Humber Real Estate - Course 1, Module 6 exam |99 questions and answers 2023

What is a contract? A legally binding agreement between two or more persons, competent at law to enter into such agreement, for consideration or value, to do or refrain from doing something lawful. True or false? An oral contract for the acquisition or disposition of any interest in the land is enforceable. False. Any contract in real estate is required to be in writing. When drafting a contract, what does The Statute of Frauds require? - Must be in writing to be enforceable by law (the only exception is when a contract is verbal but parties begin to complete the contract, then it could be enforceable) What are the contract requirements of The Vendors and Purchasers Act? - The seller is not bound to produce any abstract of title, deed, copy of a deed or other evidence of title except as are in the seller's possession or control - The buyer shall search the title at the buyer's own expense and shall make any objections in writing within 30 days from making of the contract - The seller has 30 days in which to remove any objection made to the title. If the seller is unable or unwilling and the buyer doesn't waive the request, the seller may cancel the contract and return any deposit made, but is not otherwise liable to the buyer - Taxes, local improvements, insurance premiums, rent and interest shall be adjusted as at the date of closing - The conveyance (legal process of transferring of ownership from one party to another) shall be prepared by the seller and the mortgage, if any, by the buyer; the buyer pays for the registration of the transfer/deed and the seller pays for the discharge of the mortgage - The buyer is entitled to possession or the receipt of rent and profits upon the date of closing the transaction What are the contract requirements of The Real Estate and Business Brokers Act? - All agreements are reduced to writing at the earliest opportunity, signed by the brokerage and submitted to the seller or buyer for signature - That registrants use their best efforts to ensure that all parties to an agreement receive a copy as soon as possible and ensure that deposits and other related documents (i.e. notice removing conditions) be delivered in accordance with the agreement of purchase and sale What is 'Evidence of a Contract'? Since a contract is the legal relationship created between the parties, the contract document is the written record and therefore a reflection of the mutual commitment agreed to by the contracting parties. A document, such as an Agreement of Purchase and Sale, is evidence of a contract. Define the 'Parol Evidence Rule' In the determination of contractual disputes, this rule provides that oral evidence is inadmissible in court to vary or contradict the terms of a written contract, except in a case of fraud or mistake. What is 'Privity of Contract'? The general rule that only parties to a contract can enforce it or be bound by it. (i.e. A salesperson signs an agreement as a witness, but because the contract is between the buyer and seller, only they are privy to the contract.) What are the essential elements of a contract? - Genuine intention (Both parties must consent to the terms of the contract) - Lawful object (The contractual arrangement must be lawful) - Definite & clear (The subject and terms of the agreement must be stated clearly) - Consideration (Each party must receive something of value) - Capacity of the parties (The parties entering into a contract must be legally competent & of sound mind and legal after of majority to make the contract) - Offer and acceptance (There must be mutual agreement between the parties) What type of persons may be deemed incapable of contracting? - Mentally incompetent - Intoxicated - Non est factum (did they know what they were signing?) - Minor under 18 (can decide to go forward with the contract or choose to end it) In a partnership, can one partner sign a contact on behalf of the other person? Yes. Any partner may bind the other partners in a transaction during the ordinary course of business. A binding contract requires an ___________ of something between the parties. Exchange What does "Signing under seal" mean? You cannot change your mind. What are the types of mistakes when considering law? - Common mistake - Mutual mistake - Unilateral mistake Define a 'Common Mistake' When both parties to the contract know the intention of the other, accept it, but are mistaken about an underlying fact. (ie. Both seller & buyer believe a property includes a right-of-way near a body of water, but in fact it doesn't. Basically an innocent mistake made by both parties and they both though the same thing was true.) Define a 'Mutual Mistake' When the parties misunderstand each other and are at cross-purposes, or have a contrary understanding. (i.e. A seller owns two lots on opposite sides of a lake. Buyer believes they are buying the South shore property while the seller believes the North shore property is being sold. Not intentional, but differing opinions on the mistake.) Define a 'Unilateral Mistake' When one party is mistaken about a fundamental aspect of a contract. (i.e. The buyer believes the lot is approx. 