mock 4

Question 1

Which of the following statements concerning the difference between a licence and lease is FALSE?

1. Both leases and licences create the relationship of landlord and tenant between parties.
2. A lease creates an interest in land that runs with the land, but a licence does not.
3. The BC Residential Tenancy Act does not apply to licences.
4. The most important factor in determining whether a lease or a licence has been created is whether or not exclusive possession of the premises has been given to the occupant.

Answer 1

1. Both leases and licences create the relationship of landlord and tenant between parties.

Question 2

Lenders who are attempting to ration mortgage funds could:

1. decrease their gross debt service ratio.
2. decrease their interest rate on mortgage loans.
3. increase their maximum loan to value ratio.
4. increase the maximum amortization period available on mortgage loans.

Answer 2

1. decrease their gross debt service ratio.

Question 3

According to the Real Estate Services Act Rules and Regulations, which of the following statement is TRUE?

1. An individual may commence trading in real estate immediately after receiving proof of passing the real estate licensing exam.
2. All staff employed by a real estate brokerage must be registered with the Real Estate Council.
3. An individual may be registered independently as a real estate representative without being employed by a real estate brokerage.
4. A real estate representative is employed by his or her brokerage to trade in real estate in brokerage’s name, on behalf of brokerage’s clients.

Answer 3

4. A real estate representative is employed by his or her brokerage to trade in real estate in brokerage’s name, on behalf of brokerage’s clients.

Question 4

The consumer price index is a good method to adjust sales prices to the level of values prevailing as of the date of appraisal:

1. where the comparable sales are deemed to be not recent.
2. where there are inadequate numbers of comparable sales within a particular neighbourhood.
3. where the cost method of appraisal is deemed to be inappropriate.
4. under no circumstances.

Answer 4

4. under no circumstances.

Question 5

Which of the following heating systems offers rapid response to extreme outside temperature changes?

1. electric baseboard heating
2. electric heated hot water radiant unit
3. central gas fired forced hot air
4. central gas fired forced hot water

Answer 5

3. central gas fired forced hot air

Question 6

In establishing the actual value of a residential property for tax assessment purposes the Assessor may consider:

A. the present use of the property.
B. functional obsolescence.
C. the rental value of the property.
D. selling price of the land and the improvements.

1. only C
2. B and D
3. A, B, and D
4. A, B, C and D

Answer 6

4. A, B, C and D

Question 7

You have a partially completed appraisal report that you need to fill in. The subject property has 4 bedrooms and 4 bathrooms. The house next door is similar in all respects except for the number of bedrooms and bathrooms. It sold for $234,000 and was adjusted -$4,000 for bedrooms and +$5,700 for bathrooms. If the market value of a bedroom is $4,000 and the market value of a bathroom is $5,700, you can conclude that the comparable has:

1. 5 bedrooms and 3 bathrooms.
2. 4 bedrooms and 4 bathrooms.
3. 3 bedrooms and 5 bathrooms.
4. fewer bedrooms and fewer bathrooms than the subject.

Answer 7

1. 5 bedrooms and 3 bathrooms.

Question 8

Two identical houses located next to one another in the same neighbourhood sell within one week of each other. Ms. Brown sells hers for $112,000, while Mr. Fisher is only able to sell his for $100,000. Which of the following could account for the difference in selling price?

1. The listing brokerage representing Ms. Brown spent an extraordinary amount of money on advertising her property.
2. Mr. Fisher supplied a vendor take-back mortgage at 9% while the current market rates were 12%.
3. Ms. Brown was promoted to a new position in Edmonton and her expertise was required immediately.
4. All of the above factors could account for the difference in selling price.

Answer 8

1. The listing brokerage representing Ms. Brown spent an extraordinary amount of money on advertising her property.

Question 9

Lydia has been awarded a judgement of $100,000 against Clive. If Clive refuses to pay the amount ordered, what are Lydia’s options for enforcing the judgment?

1. She may have Clive fined for contempt of court.
2. She may register her judgment in the land title office and apply to the court for a judicial sale of Clive’s property.
3. She may apply to have a garnishing order served on Clive’s employer, ordering the employer to pay all of Clive’s wages into court, whereupon Lydia could then apply to have it paid out to her.
4. She may do all of the above.

Answer 9

2. She may register her judgment in the land title office and apply to the court for a judicial sale of Clive’s property.

