EXAM Flashcards
sources of law?
statute law
common law
equity
body of laws made by government
federal - banking, postal service, criminal matters
Provincial - Property rights, education, etc.
Municipal council - Powers is derived from province, can pass local bylaws. Deal with local matters, deal with property. Get their power from the province
common law?
o Originated in England
o Judge-made law
o Based on the principle of stare decisis
“Let the former decision stand”
Based on cases decided by the court
Weakness:
• Overtime, the court system becomes too rigid and is unable to adapt to the current norms and values of society
equity?
o You’re going to have to convince the judge to use their discretion.
o Based on principle of fairness
o Originated as a means to avoid common law courts
Stated as petitions the king
Evolved into the courts of chancery or courts of equity
Merged with common law in 1873.
why is equity important?
Courts can apply both equitable and common law principles
Example of common law remedies:
• Damages
Example of equitable remedies:
• Injunctions
• Specific performance
common law vs. equity
o Overtime, the “common law” system grew unfair and rigid
o This led to the creation of a separate courts system, which decided cases on “equitable” principles and the “law of equity”, instead of “common law” prinicipels (courts of equity or “chancery”)
o Today judges can decide cases based on common law OR equitable principles
the court system?
- Small claims court; lowest trial court
o Hears claims involving claims $35,000 or less.
o An appeal from the small claim courts’ decision, it goes to the next court: - BC Supreme court; highest trial court and appeal court from small claims
- BC court of appeal
- Supreme court of canada
up until what year was the Real estate council of BC the main regulator of BC?
2016
Purpose of RESA
Establish minimum reasonable competency requirements
Set standards of conduct for licenses
Establish the governance structure of licensing
• 1. Real Estate Council
• 2. The Office of the Superintendent of Real Estate
appoint BCFSA to regulate the real estate services profession
Which creation of two other pieces of legislation does RESA authorize that affects licensees?
The real estate services regulation (the “regulation”)
• Exemptions from licensing requiremnets, licensee, disciplinary issues, and others
The real estate services rule (the “Rule”)
• Requirements and duties that apply to real estate licensees
real estate council?
They create the RESA, the regulations, the rules, and all the bylaws within it.
To protect the public by:
• Administer RESA, the regulations, the rules and bylaws subject to oversight and direction of the superintendent.
• Maintain and advance the knowledge, skill and competency of its lincenses; and
• Uphold and protect the pulic interst in relation to the conduct of its liceses
Three main objectives of RESA?
• Ensure min. competency standards for new real estate services professionals
• Ensure that those currently providing real estate services conduct themselves approprtaly
• Appoint BCFSA to reglate the real estate services profession
Activities that require a license
1. Trading services
• Rental property management services
• Strata management services
2. To or on behalf of another
3. For or in expectation of remuneration
exemptions for non-licensees?
o A lawyer who practices real estate law (RESA)
o Employees who provide real estate services to their employer, only (REGS)
Remember, once licensed under RESA, a license cannot take advantage of any of the above exemptions (“once a licensee, always a licensee”) UNLESS they into an exemption in the Rules
• A licensee will only be exempted from the formal requirements in RESA if they fall into one of the emptions contained in the rules
exemptions for licensees?
Licensees are permitted to provide rental property management services for their own real estate, or their familys real estate, if they:
• Do not use their brokerage name
• Disclose that they are not providing the services as ea licensee
• Do not accept any fees for the srvices and
• Certain other requirements
A similar exemption exists for licensees who provide strata management services to a strata corporation in which they own a strata lot
4 levels of licensing
brokerage
managing broker
associate briker
representative
brokerage?
• All real estate services are provided through the brokerage and all licensee remuneration flows through brokerage
• Brokerages must act through the other levels of licensees (managing brokers, associate brokers, representatives)
• Is a licensee on behalf of which other licensees must provide real estate services
• Key obligations:
o Record keeping
o Financial management
managing broker?
• Highest level of respsibility
• Acts for the brokerage in all respects
• Key duties:
o Supervision of brokerage’s employees and licensees
o Deal with misconduct of employees and licesees
o Proper maintenance of brokerage accounts and reocrds
o Notice once a deposit…
• A licensee responsible for exercising the rights and performing the duties imposed on the brokerage by its license and is also responsible for the control and conduct of the brokerage including its representatives and associate brokers.
o Whatever license m.b has, it determines what license wht they can offer
associate broker?
• A licensee who meets the edicational requriements to be a m.b but is providing real estate services under the supervision of a managing broker
representative?
• A licensee who provides real estate services under the supervision of a m.b.
• Provide real estate services under managing brokers supervision
• Key obliagtions:
o Provide all records to manaing broker
o Keep managing broker informe
o Promptly respond to managing broker
o Supervise employees acting for representatives
o Promptly notice managing…
Personal real estate corporation (PREC)?
A license for a licensee to operate as a corporation
teams?
• At least one licensee in combination with other licensees or non-licensees work together and share information regarding individuals to whom they provide real estate services.
purpose of REDMA
• Aims to protect purchasers by requiring developers to:
o 1. Meet any preliminary requirements or approvals
o 2. Ensure cost of utilities & other services are accounted for and to assure purchasers title upon purchase
o 3. Prepare and file a disclosure statement
REDMA?
real estate development marketing act
three things under REDMA
1. Seven say rescission right
• S. 21(2) Purchaser can rescind a purchase agreement within 7 days after the later of:
o A. the date of the purchase agreement was made; or
o B. the date of a written statement acknowledging the purchaser read the disclosure statement.
2. Failure to deliver disclosure statement
• A. purchaser is entitled to an indefinite right of rescission
3. Failure to deliver an amendment
• 1. The amendment was “reasonably relevant” to the purchase in deciding to enter into the purchase agreement; and
• 2. No more than one year has elapsed after the transfer of title
requirements for licensees?
• Applicant must be of “good reputation”
o BCFSA inquire into any criminal records, history of bankruptcy and insolvency, as well as fraud, misappropriation of funds, etc.
• Applicant is a person:
o Must be atleast 19 years of age; and
o Meet the educational and experience requirements under the rules
• Mus not have been
o Refused another license, or disciplined, by another regulatorty body
o Disciplined by a professional body; or
o Convicted of an offence
For a reason that reveals the applicant to be unfit to be a licensee
Licensees must apply to renew their licensee before the end of the 2-year term. If they do so, they can continue practicing until they year back from BCFSA.
RESA organizations?
Real estate errors and omissions insurance corporation (“E&O insurance corporation”) and indemnity plan
Real estate compensation fund corporation
RE foundation
estates?
fee simple
life estate
estates pur autre vie
interests in land than less estates?
easements
restrictive covenants
building schemes
fixtures & chattels
co-ownership of land
joint tenancy
tenancy in common
fee simple?
the greatest estate u can own in Canada
the legal term for the maximum interest in land available to a person
“fee” means the estate can be inherited
“simple” meant there were no qualifications on who can inherit the estate
life estate?
Def: an interest in land to be enjoyed during a person’s life, and which ends on that person’s death.
Example: Mr. Jones’ Will: “To my spouse, Lacey, with remainder to my sibling, Remi.”
• Life tenant (Lacey) is able to enjoy the property until death
• Remainderman (Remi) receives property in fee simple upon Lacey’s life.
o Refer to the estate pur autre vie for a different situation.
how does one terminate their life estate?
• Dictated by the document creating the life estate
• Two possibilities:
o If document provide a remaindermen, the remainderman will inherit the fee simple.
o If there’s no remainderman, than it goes to the “reversioner” (former owner or the former owners heir).
estate pur autre vie
Def: the form of life estate where the measuring life is that of some other person
Ex. Mr. Jones’ Will “To my spouse, Lacey, with remainder to my sibling, Remi.”
• Lacey sells her life estate to Pat – creating an estate per autre vie
• Pats estate will terminate upon Lacey’s death
easements?
o A right to use a neighboring property in a specific way (without possessing it) for the benefit of the holder’s land.
o The land receiving the benefit is called the dominant tenement
o The land granting the benefit is called the servient tenement
conditions to easements?
o 1. There must be both a dominant and servient tenement
o 2. The easement must accommodate the dominate tenement
o 3. The easement must be capable of forming the subject matter of a grant
restrictive covenants?
o A covenant restricting the use of land covenanter (the servient…
o Requirements
It must be negative in nature
It must benefit or enhance the value of the covenantees land in some way
Both the benefitted and burdened land must be precisely identified in the agreement or document
The burden of the restriction must have been intended by the parties to bind the land
Notice must be given to new owner, its original covenanter transfers land
requirements of building schemes?
The parties must receive their title from the same seller
The seller must have laid out and sole the property subject to restrictions
The seller must have intended that the benefit of the restrictions should bind each individual lot
The buyers must have purchased their individuals lots on the understanding that the restrictions were for the benefit of all the other lots
fixtures?
Items that go with the land and become the property of the buyer upon completion
• Things that increase the price of the home when buying one, like a really big rock
chattels?
Items that remain the personal property of the seller upon completion
Ex. a flat screen tv mounted on the wall.
how do courts determine what is a chattel or fixture?
test:
what is the degree of affixation?
what is the purpose of the affixation?
joint tenancy?
o Where two or more persons acquire an equal undivided interest in a property when one person dies, the remainder goes to the other partner.
o Test – “Four Unities”
1. Unity of Time
2. Unity of Title
3. Unity of interest
4. Unity of Possession
how does one terminate joint tenancy?
1. Severance of the joint tenancy by operation of law
2. Partition by mutual agreement of the tenants
3. Partition by a court order under the partition act.
tenancy in common?
o Where two or more persosn acqire interests in a single property. Each may sell or bequeath their interest and in the event of death, their interest becomes part of the estate
o Joint tenancy allows for the other partner to iherit the resposnibile and ervything of the property once the other partners dies, however for tenancy for common, when one partner dies their responsibility goes to who they want it to go to. Point is, the deceased’s 50% ownership does not go to other partner.
o Only has one unity: possession
how does one terminate tenancy in common?
- By agreement to sell interest to each other
- By agreement to sell to a third party
- By a court order under the Partition of property Act.
recording system?
o Existed pre-torrens
o A buyer would check and verify the chain of title when considering to buy a property.
Ex. if a buyer wanted to buy a home, he woud look at who the current owner bought the property from, then they would look at the who the previous owner bought the property from, and again and again, etc.
o This is called the chain of title
• This is done to check if there wasn’t anything done to the property in the past, or if there was any fraud, etc.
o Deed: a document used to transfer an interest in land to another
o Chain of title: buyers had to verify the history of transactions
elements of Torrens system?
indefeasibility
registration
assurance principle
indefeasibility?
Subject to certain exceptions, the Title Register is conclusive evidence that the person named as holding an estate in land is in fact entitled to that interest, and his holding is not subject to any condition or encumbrance other than those shown in The Register
1. Guaranteed title of the person named in certificate of title
2. Therefore, purchaser can rely on the ownership shown on the certificate of title
3. Over-rules common law doctrine of void deed
Indefeasibility: charges
• Charges are not indefeasible in BC’s Torrens jurisdiction
• Registration of charges on raises a rebuttable presumption that the charge is valid.
registration?
1. Torrens – title passes at registration
2. Registration makes interests valid against 3rd parties
3. Unregistered titles are still effective between parties
negligence?
a. Extremely broad “tory” intended to compensate victims who are harmed by carelessness of others
i. Tort – civil wrong (as opposed to criminal wrongs)
b. Negligence is about compensating a person (plaintiff) or losses they suffer due to the carelessness or mistakes of another (defendant)
c. Requirements
i. Defendant owes plaintiff a duty of care (people who you can reasonably foresee being affected by your actions incl. non-clients)
1. Don’t owe duty of care (DOC) to everyone the world: think railways workers case
ii. Defendant breached the standard of care
iii. Damages suffered as a result of breach were reasonably foreseeable
negligence - imagine that you are hosting an open house.
i. Did the Defendant owe the Plaa duty of care?
- A person owes a duty to take care to all those whom he/she should reasonably foresee as being affected by his/ her actions
negligence - imagine that you are hosting an open house.
ii. Did the D breach the standard of care owed?
- Duty to take the same care as a “reasonable person” would take in all circumstances.
negligence - imagine that you are hosting an open house.
iii. Did the P suffer damages as a result of the D’s breach and were they not too remote?
- Damages must have reasonable been in the contemplation of the D as a possible consequence.
negligent misrepresentation?
Simply put, you said something you shouldn’t have, and someone relies on that and suffers damages
b. Requirements:
i. Untrue statement
ii. Made negligently
iii. Special relationship between the parties (skilled person or expert giving advice in course of business to a person who will reasonably rely on it)
iv. Plaintiff must have relied on the statement and the reliance must have been reasonable
fraudulent misrepresentation?
a. A false statement of fact made by a party who knows, or should know, that it is false, and is made with the intention of deceiving another
b. Similar to negligent misrepresenaation, but also inlcuds an element of moral fraud, not just carelessness
c. Two things you need to know:
i. Person who made the statement either knew it was false, or made the statement recklessly
ii. Does not need to be skilled or an expert
errors in drafting agreements
a. Licenses expected to be able to draft simple legally enforceable contracts in simple, accurate and understandable terms.
Breach of fiduciary duty
a. Acting as an agent on behalf of another rsults in an agency relationship, a types of Fidu. Relationship
statutory relationship
a. Licensees can also face professional discipline from:
i. The real estate council
ii. The local real estate board
PCMLTFA
PCMLTFA aims to help authorities detect, investigate and deter money-laundering/ TF
PCMLTFA obligations?
o Compliance program
o Know your client
o Reporting
o Record keeping
compliance programs?
- AML “blueprint” that a licensees must understand and follow
- Elements:
o Compliance officer
o Policies and procedures (written)
o Risk assessment
o Training program
o Review of compliance program
know your client?
- If an individual = identify them
o 3 methods to do this:
Government-issues photo ID method, credit file method, dual process method - If an entity (corportation, partnerships, trust, etc.) =. Confirm the entity’s existence
reporting?