1 acre; the seller is aware of this mistaken belief but remains silent. The buyer proceeds with the purchase based on the mistaken fact.) In regard to a contract, what is 'Misrepresentation'? A false statement of fact or assertion made by one party to the other, before or at the time of contracting, regarding some existing fact, matter or circumstance affecting the contract or its object. What are the types of Misrepresentation? - Innocent misrepresentation - Fraudulent misrepresentation - Negligent misrepresentation Define 'Innocent misrepresentation' A statement by one party of a fact that is wrong, but is honestly believed to the true. Define the 3 elements of 'Fraudulent misrepresentation' - Made with the knowledge of its falsity or with reckless disregard for its truth - The purpose must have been to induce the other party to enter a contract - Must have been relied on to the other party's prejudice (Deceived party by resist enforcement of the contract and seek damages for the conduct) Define 'Negligent misrepresentation' A misrepresentation without reasonable verification of its accuracy and the person who is misled may bring a lawsuit for damages. What is 'Duress or Undue Influence'? The improper use of one person's power over another to induce that person into a contract. What is 'Failure to Disclose'? The non-disclosure of material latent defects might invalidate a contract (i.e. mould infestation in the attic) What is a 'Latent Defect'? A defect that is not easily observable. (i.e. mould infestation) What is a 'Voidable Contract'? A contract that is enforceable, valid and binding until rendered void. The offended party may choose to void the contract and treat it as being at an end, or treat it as existing and enforce it against the offending party. What is considered a 'Fundamental Breach of Contract'? A breach that goes to the root of the contract. What steps can the affected party take regarding a fundamental breach of contract that goes to the root of the contract? - Accept the breach and treat themselves as released from further performance - Accept the breach and start an action for damages against the party who breached - Treat the contract as still in effect, and waive the breach - Seek other remedies if available What steps can the affected party take regarding a breach of contract that does NOT go to the root of the contract? The impacted party can sue for damages without an option to discharge the contract. This is sometimes referred to as a minor or compensable breach. What are the remedies for a breach of contract? - Recission - Damages - Quantum meruit - Specific performance - Injunction Define 'Recission' Involves the revocation or cancellation of a contract, the contract is set aside by the court. Define 'Damages' Financial compensation arising as a result of the breach. The injured party must prove the actual actual amount of their loss. They also have a general duty to make reasonable efforts to mitigate that harm by taking steps, following the breach, in order to reduce the extent of the loss. Define 'Quantum Meruit' A reasonable sum for services rendered, as determined by the courts that directs payment to the claiming party. Define 'Specific Performance' An exceptional remedy. It's an order of the court directing the party in a breach to carry-out a specific obligation. This is a discretionary remedy and not an absolute right. It may be awarded only where damages are not an adequate remedy, the contract is fair and just, and the injured party acts promptly and fairly in making their claim. Define 'Injunction' A court order stopping a party from doing something wrongful. What are the 5 common methods to terminate a contract involving real property? - Performance (contract is fulfilled) - Mutual Agreement (both parties agree to void the contract) - Impossibility of Performance (i.e. cottage burns down before closing) - Operation of Law (i.e. death of a party, bankruptcy, unauthorized unilateral alteration of contractual terms or in other words, one party changes the terms of the contract without approval) - Breach What is the purpose of the Electronic Commerce Act? To allow any legal relationship that requires paper documents to be considered legal and enforceable when in an electronic format. Which contract documents of a brokerage can be signed electronically? All agreements relating to trading, including representation agreements, agreements of purchase and sale and agreement of lease. What is leading practice before using electronic signatures? Obtaining consent for using electronic signatures in writing. What are the requirements for using an electronic signature? - Must be reliable for the purpose of identifying the person - The