Question 10

David Jones is being sued for creating a nuisance. He makes the following arguments:

A. The activity which is involved benefits the public.
B. The damage he has created is trifling and of little consequence.
C. He has not been negligent in carrying out the activity.
D. The activity is authorized by statute and cannot be carried on without creating a nuisance.

Which of the above is a valid defence to the lawsuit?

1. A, B, C and D
2. A and D
3. B and D
4. A and C

Answer 10

3. B and D

Question 11

Cathy, a trading services representative, was the listing and selling representative with respect to the sale of Elwood’s house to Archie. After the sale completed, Archie discovered that the main and lower floors of the house sloped. Neither Cathy, Elwood nor Archie had noticed this before, although the defect was discoverable using ordinary diligence. Based on the above, which of the following statements is TRUE?

1. Cathy had a duty to inspect the premises for soundness and structural defects before advertising it for sale.
2. Both Cathy and Elwood are liable to Archie for failing to bring the defect to Archie’s attention.
3. The sloping floor is a patent defect which should have been brought to Archie’s attention..
4. The principle of “caveat emptor” will likely apply to Archie in this situation.

Answer 11

4. The principle of “caveat emptor” will likely apply to Archie in this situation.

Question 12

The residual method of appraisal is the most suitable method for use where the subject property:

1. is an apartment block in an area currently zoned for residential duplexes only.
2. is vacant land.
3. represents the highest and best use of the site and there is a large volume of market data available.
4. has latent value.

Answer 12

4. has latent value.

Question 13

Kimmy Khamble is looking for a house in Ottawa. She can make payments of $2,200 per month over 25 year amortization period. If current rates are 6.5% per annum compounded semi-annually, what is Kimmy’s maximum allowable loan?

1. $325,825.23
2. $328,444.59
3. $324,767.78
4. $51,355.66

Answer 13

2. $328,444.59

Question 14

You have a partially completed appraisal report that you need to fill in. The house next door to the subject property is similar in all respects except for the number of bedrooms and numbers of bathrooms. This comparable has 3 bedrooms and 4 bathrooms and was adjusted +$4,200 for bedrooms and -$2,600 for bathrooms. If the market value of a bedroom is $4,200 and the market value of a bathroom is $2,600, it can be concluded that the subject property has:

1. 4 bedrooms and 3 bathrooms.
2. 4 bedrooms and 2 bathrooms.
3. 2 bedrooms and 3 bathrooms.
4. 3 bedrooms and 2 bathrooms.

Answer 14

1. 4 bedrooms and 3 bathrooms.

Question 15

Given the following information, calculate the purchaser’s balance due to complete:

Price: $225,000
Deposit: $ 20,000 to Brokerage
Financing: 1st mortgage of $80,000 to be assumed
2nd mortgage $44,000 to be arranged by purchaser.
Taxes: Not paid, not due in amount of $1,600
Legal Fees: $700
Adjustment, Completion and Possession Dates: May 31st
Note: It is not a leap year.

1. $83,542.47
2. $92,288.08
3. $80,342.47
4. $81,042.47

Answer 15

1. $83,542.47

Question 16

Under the Real Estate Services Act, the Real Estate Council is empowered to investigate all but one of the following. Select the activity the Council is NOT empowered to investigate.

1. Misappropriation of Money
2. Excessive sales commission rates
3. Breaches of the Act
4. Licensee conduct that is contrary to the best interest of the public.

Answer 16

2. Excessive sales commission rates

Question 17

Barb Nelson has made an offer of $165,000 on a home in Vernon, subject to finding suitable financing. The Orchard Credit Union (OCU) has offered to give Barb a loan of 75% of the appraised value of the property, and hires John Johnson to appraise the property. John’s appraisal report states value of the property as $165,000, and on this information OCU lends Barb $123,750.
Three months later, Barb defaults on the mortgage. The outstanding balance on the mortgage is $123,400. OCU obtains two independent appraisals of the property, both of which indicate that the value of the property was $120,000 at the time of sale. OCU later sells the property for $120,000.
What actions could a. OCU and b. Barbara successfully take against John?

1. OCU can sue John for breach of contract and Barbra can also sue John for breach of contract.
2. OCU can sue John for breach of contract and Barbra has no action against John.
3. OCU can sue John for breach of contract and Barbra can sue John for negligence.
4. Neither OCU nor Barbra has an action against John.