- Terrorist property report must be filed without delay by a licensee when they know it is owned or correlated to a terrorist or group.
- Large cash transactions
o LCT report must be filed for all LCT’s - Suspicious transactions
o ST report must filed asap when they determine that there are reasonable groups to suspect that a transactions is related to the commission of a money laundering or terrorist financing office.
Difference between commercial and residential tenancies
- Commercial tenancies: governed by terms of lease and common law, and to a similar extent, the commercial tenancy act
o Disputes usually resolved in court - Residential tenancies: governed mostly by residental tenancy act and tenancy agreement
o Disputes usually resolved by residential tenancy act
what must be in a commercial agreement?
o Essential terms
Parties
Rent
Premises rented
Term
o Leases over 3 years must be in writing
what must be in a residential agreement?
o RTA states that tenancy agreements must be I writing, signed and dated by both the L and T, written so that a reasonable person can understand the terms, and delivered to T promptly
o Tenancy agreements must contain…
Types of tenancy
• Fixed term tenancy
• Periodic tenancy
fixed term tenancy?
- Tenancies that continue to a certain period ot time jan 1- dec 31
Commercial FT tenancy?
Ends automatically at the end of the fixed term
On the expiry of the term, the T must vacate and no notice is required from the L
If T remains in possession in the end of the fixed term commercial tenancy, and pays ren that the landlord accepts, a periodic tenancy will form.
residential FT tenancy?
Residential Ieases longer than 20 years are considered commercial leases
When a fixed term residential tenancy expires one of two things happens:
When the term expires, unless the parties agree to a new fixed term, the tenancy automatically continues as a month-to-month (periodic) tenancy under the same terms as the original agreement
Second, the agreement can end on the expiry date. There must be a prior written agreement for this to happen
what is tenants notice?
s. 45
periodic tenancies
- tenant may terminate by giving one months notice
reasons to end for cause?
for cause (s.47)
- Reasons to end for cause examples
o Repeatedly late paying rent
o Significant intereference with others or seruoudly jeoparizied others safety pr rights
can landlord demolish a rental unit?
if landlord wishes to demolish and convert property into another type of property, such as non-residential property, the landlord can provide 4 months’ notice.
can landlord demolish before end of fixted term
no
and tenant is entitled to one month of free rent, or payment in lieu
ways to end tenancy before the end of the term
s. 44 (c)-(g) of RTA
For cause (1 mo. - subject to RTB ending earlier)
For non-payment of rent (10 days)
ways to end tenancy by giving notice
landlord or purchaser use (2 mos.)
demolish or convert (4 mos.)
tenant notice (1 mo.)
method requiring an order from RTB
Renovations or repairs (order effective in 4 most.)
process for renovations or repairs?
if a landlord wishes to Reno a rental uni, they must first apply to the RTB for an order that they be allowed to have possession of the unit (no less than 4 mos.) landlords can no longe simply provide notice to end tenancies to Reno/ repair rental properties.
landlord must also pay on months rent to the tenant (or let the tenant stay one month for free)
after Reno’s are complete, tenant has the right to re-rent the unit at the rent determined by the landlord
when a FT tenancy auto-ends…
tenancy agreement requires tenant to vacate AND
1) landlord intends to occupy; or
2) Lease was a sublease
strata lots
- Some parts of the building/ land are owned by individual owners (“strata lots”)
common property
- Some parts are owned by all of the owners, collectively (“common property”)
unit entitlement
- every strat plan has a schedule of unit entitlement attached(form v)
o Displays each strata lots proportionate ownership share, as a TIC, in the common property
o Displays each strata lots share of common expenses - Each strta lots proprtiomate ownership and responsibility is based on that starta lots unti entitlement
o The UE is based on a strta lots habitable area (the area of a residential strata lot that can be lived in, but does not indluces patios, balconies, garages, etc) - UE of strata lot/ total UE of all strata lots, and then multiply the product by the total contribution
- SPA says that common expenses lke srata fees must be allocated based on UE
- However, SPA allows owner to allocate on a different formula by unanimous resolution, which must be filed on title
limited common property
- There are only a limited number of owners that can use this common property
o Ex. storage space, parking space, etc.
o LCP designation may appear in strta plan (changing the strata plan requires a unanimous vote)
o The LCP designation may be made through a ¾ vote at a general meeting of strata corporation
short term exclusive privileges
o Used to give exclusive use of common property or a common asset to an owner/ tent
o If the permission/ privilege would significantly change the common property’s use/ appearance, then owners must approve with ¾ vote at a general meeting
Otherwise the strat council can approve the privilege my simple majority
strata corp
o An artificial legal “person” who has the same legal abilities as a living person (e.g. the strata corp can enter contracts or sue and can be sued)
o Develop creates the strta corp by filing the strat plan in LTO
o Difference between strat corp. and business corp:
Shareholders of business corp. are not personally liable for any judgements against the business corp.
However the owners of the starta corp are personally liable for payment of any judgement against the strata corp, based on the UE.
o Manage, repair, insure common property, record keeping, and enforce bylaws and rules.
o Formed by filing a strata plan with the land title office
o Exists for as long as the strata plan is still filed with the land title office
o All strata lot owners are members of the strata corp.
strata council
o Executive body elected by the strata members
o Elected annually at AGM
o Eligibility
(a) Owners
(b) Individuals representing a corporate owners
(c) Tenants who have assigned a landlord’s rights to stand for council
Other classes of people set out in strata bylaws
strata lot owners
o Strata lot owners are responsible for adhering to the Strata bylaw and rules, and paying Strata fees and any special levies.
rights of strata lot owners
Rights of a Strata lot owner
• Use their strata lot
• Benefit of common property
• Ensure strata corp. operate in accordance with act, regulations, rules and rules.
Remedies he or she has against the Strata corp. or other owners
• Sue for damages
• Injunction – requiring them to perform their duties
• Order to prevent or remedy unfair action
purchasers - If a person enters into a witten agreement to buy a strata lot, they can access the strata records by:
4 ways…
o Requersting information certificate from strta corp
o Requtesing certifaicate of payment from strta crp
o Indirectly, by requiring the seller to provide the strata records to the buyer under the contrat
rental disclosure
o If the developer intends to rent one more strata lots s 139 of the strata propery act requires the developer to file a rental disclosure form
o Rental disclosure form, a form prepared by the owner developer of the starta property containing information about the rental of strata lots that must be filed with the superintendent of real estate before the first strata lot is offered for sale
Number of strata lots that can be rented
Length of time that strata lots may be rented
Whether there are any bylaw that restricts te renal of starta lots
co-op creation?
o Cooperative ownership: a form of property ownership whereby owners possess shares in a non-profit corporation that holds title to the land, including any buildings, and wherby owners of tehse shares are entitled to lease a unit in the building from the non-profit organization
o Co-op
No individual fee simple title. Co-op acquires fee simple title
Bound the cooperative association act
Co-op can provide can indirect financing to owners
Rights of an owner to sell interest in co-op may be restricted
o Strata
Strata lot owners have individual fee simple title to their strata lot
Bound by strata property act.
operating fund?
- Contributions are made by owners, generally via strata fees
- Can be use to pay expenses that are consistent with the purpose of the fund (common expenses occurring at least once per year and the expense falls into one of the following categories:
o It is authorized in the budget
o It is approved by ¾ vote at a general meeting
o The expense is an authorized (under the SPA) unapproved expense, which may be:
An expense which the council is allowed to pay without approval, up to a spending limit set in bylaws (or the lesser of 5% of total OF contributions for this year or 2,000)
An immediate expense that is required to ensure safety or prevent signficiant loss or damage, in which case only the min. amount necessary can be spent
contingency reserve fund?
- CRF must be seeded by developer when the first strata lot is conveyed to a purchaser
o If the first converyance is within 1 year of depotiing the strata plan, seed is 5% of estimated operating expenses in interim budget
o If first conveyance is more than 1 year after depositing strata plan, seed may be up to 25% of interim expected operating expenses, depending on certain factors - Additionally, apart from seeding the CRF, the inerim bidget must also include…
- At the first annual general meeting, if the amount of money in the CRF is less than 25% of the estimated operating expenses for the 12 month period in the interim budget, the strata corp. must contribute to the CRF
o Required contribution is 10% of the total budgeted contribution to the OF in the current strata corp. budget (meaning the budget that will be used for the coming year) - After the first AGM, the starta corp. must contribute to the CRF if the amount of money in the CRF is less than 25% of the total budgeted contribution to the OF for the last fiscal year
o Required contribution is the lesser of:
10% of the total budgeted contribution to the OF for the current fiscal year or
The amount need to bring CRF up to 25% of the total budgeted contribution to the OF for the current fiscal year
o If the CRF amount does not fall below these thresholds, then the contributions are optional - Used to pay expenses that are consistent with the purpose of the fund (occur less than once per year, or do not usually occur) AND the expenses falls within one of the following categories:
o The expense is approved by a majority (50%+1) vote if the expense is one that was recommened in a depreciation report
depreciation reports?
- An engineer will estimate the repair and reaplcement costs for major items in the strata copr, and the expected life of these items
- First report required within 6 months of the second AGM, and then a new report is needed once every three years afterwards
strata fees and special levies
- Strata fees are usually monthly payments used for operating expenses and CRF contributions, per budget
o Calculated based on UE - Special levies used to rasie money for major repairs and other unanticipated expenses hat cant be covered by CRF/OF
o Also calculated based on UE
o Approved by ¾ resolution of owners (council cannot impose levies) at general meetings if UE is used – if cost will be allocated differently, then unanimous vote is needed - Sometimes, special levies are approved before a starte lot is transferred to a purchaser
o The seller is responsible to pay any portion of the special levy amount that must be paid before the completion date
o The buyer is responsible to pay any portion of the special levy that must be paid after the completion date
o (if the buyer expects a special levy will be approved before the completion date, buyer can seek compensation for the buyer’s portion of the special levy from the seller)
essentials for binding contract
offer
acceptance
consideration
legal intention
capacity
legal object
genuine consent
under what circumstances is a misrepresentation actionable?
false statement
statement induced innocent party to act
reasonable that the innocent party would rely on the statement
innocent misrepresentation
o This is a false statement made unknowingly
o Innocent party can sue for recession prior to execution of contract and the plaintiff cannot sue for damages
defects?
latent defect
patent defect
stigma
latent defect
o Defect that would be discoverable during the course of reasonable inspection.
This needs to be disclosed!
o Material latent defect
Means a material defect that cannot be discerned through a reasonable inspection of the property
patent defect
o Defect which is visible or can be discovered during the course of a reasonable inspection
stigma
o Subjective issues
What one might consider and issue, the other may not.
Ex. smells in an area
Ex. sex offender next door
categories of mistake?
common
- both parties make the same mistake with a contract
• Void
o Mutual
Both parties make a mistake, but a different one in a contract
• Voidable
o Unilateral
One party makes a mistake
• Voidable
termination of a contract?
- Performance
- Agreement to waive performance or substitute another agreement
- Nonfulfillment of condition precedent
- Frustration
- Breach of a condition of the contract which is accepted by the injured party
condition precedent?
o Legal term for a “subject to” clause. In contract law, a condition precedent calls for the happening of some event for the performance of some act before the contract shall be binding upon the parties
performance?
- Ex. In the context of the termination of a contract, “performance” means both parties completed their obligations and the contract is over. If A and B have a contract where A gives B $5 and B gives A a ride to the mall, and they both do that, that is an example of performance which would terminate the contract. A and B no longer have obligations to each other, and the contract is over.
minutes?
- Meeting minutes are the record that is kept of what has been discussed and decided in a meeting, what actions might be taken, who must take them, and when those actions must happen.
conditions?
- Subject conditions that are agreed upon by the buyer before buying the property.
- You cannot use conditions precedent to get out of a contract
two types of assignments?
o Statutory
Complies with the Law and Equity Act
• Original promiser and assignee
o Equitable
Does not comply with all the requirements under the Law and Equity Act
• All three parties named in action
remedies for breach of contract
o Terminate the contract and sue for damages;
o Continue the contract and sue for damages and;
o Continue and contract and sue for specific performance
section 35 of RESA
1. Professional misconduct
• A type of misconduct under RESA (real estate services act) that focses on competency in practice and technical breaches of RESA, regs, and Rules
2. Conduct unbecoming a license
• A type of misconduct that is contrary to the best interests of the public, undermines public confidence in the industry or brings industry into disrepute
Honesty?
- Acting in a manner that is sincere and truthful and free of deceit
o Transparency
o Informing clearly
o Not withholding info
o No deception
o Settling appropriate and realistic expectations
o Following through promises
o Truthful about knowledge and experience
trust?
- Services of the industry will only be used if the public can trust its professionals
o Key points
Long time to build, quickly destroyed
Building and maintaining trust
integrity?
- Acting ethically and doing the “right thing”
o Behave professionally
o Act objectively
o Deal fairly and in good faith
o Maintain competence (know limits)
o Maintain confidentiality
o Act with due care and due diligence
o Have accountability for actions
common law duty to clients?
Contractual (e.g. listing agreement)
Tort laws
• If u act negligently
• If u cost them something
Agency and fiduciary duties
legislative duty to clients
rules (3-3 and 3-4)
rule 3-3 and 3-4?
• 3-3:Duties owed to clients
o Fiduciary duties
Confidentiality
Full disclosure
Avoid conflicts of interest
Act in the best interest of your client
• 3-4: general duties to clients and non-clients
o Acting honestly and with reasonable care and skill
o Reasonably prudent; licensee would in comparable circumtances
duty to report?
- Describe the rationale duty behind the duty to report
- Common obligation of professionals
- Enforcing values of professional = public confidence
- RESA – not explicit (but fundamental component)
- Rules – 3-2
o Professional misconduct
o Conduct unbecoming a licensee
o Improper or negligent conduct - General – ethical decision making
5 elements of ethical decision making
- Consider the situation and identify the potential ethical issues
- Identify the stakeholders
- Specify feasible alternatives for evaluation
- Evaluate each alternative in terms of ethical consequences
- Make and justify your choice
disciplinary procedures?
and penalties?