association of the electronic signature with the relevant electronic document must be reliable - The electronic signature meets the prescribed requirements, if any, as to method - The electronic signature meets the prescribed information technology standards Is witnessing electronic signatures required? No What are the 2 information types PIPEDA applies to? - Personal Information (easily associated info such as name, residential address) - Sensitive Personal Information (a subset of personal information dealing with sensitive data; i.e. financial info, and physical / mental condition) Who at the brokerage ensures compliance with PIPEDA? Designated Privacy Officer What is the type of information that PIPEDA does not apply to? Personal Facts (Non-identifiable facts; storage of personal facts is not regulated, provided info is anonymous.) What are the 10 Principles of Privacy? 1. Accountability 2. Identifying purposes 3. Consent 4. Limiting collection 5. Limiting use, disclosure and retention 6. Accuracy 7. Safeguards 8. Openness 9. Individual access 10. Challenging compliance What does Part I of the Family Law Act deal with? The orderly distribution of assets following a marriage breakdown or the death of a spouse with some exclusions (i.e. property inherited or received as a gift). What does Part II of the Family Law Act deal with? Details the rights of the non-owner spouse to equal possession of the matrimonial home and sets out rights of possession of that home, the designation of a matrimonial home, and limitations on ability to encumber or dispose of the matrimonial home. How is 'Matrimonial Home' defined in The Family Law Act? Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home. What is the difference between the 'Matrimonial Home' and 'Matrimonial Property'? Any family asset not considered to be the matrimonial home, with exceptions such as inheritances and insurance settlements. Is it possible to have more than one matrimonial home? Yes. However, they have the ability to designate only one as the matrimonial home if they choose to do so. What does it mean to designate a residence as a 'Matrimonial Home'? The property is deemed to be the only family residence at the time of designation. What happens if only one spouse completes a designation for a 'Matrimonial Home'? All of the remaining matrimonial homes retain their status despite that registration. If a property is a designated matrimonial home, to avoid any issues regarding conflicting ownership, you must always ensure that all parties do what? Consent to the transaction. Are both spouses required to sign all the legal documents, such as the Listing Agreement? Yes What are the titles used when a married couple signs a legal document for a house that is only in one of their names? The party who owns the property will sign the documents as a seller and the non-owner will provide spousal consent. Is it required to have spousal consent for the sale of investment properties? No, because written spousal consent is only required to sell the matrimonial home, not matrimonial property. What are the rights of the non-titled spouse in a matrimonial home? - If a property is designated as a matrimonial home, both spouses have an equal right to its possession. - To be notified of any proceedings by a third-party that could affect that possessory right. - The ability to bring a court application to determine ownership rights and to restrain the other spouse from disposing of the property without consent. What is the definition of 'Common-Law Spouse'? Partners who have cohabited for more than three years, or who cohabitate and are the natural or adoptive parents of a child or children. Spouse also includes same-sex partners, as per the Family Law Act. In a common law relationship, is the family home considered a matrimonial home? No. As such, if one common-law spouse owns the home, they can sell or mortgage it without the common-law spouse's permission whereas this is expressly prohibited with a matrimonial home. What happens in a common-law relationship in the event that the family home is sold and the relationship dissolved? The registered owner may be required to make arrangements for satisfactory accommodation of the common-law spouse and/or provide support payments. What is the aim of the Planning Act? To set out ground rules for land use planning in Ontario. It describes how land uses may be controlled and who may control them. What are the purposes of the Planning Act? - Promote sustainable economic development in a healthy natural environment - Provide for a land use planning system led by provincial policy - To integrate matters of provincial interest in provincial/municipal planning decisions - Provide for planning processes that are fair by making them open, accessible, timely and efficient - Encourage co-operation and co-ordination among various interests - Recognize the decision-making authority and accountability of municipal councils in planning