Answer 17

3. OCU can sue John for breach of contract and Barbra can sue John for negligence.

Question 18

A life tenancy created in a will grants to the life tenant the right to use and occupy a piece of property during the life tenant’s life, “without impeachment for waste”. Upon the death of the life tenant, the remainderman is entitled to the property. If the life tenant wants to deliberately damage the property in order to ensure remainderman will have little or nothing of value to inherit upon the lie tenant’s death, which additional phrase must the will contain in order to protect the life tenant from liability for waste?

1. Without impeachment for waste, including permissive waste
2. Without impeachment for waste, including ameliorating waste
3. Without impeachment for waste, including equitable waste
4. Without impeachment for waste, including voluntary waste

Answer 18

3. Without impeachment for waste, including equitable waste

Question 19

Ross is the registered owner of Hillside Farms. Chandler forges and registers a transfer of Hillside Farms to himself. Chandler then borrows $75000 from Friends Trust Co. The loan is secured against Hillside Farms by way of a mortgage and the mortgage is registered. Which one of the following statements is false?

a. Friends Trust Co may obtain its $75000 back from the Assurance Fund
b. Ross can recover Hillside Farms but the title to the property will remain encumbered by the Friends Trust Co. Mortgage.
c. Ross can have Friends’ mortgage removed from title.
d. Because Friends Trust Co. dealt with Chandler, the registered owner in fee simple, the principle of indefeasibility will protect them.

1. only d is false
2. a and b are false
3. a, b, and d are false
4. all of the statements are false

Answer 19

3. a, b, and d are false

Question 20

Which one of the following is not a reason for the adoption of planning controls for the local governments?

1. protection of property values
2. public health and safety
3. limiting the power of land developers
4. conservation of natural resources

Answer 20

3. limiting the power of land developers

Question 21

Zoning Bylaws include which of the following EXCEPT:

1. Zoning bylaws which regulate Development permit area
2. Maximum height of buildings
3. Set-backs requirements from property lines
4. Number of building on a particular lot

Answer 21

1. Zoning bylaws which regulate Development permit area

Question 22

Kent rented his Kerrisdale house to Lisa for a fixed term of three years commencing July 1, 2008 and terminating on June 30, 2011 for an annual rent of $12,000 payable in equal monthly installments on the first day of each month. On April 12, 2010 Lisa abandoned the premises without giving notice to Kent, and without paying the rent for April. The B.C. Residential Tenancy Act requires Kent to:

1. hire a bailiff to distrain Lisa’s goods left on the premises to compensate Kent for the rent in arrears.
2. limit his claim against Lisa for arrears of rent to the amount of the security deposit provided by her.
3. attempt to re-rent the premises and mitigate his damages.
4. sue Lisa for the rent due for the remaining term of the lease without any obligation for Kent to account to Lisa for the security deposit and accrued interest.

Answer 22

3. attempt to re-rent the premises and mitigate his damages.

Question 23

Which of the following would appear as CREDITS on the purchaser’s statement of adjustments:

1. Assumption of existing first mortgage, purchaser`s share of paid taxes, real estate commission.
2. Agreement for sale, deposit paid into brokerages trust account, vendors share of taxes not yet due.
3. Legal fees to discharge an existing mortgage, proceeds of new first mortgage, deposit paid into the brokerage`s trust account.
4. Legal fees for conveyance, legal fees for discharging an existing mortgage, vendor’s share of taxes not yet due.

Answer 23

2. Agreement for sale, deposit paid into brokerages trust account, vendors share of taxes not yet due.

Question 24

Which of the following statements is true?

1. As a result of its durability, land is subject to externalities, which are enjoyed or suffered by people other then those who produce them.
2. The ownership of property can be divided physically, but not legally.
3. Because real property is durable, a structure’s physical life may be longer than its economic life.
4. Land is indestructible and therefore keeps its economic value forever.

Answer 24

3. Because real property is durable, a structure’s physical life may be longer than its economic life.

Question 25

Scrambling credit card information into an unreadable format is best known as:

1. cryptomizing.
2. digitizing.
3. encrypting.
4. instilling.

Answer 25

3. encrypting.

Question 26

Four years ago, Gussy Dup bought a small apartment in a very fashionable district of New Yawk. Gussy felt his purchase was a bargain at $340,000, especially considering his down payment was only $100,000 and he was able to obtain a mortgage for the remaining $240,000 at J2 = 5%, amortized over 25 years with annual payments. However, Gussy has now lost his job and must sell his apartment. He has received an offer of $50,000 cash plus assumption of the existing mortgage. The market rate for similar 21 year mortgages are J2 =3%

Calculate the market value of the offer.