- Complaints –>Responses –>Investigations –> Disciplinary Hearings (informal and formal)
o Formal hearing is in front of a discipline hearing
penalties:
o Reprimand
o Suspension of membership
o Fine
o Costs
o Expulsion
o Orders to attend courses
o Or usually a combination of the above
why use an agent?
- Possess knowledge, skills and abilities that the principal does not
- Due to geographical or other limitations, the agent is able to perform a certain action that the principal cannot
- The principal does not have the time or desire to perform certain actions.
agency vs dual agency?
- Agency:
o A relationship in which one-person (the agent) is granted the authority to represent and act for another person (the principal) dealings with others - Dual agency:
o An agency relationship where the agent acts for multiple parties in a single…
three major ways a licensee can provide trading services in BC?
- Sole agency relationship
o Licensee represents the consumer as a client and does not represent any other party to the trade - “no agency” relationship
o May provide limited trading services outside of an agency relationship, consumer is unrepresented - Dual agency relationship
o Limited trading services to multiple parties in a trade of real estate
o Represents each party as a “client”
Only permitted in extreme circumstances
Designated agent?
- Under designated agency, while the clident stills signs a services contract with the brokerage, the client agrees that the brokerage will appoint one or more specific licensees (rather than all of its related licensees) to act as a sole agent(s) of the client.
ban on dual agency?
- Some licensees use to engage in limited dual agency = situations that were sometimes not appropriate and the licensee could not meet their fiduciary duty to both clients
concerns regarding dual agency and consumer protection?
o A real estate professional may not be able to be completely loyal and impartial to two clients with competing interests
o A real estate professional may not be able to properly advise those clients without improperly disclosing their confidential information to each other
o A real estate professional acting as a dual agent might prioritize his or her own interest in earning the whole commission, rather than acting in the best interest of his or her clients.
no agency?
what can the licensee do, and not do?
- Unrepresented parties
- Licensee may only:
o Share general information and real estate statistics
o Show property and provide factual information about the property
o Provide standard real estate forms a contract - Licensee cannot:
o Give advice on appropriate price
o Give advice on terms and conditions to include in contract
o Negotiate on behalf of unrepresented party
o Share any client’s confidential information
o Protect confidentiality of unrepresented party
what are mandatory standard disclosure forms (council)?
o Disclosure of interest in trade form
o Disclosure of representation in trading services
o Disclosure of risks to unrepresented parties
what are BCREA non-mandatory standard forms?
o Contract of purchase and sale
o Multiple listing contract
express-contract?
o An agreement under which the agent is given authority to perform actions on behalf of a principal, in return for remuneration
implied-actions?
o An agency relationship that is established by the actions and conduct of the parties
estoppel?
o Where one-person (the principal) acts in such a way as to lead a third party to believe another person (the agent) has authority to act on behalf of the principal
agency termination?
- Express- the principl and agent agree to terminate
- Termination by conduct- act of principl….
agent authority?
- Actual authority- Given to the agent by the principal
o Express
Terms of a contract
o Implied
Authority to carry out anything incidental to express authority
o Usual or customary
Customs of the industry of the trade - Apparent authority
o Through the operation of the doctrine of estoppel
how does an agent become personally liable to a third party?
o No disclosure of agency
Can be held liable as is he/ she was the principal
o No authority or insufficient authority
An agent who makes a conyrct with a third party on behalf of the principal is presumed at law to have warranted or guaranteed that the agent had the appropriate authority to do so
o Torts committed by agent
Ex. negligence, trespass, misrepresentation
conflicts of interest?
- Conflicts respecting remuneration
- Conflicts respecting current client
- Conflicts respecting former clients
- Other
o Purchasing principal’s (clients)property
o Selling own property to principal
o Receiving referral fee from service provider referred to principal (e.g. home inspector)
duties of a principal?
- Duty to comply with agency agreement
- Duty to remunerate agent
- Duty to idemniy agent – common law right
rules?
- Identify the sections in the rules that deal with a licensee’s duty to client and others
o Rule 3-3 (duties to clients)
o Rule 3-4 (duties to act honestly
o Rule 3-5 (duties to act with reasonable care and skill?
agency disclosure?
- Disclosure of representation in trading services
- Disclosure of risks to unrepresented parties
- Disclosure for residential tenancies
- Disclosure when engaging in dual agency
disclosure of remuneration?
- Disclosure of remuneration (5-11)
o Disclosure of receiving remuneration thats not paid directly principal
o Buyers agent. Is splitting the sellers agents remuneration - Disclosure to seller of expected remuneration
o Offer for sale has been received
other mandatory forms?
- Disclosure of intrest in trade
o Licensee buys, sells, or rents real estate for themselves - Disclosure of latent defects
- Notice relating to contract assignments
o Standard term has been amended
can u enforce a verbal contract to buy and sell property in BC?
No
section 59?
o Section 59 of the Law and Equity Act specifies that contract dealing with land must be in writing (does not apply to leases of three years or less) in order to e enforceable
remedies to section 59
Restitution of benefit received
Compensation for money spent relying on the contract
S. 59 remedies
• If a court decides that an alleged gift or contract cannot be enforced, it may order either or both of….
exceptions to contracts/ writing
o Party denying the contract acted in a way indicted its existence (estoppel)
o Party seeking to enforce reasonably relied on the existence of the contract and in doing so changed his/ her position (usually by spending money)
why are plans important?
They prevent errors
• Plan filed backwards. People registered on wrong title.
• Miss portion of land. property goes over more than one legal title
technical requirements of a contract of purchase and sale?
- Names and occupations of parties
- Description of property being sold
- Description of price and related financing
=
certainty
conditions precedent?
- Protecting the seller – conditions precedent
o Prequalification of purchaser
o Time limit on satisfaction of conditions precedent
o Use of time date (not just date)
can conditions precedent be broken up verbally?
No
how to remove conditions precedent?
o Deliver written notice to other party before deadline
Verbal not sufficient
important considerations for a deposit?
o Timing
Acceptance - 24 hours of acceptance is in CPS
Subject removal?
Multiple?
o Method or payment:
Certified cheque, bank draft, cash, or trust cheque
Uncertified cheque
o Stakeholder
Held in trust unless both parties agree
Standard contracts state the following regarding assignments:
o 1. Contracts must not be assignment without the written consent of the seller; and
o 2. The seller is entitled to any profits resulting from an assignment of the contract by the buyer or any subsequent assignee.
what does the competition act do?
Hold business actors accountable for mis-leading, deceptive, or anti-competitive practices
important components of the competition act?
Restraint of trade and misleading advertising
• Restraint of trade (Real Estate exmaples):
o Fixing specific minimum commission
o Allocating territories, markets and customers
o Fix the split
o Restrict public marketing real property
o Prohibit the advertising of commission rates
o Set common fees for specific services
o Control entry of licensee or firms
• False or Misleading representations
o No person shall, for the purpose of promoting, direclt , or indirectly, the supplt or use of a product or for the purpose of promoting, directly, or indirectly, any business interest, by any means whatever, knowlingly or recklessly….
criteria for determining if negotiation was successful?
o Efficiency (quantity of time and effort)
o Satisfaction of parties at the end
o No wasted resources left on the table (divide goods so that value of good is fully realized)
risk management?
risk anticipation
o Avoiding purchaser’s remorse
o Document disclosures and disclaimers
o Avail yourself to others’ experience
o Continuing education
risk shifting
o Insurance
o Referring out scertain work
o Property disclosure statement
o Third party experts
risk control
o Procedures and policies
o Avoiding litigation flashpoint
o Drafting agreements
o Documenting due diligence
o Seeking professional advice
types of equitable mortgages
1. Mortgage of the equity of redemption
2. Deposit of the duplicate certificate title
3. Agreement to give a mortgage
mortgage?
o 1. Contract
o 2. Evidence of a debt between the mortgagor and mortgagee
o 3. A transfer of an interest in security for a loan.
implied terms?
prohibition against clogging
stipulations for a collateral advantage
prohibition against clogging?
o 1. Clauses that prevent borrower from redeeming his/her property free and clear of mortgage
o 2. Such clauses will have no effect
o 3. Ex. Option to purchases property
stipulations for a collateral advantage?
o 1. Terms that give the lender advantages in addition to the security and interest payments.
o 2. Can extend past the mortgage term
Unless it is a penalty, unfair or unconscionable
o 3. Ex. owner of gas station purchases lenders automobile products
express terms?
land title act
personal covenant
security in land
land title act?
o LTA – Two-page form
Part (Form B): parties, legal description, signature…etc.
Part 2: all other mortgage terms
personal covenant?
o That the mortgagor will pay the mortgage money and intertest…
o Contractual promise to pay
o Does not run with the land
security in land?
o That the mortgagor has good title…
o And that he or she has the right to convey the land..
o And that on default the mortgages shall have possession of the land…
o Free from all encumbrances
additional clauses?
o Acceleration clause
Entire principal amount due upon default
o Omnibus clause
Amount not paid is added to the mortgage amount
o Advance clause
Mortgage not bound to advance funds
o Costs clause
If legal costs are incurred it, they will be covered on a solicitor-client basis.
interest act?
o S. 3 – no interest mentioned, no interest payable
o S. 10 – individuals can repay mortgage after 5 years
o S. 6 & 7 – blended payments
business practices and consumers act
Allows courts to intervene where transaction is “so harsh or adverse… as to be inequitable”
mortgage brokers act
o Regulates persons who deal in mortgages within BC
o Defines a mortgage brokers
For a seller to qualify the loan must be either:
To acquire the residence
To make improvements
To the residence
To make expenditures for a household for family purposes; or
To refinance for one of the above three purposes
novation
o Occurs when an original contract between the lender and seller is replaced by a new contract between a lender and the buyer
o Allows the original borrower to be released from liability
o Broader scope than Property Law Act
lenders remedies?
- Demand letter
o First step before formal foreclosure proceedings
o Accelerates loan - Petition and support affidavit & Service documents
o Commences foreclosure proceedings
o Filed in the supreme court
o Lender that initiates foreclosure is the “petitioner”
o Any interests below the petitioner are respondents - Petition hearing & Order Nisi
o Lender can request an order nisi
o May grant remedies
o Defines length of redemption period (typically 6 months)
o Order nisi = final order of the court - Conduct of sale (judicial sale)
o Sale of land carried out under the supervision of the court
o Allows lender exclusive right to list on the MLS
o Borrower is still liable or entitled to the balance - Order of absolute foreclosure
o Order forecloses of any right, title or interest in the mortgage properly for respondents
o Respondents must deliver possession of property
o Once granted petitioner can apply for title in the LTO
equity of redemption
o A borrower may “redeem” the mortgage, or take back ownership of the property, free from the mort., upon payment of the debt
o This right continues even after the due date of the mortgage, usually for approx. 6 months
o It is an implied term in all mortgage agreements and it cannot be contacted out of
legal mortgages?
o The first mortgage grantd by a borrower with respect to their property
o The effect of a legal mortgage is to transfer title of a property to a lender
equitable mortgage?
o Any mortgages registered on a property after the first, legal mortgage (i.e. mortgage of the equity of redemption) – sometimes called “junior mortgages”
o Duplicate certificate of title
o Agreement to a title
priorities in mortgages?
in what three situations will a lender retain priority?
- Lender A will retain full priority in three situations
o No written notice of second mort was given by B
So, lender b must register its mort and give written notice to lender a about its mort it it wants priority over lender a’s further advances
o Lender a was contractually required to advance the money
o Lender a and lender b have agreed that lender a have priority (most common)
statutory priorities?
- Statutes give priority to the following types of claims or charges:
o Builders liens
o Wage liens
o Starta corporation liens
o Unpaid tax
o Others
implied terms of mort.
o Binding tems of the mort that are not written down in the mort documents
Equity of redemption is an implied term
express terms of mort.
o Terms of the mort that are written down
Historically, mort agreements were faily short as each was drafted by hand. By lawyers.
With the improvement of word processing and printing, morts began to grow longer and longer, which created problems for the land title officer when these lengthy morts were filed by banks
In 1990, the land title act was amended to introduce the form B and the concept of standard mort terms to address this issue
o Term of the mort
The dates between which you are required to make monthly payments, usually 5 years or less (because of the interest act)
o Amortization period
Period of time you would require to repay the loan, including interest, at a certain monthly payment amount (usually 25 or 30 years)
At the end of the initial term, need to “renew” the mort with the lender, switch lenders, or pay out the balance owing
o Repayment and renewals
Two common misconceptions:
• Lenders will always allow you to break your mort (i.e. prepay) prior to the end of the term in exchange for 3 months’ interest
o Some mort have no prepayment penalty, some charge 3 mos interest, and some charge the “interest rate differential” which compensates the bank ofr the loss interst it is no longer going to receive ince youre paying the mort off early
• At the end of the term, lendrs will always renew your mort
section 8 of the interest act?
o Section 8: a lender cannot charge a higher rate of interest on money that is in arrears (i.e. in default) than the mort interst rate that would apply to the money that is not in arrears/ default (e.g. interest rate is normally 5%, but if you default, he interst rate increase to 10%)
o Cannot disguise that higher interest rate as a “fee” or “penalty”
o Ex. a mort loan bears interest of 3%. However, the mort loan document states that if a borrower defaults, then in addition to the 3%, the borrower will be charged an “indemnity fee” equal to 3 months interest. This “indemnity fee” would be in breach of section 8
o Ex. a mort that gives a discount which is taken away when the borrower defaults is also a breach of s. 8
levels of govern.
federal
provincial
local
federal govern.
Indirect control
• Encountered in special circumstances
o Ex. airports and fisheries
Ex.
