate dies without a will, the owner’s heirs will inherit the estate in fee simple with the priority of the heirs being determined by the laws of intestate succession. Option (4) is incorrect because a fee simple estate has rights to the land for so long as he or she has heirs. [Chapter 3]

Question 151

In relation to the notation of a trust on the title for a property, which of the following correctly describes the meaning of a trustee? 1. The trustee is the individual or entity in whose name the trust property is held. 2. The trustee is the individual or entity for whom the property is beneficially held. 3. The trustee is the financial institution hired by the executor of an estate to handle the transfer of title from the deceased to their heirs. 4. The trustee is the government agency that is appointed to administer the assets of all persons in British Columbia who become incapable of managing their own affairs.

Answer 151

Option (1) is correct because a trustee is an individual or entity in whose name a property is held, in trust for the benefit of another person, known as the beneficiary. Option (2) is incorrect because the person who the property is held for the benefit of is known as the beneficiary. Option (3) is incorrect because while an executor may seek assistance in handling a transfer of title from an estate, the title will normally be put into the name of the executor, rather than a financial institution. Option (4) is incorrect because the family members or friends of an incapable person will typically be appointed to make decisions on their behalf, and the Public Guardian and Trustee is generally only appointed where none are available or willing to act. ** Beneficiary benefits, trustee is trusted to manage the assets.*** [Chapter 4]

Question 152

In which one of the following situations may the landlord choose to give the tenant one month’s notice of the end of the tenancy agreement? 1. Charles is renting a one-bedroom apartment in the West End of Vancouver on a month-to-month basis. He has been diligent in paying his rent on the due date each month but the landlord has recently discovered that Charles’ friend, Christine, has moved into the apartment with him. 2. Jordan’s warehouse is long overdue for a major renovation, which cannot be completed with the present tenant in occupation. Aladdin, the tenant, has four months left on his fixed term tenancy and does not wish to move. 3. On September 1, Kirsten moved into a small house owned by Jackson without paying the security deposit of $300 requested by the rental agent and according to the terms of the tenancy agreement. On September 30, she tenders $600 for the October rent but refuses to pay the additional $300 for the security deposit. 4. MacGregor’s son is moving to Vancouver and wants to live in an apartment that MacGregor owns and has rented out to Mrs. Julian for the last 20 years.

Answer 152

Option (3) is correct because, under section 47(1)(a) of the Residential Tenancy Act, a landlord may give a tenant a notice of the end of a tenancy if the tenant does not pay the security deposit within 30 days of the date it is required to be paid under the agreement. Option (1) is incorrect because, as per section 47(1)(c) of the Residential Tenancy Act, a landlord may only give a tenant notice of the end of a tenancy for reasons relating to the number of occupants if there are an “unreasonable” number of occupants in the rental unit. Two occupants in a one-bedroom apartment would not be considered unreasonable, and therefore, a landlord could not end a tenancy for this reason. Option (2) is incorrect because Jordan cannot end the tenancy early in order to renovate the warehouse. Jordan must wait until the lease term expires. Option (4) is incorrect because MacGregor must give the tenant at least 2 months’ notice in order to end Mrs. Julian’s tenancy to allow his son to move into the apartment. [Chapter 6]

Question 153

An assignment of a commercial lease may be made by a tenant to a third party: 1. only if there is an express provision in the lease allowing the tenant to do so. 2. only if the tenant has a licence to do so from the landlord. 3. only if the landlord’s consent can be implied from the course of dealings leading up to the execution of the lease. 4. unless the tenant is specifically prevented from doing so by a covenant in the lease.

Answer 153

Option (4) is correct because a tenant under a commercial lease may assign without the consent of the landlord unless there is an express prohibition in the lease. Options (1), (2), and (3) are incorrect because the presumption is that assignment is allowed unless otherwise specified in the lease, and none of the situations in these options are required for the presumption to prevail. [Chapter 6]

Question 154

Mimi was house-sitting for her friends Tom and Lizzie while they were on a three month photo-safari in Africa. The front porch was damaged in a freak storm that caused a tree to fall and smash the bottom two steps. Mimi didn’t have the money to hire a carpenter to repair the stairs, so she attached a large sign to the bottom of the steps reading, “DANGER KEEP OFF”. Dave, an out of work handyman who could not read English, was walking from house to house in the neighbourhood looking for casual work. He entered Tom and Lizzie’s property, and not understanding the sign started up the steps to the front door. Dave landed on the damaged step, and the weight of his body was more than the step could stand. He broke his leg in two places, and having no insurance, has run up $3,750 in medical bills. Dave now intends to begin a lawsuit. Which of the following statements is FALSE? 1. Under the Occupiers Liability Act, both Mimi and the absent owners qualify as “occupiers.” 2. Dave will be unsuccessful in his lawsuit because he willingly accepted the risk of injury when he walked up the broken steps. 3. The duty of care owed by an occupier under the Occupiers Liability Act applies in relation to the condition of the premises, activities on the premises, or the conduct of third parties on the premises. 4. A court will consider the reasonableness of the occupier’s actions in order to establish liability in this case.

Answer 154

Option (2) is correct because Dave is not trespassing while committing or intending to commit a criminal act (as he was merely looking for casual work). Dave also does not fall under any of the other enumerated categories of visitors who are deemed to have willingly assumed all the risks of entering on a property under section 3 of the Occupiers Liability Act. Option (1) is incorrect because Mimi is an occupier since she is in “physical possession of the premises”, and the absent owners remain occupiers because they still have “responsibility for, and control over” the property. (There may be more than one occupier of the same premises as per section 1 of the Occupiers Liability Act.) Option (3) is incorrect because section 3(2) of the Occupiers Liability Act states that the duty of care imposed on occupiers applies in relation to the: (a) condition of the premises; (b) activities on the premises; or (c) conduct of third parties on the premises. Option (4) is incorrect because the duty of care imposed by the Occupiers Liability Act on an occupier is to take such care as in all the circumstances is reasonable to see that persons coming onto the property will be reasonably safe. [Chapter 5]

Question 155

Which of the following could a defendant use as a defence to a claim in negligence against them? 1. The defendant did not intend to cause injury or damage to the plaintiff. 2. The defendant breached the standard of care owed to the plaintiff. 3. The damage suffered by the plaintiff was not reasonably foreseeable by a person in the defendant’s position. 4. The act of the defendant was authorized by statute.

Answer 155

Option (3) is correct because damages that are not reasonably foreseeable are considered too “remote” in law, and a plaintiff will not be able to get compensation for them. Option (1) is incorrect because a claim for negligence is concerned with whether the defendant breached the standard of care owed, not whether they intended to cause injury or damage to the plaintiff. Option (2) is incorrect because this is a required element for a successful claim of negligence. Option (4) is incorrect because even if an act was authorized by statute, a defendant could still be found negligent for the way that act was done. [Chapter 5]

Question 156

Charlotte offered to sell her property to Dennis for $180,000 by email. Dennis emailed, “Send lowest cash price – will give $165,000 cash”. Charlotte replied, “Cannot reduce price”. Dennis then accepted the original offer but Charlotte refused to sell claiming that there was no contract. Which of the following statements is TRUE? 1. There is no contract because Charlotte’s reply was not a renewal of her original offer. 2. Charlotte’s reply to Dennis’ first wire was, in effect, a counter-offer on the same terms as her original offer. 3. Charlotte may successfully claim that her initial price of $180,000 was an “invitation to treat” and therefore she was entitled to refuse Dennis’ offer to pay that amount. 4. Options (1) and (3) are both true.

Answer 156

Option (2) is correct because Charlotte effectively revived her original offer (to sell her property to Dennis for $180,000), which Dennis then accepted. Dennis’ offer of $165,000 was a counter-offer, which therefore terminated the original offer. However, Charlotte made her own counter-offer when she replied, “cannot reduce price”, which effectively renewed her original offer. Option (1) is incorrect because the case of Livingstone v. Evans tells us that the words “cannot reduce price”, uttered in this context, renew the original offer. Dennis was therefore entitled to accept the renewed offer. Option (3) is incorrect because Charlotte’s initial email contained the necessary terms (the property and the price) to constitute an offer capable of being accepted, and therefore was more than a mere invitation to treat. Option (4) is incorrect because Options (1) and (3) are both incorrect. [Chapter 10]

Question 157

From the point of view of the lender, the interest charged on a mortgage does NOT represent: 1. a payment for a portion of the general overhead and operating costs of the lender. 2. the cost of financing the lender’s debt. 3. an incentive to accept uncertainty or risk. 4. a return on capital invested.

