Humber Real Estate - Course 1, Module 6 Introducing the Key Legislation & Regulations 200 questions and answers

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 is the exception to a "verbal" contract? The exception with a verbal contract is that both parties begin to complete the contract, then it could be enforceable A seller and a buyer make a handshake agreement that the buyer will purchase the seller's property for $200,000 with a $5,000 deposit. The buyer gives the seller a cheque for $5,000, which the seller cashes. Is this consider a contract? Yes/true The buyer could later be successful in enforcing this contract even without it being in writing What must a contract do? An agreement must be complete and accurately describe the subject of the agreement and the parties’ intentions to be considered enforceable. What is the purpose of the vendors and purchasers act? This Act specifies several rights and obligations that are incorporated into every agreement of purchase and sale. What are the contract requirements of The Vendors and Purchasers Act? (6 requirements) 1. 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 2. 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 3. 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 4. Taxes, local improvements, insurance premiums, rent and interest shall be adjusted as at the date of closing 5. 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 6. The buyer is entitled to possession or the receipt of rent and profits upon the date of closing the transaction what does REBBA stand for? Real Estate and Business Brokers Act, 2002 What are the contract requirements of The Real Estate and Business Brokers Act (REBBA)? 1. All agreements are reduced to writing at the earliest opportunity, signed by the brokerage and submitted to the seller or buyer for signature 2. That registrants use their best efforts to ensure that: (i) all parties to an agreement receive a copy as soon as possible and (ii) 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 a representation agreement? • Agreements signed between the brokerage and the seller or buyer What is a listing agreement? Agreements signed between the brokerage and the seller or the buyer such as a seller or buyer customer service agreement What is an agreement of purchase and sale? Agreements signed between the seller and buye What is an agreement of lease? • Agreements signed between a landlord and a tenant 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. i.e. A document, such as an Agreement of Purchase and Sale, is evidence of a contract. What is "Evidence of a Contract" 1. A contract is the legal relationship created between the parties 2. A contract document is the written record therefore reflection of the mutual commitment agreed to by the contracting parties. 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. Is oral evidence admissible in court? NO. It is inadmissible. Only exception is in a case of fraud or mistake. TRUE. In real estate, every party to the contract must agree in writing to any terms or additions to an agreement. Any changes to the original document need to be agreed to by the parties and in writing in order to be enforceable. True or false? 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) Who is responsible for paying Eric? (Privity of Contract) Kara hires Bob, a contractor, to replace the wiring in her home. Bob hires Eric, an electrician, as a sub-contractor to do the work. Kara is unhappy with the progress and quality of the work being done by Eric. She fires Bob and refuses to pay him. Eric approaches Kara and demands payment for the work he has completed. Since Kara did not directly contract Eric, she is not responsible to pay him for his services. BOB is responsible. Can a buyer or seller take legal action if a breach occurred? YES When can a brokerage face legal action from its clients? They can be subject to legal action by: 1. providing misleading information 2. Misrepresentation of facts, failure to filfill its obligations. What are six elements of a binding agreement (CLOGCD) 1. Offer and acceptance: There must be mutual agreement between the parties • 2. Capacity of the parties: The parties entering into a contract must be legally competent (of sound mind and of legal age of majority) to make the contract • 3. Consideration: Each party must receive something of value • 4. Definite and clear: The subject and terms of the agreement must be stated clearly • 5. Lawful object: The contractual arrangement must be lawful • 6. Genuine intention: Both parties must consent to the terms of the contract