• Arbutus greenway
• CR Rail vs City of Vancouver
provincial govern.
Agricultural land commission act
• Agricultural land reserves established 1970’s to preserve agricultural land
• Powers:
o Pass regulations affecting ALR land
o Exclude land from ALR
o Allow non-farm use (application required)
o Allow subdivision (application required)
Health act
• Established public health departments responsible for maintaining the public health of the province
Local services act
• Provincial govern. Enforces planning regulations
• Rural areas where no other body exists
The islands trust act
• Provincial govern. Assigned planning powers to the islands trust council
• To simplify and standardize the planning process for gulf islands
provincial and local govern.
1. Regional districts
• Province divided into 30 regional districts
• Role varies depending on area
• Some long-term planning powers
• Ex. Garbage disposal
2. Municipal govern.
• Villages
• Towns
• Cities
• Municipal districts
3. Improvement districts
• Construction, operation, and maintenance of utilities
• Established after resident’s petition minister of municipal affairs
• Power to levy taxes, borrow money, and expropriate land.
rationale for the regulatory system
o Public health and safety
Building code regulations to prevent spread of fire
Subdivision regulations to prevent health hazard (i.e. improper water or sewer installations)
o Protection of property values
Maintain existing property values
Zoning controls
o Efficiency, convenience and appearance
Designed to be convenient for residents
Communities are arranged for efficient installing of utility systems
o Conservation of natural resources
Ex. ALRs
zoning?
o The legislation division of a region into separate districts with different regulations for land use
Frequently encountered restrictions
• Restrictions on the number of buildings on a lot
• Set-backs and yards
• Height
• Density
• Home occupations
• Off street parking
• Signs
rezoning?
Usually initiated by property owners
Building regulations are administered in two ways:
building permits
inspectors
three statutes have been passed created local governments:
local government act
community charter
Vancouver charter
types of local governments
regional districts
municipalities
improvement districts
Planning controls for the use of land (including zoning bylaws) have certain purposes:
o Public health and safety
o Protection of property values
o Efficiency, convenience, and appearance
o Conservation of natural resources
official communit plans
- Aka official development plans in van
- Optional for munici. And regional distric
- OCPs encourage local govermenst to plan future growth and financial capacity for the growth
- OCPs, if created, must contain policies on things like:
o Residential developemtn required to meet future housing need
o Location and phasing of public works like highways, sewers, water lines
o Present and future public facilities - Not the same as bylaw, but any bylaws or permits after an OCP is enacted must be consistent with the OCP
what are zoning bylaws?
- Zoning bylaws regulate only current land use, unlike OCPs which deal with current and future use
secondary suites?
- A self-contained dweling located in another dwelling
- Non-complianant secondary suites are “illegal suites” or “unauthorized accommodation” or “non-conforming suites”
- Risk: if an illegal suite is discovered, owner may need to bring it into compliance with current codes/ bylaws…
- Buyers (or listing) agents can easily confirm whether a suite islegal by contracting the local government
o As a buyers agent, don’t simply rely on what the seller puts in the PDS – rules require you to discover relevant facts about the property the buyer may be acquiring
o As a lisiting agent, before you make representations about a suite being legal, you should also takes steps to make sure that it is by contacting the local government
Advertsiign an illegal suite as a possible source of reventue is false and misleading advertising which is prohibited by the rules
two potential problems with secondary suites?
o May not be permitted under zoning bylaws
o May not have been constructed with proper suites
non-conforming uses when rezoning
o Non-conforming uses are where a property previously complied with zoning, but no long dpes do because of a change in the zoning
gst under excise tax
- Subject to this part, every recipient of a taxable supply made in Canada shal pay to her majesty in right of Canada tax in respect of the supply calculated at the rate of 5% on the value of the consideration for the supply.
- Taxable supply is “a supply that is made in the coruse of a commercial activity”.
- Supply means to provide property (including real property like fee simple intrests, or even an option to purchase real property) or services in any manner whatever.
three types of builders
o A developer who builds/ substantially renovates a residential property for sale
o A person buys a residential property after the construction is complete and then resells it before it is occupied as a residence
o A person who is not a developer (Called “one-off” developers in the manual) but who builds/ substantially renovates a residential property and then sells it befoe they occupy It as their residence (or they only occupy it for a short time)
self-supply rule
- A builder may be deemed to have supplied a newly constructed/ renovated residential property to themselves (and would be responsible to pay gst) if:
o They move into the propert (even tho these no actual sale)
o They rent out the home to a long-term tenant before an actual sale
property owners must complete annual declaration by…
March 31st
multiple owners must submit one for each owner
who pays tax?
what is taxed?
community charter
- owner is taxed
assessment act
- registered owner is taxed
taxed at market value
land is taxed
improvements are taxed
• Any buildings, fixture, structure or similar thing constructed or placed on or in land or water over land or on another improvement
assessment appeals?
o Property assessment review panel
Onus is on the complainant
o Property assessment appeal board
- Statements of adjustments?
o Intro
o Sources
o Three dates
o Debit or credit
o Items on a statement
who is responsible for drafting the COPS?
and who verifies title?
The license
the conveyancer will coduct a title search on myLTSA to verify info in Contract
o Errors in terms relating to title can result in:
A potentially voidable contract
Liability for the licensee
Loss of commission
three important dates for the COPS?
o Completion date
The date the title is transferred and seller becomes entitled to the sale proceeds
o Possession date
The date the buyer is entitled to possession of the property
o Adjustment date
The date set for the adjustment of taxes, interests, rents, etc.
Conveyancer?
and what do they do?
o A lawyer or notary who handles the land title officer filling relating to the sale of the property
o Conveyancers will require information for:
Tax, water, rent, and other adjustsments
Loan information for buyer’s new mortgage
Balance payable by seller to discharge existing mortgage
other items related to the closing of the COPS?
survey
title insurance
document prep for COPS?
o Form A transfer
o PTT form
o Buyers and seller statements of adjustments (SOAs)
o Mortgage documents like form B
o Balance due to complete from buyer
o These documents are held by the conveyancer on undertakings
What happens when the documents for the COPS are prepared?
o Registering docs into LTO
On closing date, the conevyaner will check title once again to make sure there is nothing unexpected (liens, CPLs)
Form a is then sent to lto for registration, along with mortage docs (form B)
Once docs are sent for filing, the lto will acknowledge receipt and show that they are “pending”
Once the lto shows them pending, BC conveyancers will make closing payments
The LTO will check the pending docs and sort out any issues with the conveyancer – very rare for applications to be rejected.
statement of adjustments
o A statement of adjustments provide detailed info concerning the transaction specific to each party
Seller SOA – net sale proceeds
Buyer SOA– balance owed
o Statements for buyer and sellers are not comprised of identical so they will not be the same.
Where does the conveyancer obtain the information needed to prepare the SOAs?
• Primary sources
o The contract of purchase and sale
• Other sources
o Property tax statements, mortgage payout statements, electivity bills, etc.
debit?
Amounts owed by the party
Increases the cash needed to close for buyer
Decreases the cash received by seller on closing
credit?
Amounts owed to or already paid by the party
Decreases the amount of cashed need to close for buyer
Increases cash received by seller on closing
who is responsible for the adjustment date day?
The buyer!
how often are rental expenses and revenues paid?
Whereas property taxes ae paid on a yearly basis, rental revenues are earned on a monthly basis
Expeneses like utilities are also paid on a monthly basis
Monthly revenues/ expenses are adjusted according to the days in each month, rather than the days in each year
professional misconduct?
o Focuses on competency in practice and technical breaches of RESA and the Rules.
Conduct unbecoming a licensee: conduct, inside or outside the workplace, that:
o 1. Contrary to the best interests of the public;
o 2. Undermines public confidence in the real estate industry; or
o 3. Brings the real estate industry into disrepute
Conduct unbecoming a licensee
o Applicants must be fit to be licensed (Section, 10, RESA)
o Licensees must also promply notify their regulator and managing broker of certain events (Section 23, Rules)
how does the common contribute to the source of duties to clients?
Contractual dual
Tort law duties
Agency and fiduciary duties
how does the legislation contribute to the source of duties to clients?
The rules (sections 30 and 33); and
RESA (sections 35(1) and (2))
duty to third parties?
- Conduct unbecoming a licensee (section 35(2), RESA)
- Reasonableness standard (section 33, RESA)
duty to report misconduct?
- RESA (section 35):
o The duty to report misconduct directly relates to conduct unbecoming a licensee - Profession is a shared responsibility
o Licensees have an important role in maintaining the integrity of the real estate profession
a void contract?
- A contact that never had any legal existence or effect and which is not capable of being enforced
an illegal contract?
- A contract that offends against public policy or statute
voidable contract?
- A contract which exists until repudiated by a party entitled to do so, at which time it becomes void.
unenforceable contract?
- A contract which has all the essential elements of a valid contract, but which cannot be sued upon for some procedural reason.
four common types of incapacity?
capacity as in one of the seven elements of a contract
1. Infancy
• In BC, this means a person younger than 19 years of age
2. Insanity
• 1. Inability to understand the terms of the contract
• 2. Inability to understand how tge contract will adffect tehir interests
• 3. The other party has knowledge of the first patys mental capacity
3. Drunkenness
4. Lack of capacity of a corporation
termination of a contract?
- Performacne
o All parties to the contract perfrom their respective obligations
- Performacne
- Agreement
o The peraties agree to terminae the contract…
- Agreement
- Nonfulfillment of a condition precedent
o Condition precedent
Calls for the happeneing of some event or the performance of some act before the contrac will be binding on the parties
o If the condition precedent is not fulfilled, the contract never becomes a bidning legal document.
- Nonfulfillment of a condition precedent
- Frustration
o Where the exitsnce of a specific thing is necessary fro perfroance of the contract, the duty for performacen of the contract, th euty to perform is discharged if the thing, for reasons beyond ones control, is no longer in exisence…
- Frustration
- Breach of a condition accepted by the injured party
remedies awarded by the courts towards contract termination?
Damages (money)
Specific performance (order to complete transaction)
Injunction (order to do something/ stop doing something)
Quantum meruit (fee for service)
information about the listing agreement?
o Information about property, including:
Financial encumbrances (e.g. mortgage)
Type of dwelling
Size of dwelling and property
o If there ia sounds factual basis for suspecting that information from the seller is incorrect or misleading, the licensee has a duty to verify it
agreements in restraint of trade: criminal prohibition (section 45)
Agreements to:
• Fix specific or minimum commission rates on property transactions
• Allocate territories, markets, or customers
• Fix the split between listing and selling licensees; or
• Set common fees for specific services
agreements between competitors: civil (section 90.1)
Agreements between competitors that substantially prevent or lessen, or are likely to substantially prevent or lessen, competition in the marketplace
misleading advertising: criminal (section 52)
No person shall, for the purpose of directly or indirectly romoting the supply or use of a product or any business interest, knowingly or recklessly make a reperesentaion to the public that is false or misleading in a material respect.
Misleading advertising: civil (Section 74.01)
The civil sanction is very similar to the criminal sanction, except there is no requirement to prove that the deceptive practices were made knowingly or recklessly
There are two other civil prohibitions that can apply to licensees:
Price maintenance (section 76)
Sale above advertised price (section 74.01)
three golden rules
Don’t collude
Don’t discriminate
Don’t mislead
privacy legislation requires organizations to:
• Collect, use, and disclose personal information of their clients and customers according to specific rules
• Ensure adequate polcieis and procedures are in place to protect information as the law requires
• Create internal processes to handle inquiries, complaints, and requests from people for access to their own information.
title search?
- Includes registered owner information as well as legal description and civil address of property
- Title search can be obtained online
- Nominal fee
5 elements of the COPS?
o Names and occupations of the parties
Joint tenants vs tenants in common
o Description of the property being sold
Legal description, civic address, and chattels
o Description of the price and related financing
Mortgages and agreements for sale
o Terms, conditions, and warranties
Term: a promise
• Condition: a fundamental term
o Breach may equal termination of contract
• Warranty: a subsidiary term
o Breach may not equal termination of contract
o Deposit
An amount of money deposited with the brokerage by the purchaser when an offer to purchase is made
condition precedent
o Calls for the happening of some event or the performance of some act before the contract is binding…
condition subsequent
o A condition or event the occurrence of which will discharge the principal obligations of a party to the contract
Ex. if the buyer defaults on any of the buyers deposit obligations, the seller may choose to terminate the contract.
subject clauses
o A subject clause may not be too subjective – otherwise, there will be no binding contract
o There will be no binding contract if one party has the sole discretion whether to proceed with the sale
o To remove a subhect clause, the removal must be delivered in writing prior to the subject removal deadline.
three ways to protect the seller when a condition precedent is being included in the contract?
Prequalification of the purchaser
Time lmit on satisfaction of condition precedent
The use of a time clause
assigning the contract:
they must include the following terms:
o The contract must not be assigned without the written consent of the seller; and
o The seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.
three ways an equitable mortgage is created?
o Deposit of the duplicate certificate of title
o By an agreement to give a mortgage
o By disguising a mortgage as a transfer
Substance over form
form b mort.
what are one the two pages of the doc?
Part 1
• Parties, legal description of property, sign of parties
Part 2
• Terms of mort
vendor “take back” mort
- Similar to conventional mort
- The seller “takes back” a mortgage from the buyer for part of the sale price of the property to facilitate the sale
- Vendor = mortgagee
- Purchaser = mortgagor
reverse annuity mort
- The lender makes a series of payments to the borrower over the term of the mort
- At the end of the term, the loan balance and interest is repaid by:
o Refinancing
o Sale of the property
o Estate of the borrower
bridge financing?