Answer 157

Option (2) is the correct answer as it is the only option that is not represented by interest received by a lender. Interest due or paid represents the cost of financing debt, not interest received. Options (1), (3), and (4) all represent interest charged on a mortgage and are therefore incorrect. [Chapter 13]

Question 158

Which of the following is a common law source of duties to clients? 1. The Real Estate Services Act 2. The Real Estate Services Regulation 3. Agency/fiduciary law 4. The Real Estate Services Rules

Answer 158

Option (3) is correct because agency/fiduciary law is an example of a common law source of duties to clients. Options (1), (2), and (4) are incorrect because they are examples of legislative duties to clients. [Chapter 9]

Question 159

Which one of the following is NOT a rationale for government regulation of land use? 1. Protection of property values 2. Public health and safety 3. Limiting the power of land developers 4. Conservation of natural resources

Answer 159

Option (3) is correct because limiting the power of land developers is not a rationale for government regulation of land use. Options (1), (2), and (4) are incorrect because they are all rationales for government regulation of land use. [Chapter 18]

Question 160

If a licensee falls into the narrow exception in the Rules for the practice of dual agency, they must ensure that which of the following agreements is entered into before providing services within the dual agency relationship? 1. An Agreement Regarding Conflict of Interest Between Clients 2. A written agreement of dual agency 3. A Disclosure of Interest in Trade form 4. A Disclosure of Risks to Unrepresented Parties form

Answer 160

Option (2) is correct because a licensee must obtain a written agreement of dual agency by both clients before providing services within the dual agency relationship. Option (1) is incorrect because an Agreement Regarding Conflict of Interest Between Clients is entered into when a licensee faces a conflict of interest when acting for multiple clients, and obtains written consent by all clients to continue to represent only one client. Option (3) is incorrect because the applicable one of the Disclosure of Interest in Trade forms is required when a licensee or an associate of a licensee (being provided real estate services by the licensee) is to directly or indirectly acquire or dispose of real estate. Option (4) is incorrect because a Disclosure of Risks to Unrepresented Parties form is required when a licensee makes a disclosure under section 54 of the Rules to an unrepresented party while also representing a client to that trade in real estate. [Chapter 12]

Question 161

Which of the following statements is TRUE pertaining to the purposes of assessment and taxation? 1. The strata development is assessed as a whole and each strata lot owner pays taxes in proportion to their value on destruction. 2. Each strata lot is assessed and taxed separately from the common areas, which are assessed and taxed to the strata corporation. 3. The strata development is assessed as a whole and each strata lot owner pays taxes in accordance with their unit entitlement. 4. Each strata lot, together with the owner's share in the common property, is deemed to be a separate parcel of land and improvement.

Answer 161

Option (4) is correct and Options (1), (2), and (3) are incorrect because each strata lot, together with the strata lot owner’s share in the common property, is deemed to be a separate parcel of land and is assessed and taxed individually. [Chapter 4]

Question 162

Which of the following is NOT a significant characteristic of improved land? 1. Immobility 2. Durability of improvements 3. Indivisibility of ownership 4. Uniqueness of each parcel

Answer 162

Option (3) is correct because ownership can be divided. Options (1), (2), and (4) are significant characteristics of improved land. [Chapter 21]

Question 163

The risk involved in being a mortgagee (a lender of funds secured by a mortgage) is: 1. lower than the risk involved when investing in Canadian government bonds for a similar time period. 2. unacceptable to many investors if the interest rate is high enough. 3. increased through careful appraisal of the value of the property and the credit rating of the borrower. 4. increased due to the greater degree of management time involved.

Answer 163

Option (4) is correct because the risk involved in being a mortgagee is increased due to the greater degree of management time involved. Option (1) is incorrect because mortgage risk is higher than that of Canadian government bonds. Option (2) is incorrect because investors are willing to accept higher risk for higher return; if the interest rate is high enough, investors will accept the risk of lending mortgage funds. Option (3) is incorrect because mortgage risk can also be reduced through careful borrower qualification measures. [Chapter 13]

Question 164

Two mortgages requiring constant blended payments are identical in all respects except that one has a five-year term and the other has a two-year term. The monthly payments on the five-year term mortgage would be: 1. higher than those required on the two-year term mortgage. 2. lower than those required on the two-year term mortgage. 3. the same as those required on the two-year term mortgage. 4. impossible to compare given the information presented.

Answer 164

Option (3) is correct because the difference in term has no impact on the monthly payments. Since the loan amount, interest rate, and amortization period are all the same, the monthly payments will be the same. Options (1), (2), and (4) are incorrect for this reason. [Chapter 13]

Question 165

Calculate the nominal rate of interest, compounded quarterly that is equivalent to 1.5% per quarterly compounding period. a) 18% b) 6% c) 12% d) 10%

Answer 165

Nominal = Phenomenal rate of the year! J 🎉 What is it, if it's also J4 = 1.5% 1.5 (C) 1.5 (C) 1.5 (C) 1.5 (C) = 6%

Question 166

Which of the following elements are NOT considered in determining appropriate rates of interest on mortgage loans? 1. The credit rating of the borrower 2. The type of property used for security 3. The amount of administrative attention required on the loan 4. The amount of property insurance

Answer 166

Option (4) is correct because the amount of property insurance does not affect the risk to the lender, and therefore will not be considered in determining the appropriate rate. Options (1) and (2) are incorrect because the borrower’s credit rating and the type of property affect the risk of the loan to the lender. Option (3) is incorrect because a lender will set an appropriate rate of return based on the risk of lending, as well as the amount of administrative work required. [Chapter 13]

Question 167

On a straight line principal reduction loan, the monthly payment: 1. is a constant amount each month. 2. pays interest only. 3. pays principal only. 4. declines over time.

Answer 167

Option (4) is correct because the monthly payment on a straight line principal reduction loan declines over time. Options (2) and (3) are incorrect because each monthly payment includes a constant amount of the principal, plus the interest that has accrued for the month. Options (1) is incorrect because as the outstanding balance declines over time, the amount of monthly interest declines; therefore, the total payment declines. [Chapter 13]

Question 168

Two mortgages requiring constant blended payments are identical in all respects except that one has a five-year term and the other has a two-year term. The monthly payments on the five-year term mortgage would be: 1. higher than those required on the two-year term mortgage. 2. lower than those required on the two-year term mortgage. 3. the same as those required on the two-year term mortgage. 4. impossible to compare given the information presented.

Answer 168

Option (3) is correct because the difference in term has no impact on the monthly payments. Since the loan amount, interest rate, and amortization period are all the same, the monthly payments will be the same. Options (1), (2), and (4) are incorrect for this reason. [Chapter 13]

Question 169

Which of the following is NOT a characteristic of a mortgage as an investment? 1. Illiquid relative to government bonds 2. Requires a high degree of administrative work 3. Requires a high initial outlay of capital 4. Has short repayment terms and amortization periods

Answer 169

Option (4) is the correct answer as a mortgage typically has long terms and amortization periods. Option (1) is incorrect because mortgages do not trade publicly such as bonds and stocks, making them relatively illiquid. Options (2) and (3) are incorrect because mortgage loans also require a high degree of administrative work, and a relatively high initial outlay of capital compared to other investments. [Chapter 13]

Question 170

Calculate the semi-annual periodic rate of interest that is equivalent to 12% per annum, compounded semi-annually. 1. 1% 2. 4% 3. 12% 4. 6%

Answer 170

Calculate the semi-annual periodic rate from the semi-annual nominal rate. J1 = 12 > j2 = 6 12 ÷ 2 = 6 The periodic rate is 6%. [Chapter 13]

Question 171

Which of the following appears in the “Description of Land” section of a Land Title Search in British Columbia? 1. Civic street address of the property 2. Parcel identifier, or PID 3. Dimensions of the parcel of land 4. Geodetic coordinates for each corner of the property

Answer 171

Option (2) is correct because the parcel identifier (PID) is listed under the “Description of Land” section of a title search. Options (1), (3) and (4) are incorrect because these items are not listed on a title search. [Chapter 4]

Question 172

Which of the following is an example of an equitable mortgage? 1. Mortgage of the equity of redemption 2. Agreement to execute a legal mortgage 3. Mortgage by way of deposit of the duplicate certificate of title 4. All of the above

Answer 172

Option (4) is correct because a mortgage of the equity of redemption, an agreement to execute a legal mortgage, and a mortgage by way of deposit of the duplicate certificate of title are all examples of ways to create equitable mortgages. A mortgage of the equity of redemption is a mortgage of the equitable interest in the land that the borrower retains after granting a legal mortgage. An agreement to grant a mortgage in the future is recognized as a present equitable mortgage. A mortgage by way of deposit of the duplicate certificate of title occurs when a bank requires the duplicate certificate as collateral security for a demand loan. [Chapter 15]

Question 173

An offer to purchase real estate: 1.must have the words “or nominee” or “or assignee” if the buyer wishes to assign the contract. 2. must by default have standard terms relating to contract assignments unless the buyer instructs otherwise. 3. always provides either party with the option to assign the contract. 4. cannot be assigned.