1. $297,634.92
2. $347,634.92
3. $311,197.81
4. $313,571.25

Answer 26

4. $313,571.25

Question 27

Which of the following correctly completes the sentence: In a strata plan, the term “unit entitlement” refers to:

A. the value of each condominium unit relative to other units.
B. the share of the value of demolition owed by each condominium unit owner.
C. the share of real property taxes payable by each condominium unit owner.
D. the figure used to calculate a strata owner’s contribution to the common expenses of the strata corporation.

1. B, C and D only
2. A and C only
3. C and D only
4. Only D

Answer 27

4. Only D

Question 28

Which of the following statements is/are TRUE?

A. On the completion date of the sale of real property, the purchaser is usually entitled to the transfer of title.
B. The total of the debit column on the vendor’s statement must be identical to the total of the credit column on the purchaser’s statement.
C. The practice is to hold the vendor responsible for the taxes on the adjustment date itself.
D. The adjustment date and the possession date must be the same day.

1. All of the above statements are true.
2. Only A and B are true.
3. Only A is true.

Answer 28

3. Only A is true.

Question 29

Depreciation expense is:

1. another name for capital cost allowance.
2. a deductible expense in computing income for purposes of income taxation.
3. usually calculated on land by the straight-line method.
4. none of the above.

Answer 29

4. none of the above.

Question 30

Where a licensee intends to purchase property, which of the following details must he or she disclose to the vendor?

1. The fact that he or she holds a real estate licence.
2. Any details that have been arranged for the resale of the property.
3. The fact that he or she will be sharing in the commission on the sale.
4. All of the above information must be disclosed.

Answer 30

4. All of the above information must be disclosed

Question 31

Bill is an agent acting within scope of his authority for his client Rufus. Bill discloses to Ted, a third party, that he is acting as an agent, and enters into a contract with Ted on that basis. The parties to the contract that Bill and Ted signed are:

1. Ted and Rufus
2. Ted and Bill
3. Ted, Bill and Rufus
4. None of the above

Answer 31

1. Ted and Rufus

Question 32

Which of the following statements regarding mortgagees is FALSE?

1. A mortgagee may require the addition of a guarantor to provide a separate personal covenant as a third party in addition to the borrower’s personal covenant to pay.
2. Where the property secured is a condominium, a mortgagee may require the borrower to grant to the mortgagee the right to vote at meetings of the strata corporation on various matters affecting the security of the mortgage.
3. Although a number of remedies are usually available to a mortgagee in the event of borrower default, the lender usually has complete discretion in deciding the most suitable remedy to use in the circumstances.
4. Once the mortgage terms have been agreed to by the mortgagor and the mortgagee, the mortgagee is bound to advance the total amount of the funds when requested by the borrower, regardless of the terms of the mortgage.

Answer 32

4. Once the mortgage terms have been agreed to by the mortgagor and the mortgagee, the mortgagee is bound to advance the total amount of the funds when requested by the borrower, regardless of the terms of the mortgage.

Question 33

Which of the following is not a generally accepted accounting principle?

1. Matching Principle
2. Substitution Principle
3. Cost Principle
4. Objectivity principle

Answer 33

2. Substitution Principle

Question 34

Martha Stuwart has recently become a limited partner in a limited partnership. It is important for her to know that in a limited partnership:

1. the general partner has unlimited liability and carries on the business of the partnership.
2. the income is taxed before it is distributed to the partners.
3. a limited partner can actively be engaged in managing the business without any consequences to his or her partnership status.
4. each limited partner is personally liable for all debts that the partnership incurs.

Answer 34

1. the general partner has unlimited liability and carries on the business of the partnership.

Question 35

Which of the following best describes a “strata corporation”?

1. once the strata plan has been deposited at the land title office, it is the individual strata owners collectively as one entity
2. a body of three to seven elected representatives from among the owners of the strata lots
3. a corporation formed by a group of individuals who possess an undivided joint ownership interest in the land and/or buildings
4. a group of professional managers hired by a condominium project to handle the matters affecting the security and maintenance of the common property, facilities and assets of the condominiums

Answer 35

1. once the strata plan has been deposited at the land title office, it is the individual strata owners collectively as one entity

Question 36

A young administrative assistant has applied to her bank for a mortgage loan to enable her to purchase a house. Her income is $35,000 per year. The bank informs her that they will apply a 30% gross debt service ratio when calculating her maximum loan, and that current mortgage rates are 20% per annum, compounded monthly for 20 year term mortgages. Given that annual property taxes are $975.00, and mortgage payments are to be made monthly, what is the maximum mortgage loan the bank will grant?