- Short term
o Interim financing - Borrower receives a loan and grants a mort to the lender for a short period of time while long-term financing is being pursued
- Often see it when a borrower has purchased a new property but has not sold their existing property
foreclosure priorities?
o Demand letter
o Foreclosure proceedings are commenced when the lender files a petition in BCSC with a supporting affidavit setting our the factual basis for the petition and to support the refief sought
o All respondents
- The order nisi
o A final order includes
Declaration
Declaration
Amount
Order
Order
general partnership
- two or more people
- expectation of sharing of profit
- each partner personally liable for themselves and the other partners
- not a separate taxable entity
limited partnership
- consists of one or more general partners and one or more limited partners
- general partner – unlimited liability
- limited partner – liability limited to amount invested
- One or more limited partners (cannot take part in day to day operations) with liability limited to amount paid into partnership
- Both types of partners are taxed on personal income
benefits of a personal real estate corp (PREC)
- taxes – separate taxable entity, pay (lower) coporate taxes, and provide for additional deductable expenses.
- income splitting (via non-voting shares) to family members – to lower taxes
- tax deferral ($ can be kept within the PREC)
Family trusts & real estate investment trusts
- a vehicle for collectively investing (family trust or REIT)
- separate legal entity
- asset held “in trust” for beneficial owner”
- trustee manages the assets on their behalf
- beneficiary owns “right” to income, not the asset itself
- taxed in the hands of the beneficiary (benefit)
- real estate investment trust (REIT) – trust units are sold to investors
revenue principle?
- revenue should be recognized by an enterprise when it is earned (accrual basis) , not necessarily when cash is received (Cash basis). E.g. real estate commission revenue
matching principle?
- match expenses with the revenues they generate – in the same period
materiality Principle?
- expenses need to be “material enough” (i.e…
objectivity principle?
- accounting information must be reported on objective and verifiable information
- aligned with the cost principle
consistency principle?
fiscal year?
????
general expenses?
o All operating expenses (e.g. heat, A/C, insurance, property taxes, maintenance, wages, etc.)
interest expenses?
o Cost of borrowing, bank loans/ debt
cost of goods sold?
o The cost of purchase or manufacture goods for sale
what is an appraisal?
- The process of developing an opinion of value
- An estimate of the value of an interest in real property
why do we need appraisals?
- Turnover is low: few transactions, so limited data.
- Properties are uiqye (heterogeneous) – so difficult to compare
- Long-lived – properties last far beyond demand and supply cycles, so need to account for time value changes.
- Property markets are local (fixed)
generally accepted accounting principles
- Consistency
o Once a method or approach for recording accouting information is adopted, the same approach should be followed in future years - Objectivity
o All amounts entered onto the financial statements must be objective (unbiased) and verifiable (i.e., by a third party) - Fiscal year
o Calendar year for individuals Jan 1 to Dec 31 - Cost
o “Historic cost principle”
o Record the amount paid for an asset - Revenue recognition
o Revenue should be recognized (put inot the financial statements) when earned, not necessarily when received - Matching
o Expenses should be recognized (and recorded) in the same period as the revenues they generated - Materiality
o Low-cost items (assets) may be expenses immediately and not depreciated
o The effort to allocate the costs over the priod of use if greater than any benefit generated from the additional information
o Will not have an impact on any users decisions
o Examples: office supplies
balance sheet?
o At a specific date, the BS lists the assets, liabilities, and owners equity
o Assets: what the business owns
o Libailites: what the business owes to investors
o balance sheet assets = liabilities + owners equity
capital cost allowance?
o CCA is the amount of depreciation that the Canada revenue agency will allow for tax purposes that are prescribed in the income tax act
o Assets are grouped into classes, and CCA is calculated using the aggregate bok value (called the Undpreacited capital cost (UCC) of the class rather than on individual assets
o The CRA list the asset classes and the allowable tax rates (and methods) in the tax code. For example buildings (after 1987) Class 1: 4% per year
o Generally cannot create a loss (negatve tatable income) using CCA
o Only one-half of the maximum CCA can be claimed in year 1
o No CCA claim allowed in the year an asset is sold
why are appraisals needed?
because real property and markets are different than other assets/ markets:
low turnover rate
it is unique
it is durable, long lifespan
highly local markets and immobile
who needs appraisals?
- Formal apprisals are needed for:
o Mortage finance (market reason)
o Expropriation (statutory reason)
o Property tax assessment (statutory reason)
o Insurance and financial (market reason)
o Legal: estate planning, gifts, and divorce (statutory reason) - Informal appraisals:
o Any time properties are bought or sold (market reason)
who can conduct appraisals?
- Anyone
- BC has no licensing requirement for appraisers
what is value?
subjective value
objective value
value in exchange
subjective value
what two factors is market value based on?
o Rights of ownership (interests in land)
o Physaicl property (location, improvements, amenities)
factors affecting property value?
house, lot, location (subject property information)
neighbourhood
economic factors like inflation, interest rates, exchange rates, etc.
highest and best use
appraisal methods?
comparative methods
cost method
income method
residual method
market comparison method
Canada’s two sets of accounting standards?
o (1) IFRS: international financial reporting standards: used by for publically traded companies
o (2) ASPE: Accounting standards for private enterprise also known as PE-GAAP: Private enterprise generally accepted accounting principles used by non-publically traded (private) companies
curable depreciation?
???
incurable depreciation?
o Use x%
o Depreciation per year = cost – salvage value/ remaining economic life (years)
o Total depreciation
Depre. Per year multiplied by the effective age of the building. All difficult to measure.
scope of cost approach?
- Limited practical appeal, last resort use
- Used where separate land/ builing values needed, e.g., insurance appraisals
- Used for unique properties – churches, stadiums, factories, etc. – when little comparison data available
limitations of the cost approach?
- Does cost equal market value?
- Depreciation calculations are difficult, particularly with very old buildings
income approach?
- Income or investment approach
o Market value is equal to present value of all future benefits from the property
how is depreciation measured?
o Economic age, not physical age
o No objective way to determine economic life
o Very long economic life, dpere./ year is negligible
o Builings deprecaite, but land appreciates
o For similar buildings, difficult to know if/ how depreciation is relevant ot vendor/ purchaser
fixed expenses?
o Real property taxes
o Insurance policies
variable expenses?
o Manuageemnt costs
o Utilties
o Maintenance
o Wages
o Garbage removal
o = net operating income
what is omitted when measuring NOI?
Depreciation
income tax
CCA
Debt Services
how is NOI calculated?
o Manuageemnt costs
o Utilties
o Maintenance
o Wages
o Garbage removal
o = net operating income
capitalization rate?
o The return an investor requires for investing in a property to receive the actual net operating income
how is capitalization rate calculated?
NOI/ sale price = Cap price.
o NOI = 45,000, recently sold for 562,000. What is the return?
NOI/ sale price = 45,000/ 562,000 = 0.08007 or 8% (Cap rate or return)
how is market value calculated?
NOI/ interest rate = Market value
only common law remedy?
damages
equitable remedies
Specific Performance
Injunction
Quantum Meruit: As much as he deserves
NOTE: Specific performance is generally not granted where the court feels that damages are a sufficient remedy
who deals with property and civil right matter?
Provincial Government delegates powers regarding property and civil rights to the third level of government i.e. municipalities.
civil law
This is private law that is of no direct concern to the state (breach of contract, agency, and tort). Civil law is the most important law to the licensee, particularly real property law.
public law
Public law includes areas of law that deal with the constitution (tax law, constitutional law, and criminal law). It addresses the disagreements with the Government or government agencies. E.g. Income Tax disputes are addressed by public law.
the bc court system
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.
courts of original jurisdiction (trial courts)
Small Claims Court
B.C. Supreme Court
appellate courts
B.C. Court of Appeal
Supreme Court of Canada
small claims court?
Lowest trial court
Hears cases involving claims of 25 000 or less. Claim must be filed in the Small Claims Court nearest to where the defendant lives or where the cause of action arose
bc supreme court
Highest trial court and appeal court for small claims court decision
No territorial or monetary limitations exist
bc court of appeal
Highest appellate court in BC
3, 5 OR 7 judges hear appeals from the B.C. Supreme Court. Considers legal issues only. No evidence is reheard. The decision of the majority of the judges decides the matter.
supreme court of Canada
Highest appellate court in Canada
Can decide not to hear an appeal. LEGAL issues only, no evidence will be reheard. 3, 5, 7 0r 9 judges hear the appeal. Majority decision of the judges decides the matter
executing a judgement
If the judgment debtor has assets, they can be seized and sold. Plaintiff can request a Writ of Execution from the court to the sheriff. Sheriff can seize and sell enough of the debtor’s assets to pay the judgment + the cost of seizure. If the debtor has no assets, the sheriff returns the Writ to the court marked “nulla bona” or “no goods”.
garnishing an order
Where a third person owes money to the judgment debtor, a garnishing order can be served on the third person to pay the money into court instead of the debtor. Wages or bank accounts are two common forms of the debt that may be subject to a garnishing order. It is not possible to garnish all of a judgment debtor’s wages.
to be a licensee
- 19 years of age
- Of good reputation
- Education(UBC examination)
to be a managing broker
- Be 19years of age
- Have good reputation
- have two years of experience as a licensee
- Education (UBC examination)
To start a brokerage or a real estate company, a person should:
- Provide financial statements of brokerage.
- Appoint one managing broker.
What can a real estate licensee do?
- Trading of properties
- Trading of businesses
- Collection of rent
- Selling of mortgages
- Leasing the property
exemption to the license
The persons who can do real estate business or who are exempted from real estate license but still can buy or sell property are:
- Lawyers dealing with a case
- Accountants: For sale of business
- Employees of mega construction companies
All members of BCFSA are publically appointed by:
how many members does BCFSA have?
BCFSA consists of 16 members:
All members of BCFSA are publically appointed by the Lieutenant Governor in Council, bringing a wide range of expertise in regulatory and governance best practices.
Responsibilities of Real Estate Council
- Issue and renew real estate licenses
- To collect premium for error and omission insurance
- To take disciplinary action against members and brokerages
- To implement laws
Main responsibilities of real estate board are:
- To implement Code of Ethics (Standard to maintain)
- To run MLS (Multiple Listing System)
Transaction Sheet: 3 P’s + Commission
- Property description
- Names of the parties (Purchaser and Seller)
- Price at which property has been sold
- Commission paid
Things that should not be included on the Transaction Sheet are:
- MLS date
- Names of financial institutes (example: name of a bank)
Real Estate Development Marketing act:
If there are five or more lots developed then disclosure statement has to be sent to Superintendent of Real Estate.
If the property has been sold in B.C. without the disclosure statement to superintendent, the purchaser can rescind (cancel) the contract within 7 days. If the property has been sold without disclosure statement outside B.C. then the purchaser can rescind the contract within one year.
ADVERTISEMENT:
Any advertising must include the name of the brokerage. If advertisement includes the name of managing broker, associate broker or representative, it must be the licensed name of the individual. If an office address is identified, it must be the brokerage office (not licensee’s home office address).
DISCLOSURE OF INTEREST IN TRADE
You must disclose that you are a licensee to the owner of the real estate if you or an associate licensee is acquiring real estate. Similarly, if you are selling real estate, you must disclose that you are a licensee.
FINANCIAL RECORDS
A brokerage must keep a real estate trade record sheet for each transaction where the brokerage or licensee holds or receives money.
A brokerage must have at least one trust account in a bank, trust company or credit union.
COMMISSION
Real Estate Boards and real estate brokerages can not fix commission rates. It is illegal to enter into an agreement for a net listing i.e. the commission will be any amount realized over and above a specific sale price.
Vicarious Liability
A brokerage is vicariously liable for any misrepresentation made by a licensee, even if the brokerage is not aware of misrepresentation.
Deposits held as stakeholder:
A brokerage holds money as a stakeholder and is not an agent for one of the parties unless the parties agree otherwise.
types of property
(a) land or real property and (b) personal property.
what is subject to ownerhsip?
Land is not subject to ownership except by the Crown. The only thing that is subject to ownership is an estate in land. An estate is a bundle of rights held by the owner.
life estate
A life estate lasts for the lifetime of the holder (life tenant) and terminates upon his/her death.
A life tenant may use the land and receive any revenue generated from it.
A life estate is registered as a charge on the fee simple title.
pur autre vie
If a life tenant disposes off the property to another person, the third party receives an estate known as a pur autre vie (an estate based on the life of another person). The estate ends on the death of the life tenant.
Upon the death of the life tenant, the estate will pass to the “remainderman”.
waste?
Voluntary Waste: Direct positive acts which result in damage to property beyond the use of a life tenant. Life tenant will be liable to the remainderman for this type of waste
Permissive Waste: Allowing property to deteriorate. Life tenant is not liable to the remainderman.
Ameliorating Waste: Direct positive acts that improve property. Life tenant is liable to the remainderman
what is the 4th category of waste?
Courts of equity created a 4th category of waste known as Equitable Waste. For a life tenant to be exempt from liability for this type of waste, the document creating the life tenancy must expressly provide against the liability for equitable waste.
Rights and Obligations of the Remainderman
The remainderman or reversioner must pay any principael owing on the mortgage and insurance premiums.
There are 3 main interests in land that do not amount to estates;
• Easements
• Restrictive covenants
• Profits a prendre
how long are easements granted for? who grnts them?
Easements can be granted for any length of time. They may be granted by:
• Statute
• An express document
• Implication of law
Release of an Easement:
An easement will be deemed to be released if, the dominant owner shows an intention to release it by abandonment, or an express agreement is made between the parties.
Release of a Restrictive Covenant: There are 4 ways that a restrictive covenant can be released:
- Can be released by an agreement between the parties (must be current owners).
- It ceases to be enforceable if the neighborhood has changed so as to make enforcement useless
There are 4 essential requirements for the arrangement to be considered a building scheme:
- All parties must receive their title from the same vendor (initial purchaser may sell to others without affecting the building scheme)
- The vendor must have sold the property subject to restrictions that apply equally to all of the lots
- The benefit of the restrictions must bind each individual lot
- The purchasers must have purchased their individual lots on the understanding that the restrictions were for the benefit of all the lots
Airspace
A landowner has the rights to airspace above his/her property only to the extent that he can make effective use of it. This can be altered by statute. The federal Aviation Act allows aircraft to pass through it without liability for lawsuits if there is no damage caused.
