Assignment 7 (Chapter 10) Flashcards
Legal Capacity
The ability of a person to enter into a legally binding contract, typically requiring that the person is of sound mind and of legal age.
Consideration
Something of value exchanged between parties in a contract that is necessary for the contract to be enforceable.
Past Consideration
A promise made in return for actions or events that have already taken place, which does not constitute valid consideration for a new contract.
Binding Contract
An agreement between parties that is enforceable by law, requiring offer, acceptance, consideration, and mutual intent to be bound.
Ethical Principles
The foundational guidelines that inform and shape ethical behavior, such as honesty, integrity, and fairness.
Trust in Profession
The confidence placed by the public in professionals, based on their adherence to ethical principles and standards.
Headline Test
A self-evaluation method where one considers how their decision or action would look if it were reported as a headline in a newspaper.
Ethical Decision Making
The process of evaluating and choosing among alternatives in a manner consistent with ethical principles.
Net Income
The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.
Depreciation Expense
The allocation of the cost of a tangible asset over its useful life, representing the wear and tear on the asset.
Legal Non-Conforming Use
A use of land that was lawful prior to the implementation of a new zoning bylaw but does not conform to the new bylaw. This use may continue but cannot be expanded or changed.
Depreciation Report
A report required for strata corporations outlining the anticipated maintenance, repair, and replacement costs over time.
Fiduciary Duty
The obligation of a real estate licensee to act in the best interest of their client, putting the client’s interests ahead of their own.
Duty of Care
The obligation to act with the level of care, diligence, and skill expected of a reasonably prudent person in similar circumstances.
Gross Lease
A lease agreement where the tenant pays a fixed amount of rent and the landlord covers all property expenses, such as maintenance, insurance, and taxes.
Net Lease
A lease where the tenant pays a base rent plus a portion of the property’s operating expenses, such as taxes, insurance, and maintenance.
Real Estate Investment Trust (REIT)
A company that owns, operates, or finances income-producing real estate, allowing investors to pool their capital to buy shares in a portfolio of properties.
Equity REIT
A type of REIT that owns and operates income-generating real estate, deriving revenue primarily from rental income.
Interest Act (Canada)
Legislation that governs the calculation and disclosure of interest rates in Canada, including provisions for prepayment of mortgages.
Prepayment Privilege
The ability of a borrower to pay off a mortgage in full or in part before the maturity date without penalty, as allowed under certain conditions in the Interest Act.
Leasehold Estate
An interest in real property that grants the lessee (tenant) the right to use and occupy the property for a specific period, as stipulated in the lease agreement.
Freehold Estate
An estate in land in which ownership is for an indefinite period, and the owner has full control over the property, subject to any restrictions or liens.
Amortization
The process of gradually paying off a debt over a period of time through regular payments that cover both principal and interest.
Balloon Payment
A large payment due at the end of a loan term, representing the remaining balance of the loan that was not amortized over the loan period.
Easement
A non-possessory right to use or enter someone else’s land for a specific purpose, such as utilities or access. Easements can affect property value and use.
Encroachment
An intrusion onto another person’s property, such as a fence or building that extends beyond the property line. Encroachments can lead to legal disputes and affect property rights.
Vendor Take-Back Mortgage
A type of mortgage where the seller of a property provides financing to the buyer. This is often used when the buyer cannot obtain a loan from a bank.
Mortgage Assumption
The process where a new buyer takes over the mortgage obligations of the existing borrower.
Collateral Advantage
A benefit or advantage that a lender requires in addition to the repayment of the loan, which must be connected to the loan and not extend beyond the term of the loan to be enforceable.
Restraint of Trade
A clause in a contract that restricts a party’s ability to engage in business or trade, often found unenforceable if it is too restrictive.
Duty to Act Honestly
The obligation of a licensee to be honest in all their dealings with clients, customers, and other parties. This duty extends to both clients and non-clients.
Reasonable Care and Skill
The standard of care that a licensee is expected to provide, which must match that of a competent and prudent professional.
Sales Clause
A clause in a mortgage agreement that gives the lender discretion to approve or deny the assumption of the mortgage by a new buyer.
Assumable Mortgage
A mortgage that can be transferred from the current owner to a buyer, typically with the lender’s approval.
Reasonable Grounds to Suspect
The standard for forming a suspicion based on factual context and indicators, used in identifying potential money laundering activities.
Money Laundering Indicators
Red flags or warning signs that suggest potential money laundering activities, such as unusual transaction patterns or client behavior.
Due Diligence
The reasonable steps taken by a person to avoid committing a tort or offense, including the investigation and verification of information before entering into an agreement or transaction.
Ethical Responsibilities
The moral obligations that real estate professionals have to act with integrity, honesty, and fairness in their dealings with clients, customers, and other parties.
Agency Relationship
The relationship between a principal and an agent, in which the agent is authorized to act on behalf of the principal in business transactions.
Principal-Agent Relationship
The legal relationship in which one party (the agent) is authorized to act on behalf of another party (the principal) in business matters.