Answer 173

Option (2) is correct because unless the buyer instructs otherwise, an offer to purchase real estate must have standard terms relating to contract assignment. Option (1) is incorrect because the Knowledge Base, “Assignment Guidelines”, states that these words should not be used to describe the buyer. Option (3) is incorrect because assignments are permissible only as long as the Standard Assignment Terms are included in the contract of purchase and sale of real estate, and provided that the assignment does not prejudice the rights of the seller and the contract does not prohibit assignment. Option (4) is incorrect because a contract of purchase and sale can be assigned if certain requirements are met. [Chapter 11]

Question 174

Which of the following would be classified as a current asset on the financial statements of a business? 1. Land 2. Rents receivable 3. Real property at its historic cost 4. Accounts payable

Answer 174

Option (2) is correct because rents receivable is the only account listed that will be classified as a current asset. A current asset is something that the company owns, that will be used up within the next year. The rent receivable account is expected to be collected within the next year. Options (1) and (3) are incorrect because land and real property are classified as fixed- or long-term assets. Option (4) is incorrect because accounts payable is classified as a current liability. [Chapter 8]

Question 175

Which of the following would be classified as a current asset on the financial statements of a business? 1. Land 2. Rents receivable 3. Real property at its historic cost 4. Accounts payable

Answer 175

Option (2) is correct because rents receivable is the only account listed that will be classified as a current asset. A current asset is something that the company owns, that will be used up within the next year. The rent receivable account is expected to be collected within the next year. Options (1) and (3) are incorrect because land and real property are classified as fixed- or long-term assets. Option (4) is incorrect because accounts payable is classified as a current liability. [Chapter 8]

Question 176

Assume that a seller instructs his real estate licensee to make certain oral representations regarding a property that both the seller and the licensee know to be false. If the purchaser later sues the seller and the licensee on the basis of this misrepresentation, then: 1. the seller will be liable to the buyer because he explicitly authorized the tort. 2. the licensee can escape personal liability by arguing that he was authorized to commit the tort. 3. the seller and the licensee will not be liable if there is a clause in the contract of purchase and sale reading, “There are no representations, warranties, guarantees, promises, or collateral agreements other than those contained in this written agreement”. 4. the buyer’s only remedy will be a court order against the seller for damages.

Answer 176

Option (1) is correct because the seller will be liable because he, as the principal: (a) is responsible for the acts of his agent and (b) expressly authorized the tort. Option (2) is incorrect because an agent can never escape liability for torts committed by the agent on the basis that the agent was authorized by the principal to commit them. Option (3) is incorrect because the inclusion of this clause in the contract of purchase and sale gives the vendor protection against innocent misrepresentations; however, it will not protect the vendor in the case of fraudulent misrepresentation. Option (4) is incorrect because, as previously mentioned, the buyer can also bring an action for damages against the licensee. The buyer can also sue for rescission of the contract. [Chapter 12]

Question 177

Which of the following is NOT a part of a standard zoning bylaw? 1. The official zoning map 2. Restrictions as to land use 3. The schedules outlining the regulations applicable to each particular zoning district 4. A consolidation of all amendments to the bylaw adopted up until the time of consolidation

Answer 177

Option (4) is correct because zoning bylaws are periodically consolidated to include all the amendments that have been adopted up to the time of that consolidation, but this is not a standard part that is usually included in the bylaw. Options (1), (2), and (3) are incorrect because they are all part of a standard zoning bylaw. [Chapter 18]

Question 178

Which of the following is FALSE with respect to the law of contract? 1. Subject to some exceptions, only the parties to a contract have a right to sue or be sued for breach of the contract. 2. The burden or liability under a contract may be assigned, provided that the requirements of the Law and Equity Act are met. 3. A contract that creates an interest in land is one of the exceptions to the doctrine of privity of contract. 4. A statutory assignment must be in writing, must be absolute and unconditional, and notice in writing of the assignment must be given to the original promisor.

Answer 178

Option (2) is correct because while a person can assign away benefits under a contract to a third party, a person generally cannot assign liabilities. Option (1) is incorrect because under the doctrine of privity of contract, only the parties to a contract can sue or be sued for its breach. Option (3) is incorrect because one exception to the doctrine of privity of contract is contracts which create an interest in land. Option (4) is incorrect because the Law and Equity Act states that a statutory assignment must be in writing, must be absolute and unconditional, and notice must be given in writing to the original promisor. [Chapter 10]

Question 179

Section 52 of the Competition Act prohibits false or misleading advertising and creates an offence punishable by imprisonment or a fine. Which of the following statements is FALSE concerning this offence? 1. This offence punishes misleading statements in various forms, including oral and written. 2. All false advertisements made to the public will constitute an offence under the provisions of the Competition Act, even if the misrepresentation is not misleading in a material respect. 3. Both the general impression of the representation as well as its literal meaning are relevant in determining whether a breach of the Act has taken place. 4. The person making the representation can escape liability if they can show that they honestly believed the statement was not false or misleading and exercised due diligence in making sure that was the case.

Answer 179

Option (2) is correct because it is only an offence under section 52 of the Competition Act if the false advertisement is misleading in a material respect. Option (1) is incorrect because the forms of advertising covered by section 52 are extremely broad, and include representations in print, oral, and digital form. Option (3) is incorrect because the courts will consider both the literal meaning and general impression of the advertisement to determine whether the representation is false or misleading in a material respect. Option (4) is incorrect because an accused may escape liability under section 52 if they honestly believed that the representation or advertisements were not false or misleading and that they exercised due diligence in making sure that was the case. [Chapter 11]

Question 180

Which of the following statutes affects the real property taxation system in British Columbia? 1. The Real Estate Services Act 2. The School Act 3. The Arbitration Act 4. The Land Transfer Form Act

Answer 180

Option (2) is correct because the School Act is one of seven statutes which form the foundation of the real property tax system in British Columbia. The School Act provides for real property taxation to fund public school education throughout the province. Options (1), (3), and (4) are incorrect because they are not included among the 17 statutes which significantly affect the real property taxation system in British Columbia. [Chapter 19]

Question 181

Value in exchange is: 1. commonly referred to as value to the owner. 2. the sale price. 3. the owner’s minimum price, called the floor price. 4. a range of mutual profit.

Answer 181

Option (2) is correct because the value in exchange is the sale price of the home. Options (1), (3), and (4) are therefore incorrect. [Chapter 21]

Question 182

Which of the following statements about the trial process in British Columbia is FALSE? 1. Our common law system is based on an adversarial process in which each of the two opposing parties presents its point of view to an impartial trier of fact whose decision is binding on both parties. 2. A plaintiff commences an action by filing a notice of civil claim in the court registry; once served with the notice of civil claim, the defendant can answer by denying some or all of the claims set out in the plaintiff’s notice of civil claim by filing a response to civil claim. 3. One of the major reasons why most claims are settled out of court is that the discovery process allows the parties to see more plainly the strengths and weaknesses of their positions. 4. The plaintiff and defendant alternate in calling their witnesses.