Subsurface
The provincial government retains most subsurface rights i.e. precious minerals, metals and petroleum products
what happens in cases where the contract of purchase and sale did not expressly identify fixtures and chattels?
Therefore, the courts have devised a two-part test
Degree of Affixation: Articles that are affixed, even slightly, will be considered fixtures unless circumstances show that they were intended to be chattels.
Purpose of Affixation: If an item is affixed for the better use or enjoyment of the object, it will be considered a chattel. If the item is affixed to enhance the land, it will probably be considered a fixture.
At Common Law, there are three of the most common types of void deeds:
• The forged deed (fraud, forgery must be proven)
• A deed given in exchange for an illegal act or thing
• The deed signed in circumstances where the party can plead non est factum
The Torrens System of Land Registration
The main objects of the Torrens system are to provide security in the holding of interests in real property and to remove the need for looking back through old title documents.
The Indefeasibility Principle
The principle of indefeasibility means that the title of an innocent purchaser who purchased for valuable consideration from the registered owner in fee simple cannot be annulled. These purchasers can keep their interest in land even if the registered owner has acquired title by forgery.
However, persons acquiring an interest in land by fraud are not protected by the Indefeasibility Principle.
There are 10 exceptions to the indefeasibility principle:
- Reservations contained in the original or other Crown grant
- Federal or Provincial taxes, rates or assessments, etc.
- Municipal charges, rates or assessments, etc.
- Leases for terms of three years or less where the tenant is in actual occupation
- Highways or public rights-of-way, watercourses, public easements, etc.
- Rights of expropriation or to an escheat
- A caution, caveat, charge, builder’s lien, judgment, certificate of pending litigation, etc. noted or endorsed on the certificate of title
- The right of a person to show that the land is, by wrong description of boundaries, included in the certificate of title
- Fraud, including forgery, by the registered owner
- A restrictive condition imposed on the land by the Forest Act that is endorsed on title
Abolition of Notice
Abolition of the Doctrine of Notice means that you do not have to search back through deeds anymore. The person purchasing only needs to be concerned with those interests contained on the register. This is subject to an exception of “fraud”.
The Assurance Principle
The Assurance Fund was established to compensate persons that lost their rights to land by dishonest means.
To qualify for compensation from the fund, a claimant must prove the following:
• That the claimant has lost an interest or estate in land;
• That the claimant cannot recover it by a court action;
• That if the Land Title Act had not been passed, the claimant would have recovered the interest at common law by a court action
Notation of Trusts
In some cases, a person holds a property ‘in trust’ for the benefit of another. The person holding the property is known as the “trustee”. Notation of Trust is made on the title, and the trust document is filed in the Land Title Office.
The Form of Documents
There is a prescribed form for most types of transactions. Other forms can be used only by permission of the Registrar.
Common Items Appearing on Title
caveat
judgement
builder’s lien
registration
manufactured homes
trepass and remedies?
It is wrongful entering or placing something on another’s land. Trespass is actionable per se-physical damage does not need to occur for a legal action to succeed.
Remedies
1. Damages
2. Injunction
3. Self help
Private Nuisance and remedies?
Private Nuisance
A private nuisance involves some use of a person’s own property which interferes with the use and enjoyment of, or cause damage to the property of another.
Valid Remedies:
1. Damages
2. Injunction
3. Abatement: Peaceful prevention of the nuisance- notice should be given to cut down over hanging branches
Valid defense for private nuisance
- The nuisance is the unavoidable result of statutorily authorized activity. (Taking a municipal business license does not qualify for the above statutorily authorized activity).
- The damage suffered is trifling in nature (of little consequences).
B.C. Occupiers’ Liability Act
Occupier is one who is in physical possession of the property and having responsibility for and control over the condition of the premises and the activities conducted on the premises.
Occupier is liable for injury suffered by people entering the premises:
- Trespasser: Responsibility of the occupier is very limited but he/she cannot intentionally harm the trespasser.
- Licensee: Licensee is a person who comes on the property with express or implied permission of the occupier for the purpose in which the occupier has no economic interest. E.g. Mail delivery: warning of dangers must be given.
- Invitee: Invitee is a person who enters the property with the permission of the occupier and for a purpose in which the occupier has an economic interest. E.g. Customers to retail store. Occupier should keep the invitee safe from all dangers which he knows and from all those dangers which he ought to know.
- Children: Occupier owes the highest duty of care towards the children.
Difference between a Lease and a License:
A lease creates an interest in land and it runs with the land; therefore a lease binds successors. Further a lease creates a landlord/tenant situation, but a license does not. Generally speaking a lease creates an exclusive possession.
A license to occupy is a contract between two parties and does not run with the land.
Difference between Commercial Tenancies and Residential Tenancies:
Commercial Tenancies are governed completely by common law, the actual terms of the lease and the Commercial Tenancy Act.
The Residential Tenancy Act governs residential tenancies. This Act covers dwellings used for residential purposes
What must be in a commercial Agreement?
Commercial: Time period of more than three years requires a lease in writing to comply with the Law and Equity Act. It is strongly recommended that a lease always be in writing regardless in order to avoid disputes.
A lease document must have the following:
• Names of the parties
• Description of the premises
• Start date of the lease
• Duration of the Lease
• Rent to be paid
• Any other material term of the contract
A commercial lease must cover matters in detail, or otherwise common law can impose unexpected obligations on the parties.
Matters not covered in a residential tenancy agreement are covered by the commercial Act.
What must be in a residential Agreement?
Any agreement after 1996 is subject to the Tenancy Agreement Regulation, which requires a tenancy agreement be in writing, signed and dated by both parties, and written in a manner that is easily understood.
Each tenancy agreement must contain the following terms:
• Legal names of the landlord and tenant
• Address of the premises
• Address and telephone number of the landlord/landlord’s agent
• The amount of rent and frequency of payments
• The day of the month the rent is due
• The amount of the security deposit and the date paid
• The date the tenancy starts
• Whether the tenancy is daily, weekly, monthly or fixed term
Where there is a fixed term, it must be specified, beginning and end and whether the tenancy may continue at the end.
NOTE: There is no need to maintain the professional and previous address of the tenant.
Periodic Tenancy
This tenancy automatically renews itself on the last day of the term for a further term of the same length until either party with proper notice terminates it.
Periodic Tenancy - commercial and creation
Creation: Express terms of the lease can create a periodic commercial tenancy or
It can be created by implication of law, this happens when the tenant stays on the
premises and pays rent which the landlord accepts.
Periodic Tenancy - residential and creation and termination
Creation: When fixed terms end, they automatically become periodic unless the parties agree otherwise.
Termination by the landlord: Can only take place for specific reasons:
• Proper notice of termination in accordance with the act
• Where the tenant vacates or abandons the property
• Fixed term agreement and term expires
• Mutual agreement
ther termination of residential periodic tenancy - the Act determines length of notice in various circumstances:
Non-payment of rent
• The landlord can give notice of end of tenancy to be effective not earlier than 10 business days after the date the notice is given.
• A tenant may, within 5 business days after receiving notice pay all rent due and any notice will be void.
For Cause: The landlord can give notice of end of tenancy if any of the following occurs:
• The enjoyment of others has been unreasonably disturbed.
• Extraordinary damages have occurred
• The tenant has failed to give the security deposit within 30 days
• The number of persons permanently occupying the premises is unreasonable
The notice must be for at least one month
Landlord Use of Property
Under these circumstances notice can be given to the tenant for certain reasons such as the property has been sold and the new purchasers wish to occupy
Notice must be at least for 2 months and one month rent free accommodation. If there is a lease, the expiry date applies.
Termination by Tenant
I f there is no fixed agreement; the tenant can give notice before the Iast day of the rental period to be effective one month later.
Form of Notice
A landlord has to give notice on a prescribed form:
in writing and signed by LL & tenant
Residential Tenancy Arbitrations
Arbitrators facilitate a simple and inexpensive way of settling disputes in residential tenancies. It is not available in commercial tenancies.
Distress
Commercial: A landlord can seize the tenant’s goods and eventually sell them to satisfy a claim for rent owing
Residential: No such provision
Security Deposits
Commercial: Amount is left open to the market place, as is possible. No interest payable.
Residential: A Security deposit must be paid within 30 days, cannot exceed half a month’s rent. LL must pay interest on the deposit (Annual Compounding).
The Right to Assign or Sublet
Commercial: Unless expressly prohibited the tenant has the right to assign.
Residential: With the LL consent.
Mitigation
Commercial: A landlord is not obligated to mitigate.
Interesse Termini: No estate in Iand passes until the tenant has possession.
Commercial: If the tenant cannot get possession the only remedy would be sue for damages.
Residential: The residential tenant is not governed by this and can gain an order for possession if necessary. The residential tenant is not limited to damages.
Quiet Enjoyment
Commercial and Residential: This assures the tenant of the use and enjoyment of the premises for all usual purposes without interference from the LL, also ensures against defective title, if the tenant’s rights to remain on premises is attacked.
Derogation from Grant
Commercial and Residential: The LL cannot take away any rights which he has created for the tenant.
Landlord’s Duty to Repair
Commercial: No obligation
Residential: A LL has a duty to repair and maintain all types of residential premises in order that the property is safe for human habitation.
The Strata Corporation
The strata corporation consists of individual strata owners once the strata plan is deposited in the land title office.
Responsibilities of Strata Council
- Maintenance of common property insurance
- Creation of operating funds for common expenses
- Contingency (unpredicted happenings) reserve fund
NOTE: Council is not responsible for a public authority work required on an individual strata lot.
Powers of Strata Council:
- Control and management
- Register lien on unpaid expenses (strata fees)
- Remove use of common property by an individual, for a valid reason.
Management Contracts:
As per strata property act either party to a management contract can rescind (cancel) the contract by giving two months notice and hence there is no breach of contract. The parties to the management contract are Strata council and the Strata management company.
strata By-laws and rules
By-laws are passed by the Strata Corporation while the rules are passed by Strata Council. If there is a conflict, the by-laws prevail.
Amendment (changes) of By-Laws: The council needs ¾ votes in favor of amendment for residential stratas and a majority vote for commercial strata.
If someone is dissatisfied with the decision of strata council, he/she can move to B.C. Supreme Court or can bring Mandatory Injunction (i.e. stay order issued by B.C. Supreme Court) or can get an arbitrator appointed in residential strata.
Grand-fathering
No decision can be enforced retro-actively (from back-date). If there is change in the by-laws but a person is already practising that before the law is changed, he is exempted under the grand-fathering clause.
Conversions
For converting an existing building into a strata, the approving authority (i.e. Municipal Corporation) will consider following things:
1. Priority of rental accommodation over privately owned housing in that area.
2. Proposals for re-locating persons presently occupying the building.
3. Life expectancy of the building.
Sole Proprietorship
• Owned by single individual;
• Owner is liable for all debts personally i.e. unlimited liability;
• Not a separate legal entity, does not pay income tax;
• Profits accrue directly to the owner and taxed on personal income
corporation
• A Separate legal entity
• Company subject to income tax
• Limited liability of share holders
Cost Principle
It states that the actual amount paid to acquire an asset is recorded in books of account.
Revenue Recognition Principle
It states that revenue should be recognized when it is earned, NOT when cash is received
Matching Principle
Any expenses associated with revenue should be recognized in the same period as the revenue is recognized. Expense is recognized when incurred and not when paid.
Income Statement
The general format is: Revenue-Expenses = Net Income
Economic Life
When an asset is purchased, an estimate is made of its economic life (number of useful years)
Salvage Value
The amount that can be realized from the sale of the asset at the end of its economic life.
Depreciation Expense?
Cost-Salvage Value/ Estimated Economic life in years
Once established, this amount will be used every year for depreciation expense.
Example:
Cost of Truck $50,000
Estimated Economic Life 10 years
Estimated Salvage Value (end of 10 years) $5,000
Depreciation Expense = $50,000-$5,000/10
= $4,500 per year used for depreciation of assets
Capital Cost Allowance
Prescribed percentage rate according to the Income Tax Act
Depreciation is not a deductible expense for computing taxable income but Capital Cost Allowance is.
What are professional ethics?
discloe all the options
duty of discretion
duty to follows clients instructions
acting for competing clients
disciplinary hearings
Penalties for Ethical Breach
Could be one or more of the following:
• A reprimand (warning)
• A suspension membership privileges
• A fine
• The costs of hearing
• Expulsion from membership in the board
• An order to complete certain real estate courses
What is an agent?
An agent is a person authorized to act on behalf of another person called the principal. The agent has the authority to represent and act on behalf of the principal in dealing with others for a fee or commission (Real Estate Commission is payable on completion)
termination of agency
- Revocation: Any act of the principal which is inconsistent with the continuation of the agency.
- Frustration
- Performance
Types of Real Estate Agency Listing contracts
Listing contracts is a specialized type of agency.
Exclusive listing:
Multiple listing:
Open or general listing
If no listing contract- but principal requests- commission is payable
Agency disclosure
if not disclosing: principal still binding plus agent becomes personally liable
Fiduciary Capacity
Loyal: Agent must be loyal to the principal; otherwise the profits must be counted for.
valid contract
Which has seven essentials
Release or expiry of an Offer
Offer is released or expires when one of the following takes place:
• A time limit is specified in the offer and the offer is not accepted within the specified time;
• No time limit is specified, but reasonable time has passed;
• The offeror (person who made the offer) revokes the offer before acceptance;
• Either party becomes insane or dies before acceptance;
• Counter-offer is made. When a change is made to the offer, it forms a counter-offer; It becomes the offer. If counter-offer is not accepted, the offeree (person who received the offer) can not accept the first offer because it has been terminated;
• Offer is rejected
revoking an offer?
An offer can be revoked without the specified time limit running out. Revocation must be communicated to the offeree. It can be revoked anytime before acceptance.
