RECA RESIDENTIAL UPDATED EXAMS SCRIPT
QUESTIONS AND ANSWERS SURE A+
✔✔Title Insurance - ✔✔protects insured against losses as a result of some title related
and some non-title related matters.
ex. fraud, forgery, building permits
- some lenders accept title insurance in lieu of RPR for property Insurance.
- provides gap coverage
- may facilitate a transaction when RPR is unavailable or issues cannot be resolved in a
timely manner
- some policies may extend coverage to insured heirs
- title insurance has a duty to defend insured's interest
✔✔CADS - ✔✔document used to register encumbrances, financial obligations, and
pending litigations
- includes legal description, name of condo corp and address, number of units,
registered bylaws, any financial obligations
found on SPIN2
✔✔Discharge of Contracts - ✔✔Performance - complete
Mutual agreement
Frustration - impossibility of performance, out of parties control
Operation of Law - Bankruptcy
Breach - fails to fulfil obligation subject to Quantum Meruit (entitled to reasonable value)
✔✔Percentage changes - ✔✔new-old/old
✔✔Preparing a comparative market analysis - ✔✔1. communicate with client
2. do background research - view property, learn land use, search certificate of title,
search history, otain the RPR, search active and archived listings
3. View property
, 4. Select comparable sales (recently sold, same area, similar features)
5. make adjustments to comparable properties (principal of contribution) no adjustments
made to subject property. Superior property (-) Inferior property (+) make equal with
subject property
6. Determine value of subject property
✔✔Calculations for Adjustments to Comparable Properties - ✔✔Percent adjustments =
((New-old)/old X 100)/ number of months between sales
ex. overall time adjust of -4% = sale price x 96%
ex. four months ago with time adjustment of 1/2%
1/2% x 4 = 2% overall time adjustment
sale price x 1.02 =
✔✔Property Assessments vs Property Valuations - ✔✔- based on sales as far back as
a year
- done for taxation purposes opposed to a sale
- uses mass appraisal process
Property Valuations
- relies on most recent sales
- based on factual and relevant information
- include disclaimer in written property valuation report
✔✔Financial terminology - ✔✔Financial statement - operational transactions for specific
period
- evaluated financial strength, profitability, and future prospects
Income statement - statement of income and expenses
- reflects how much an operation makes or loses during given period
Cash accounting - records cash when received and expenses when paid
accrual - records transactions when they occur
✔✔Income Properties - ✔✔Monthly Rental Factor (MRF) - for income properties with a
single rental unit
MRF = Value(Price)/gross monthly income
Gross Income Multiplier (GIM)- for smaller revenue properties with limited number of
rental units
GIM= Value/Effective Gross income (gross income-allowance for vacancy/bad debt)
Cap rate - used for properties with multiple rental units
✔✔Comparable Market Analysis (CMA) - ✔✔present topics
- sold properties
QUESTIONS AND ANSWERS SURE A+
✔✔Title Insurance - ✔✔protects insured against losses as a result of some title related
and some non-title related matters.
ex. fraud, forgery, building permits
- some lenders accept title insurance in lieu of RPR for property Insurance.
- provides gap coverage
- may facilitate a transaction when RPR is unavailable or issues cannot be resolved in a
timely manner
- some policies may extend coverage to insured heirs
- title insurance has a duty to defend insured's interest
✔✔CADS - ✔✔document used to register encumbrances, financial obligations, and
pending litigations
- includes legal description, name of condo corp and address, number of units,
registered bylaws, any financial obligations
found on SPIN2
✔✔Discharge of Contracts - ✔✔Performance - complete
Mutual agreement
Frustration - impossibility of performance, out of parties control
Operation of Law - Bankruptcy
Breach - fails to fulfil obligation subject to Quantum Meruit (entitled to reasonable value)
✔✔Percentage changes - ✔✔new-old/old
✔✔Preparing a comparative market analysis - ✔✔1. communicate with client
2. do background research - view property, learn land use, search certificate of title,
search history, otain the RPR, search active and archived listings
3. View property
, 4. Select comparable sales (recently sold, same area, similar features)
5. make adjustments to comparable properties (principal of contribution) no adjustments
made to subject property. Superior property (-) Inferior property (+) make equal with
subject property
6. Determine value of subject property
✔✔Calculations for Adjustments to Comparable Properties - ✔✔Percent adjustments =
((New-old)/old X 100)/ number of months between sales
ex. overall time adjust of -4% = sale price x 96%
ex. four months ago with time adjustment of 1/2%
1/2% x 4 = 2% overall time adjustment
sale price x 1.02 =
✔✔Property Assessments vs Property Valuations - ✔✔- based on sales as far back as
a year
- done for taxation purposes opposed to a sale
- uses mass appraisal process
Property Valuations
- relies on most recent sales
- based on factual and relevant information
- include disclaimer in written property valuation report
✔✔Financial terminology - ✔✔Financial statement - operational transactions for specific
period
- evaluated financial strength, profitability, and future prospects
Income statement - statement of income and expenses
- reflects how much an operation makes or loses during given period
Cash accounting - records cash when received and expenses when paid
accrual - records transactions when they occur
✔✔Income Properties - ✔✔Monthly Rental Factor (MRF) - for income properties with a
single rental unit
MRF = Value(Price)/gross monthly income
Gross Income Multiplier (GIM)- for smaller revenue properties with limited number of
rental units
GIM= Value/Effective Gross income (gross income-allowance for vacancy/bad debt)
Cap rate - used for properties with multiple rental units
✔✔Comparable Market Analysis (CMA) - ✔✔present topics
- sold properties