Answer 182

Option (4) is correct because, in British Columbia, the plaintiff calls each of its witnesses first. Once the defendant’s lawyer has had the opportunity to cross-examine each witness called by the plaintiff, the defendant then calls each of its own witnesses. Options (1), (2), and (3) are incorrect because each statement accurately describes the trial process in British Columbia. [Chapter 1]

Question 183

As one lowers a discount (or expected yield) rate, the present value of a given series of future payments: 1. decreases. 2. could go up or down depending on the timing of the payments. 3. increases. 4. remains constant.

Answer 183

Option (3) is correct because the payments of a loan contract are calculated based on a contract yield rate. If the discount, or expected yield rate decreases, the present value of the given contracted payments increases. Options (1), (2), and (4) are incorrect for this reason. [Chapter 16]

Question 184

A board of variance is a board established to: 1. ensure that actions by municipalities are not at variance with the Local Government Act. 2. settle boundary line disputes between private parties. 3. ensure that all non-conforming uses cease within six months after a change in a zoning bylaw. 4. permit a minor deviation from a zoning bylaw for an individual property owner.

Answer 184

Option (4) is correct because a board of variance must be established by every local government that has adopted a zoning bylaw to ensure that the bylaw does not cause undue hardship. A board of variance may grant minor variances from zoning bylaws where compliance would cause undue hardship provided that the variance would not conflict with the policies of the local government. Option (1) is incorrect because boards of variance do not enforce municipality compliance with the Local Government Act. Option (2) is incorrect because boards of variance do not settle boundary line disputes between private parties. Option (3) is incorrect because legal non-conforming uses may be permitted to exist for more than six months. [Chapter 18]

Question 185

An appraiser is using the market approach for an appraisal of a single-family house. By proper adjustment, the appraiser can use sale prices of all the following properties for comparison purposes, EXCEPT: 1. houses in different neighbourhoods. 2. houses with different square footage. 3. houses recently sold between related parties. 4. houses sold over six months ago.

Answer 185

Option (3) is correct because appraisers cannot use sale prices for houses recently sold between related parties for comparison purposes. Market value is determined by analyzing market transactions where the buyer and seller have no special relationship (i.e., the sale occurred at arm’s length) and the properties sold are similar (or comparable) to the subject property. Options (1), (2), and (4) are incorrect because with appropriate adjustment, the sale prices of all of these properties can be used for comparison purposes. [Chapter 22]

Question 186

A clerk in the Land Title Office mistakenly registered a fee simple transfer on the wrong title, with the result that Lot 5, owned by Michael, was transferred to Scott. Scott discovered this error and, instead of correcting the error, he sold the property to another person who was unaware of the clerical error and of Scott’s dishonest conduct. Michael discovered the error after the buyer had registered the transfer from Scott. He wants his land restored to him and the register corrected. You correctly advise Michael that: 1. because this situation was caused by a clerical error, the Registrar will correct the register and restore Michael’s property to him. 2. the person who bought the property, bona fide and for value, from Scott, is protected by the British Columbia land title system; as a result, Michael cannot have his property restored to him. 3. Michael contributed to his own loss by neglecting to register a lien on his title to indicate to anyone searching title that he was the registered owner; as a result, he cannot recover damages in a lawsuit against Scott. 4. because Scott acted fraudulently, the transfer of the property to the third party is a void deed, meaning that Michael can have the property restored to him.

Answer 186

Option (2) is correct because the indefeasibility principle means that any registered owner who acquires a fee simple estate in good faith and for valuable consideration is protected by the land title system. That purchaser can keep his or her title, even if the previous registered owner acquired title by way of fraud or forgery. Option (1) is incorrect because the indefeasibility principle allows the purchaser to keep his or her title. Option (3) is incorrect because Michael did not contribute to his own loss by neglecting to register a lien on his title to indicate that he was the registered owner. Option (4) is incorrect because the principle of indefeasibility overrules the common law doctrine of void deed, and so the transfer of the property to the third party was valid and the purchaser now has indefeasibility of title. [Chapter 4]

Question 187

Which one of the following terms does NOT describe a type of structural method used in housing construction? 1. Log 2. Concrete block 3. Vaulted ceiling 4. Post, beam, and plank

Answer 187

Option (3) is correct because a vaulted ceiling is an architectural variation, not a structural method used in housing construction. Options (1), (2), and (4) are incorrect because they describe types of structural methods used in housing construction. [Chapter 20]

Question 188

Zelda was in a good mood one day, and she went over to her next door neighbour Herb’s house and cleaned all his gutters. When Herb returned home from work, he was thrilled by what Zelda had done and he said, “Zelda, I am going to give you a case of wine for doing this.” Weeks passed, and finally Zelda asked Herb when she could expect to receive her wine. Herb said that he had changed his mind. Zelda is now furious and wants to sue Herb in small claims court for a breach of contract. Which of the following statements is most relevant to these facts? 1. An invitation to treat is distinguishable from an offer because it cannot form a binding contract, if accepted. 2. A voidable contract exists until it is repudiated by the party entitled to do so. 3. Past consideration is no consideration. 4. Breach of a condition of a contract entitles the injured party to terminate the contract.

Answer 188

Option (3) is relevant and therefore correct because although Herb offered a case of wine as present consideration, the cleaning of the gutters was past consideration. Since past consideration is no consideration, no contract formed between Herb and Zelda. Option (1) is incorrect because an invitation to treat is typically an advertisement or other statement from one party inviting another party to make a legal offer. No invitation to treat appears in this scenario. Option (2) is incorrect because there is no voidable contract to be repudiated on the facts. Option (4) is not relevant because the issue is whether there was consideration to give rise to a valid contract in the first place. [Chapter 10]

Question 189

Which of the following statements regarding income statements is FALSE? 1. It is also known as a profit and loss statement. 2. It is a listing of the revenue and expenses of a business enterprise. 3. It may include depreciation, revenue, and cost of goods sold. 4. It is always determined on an annual basis.

Answer 189

Option (4) is correct because an income statement is not always determined on an annual basis. Many large companies will generate quarterly reports, and sometimes generate reports covering other time periods. Options (1), (2), and (3) are all true and are therefore incorrect. [Chapter 8]

Question 190

Focusing on client needs and using need satisfaction as the starting point for the development of a marketing program is known as which of the following options? 1. The marketing concept 2. Personal selling 3. The promotional mix 4. Differentiated marketing

Answer 190

Option (1) is correct because the marketing concept involves focusing on the client’s needs and using need satisfaction as the starting point for the development of a marketing program. Option (2) is incorrect because personal selling involves face-to-face communication with a potential customer. Option (3) is incorrect because the promotional mix refers to the proper blending of components to satisfy the needs of the target market and to accomplish the desired promotional objectives. Option (4) is incorrect because differentiated marketing refers to similar products being marketed to different market segments using different marketing techniques. [Chapter 25]

Question 191

As one lowers a discount (or expected yield) rate, the present value of a given series of future payments: 1. decreases. 2. could go up or down depending on the timing of the payments. 3. increases. 4. remains constant.

Answer 191

Option (3) is correct because the payments of a loan contract are calculated based on a contract yield rate. If the discount, or expected yield rate decreases, the present value of the given contracted payments increases. Options (1), (2), and (4) are incorrect for this reason. [Chapter 16]

Question 192

Frank sends a letter to Joe saying, “I will sell you 200 dozen widgets for $1,200.” Before Joe receives the letter, he sends an email to Frank offering to buy “200 dozen widgets for $1,200.” Given this information, which of the following statements is TRUE? 1. Frank and Joe have formed a binding and enforceable contract. 2. Because the requirement of writing contained in section 59 of the Law and Equity Act has not been complied with, a contract has not been formed. 3. There has not been a valid offer and acceptance and therefore a contract has not been formed. 4. Both (2) and (3) are true.