Invitation to treat
An “invitation to treat” is not an offer- it is a request for offer.
OPTION AGREEMENT
• Can keep an offer open for a stipulated period of time (can not be revoked) under an option agreement, separate consideration is made to keep the offer open.
• A request for information does not terminate an offer
Acceptance
• Must be a positive act
• Acceptance should be made in the manner specified in the offer
• If the offer is silent about acceptance, it should be accepted the same way the offer was made
• If acceptance is by instantaneous means (e.g. telephone) it is not effective until the receiving party hears it
• If acceptance is by non-instantaneous means (e.g. mail), it is effective when it is posted in the mailbox
Consideration
• Consideration means exchange of something of value
• “Past consideration” not effective
• Contract can be without consideration if under seal, that is to say, a seal is a substitute for consideration.
Consideration
• Consideration means exchange of something of value
• “Past consideration” not effective
• Contract can be without consideration if under seal, that is to say, a seal is a substitute for consideration.
Legal Intention
• Must intend to be bound by a contract
Legal Capacity
Parties entering into a contract must be competent.
Legal Capacity can arise in following situations:
Infancy: Contract unenforceable against an infant (legal definition is a person who has not reached the age of majority i.e. 19 years). This applies even if the adult was unaware that the other party is an infant.
Insanity or Intoxication: Any person under the influence of intoxication is not competent to enter into a contract.
Exceptions in which the contract is enforceable against the infant are:
• The infant affirms contact after turning 19
• The infant performs/partially performs the contract after turning 19
• The infant does not repudiate the contract within one year of turning 19
Legal object
The object under the contract should be a legal object
Genuine Consent
Parties have clear understanding of the substance of the contract. There should be no violence or threat of violence used to make a contract.
Three elements necessary to prove misrepresentation:
• The statement must be false
• It must have induced the other party to enter the contract
• It must be one that would have induced a reasonable person to enter the contract
• If any party to a contract is victim of a misrepresentation, he/she can approach the court for rescission of the contract
Common Mistake
• Both parties make the same mistake and the contract is void
• Must occur before contract is entered into (e.g. a house being sold has been destroyed and both parties are unaware of it)
Termination of a contract
• Performance: Contracts end when performance occurs
• Agreement: Mutual waiver of obligations
• Non-fulfillment of a Condition Precedent: Condition that must be satisfied before a contract is to be performed e.g. purchaser to arrange for a mortgage loan
• Frustration: Events outside the control of the parties that change the subject matter in such a way that it becomes fundamentally different from the original contract. Parties are mutually relieved of their obligations. For example: A house, for which a contract has been written, burns down after the date of the contract.
• NOTE: “Subject to” in a contract of purchase and sale: The legal name for “subject to” clause is “condition precedent”.
Assignment:
A person can assign benefits under a contract to a third party. The third party can sue to enforce the benefits. A party can not assign liabilities under a contract.
A statutory assignment has three elements:
• Must be in writing.
• Must be for the whole amount.
• Notice of the assignment must be given in writing to the original promisor
Remedies for the breach of a contract
Damages:
• Only common law remedy available for the breach of contract
• Anyone who can prove loss suffered as a result of breach of contract is entitled to be awarded damages
Specific Performance: to perform the original contract specifically
• An equitable remedy
• Will not be exercised when damages are considered to be an adequate remedy
Injunction (stay-orders)
• An equitable remedy
• Can stop a party from doing something
• Can require a party to do something
Quantum Meruit
• An equitable remedy i.e. as much as he/she deserves
Contract by a corporation:
A corporation can enter into a contract. Before making a contract with a corporation, any person may ascertain the legal capacity of a corporation to a contract by reviewing its incorporation documents maintained at its official records office.
Doctrine of Privity of a contract
Subject to some exceptions, only the parties to a contract have a right to sue or be sued for breach of a contract.
Exception: A contract which creates an interest in land is one of the exceptions to the doctrine of privity of contract.
The Real Estate Services Act requires what of an exclusive listing?
The Real Estate Services Act requires that an exclusive listing be in writing.
Law and Equity Act (section 59)
states that in most cases a contract dealing with Real Estate must be in writing to be enforceable. This is called the requirement of writing.
exceptions to the writing requirement
The first exception to the writing requirement is where the party seeking to enforce the contract can prove that the party denying it had acted in such a way, that indicated the existence of a contract,
The second exception is where the party seeking to enforce the contract had reasonably relied on the existence of a contract and in doing so had changed its position, usually by spending money.
Make sure all contracts, offers, acceptances, counter-offers and amendments are in writing.
what does section 59 not apply to?
This section does not apply to leases or agreements to lease land for a term of 3 years or less.
Listing Contract:
A listing agreement is a contract between the seller and a real estate brokerage.
The buyer is not a party to this contract.
Information required for a Listing Contract:
Most importantly the property has to be described accurately and the listing contract must be signed by all owners of the property.
Title search should be undertaken. All information must be correct.
Physical features of the property must be checked, as well as legal and financial characteristics
Environmental Information:
Be aware of general information regarding contaminated sites in your area and always verify information given by the seller.
The Role of the Competition Act:
This Act is designed to:
• Eliminate restraints of trade and to encourage competition. Each company must be free to set its own commission rates and split with the cooperating broker.
• Prevent misleading advertising.
• Prevent certain deceptive practices (showing one model, with other models price)
How a court decides whether an advertisement is misleading or not?
To avoid liability for a misleading advertisement, you must prove that you took reasonable care, used due diligence and honestly believed the advertisement to be true
Contract of Purchase and Sale:
Use the standard form. Any changes must be considered very carefully. This form has been created by the legal professionals.
Confirm lot size, house size, zoning from outside sources.
Technical Requirements:
• Write clearly
• Name and occupations of the parties
• Make sure any amendment does not terminate the original contract (each party must sign the changes). The initial agreement is binding upon all parties until the amendment is finalized.
• Financing clauses must be clear and not ambiguous.
• Precise description of property, street address and legal description
• Chattels and fixtures, describe what goes and what stays.
• Don’t write conditions as a free option, tie the subjects down, be specific.
Terms and Conditions:
A condition or a subject clause can be an essential term in a contract.
A term is a promise that forms part of the contract, for example the terms of paying a deposit.
Remember the deposit is held by a party as a stakeholder, meaning the deposit cannot be released unless all parties agree as to who gets the money, if they do not, the money gets paid in the court.
Conditions Precedent (Subjects)
Some specific event must happen before an unconditional contract is entered into. This event is usually determined by some outside party (mortgage approval, inspection, rezoning). Be careful you are not writing a free option, be specific.
Removing a subject clause must take place before the deadline, or otherwise the contract will be null and void.
Four ways to protect the Seller:
I. Pre-qualify the Buyer
2. Time limit on satisfaction of subject (must be reasonable)
3. Use the Time clause (72 hours clause).
4. Promise to attempt to satisfy the condition.
Removing the Condition Precedent:
Have all parties signed a subject removal form. A written notice for removal of subjects will be given by the benefiting party on or before the deadline, or otherwise the transaction will be null and void.
Assigning a Contract of Purchase and Sale:
The buyer has the right to assign a contract, providing there is a standard assignment clause in the original contract and assignment is not prohibited.
The Federal Government
• Has established restrictions regulating the height of buildings near airports or in flight paths
• Has jurisdiction over rivers that support spawning areas
• Has jurisdiction over its own lands and is not subject to municipal zoning
The Provincial Government
Has delegated most of its authority to regulate land use to local governments
Agricultural Land Commission Act
The Agricultural Land Commission has the power to:
• Pass regulations affecting ALR (Agricultural Land Reserve)
• Exclude land from an ALR
• Allow non-farm use of ALR
• Allow subdivision of ALR land
Note: Agricultural Land Commission has no power to add land to ALR
Health Act
It is responsible for maintaining public health of the province. It has control over the installation of septic tank disposal fields. It must be determined that the lands can be adequately serviced by a septic system
Local governments have three levels of government as follows:
Regional Districts: Thirty regional districts in the province. In unorganized areas, the regional district assumes the roles of a municipal government.
Municipal Governments: Forms of government are villages, towns, cities and municipal districts.
Improvement Districts: Generally the powers of improvement districts are restricted to the construction, operation or maintenance of utilities such as water works, sewer or drainage systems and electrical distribution.
Governments are concerned with;
• Public health and safety
• Protection of Property Values
• Efficiency, convenience and appearance
• Conservation of natural resources
Official Community Plans
A community plan defines the policy of a local government in terms of existing and proposed land use and servicing requirements.
A plan is usually prepared by the municipal or district staff. The council must then hold a public hearing to obtain public input after which it may be adopted as a bylaw.
Zoning
A Zoning bylaw places some restriction on the use of that property, the location of buildings on the property and the form or shape of the buildings that are permitted.
Zoning bylaws usually consist of three parts:
The official map
The sections listing definitions used in the bylaw
The schedules outlining the regulations
Density Measurement
In some zones, the density of building may be limited. Density is often measured in terms of the total floor area of the building in relation to the size of the lot. The most common term for this is floor area ratio. Density may also be measured by the number of dwelling units per hectare or by prescribing the minimum lot area per dwelling.
Common zones are industrial, commercial, residential and agricultural zone
Rezoning
A council or regional district may begin the rezoning process on its own or upon receiving an application from a property owner.
Most local governments will, as a matter of policy, require that a public hearing be held, before amending, adopting or repealing a zoning by-law.
Non- Conforming Uses
Under the Local Government Act, non-conforming uses may continue in the following circumstances:
• Through successive changes of ownership. Loses its status if the use is discontinued for more than six months, unless discontinuance is part of normal seasonal practice.
• A structural alteration cannot be made to a building used for a non-conforming use.
• Non-conforming use may be extended throughout the existing structure.
• Where a building with a non-conforming use is destroyed to the extent of 75 % or more of its value, it cannot be rebuilt without conforming to the new bylaw.
Board of Variance
A board of variance can determine if compliance with a zoning bylaw would cause undue hardship to the property owners
Powers of Board of Variance
- Minor deviations from by-laws
- Review decisions of building inspectors
- Time limit for variance to be completed
Note: A Board of Variance cannot amend the by-laws
tax rate
The tax rate is a rate of tax per $1,000 of the net taxable value (called a “mille rate”)
A tax rate of 4.9762 means a real property tax of $4.9762 for every $1,000 in net taxable value. If a property has a net taxable value of $122,258, the taxes payable are calculated as follows:
Real Property Tax= Tax Rate x Net Taxable Value/ 1000
Real Property Taxes= 4.9762 x $122,258/ 1000
= 4.9762x $122.258
= $608.38
General Tax Rate
General Tax Rate is determined by the local municipal council. Other statutes which affect the Property Tax are:
1. School Act
2. Hospital Act
3. Regional Districts
Who Pays the Real Property Tax?
Under the Assessment Act, an “owner” is defined as the registered owner of an estate in fee simple and includes:
The registered owner of a life estate or an estate in fee simple
If there is a registered agreement for sale , the registered holder of the last registered agreement for sale and purchase
The occupier of the real property if it is occupied in the following manner:
Crown/municipal lands/tax exempt organizations, universities, cemeteries are exempt from real property taxes. But, if the land is leased to a private citizen or corporation that is not tax-exempt, the occupier is liable for taxes.
Note: Residences owned by elected government officials are assessed at market value for purposes of property taxation.
What Value is taxed?
The assessor must determine the actual value of the land and improvements and must enter the actual value of the land and improvements in the assessment roll.
The assessor may consider the following in determining the actual value:
• Present Use
• Location
• Original cost
• Revenue or rental value
Assessment Notice
It is an extract from the assessment roll concerning a specific property.
Home Owner Grants
An owner of an eligible residence, who occupies it as his/her principal residence is entitled to a grant.
Tax Deferral
A Canadian citizen or landed Immigrant who has lived in BC for one year or more, and is 60 years of age or more, or a widow or a widower, or a permanently disabled person may apply to defer 100% of the net property taxes payable.
Assessment Appeals
If a property owner considers that the actual value assessment of his property is too high or too low, he must first submit his complaint to the Property Assessment Review Panel.
The Property Assessment Review Panel
The first level of appeals from property assessments.
An owner or another party may appeal an assessment. If the appeal is made by another party, the assessor must deliver notice of the hearing to the owner as well.
If not satisfied with the decision of the review panel, the owner can appeal to Property Assessment Appeal Board. After that, the owner can go to the Supreme Court of B.C. and further to Appeal Court of BC but only at a point of law.
PURPOSE OF APPRAISAL
• Vendor planning to sell
• Purchaser planning to buy
• Developer requiring estimates for redevelopment
• Mortgagee assessing loan security
• Determining insurable value for insurance
• Real property taxation
• Legal Circumstances (estate, gift and transfer taxes, divorce)
• Expropriation
Licensing Requirements for Appraisers
In BC anyone may legally undertake appraisal work and charge a fee.
Subject of an Appraisal
It is the value of legal interests in real estate (legal rights of ownership) that is estimated.
They may include:
1. Fee-simple ownership
2. Leasehold estate
3. Condominium ownership
4. Air space
5. Easements
6. Any combination of the above
Value is the product of two variable elements:
- Right of ownership
- The physical property in which those rights are vested
Value of the Owner-Subjective value
Value of owner is assessed from investment point of view
Floor Price
The owner’s minimum price
Ceiling Price
The prospective buyer’s maximum price
For a potential sale to occur; there must be at least one buyer who is prepared to make an offer (ceiling price) equal to or greater than the vendor’s floor price.
When a price is agreed upon, it is referred to as the sale price or value in exchange
Variations in Sale Prices
Circumstances surrounding individual sales may cause variations in sale prices
Time
The length of time allowed for the sale to take place will affect the sale price
Advertising
Adequately advertised property will probably realize a higher sale price
Sales between Related Parties
In cases where there is some relationship between the parties (e.g. father and daughter), the sale price will likely differ from what is expected in an open market. When there is no relationship between the parties, they are said to have been bargaining at arms’ length.