Answer 192

Option (3) is correct, because in order for a valid contract to be formed, there must be acceptance of an offer. In this case, although both parties have made identical offers, neither offer has been accepted by the other party. Joe has not accepted Frank’s offer because he did not have notice of the offer before sending the email to Frank; rather, he has make a separate offer. Option (1) is incorrect for the same reason. Option (2) is incorrect because section 59 of the Law and Equity Act requires most contracts affecting land to be in writing, and since this is not a contract respecting land, section 59 would not apply. Therefore, Option (4) is also incorrect. [Chapter 10]

Question 193

If the metric building module is increased from 100 mm to 150 mm, this would be considered as which of the following? 1. A hard change to the metric standard of measurement 2. A soft change to the metric standard of measurement 3. A switch to the imperial standard of measurement 4. A continuation of the current imperial standard of measurement

Answer 193

Option (1) is the correct answer as a hard change is the establishment of a new metric standard size, such as 150mm. Options (2), (3), and (4) are incorrect. [Chapter 20]

Question 194

With respect to bylaws in a strata development, which of the following statements is TRUE? 1. Bylaws are passed by special resolution of the strata council. 2. Bylaws may limit an owner’s right to lease a strata lot if it is a commercial condominium complex. 3. Bylaws provide for the control and management of the strata lots and common property. 4. Bylaws can be enforceable despite violating the Human Rights Code as long as they were unanimously passed by the members.

Answer 194

Option (3) is correct because a strata corporation may amend the Standard Bylaws in the Strata Property Act by creating a new custom-made bylaw, but they may not enforce such a bylaw until it has been filed at the land title office. Option (1) is incorrect because a vote’s decision-making value is not determined by the lot’s unit entitlement – rather, one vote per lot is given regardless of the size of the lot. Option (2) is incorrect because a strata corporation cannot pass bylaws to restrict the rental of strata units. Option (4) is incorrect because the strata lot is restricted to its description in the strata plan, and everything outside of that parcel is considered to be common property. [Chapter 7]

Question 195

“Reproduction cost” is best defined as: 1. the current construction cost of a building that would provide the same utility as the subject property. 2. the current cost of moving the building to a site where the building would represent the highest and best use of that site. 3. the current cost of constructing an exact replica of the subject property. 4. the original cost of construction, adjusted for inflation.

Answer 195

Option (3) is correct because reproduction cost is the current cost of constructing an exact replica of the subject property. Options (1), (2), and (4) are incorrect for this reason. [Chapter 22]

Question 196

Which one of the following is the BEST method of accounting for cyclical repairs in the appraisal of an income-producing property? 1. Increase the capitalization rate 2. Deduct the amount of the repair in the year it is expected to be incurred 3. Apportion the amount of the repair to an annual allowance 4. Reduce the eventual sale price of the property to reflect depreciation

Answer 196

Option (3) is correct because when using the income approach, an appropriate annual allowance or reserve should be made to cover the total cost of periodic repairs. For example, to cover the cost of painting every three years, one-third of the total painting cost could be allocated as an expense each year. Options (1), (2), and (4) are therefore incorrect. [Chapter 23]

Question 197

Given a nominal rate of interest of 5%, the greater the frequency of compounding: 1. the lower the effective annual rate. 2. the higher the rate per compounding period. 3. the higher the yield to the lender. 4. the lower the payments to the borrower.

Answer 197

Option (3) is correct and can be illustrated by way of example. A loan with an interest rate of 5% compounded annually will yield a $5 return at the end of the year for a $100 investment. If it was a nominal rate of 5%, compounded semi−annually, the yield would be $5.06025 (a 5.06025% effective rate). Therefore, increasing the compounding period increases the yield to the lender. Options (1), (2), and (4) are incorrect for this reason. [Chapter 14]

Question 198

Given that all other factors are identical, the shorter the term of the contract on a bonused, partially amortized mortgage (where the bonus is paid by the borrower): 1. the lower the effective interest rate paid by the borrower. 2. the higher the effective interest rate paid by the borrower. 3. the higher the required monthly payment. 4. the lower the outstanding balance at the term’s end.

Answer 198

Option (2) is correct because all things being equal, a shorter term on a bonused partially amortized loan will result in a higher effective interest rate paid by the borrower. This is because the value of the bonus is paid off over a shorter term, thus increasing the annual cost of borrowing. Options (1), (3), and (4) are incorrect. [Chapter 16]

Question 199

Which of the following correctly outlines the objective/task method of creating a promotional budget? 1. Define the competition, outline competitors’ expenditures, and set tasks to maintain competitive-parity with competitors 2. Conduct tasks in order to reach a sales objective that is specific, realistic, measurable, and within a predetermined timeline 3. Create an objective, analyze costs and benefits, and determine the tasks to reach the objective 4. Define the advertising objective as “SMART”, outline the necessary tasks, and estimate the costs of performing the tasks

Answer 199

Option (4) is correct because the “objective/task” method of creating a promotional budget requires that the licensee first determine the objectives of the advertisement, and then determine the desired tasks and activities necessary to reach the objective. This involves defining a “SMART” marketing objective, outlining the tasks required to attain the objective, and estimating the cost of performing these tasks. Option (1) is incorrect because this approach describes the “follow-the-competition” method. Option (2) is incorrect because this approach describes the “SMART” criteria for developing effective business and marketing goals. Option (3) is incorrect because it fails to discuss the step of defining a “SMART” marketing objective. [Chapter 25]

Question 200

Most zoning bylaws include density restrictions. Which of the following is NOT a method of measuring density? 1. Total floor area of the building in relation to the size of the lot 2. Floor area ratio 3. Number of dwelling units per hectare 4. Prescribing the maximum lot area per dwelling

Answer 200

Option (4) is correct because prescribing the maximum lot area per dwelling is not a method of measuring density. Rather, prescribing the minimum lot area per dwelling is a method of measuring density. Options (1), (2), and (3) are incorrect because total floor area of the building in relation to the size of the lot, floor area ratio, and number of dwelling units per hectare are all methods of measuring density. [Chapter 18]

Question 201

The effective annual rate of interest for 10% per annum, compounded semi−annually, is: 1. less than the effective annual rate for 9% per annum, compounded semi−annually. 2. less than the effective annual rate for 10% per annum, compounded annually. 3. greater than the effective annual rate for 10% per annum, compounded monthly. 4. less than the effective annual rate for 9.9% per annum, compounded daily.

Answer 201

Calculate the effective annual rate of interest of 10% per annum, compounded semi−annually, and the effective annual rates of interest for each option. Press Display 10 ■ NOM% 10 2 ■ P/YR 2 ■ EFF% 10.25 Option (1): 9 ■ NOM% 9 2 ■ P/YR 2 ■ EFF% 9.2025 Option (2): 10% per annum compounded annually = 10% effective annual rate Option (3): 10 ■ NOM% 10 12 ■ P/YR 12 ■ EFF% 10.471307 Option (4): 9.9 ■ NOM% 9.9 365 ■ P/YR 365 ■ EFF% 10.405148 Therefore, Option (4) is correct. [Chapter 14]

Question 202

Suppose XYZ Ltd. is located in a building that was purchased two years ago for $1,000,000. The building has an economic life of 10 years with no salvage value. Annual depreciation is calculated using the straight-line method. If XYZ Ltd. earned a net income of $450,000 and claimed $38,400 of capital cost allowance in the second year, what is XYZ’s taxable income at the end of Year 2? 1. $511,600 2. $488,400 3. $394,600 4. $387,400

Answer 202

First, find the annual depreciation expense from the building. Then, in order to calculate the annual depreciation expense using the straight-line method, take the cost of the building less any salvage value and divide the sum by the economic life. 428-1.JPG Net income per financial statements + Depreciation expense = Subtotal − Capital cost allowance = Taxable Income $450,000 + 100,000 = 550,000 − 38,400 = $511,600 XYZ Ltd.’s taxable income for this year is $511,600. [Chapter 8]

Question 203

Which one of the following is TRUE where a comparable property is sold subject to a vendor supplied mortgage at an interest rate lower than the current market rate? 1. The comparable property may never be used as evidence of market value. 2. The comparable sale price must be adjusted upward. 3. The comparable sale price may only be used as evidence of market value. 4. The comparable sale price must be adjusted downward.

Answer 203

Option (4) is correct because when a comparable property is sold subject to a low interest rate, the comparable sale price must be adjusted downward. Option (1) is false because the comparable property can be used as evidence of market value, as long as an adjustment is made for the “cheap” financing provided by the vendor. Option (2) is false because the comparable sale price must be adjusted downward to compensate for the benefit provided by the below-market interest rate on the mortgage. Option (3) is false because the price of the comparable property needs to be adjusted to its cash-equivalent price. [Chapter 22]

Question 204

Which of the following is NOT one of the required elements of negligent misrepresentation? 1. There must be an untrue statement 2. The statement must have been negligently 3. The defendant must have known that the statement was false at the time that it was made 4. There must be reasonable reliance by the plaintiff on the negligent statement

Answer 204

Option (3) is correct because knowledge that a statement is false is one of the elements of fraudulent misrepresentation, not negligent misrepresentation. Options (1), (2), and (4) are all incorrect because they are all requirements for liability for negligent misrepresentation as articulated by the Supreme Court of Canada. [Chapter 5]

Question 205

Which of the following statements regarding the stress test borrower qualification rule for uninsured mortgages is TRUE? 1. The mortgage qualifying rate is always based on an additional 2% above the mortgage’s negotiated contract rate. 2. The stress test mortgage qualifying rate is also known as the benchmark interest rate. 3. The British Columbia Financial Services Authority established the stress test requirements for all new mortgages from federally chartered institutions. 4. The stress test qualification rules only apply to mortgages from credit unions.

Answer 205

Option (2) is correct because it is true. Option (1) is incorrect because the mortgage qualifying rate is based on the greater of the government-specified qualifying rate (j2 = 5.25% as of June 2021) or an additional 2% above the mortgage’s negotiated contract rate. Option (3) is incorrect because the Office of the Superintendent of Financial Institutions (OSFI) established the stress test requirements for all new mortgages from federally chartered institutions. Option (4) is incorrect because the stress test qualification rules only apply to mortgages from federally regulated financial institutions, which does not include credit unions. [Chapter 17]

Question 206

The practice of recognizing expenses as they are incurred, rather than when they are paid for, is a characteristic of which generally accepted accounting principle? 1. The cost principle 2. The recognition principle 3. The matching principle 4. The conservation principle

Answer 206

Option (3) is correct because the matching principle states that expenses must be recorded when they are incurred, not when they are paid. Option (1) is incorrect because the cost principle states that assets must be recorded for the purchase price on the date of acquisition. Option (2) is incorrect because the recognition principle is not an accounting principle, although the revenue recognition principle states that revenues must be recorded when they are earned, not when money is received. Option (4) is incorrect because the conservation principle is not a generally accepted accounting principle. [Chapter 8]

Question 207

Which one of the following transactions does NOT affect the amount of owner’s equity? 1. Investments by the owner 2. Personal withdrawals from the business 3. Net income earned 4. Purchase of assets by the business

Answer 207

Option (4) is correct because purchasing assets will not affect owner’s equity. The purchase of the assets will either be funded by cash that will result in no net change in assets, or it will be funded by debt, which will increase both assets and liabilities. Option (1) is incorrect because Investment by the owner will increase the amount of equity. Option (2) is incorrect because personal withdrawals from the business will decrease the amount of equity. Option (3) is incorrect because earning net income will also increase the amount of equity. [Chapter 8]

Question 208

A balloon payment is any payment of: (1) interest over or above regular interest payments, but only when it occurs during the term of the loan (2) principal over and above the regular payments, whether it occurs during or at the end of the loan term (3) principal over and above the regular periodic payments, but only when it occurs at the end of the loan term (4) interest over and above regular interest payment, whether it occurs during or at the end of the loan term

Answer 208

Balloon Payments (2) principal over and above the regular payments, whether it occurs during or at the end of the loan term

Question 209

SINKING FUND ASSISTED MORTGAGE a loan repayment plan which _________ the amount of the initial payments in order to ________ affordability.

Answer 209

reduces the amount of the initial payments in order to improve affordability.

Question 210

Which of the following statements about easements is TRUE? 1. Only the land owner and not the land benefits from an easement. 2. The granting of an easement by one landowner to another conveys ownership of the easement area to the dominant tenement owner. 3. An implied easement may result if the intention of the property owners has not been sufficiently explicit. 4. A tenant who occupies land under a 20 year lease can grant an easement to a neighbouring property owner and the easement, if registered in the land title office, will run with the land even after the lease expires.

Answer 210

Option (3) is correct because an implied easement may result if the intention of the parties granting the easement has not been sufficiently explicit. Option (1) is incorrect because one of the requirements of a valid easement is that the easement must benefit the land itself, not merely the land owner. Option (2) is incorrect because the dominant tenement owner does not receive an ownership of the easement area, but rather has an interest in the land less than ownership. Option (4) is incorrect because a tenant cannot grant an easement over a property that extends beyond the end of the tenancy. [Chapter 3]

Question 211

Which of the following statements regarding capital cost allowance (CCA) is FALSE? 1.Only one-half of the maximum allowable CCA may be claimed on an asset in the year the asset is purchased. 2. No CCA may be claimed in the year of the asset’s disposal. 3. The maximum CCA in a given year is equal to the depreciation expense multiplied by the CCA percentage. 4. The CCA percentage rate is determined by the Canada Revenue Agency.

Answer 211

Option (3) is correct (false); the maximum CCA in a given year is equal to the undepreciated capital cost (UCC) multiplied by the CCA percentage. Options (1), (2), and (4) are incorrect because they are true. [Chapter 8]

Question 212

Hurston, the Head of Production at XYZ Preservatives Ltd., has been ordered by the company’s president, in Toronto, to vent some gasses that have been stored in a pressure chamber at the Vancouver plant. Although the president knows that the gas is highly toxic, Hurston has been assured by the president that the gas is totally harmless and will quickly dissipate when released. Unfortunately, having escaped from the pressure chamber, the gas drifts in a dense cloud over Ralph’s neighbouring apple orchard and destroys the apple crop. Which one of the following is TRUE? 1. Ralph will be successful in a claim against XYZ’s president under the doctrine of trespass. 2. Ralph will probably succeed in a claim against XYZ based on negligence. 3. Ralph will be successful in his claim against XYZ based on XYZ breaching its fiduciary duty towards Ralph. 4. Ralph would probably have a successful claim against XYZ based on the provisions of the Occupiers Liability Act.

Answer 212

Option (2) is correct because Ralph will likely be able to establish the three elements required for a successful negligence claim: (1) that XYZ, a company storing highly toxic gasses, owed him a duty of care as his neighbour; (2) that XYZ breached the standard of care by allowing the gas to drift over Ralph’s apple orchard; and (3) that the damage to Ralph’s orchard was reasonably foreseeable (i.e. not too remote). Option (1) is incorrect because trespass is an intentional tort, and consequently must be a direct, voluntary act, as opposed to an indirect result of an act. In this case, there is no indication that Hurston or the President intended to release the gas over Ralph’s apple orchard. Option (3) is incorrect because a fiduciary duty is only owed by a person who holds a legally significant position of trust with respect to someone else, and is obliged, by virtue of that relationship or trust, to act solely for the other person’s benefit. There is no indication, on the facts provided, that XYZ was in such a relationship of trust with Ralph. Option (4) is incorrect because the Occupiers Liability Act would only apply if Ralph had suffered damage while on XYZ’s premises. [Chapter 5]

Question 213

A 50-year-old house is arranged such that when the front door is opened fully, it is possible for a person standing on the porch to look straight down a hallway into the main bathroom. This is NOT an example of: 1. a design deficiency in today’s market. 2. functional depreciation under the cost approach of appraisal. 3. a patent defect. 4. physical curable depreciation.