Financing
Terms of financing may affect a sale price. For example: A vendor take-back mortgage with a lower interest rate will probably increase the sale price of a property.
Special Purchasers
If a property has a unique advantage to a prospective buyer (e.g. an adjacent property); the buyer will probably be prepared to pay more for it. The presence of a special purchase will increase the number of possible bids.
Definition of Market value
At any given time, the market value of an interest in land is the price it might reasonably be expected to realize when sold by a willing seller to a willing buyer after adequate time and exposure to the market.
Legal considerations for appraisers
Allowable error will vary with the purpose and complexity of the appraisal.
Where the object of the appraisal is to find market value, the property is of a common type (e.g. a single family residence) and there is sufficient evidence of recent sales, up to 10 % may be reasonable.
Legal Responsibilities of an Appraiser
Situations may arise where a carelessly prepared appraisal report results in one action based on contract law by a person who ordered the appraisal (e.g. a mortgage lender)and a second action based on the law of tort by another person who relied on the appraisal (e.g. a purchaser).
Degree of Development
Properties can be classified by their degree of development:
1. Those which possess highest and best use, or
2. Those which possess potential for redevelopment (latent value).
Highest and Best Use
Implies that the existing development is likely to yield the maximum net return to the land during the foreseeable future. Ask, “if this building burned down, would the same type of building be constructed in its place?” If so, it represents its highest and best use
Redevelopment Potential
Latent value occurs when the maximum net returns are likely to result if existing redevelopment is changed in the foreseeable future
Most properties representing highest and best use are located within areas of similar use. For example: a residential property in a residential subdivision.
Zoning and restrictive covenants may complicate the process of converting a property to its highest and best use.
Comparative (Market) Method
It involves collecting and analyzing data for similar properties that have been recently sold. It operates on the principle of substitution. This method is likely to provide most reliable estimate of market value.
It is most useful for properties that are within their property class. For example: single-family dwellings. The assumption is that if several identical properties recently sold for $60,000; the subject property should sell for $60,000.
“Recent” means that time period during which the market forces of demand and supply have remained stable.
Investment or Income Method
It is often used for income-producing properties. It requires recent market evidence of similar properties to compare rental levels, operating expenses, sale prices and yield (capitalization rate).
Net Operating Income (NOI)
_______________________
Market value/sale price
= Yield (capitalization rate)
Cost Method:
It is based on the assumption that cost is equal to value which is not necessarily correct. This method is inexact since cost and market value are not necessarily equal at any given time. This method can be used for properties on which there is a little comparable data. For example: A Church i.e. the property is unique.
Residual Method
Should only be used if the property possesses latent value i.e. the property is not at its highest and best use. The property has redevelopment potential.
Demand for Real Property
Demand measures the quantity of property that the market would like to purchase at any given price. Demand decreases as the price increases. Demand for real estate changes:
1. In the short-run, due to change in:
a) Rate of interest
b) Tastes and preferences of buyers
2. In the long-run; due to a change in:
a) Population
b) Income of people
c) Government projects
Supply of Real Property
Land cannot be created. The supply of real property is fixed in location.
Real property markets are local by nature because real property is immobile. Real property will be affected by external influences from neighboring property. Real property is more prone to the effect of externalities because of its immobility.
Background Analysis
The appraiser should ascertain the effect that each factor will have on the subject property. For example: socio-economic factors, the comparables chosen, the trends in the market viz-a-viz the subject.
Is Mortgage a loan?
No, mortgage is not a loan.
1. It is a contract which is an evidence for a loan and
2. It is a security for a loan
Definition of a Mortgage
A mortgage is an interest in land created by contract as security for a loan made by the lender
(mortgagee) to the borrower (mortgagor).
A mortgage transfers a legal or equitable interest in land. The interest will be returned to the borrower when the debt is repaid
Legal Mortgages
The first mortgage granted is the only ‘legal’ mortgage.
The borrower retains an equitable interest in land (Equity of Redemption) after granting a legal mortgage and is free to mortgage this equitable interest by a 2nd, 3rd, etc. mortgage.
Mortgages are registered as charges against the title.
Equitable mortgages are created in the following ways:
Equitable Mortgage: A mortgage of equity of redemption.
By deposit of Duplicate Certificate of Title: A fee simple owner of property that is free of financial charges can apply in writing to the registrar of the Land Title Office for the Duplicate Certificate of Title. This document can be used to obtain an equitable mortgage by giving the certificate to the new lender as security. The lender will hold the Certificate as collateral security because a person cannot sell the property or take out another mortgage without the Certificate being present in the LTO.
By an Agreement to Give a Mortgage
An agreement to grant a mortgage in the future is a present equitable mortgage. Also, a mortgage that is granted but for procedural rules is not registrable, is an equitable mortgage. The lender should file a caveat to protect its interests.
Disguising a Mortgage as a Transfer
Sometimes a mortgage agreement is written to appear that it is transferring the estate in fee simple to avoid the Doctrine of Equity of Redemption. If the courts find that the main purpose of the document was to offer land as security for loan, they will find the arrangement to be a mortgage and the Equity of Redemption will apply.
Express Terms
Express terms contain amount of loan, rate of interest, repayment etc.
Acceleration on default
the principle and interest secured hereby shall become due and payable forthwith, at the option of mortgagee, on default
Omnibus Clause
In case of default of any money by the mortgagor, the mortgagee may pay the wholesome and the amount so paid will be added to the principal loan
Mortgagee in possession
In case of default, the mortgagor shall hand over the possession of the property to the mortgagee.
Collateral Advantage
It is common for mortgages to contain terms giving the lender advantages in addition to the security and interest payments.
A collateral advantage that extends past the term of the mortgage is not a clog. It can be enforced unless it is viewed as a penalty, or as being unfair and unconscionable. In that case, the borrower can go to the court under Consumer Protection Act.
Federal Interest Act
The Federal Interest Act imposes no limit on the rate of interest that can be charged on a mortgage. Under the Federal Criminal Code, it is an offence for a person or a corporation to enter into an agreement to receive interest at a criminal rate, which is defined as an effective annual rate of over 60%.
Section 3 of the Federal Interest Act states that if a document does not refer to interest, no interest can be charged. If a document states that interest is to be paid, but does not specify the rate, then the rate will be 5% per annum.
Mortgage Repayment:
Section 10 of the Federal Interest Act says that, “at any time after the expiry of 5 years from the date of mortgage, the borrower can tender payment of all o/s principal and interest, plus an additional three months interest in lieu of notice”. After this, the lender cannot charge any further interest.
Continuing Liability of the Original Borrower
Assumable mortgages are ones that can be assumed by the future purchases. The original borrower may remain liable on their personal covenant if the purchaser defaults on his/her payments. But if the lender becomes disabled from restoring the property unimpaired, the original borrower will be released of his personal covenant.
Lenders Remedies
when the borrower defaults, the lender (mortgagee) will file a recovery case in the court and the court will first issue:
Order Nisi: this is an order given at the first court appearance granting the requested remedies.
Order Absolute: If payment of the amount due is not made within the set period of time for redemption, the petitioner can apply to the Court for an Order Absolute, declaring that the respondents are foreclosed on any title or interest in the mortgages property.
When a petitioner has received an order absolute, he/she cannot sue the borrower on the borrower’s personal covenant.
Judicial Sale
The petitioner or any of the respondents can apply for a judicial sale. The application would normally be made if the property is worth less than the mortgage debt, because the petitioner is entitled to recover the difference between the sale proceeds and the mortgage debt from the borrower. If the property is worth more than the mortgage debt, the petitioner would want to try to obtain an order absolute, because there is no requirement to account to the borrower for any profit made.
The petitioner can make an offer on the property. If the court approves the sale and the proceeds are not sufficient to pay the mortgage debt and the costs of the sale, the petitioner can sue the borrower for the difference.
Action on the Personal Covenant
The lender can exercise the remedy of an ordinary creditor and sue the borrower on the borrower’s personal covenant.
Quitclaim Deed
If the borrower does not wish to redeem the mortgage, the borrower may wish to quitclaim his/her interest in the property. The borrower must receive some consideration from the lender for doing this. When the quitclaim is registered, it transfers title to the lender and usually extinguishes the mortgage loan.
Agreements for Sale
When the purchase price is payable in installments, the title to the property stays in the vendor’s name, until the purchaser has made the final payment. Title is transferred at that point.
Soft Changes:
Use of existing physical sizes now specified in metric measurement. For example: The old 2”X4” structural lumber is now specified as 38 mmx89 mm.
Hard changes:
Involve the establishment of metric standards. For example: the metric building module is now 100 square meters. Also involves the dimensions of sheet products i.e. plywood, gyproc etc.
Residential Housing Classifications
By size of Living Area and/ or Number of Floors
Living area is the total finished living area situated above ground. Living areas exclude: basements, sundecks, patios, balconies, garages, carports and parking stalls.
If areas are calculated in square meters, imperial measurements (square feet) can be calculated by multiplying the number of square meters by 10.76.
Classification by External Style
• Tudor
• Heritage
• West Coast Contemporary
• Ranch
• Narrow Lot (Vancouver Special)
• Manufactured Home
Variations on External Style
Bay Window: An extension of the floor and walls to increase the size of a room.
Dormer: Extensions in the main roof to provide extra floor area, headroom and light.
Classification by Structural Method
• Log
• Brick
• Stone
• Concrete Block
• Post, Beam and Plank
West Coast Contemporary
This style is composed of angular roof components and broken rectangular walls.
Superstructure Systems
• Joist: A horizontal framing member used to support a floor and /or ceiling
• Stud: The vertical framing member used to construct walls
• Lintel: The supporting structure over an exterior opening. For example: A wooden support above the window
• Truss: An engineered, pre-fabricated roof or floor support structure
• Plate: the horizontal lumber that the studs rest on at the bottom and the top of all framed walls
Thermal Broken
the frame of the window is split in two parts from the inside to the outside to reduce the conduction of heat from the home to outside and vice-versa
Domestic Heating Systems
Fuels are: wood, electricity, gas or fuel oil
pro/ cons of Electrical Base Board
No ducts or pipe
Very Clean
Moderately rapid response to changes in outside temperature
Mostly convection heat with some radiation
Lack of Air Filtration
Baseboard occupies wall space
pros/ cons of Central Gas Fired Forced Hot Air
Rapid response to changes in outside temperature
Air filtration included
Clean
Can add humidifier
Requires ductwork under main floor
Air ducts require cleaning
pros/ cons of Central Gas Fired Forced Hot Water
Steady consistent heat
Clean
Provides mostly convection heat with some radiation
Lack of Air Filtration
Baseboard occupies wall space
Slow response to changes in outside temperature
pros/ cons of Wood Fired Space Heater
Reduced heating expense
Provides radiant and convection heat
Rooms other than space heated room remain cool
Inconvenient
Plumbing Systems
Piping for the water supply may be copper, Plastic, galvanized steel.
Electrical Service
Voltage: Measure of pressure of current flow
Amperage: Measure of the rate of current flow
Wattage: Measure of power consumption
Watts= Volts X Amps. Therefore, Amps=Watts/Volts
The Canadian Electrical Code requires that new or substantially renovated houses over 80 square meters have a service capacity of at least 100 amps
Design Defects
For Example: Main entrance directly through the bedroom or utility room, main bathroom directly off living room, etc.
Visible Defects
Defects from improper installation (cracks in the foundation from installing footing on non-compacted fill). Can also be caused by installing low-quality products, improper use or inadequate maintenance
• Invisible Defects
Defects of omission (lack of moisture barrier). Can also be caused by installing low-quality products, improper use or inadequate maintenance
Energy efficient housing style
- Using metal framed windows with a thermal break
- Including an air to heat exchanger to bring in cold exterior air
- Follow R 2000 standards
- Installing sliding glass doors to a SOUTH facing patio
Zinc
Zinc is a chemical used on the roof toppings to prevent the growth of moss on the roof.
FINTRAC
- Financial
- Transaction &
- Reports
- Analysis
- Centre of …
Private nuisance
- Doing something on my own property, but it is bothering the neighbors
o Playing music really loud, and this bothers the neighbors. - Doing something on my own property, but also damaging the neighbors property.
o Cleaning my swimming pool, but the water goes over the fence and damages the neighbors plants, etc
BC occupier liability act
- Let’s say you are a occupier (u are occupying the building), u have a responsibility for take care of visitors.
- This applies to occupiers liable to the visitor.
o Trespassers
Enter the property without permission, you don’t have a duty as a occupier to take care of them.
• Ex. If they slip on the floor, they cannot bring a liability case against me. But I do have a minimal duty to not intentally injure them.
Self-help
• Using reasonable force against a danger me.
• Someone tries to fight me if I entered their property.
o Cannot beat to death, they must be reasonable
Remedies
• I can sure for damages if the trespasser steals stuff.
• Trespasser trespasses onto neighbours property
o Licensees
Come on your property for doing their job.
• Must giving the licensee a warning of the dangers within the property.
o Like dog inside, slippery floor, broken steps, etc.
• Ex. mail man enters property to deliver mail.
• Ex. pizza man delivers pizza.
o Invitee
Come on our property for an economic interest.
• Ex. you own a furniture store, customers come to the property to purchase things.
o Give warning of any dangers within property like slippery floor.
Can give liability case against the owner since they did not warn the invitee of the dangers they knew of, or should have known of.
o Children
Simply putting a warning sign of slippery floor does not help with children.
• There must be a barrier preventing children from getting injured.
SMART?
o Specific
For ex. I wanna make 4 sales in my first year
o Manageable
o Achievable
o Relevant
Should be relevant to the business one is involved in
o Timely
AIDA
- Attractive
- Interested
- Desire
- Act
Purchase activity
- Felt need
- Pre-Purchase activity
- Purchase activity
- Post-purchase
encrypting
Scrambling credit card information into an unreadable format