Answer 213

Option (4) is correct because if a person standing on the porch is able to look straight down a hallway into the main bathroom when the front door is open, this is not considered to be physical curable depreciation but rather functional and likely incurable. Option (1) is incorrect because this is considered a design deficiency in today’s market. Options (2) and (3) are incorrect because this describes a patent defect since it is visible, and functional depreciation under the cost approach of appraisal. [Chapter 22]

Question 214

The book value of an asset can be BEST defined as which of the following? 1. The purchase price of that asset less any depreciation taken to date 2. The price for which a similar asset could currently be purchased in the market 3. The price at which the asset could be sold 4. A value that is subjectively arrived at by an appraiser

Answer 214

Option (1) is correct because the book value of an asset is calculated as the purchase price of the asset, less all of the accumulated depreciation to date. Options (2) and (3) are incorrect as they both refer to the market value of the asset, and Option (4) is incorrect as it refers to the appraised value of an asset. [Chapter 8]

Question 215

Consider a building for which a strata plan was filed in August of 2011. In the event that the building is destroyed and the strata corporation passes a resolution not to rebuild, how will the proceeds of any insurance policy be distributed? 1. Equally between all owners 2. According to the unit entitlement of the individual strata lot owners 3. According to the value each strata lot bears to the total value of all lots (values determined at the inception of the project) 4. According to a conversion schedule based upon the most recent assessed values of the strata lots

Answer 215

Option (4) is correct because the Strata Property Act applies to strata plans deposited on or after July 1, 2000, replacing the Schedule of Interest on Destruction which was used under previous legislation. Section 273 and 278 of the Act provide for a “conversion schedule” or “interest schedule” that will be employed to determine the distribution of the proceeds in the event that a strata complex is destroyed and the owners decide to take the insurance money instead of rebuilding. Option (1) is incorrect because the value of each strata lot is different and therefore it would be unfair to distribute insurance policy proceeds equally between all owners. Options (2) and (3) are incorrect because they are based on unit entitlement, which is similar to the Schedule of Interest on Destruction, which is only used for strata plans deposited prior to July 1, 2000. [Chapter 7]

Question 216

Who owns the common property of a strata corporation? 1. The owner-developer of a strata project, as a trustee for the individual strata lot owners 2. The strata corporation 3. Each individual strata lot owner owns a share of the common property of a strata corporation in the proportions set out in the Schedule of Unit Entitlement 4. None of the above

Answer 216

Option (3) is correct because each strata owner jointly owns the common property of the strata development, and the Schedule of Unit Entitlement determines each owner’s proportionate, undivided ownership share as a tenant in common of the common property in the strata plan. Option (4) is incorrect for the same reason. Option (1) is incorrect because the owner-developer is not a trustee for the individual strata lot owners. Option (2) is incorrect because, although the strata corporation exercises exclusive control over the common property, it is still owned jointly by the individual strata lot owners. [Chapter 7]

Question 217

With respect to the valuation of real property, value to the owner is most often required to be estimated in the context of: 1. churches and heritage buildings. 2. investment analysis. 3. a stable, unchanged market. 4. mortgage lending practice.

Answer 217

Option (2) is the correct answer because the value to owner cannot be used in appraisal, but may be used in investment analysis. Options (1), (3), and (4) are incorrect for this reason. [Chapter 21]

Question 218

Which of the following statements is TRUE when calculating income taxes payable for a corporation? 1. Depreciation expense cannot be treated as a deductible expense. 2. Capital cost allowance cannot be treated as a deductible expense. 3. The computation of taxable income is irrelevant. 4. It is necessary to know what the amount of declared dividends will be.

Answer 218

Option (1) is correct because depreciation expense cannot be deducted from taxable income. Instead, the Income Tax Act permits a capital cost allowance deduction from taxable income. Option (2) is therefore incorrect. Option (3) is incorrect because taxable income is used to calculate income taxes payable. Option (4) is incorrect because any declared dividends are important for taxation, as corporations receive special tax treatment for declaring and paying cash dividends. [Chapter 8]

Question 219

This formula can also be expressed as: Amps =

Answer 219

Amps = Watts ÷ Volts For example, a 100 watt light bulb operating at 120 volts requires a current of .83 amps (100 watts ÷ 120 volts).

Question 220

The wires to most homes carry ___/___ volt, _-wire electrical service.

Answer 220

The wires to most homes carry 120/240 volt, 3-wire electrical service.

Question 221

The electrical service box (sometimes referred to as the service panel) provides both ___ volt service for lights and duplex receptacle circuits (standard household plugs), and ___ volts for major appliance circuits (e.g., range, dryer, hot water, and electrical heaters).

Answer 221

The electrical service box (sometimes referred to as the service panel) provides both 120 volt service for lights and duplex receptacle circuits (standard household plugs), and 240 volts for major appliance circuits (e.g., range, dryer, hot water, and electrical heaters).

Question 222

The Canadian Electrical Code requires that new or substantially renovated houses of more than __ square metres have a service capacity of not less than ___ amps; however, it is common to find capacities of 125, 150, or 200 amps, especially if electric heating is used.

Answer 222

The Canadian Electrical Code requires that new or substantially renovated houses of more than 80 square metres have a service capacity of not less than 100 amps; however, it is common to find capacities of 125, 150, or 200 amps, especially if electric heating is used.

Question 223

Knob and Tube Wiring: Found in homes built prior to ____, knob and tube wiring looks dangerous to the amateur electrician.

Answer 223

Knob and Tube Wiring: Found in homes built prior to 1950, knob and tube wiring looks dangerous to the amateur electrician. However, if properly installed, it can be just as safe as modern wiring systems. Knob and tube wiring uses copper wire (like today’s wiring systems), but with only two wires and without a ground. Each time the wire passes through a joist, a tube is installed and each time the wire changes direction, a knob is installed. The joints in the wire do not have a junction box, but are simply twisted together, soldered, and taped. Knob and tube wiring ceased being used because it became too expensive with three-wire systems. If a home’s electrical outlets only have two holes in them, the wiring is probably knob and tube. A shortcoming of this system is that it does not support electrical equipment that requires grounding

Question 224

Aluminum Wiring: If installed property, aluminum wire is just as safe as copper wire. The problem with aluminum is that it ______ and expands more than _______. Because of this, the joints between the wires can overheat and separate, forming a gap that can cause an electrical arc.

Answer 224

Aluminum Wiring: If installed property, aluminum wire is just as safe as copper wire. The problem with aluminum is that it oxidizes and expands more than copper. Because of this, the joints between the wires can overheat and separate, forming a gap that can cause an electrical arc.

Question 225

Copper Wiring: Copper wire is available in a wide variety of sizes to accommodate different electrical loads. The modern three wire insulated copper wire is by far the ____ common product. With joints and outlets housed in metal or plastic junction boxes, and with close scrutiny by electrical inspectors, these systems can be very safe.

Answer 225

Copper Wiring: Copper wire is available in a wide variety of sizes to accommodate different electrical loads. The modern three wire insulated copper wire is by far the most common product. With joints and outlets housed in metal or plastic junction boxes, and with close scrutiny by electrical inspectors, these systems can be very safe.

Question 226

Unit Entitlement calculation

Answer 226

Unit entitlement of Strata Lot ________________ Total unit entitlement of all strata lots = Total contribution

Question 227

IRD Penalty =

Answer 227

IRD Penalty = OSB × IRD × Time remaining

Question 228

Where a seller sells a unit of subdivided land in British Columbia and the subdivision is a development property: 1. the Real Estate Development Marketing Act has no jurisdiction. 2. the unit of subdivided land is called a subdivision unit. 3. the buyer has the right to rescind the purchase agreement at any time by providing appropriate notice, if the seller has not provided a disclosure statement to the buyer. 4. None of the above are correct.

Answer 228

Option (3) is correct because a purchaser has a right to rescind the purchase agreement if the developer fails to deliver a disclosure statement to the purchaser by serving a written notice of rescission on the developer under the Real Estate Development Marketing Act (REDMA). Option (1) is incorrect because REDMA applies to the marketing of development units in a development property, and subdivisions are included as development properties. Option (2) is incorrect because the a subdivided lot in a development property is called a development unit. [Chapter 2]

Question 229

Which one of the following is NOT a course of action that the British Columbia Financial Services Authority can take following a disciplinary hearing? 1. Reprimand the licensee 2. Order the cancellation of the licensee’s licence 3. Suspend the licensee from participation in the Multiple Listing Service® 4. Order the licensee to enroll in and complete a course of studies or training

Answer 229

Option (3) is correct because the British Columbia Financial Services Authority (“BCFSA”) cannot suspend the licensee from participation in the Multiple Listing Service (MLS) following a disciplinary hearing. Only a local real estate board can suspend a licensee from participation in the MLS. Options (1), (2), and (4) are all examples of actions that BCFSA can take following a disciplinary hearing, under section 43 of the Real Estate Services Act. [Chapter 2]

Question 230

A developer is selling a development unit of subdivided land situated in British Columbia and the developer has obtained a written statement from the purchaser acknowledging that the buyer has read the appropriate disclosure statement. If the purchase agreement is then entered into, the buyer: 1. may serve notice to rescind the contract no later than three days from the date of the contract. 2. may serve notice to rescind the contract no later than seven days from the date of the contract. 3. may serve notice to rescind the contract no later than one year from the date of the contract. 4. may not rescind the contract.

Answer 230

Option (2) is correct because there is a seven day rescission right whereby the purchaser can serve written notice of rescission seven days after giving a written statement that they have read the disclosure statement. Options (1), (3), and (4) are incorrect for this reason. [Chapter 2] Explained: In this scenario, the buyer of the subdivided land in British Columbia has the right to rescind or cancel the contract within seven days of entering into the purchase agreement. This right is granted to the buyer after they have read the appropriate disclosure statement and have acknowledged it in writing. If the buyer wishes to cancel the contract, they must serve written notice of rescission within seven days from the date of signing the contract. This means that options (1), (3), and (4) are incorrect, and the correct option is that the buyer may serve notice to rescind the contract no later than seven days from the date of the contract.

Question 231

Which one of the following actions would constitute trespass to land? 1. The crossing of another person’s property by mistake 2. The deliberate crossing of another person’s property 3. The throwing of an item upon another person’s property 4. All of the above

Answer 231

Option (4) is correct because all of the options are examples of trespass. Trespass consists of wrongfully entering, remaining on, or placing something on another’s land. Trespass requires both a voluntary and a direct action. Option (1) is an example of trespass because even though entering the other property was a mistake, it was still intentional since the person had control over where they were walking. Option (2) is an example of trespass because deliberately crossing another person’s property is both voluntary and direct. Option (3) is an example of trespass because even though the person did not personally step on another person’s land, they intentionally threw the item. The item ended up on the other person’s property as a result of the direct act of the trespasser. EX. In this explanation, it is clarified that all of the actions mentioned would constitute trespass to land. Trespass to land occurs when someone wrongfully enters, remains on, or places something on another person's property without permission. The deliberate crossing of another person's property, the throwing of an item onto another person's property, and even crossing by mistake all fall under the definition of trespass because they involve a voluntary and direct action that interferes with the owner's rights to their property. [Chapter 5]

Question 232

In British Columbia there are three basic requirements for an easement. Which one of the following is NOT a requirement? 1.There must be a dominant and servient tenement. 2. The easement must accommodate the dominant tenement. 3. The dominant and servient tenements must be owned by different parties. 4. The easement must be capable of forming the subject matter of a grant.

Answer 232

Option (3) is correct because there is no requirement for the dominant and servient tenements to be owned by different parties in order for an easement to be valid. Options (1), (2), and (4) are incorrect because an easement requires that there be a dominant and servient tenement, that the easement accommodate the dominant tenement, and that the easement be capable of forming the subject matter of a grant in order to be valid. [Chapter 3]

Question 233

The owner of an interest in real property that is located in British Columbia always has: 1. a fee simple interest. 2. the right to use their property in any way they choose. 3. at least a 99-year lease from the Crown. 4. common law rights as modified by legislation.

Answer 233

Option (4) is correct because real property ownership in British Columbia is based on English common law property rights as modified by legislation such as the Property Law Act and the Land Title Act. Option (1) is incorrect because an owner of an interest in real property in British Columbia may have a number of interests that fall short of a fee simple interest (e.g., life estate, estate pur autre vie, leasehold, etc.). Option (2) is incorrect because the extent of the usage rights enjoyed by an owner of an interest in real property depends heavily upon the type of interest that the owner holds. Additionally, even an owner of real property in fee simple must still abide by various common law restrictions as well as legislative restrictions (e.g., municipalities have the power to regulate subdivision). Option (3) is incorrect because an owner of an interest in real property in British Columbia can have an interest less than a 99-year lease from the Crown (e.g., a lease for a term of less than 99 years). [Chapter 3]

Question 234

Cornelius gave a life tenancy to Ruel, which did not expressly state anything about Ruel’s liability for waste. Ruel will NOT be liable to the remainderman for: 1. permissive waste. 2. voluntary waste. 3. ameliorating waste. 4. equitable waste.

Answer 234

Option (1) is correct because, at common law, a life tenant is generally under no obligation to repair or compensate for waste that occurs as a result of allowing the property to deteriorate without any positive acts (permissive waste). Option (2) is incorrect because life tenants are liable to the remainderman for direct, positive acts that result in damage to the property beyond the use to which the life tenant is entitled (voluntary waste). Option (3) is incorrect because a life tenant is liable for direct, positive acts which improve rather than destroy the property (ameliorating waste) – but, usually no damages can be awarded, as the property has been improved. Option (4) is incorrect because a life tenant is liable for waste that he or she causes by flagrantly or maliciously damaging or destroying the property (equitable waste). [Chapter 3]

Question 235

The term “fee simple”: 1. indicates something less than absolute ownership of land. 2. describes an unencumbered or clear title to land. 3. was abolished by the Land Title Act. 4. refers to an interest in land that does not amount to an estate.

Answer 235

Option (1) is correct because while a fee simple estate is the greatest estate in land, the owner of the estate in fee simple is not the absolute owner. This is because underlying title in all land in British Columbia is held by the Crown. Option (2) is incorrect because a fee simple estate does not always have clear title. Option (3) is incorrect because the term “fee simple” is still used today to describe the greatest interest in land, and has not been abolished. Option (4) is incorrect because fee simple is a form of estate in land. [Chapter 3] EX "The term 'fee simple' indicates something less than absolute ownership of land. While a fee simple estate is the greatest estate in land, the owner of the estate in fee simple is not the absolute owner. This is because underlying title in all land in British Columbia is held by the Crown. So, even though fee simple is the most extensive form of ownership, it doesn't equate to complete and unrestricted ownership."

Question 236

Which of the following is an interest in land that can be valued? 1. An easement or right-of-way 2. Building scheme 3. Leasehold 4. All of the above

Answer 236

Option (4) is correct because an easement or right-of-way, building scheme, and leasehold are all interests in land that can be valued. An easement or right-of-way affects the value of the properties involved depending on the location of the easement. A building scheme, which is a type of restrictive covenant, must benefit or enhance the value of the covenantee’s land in some way. A leasehold estate has great economic value and grants important rights to land. Options (1), (2), and (3) are incorrect because they are all interests in land that can be valued. [Chapter 3] EX This passage explains that all of the following - easement or right-of-way, building scheme, and leasehold - are interests in land that can be valued. An easement or right-of-way can affect property value based on its location. A building scheme, a type of restrictive covenant, should enhance the value of the covenantee's land. A leasehold estate holds economic value and provides significant rights to the land. Therefore, all of these options are interests in land that can be valued.

Question 237

Mr. & Mrs. Tom Jones and Ashraf Menzies have a signed contract of purchase and sale for a triplex owned by Alan Sinclair. Mr. & Mrs. Jones have agreed to pay $100,000 each and Ashraf has agreed to pay the balance of $50,000. They would like their ownership registered as a joint tenancy. Which one of the following statements is TRUE? 1. Tom, Mrs. Jones, and Ashraf cannot register their ownership as a joint tenancy because they did not each contribute the same amount of cash. 2. If their interest is registered as a joint tenancy, Tom, Mrs. Jones, and Ashraf will each own an undivided interest in the triplex. 3. Tom and Mrs. Jones would be allowed to register their interests as a joint tenancy because they are husband and wife, but Ashraf would have to be a tenant-in-common with them. 4. Tom, Mrs. Jones, and Ashraf cannot meet the four common law principles required to create a joint tenancy.

Answer 237

Option (2) is correct because, in a joint tenancy, co-owners are viewed as a single legal owner against everyone else; therefore, each owns an undivided interest in the whole of the estate. Option (1) is incorrect because individuals can enter into a joint tenancy regardless of their respective financial contributions to the purchase of the property. Option (3) is incorrect because more than two individuals can enter into a single joint tenancy and because individuals do not have to be married to enter into a joint tenancy. Option (4) is incorrect because each of the following four common law “unities” can be satisfied: (1) all joint tenants must receive their interests at the same time; (2) all joint tenants must receive their interest from the same document; (3) all joint tenants must have the same interest in the land; and (4) all joint tenants must be entitled to possession of the whole estate. [Chapter 3]