1. $51,384.30
2. $50,308.24
3. $46,723.48
4. $45,346.54

Answer 36

3. $46,723.48

Question 37

One way that housing styles can be classified is by the structural method used in construction. Which one of the following terms does NOT describe a type of structural method?

1. dry wall
2. concrete block
3. log
4. post, beam and plank

Answer 37

1. dry wall

Question 38

The Competition Act prohibits false or misleading advertising. Which of the following statements concerning this offense is FALSE?

1. The standard applicable in determining whether a statement is misleading or not is whether a inexperienced person would be misled.
2. For a misrepresentation to offend against the Competition Act it must be false or misleading in a material respect.
3. A person or company will not be guilty under the Competition Act even though every part of their advertisement is literally true, when the general overall impression is misleading.
4. Where an accused can show that he or she had taken all reasonable care to determine the truth of the statement and that he or she honestly believed it to be true, the accused will avoid liability.

Answer 38

3. A person or company will not be guilty under the Competition Act even though every part of their advertisement is literally true, when the general overall impression is misleading.

Question 39

A property is located in an area where most of the houses are connected to the sewer. The fact that the property in question is only connected to a septic tank creates a situation known as:

1. An encumberance
2. A patent defect.
3. A unilateral mistake.
4. A latent defect.

Answer 39

4. A latent defect.

Question 40

Which of the following does not result from the doctrine of stare decisis?

1. Decisions by the Supreme Court of Canada are accorded the most weight in our jurisprudence.
2. The outcome of the cases can be predicted with absolute certainty.
3. Former decisions are used as a basis for later decisions.
4. The common law system has uniformity.

Answer 40

2. The outcome of the cases can be predicted with absolute certainty.

Question 41

A real estate developer has borrowed $60,000 by way of an interest accruing loan written at J12 = 18%. How much will he owe at the end of nine months?

1. $74,400.00
2. $68,603.40
3. $68,279.60
4. $70,800.00

Answer 41

2. $68,603.40

Question 42

Which of the following statements about the principle of indefeasibility is FALSE?

1. In British Columbia, there are a number of exceptions to the principle of indefeasibility.
2. The principle of indefeasibility is inconsistent with the common law doctrine of the void deed.
3. Legal mortgages, but not equitable mortgages, are guaranteed by the principle of indefeasibility in British Columbia.
4. The guarantee of title is the key feature of Torrens system.

Answer 42

3. Legal mortgages, but not equitable mortgages, are guaranteed by the principle of indefeasibility in British Columbia.

Question 43

Jefferson Butterfield has decided to sell his property, buy first he wants to determine what the market value is. Unfortunately for Jefferson, he lives in a sparsely inhabited region where no similar properties have sold for quite some time. However, he does know the replacement cost (new) of his 3,600 square foot house is $52.50 per square foot. The land value estimate using the comparative method is $62,500.
Mr. Butterfield has taken exceptional care of his home, so it has depreciated only slightly in value. There has been $1,300 of curable physical depreciation. The bathroom and kitchen fixtures, however are outdated and their replacement cost is $13,200.

What is the market value of his property?

1. $237,000
2. $250,200
3. $238,300
4. $251,500

Answer 43

1. $237,000

Question 44

One or more of the following statements correctly describes the law with respect to security deposits in a commercial tenancy.

A. The interest, which accrues on a security deposit, is always paid to the account of the landlord.
B. Return of the deposit is not a personal obligation of the landlord.
C. The amount of a security deposit may be freely negotiated between the two parties to a commercial lease.
D. Someone who purchases the property from the landlord is obligated to repay the security deposit to the tenant.

Which of the above statements is/are TRUE?

1. All of the above are true.
2. Only B and C are true.
3. Only C is true.
4. Only B, C and D are true.

Answer 44

3. Only C is true.

Question 45

The Occupiers Liability Act of BC provides that:

1. The standard of care is always the same regardless of the circumstance.
2. An occupier has no duty in respect of risks implicitly accepted by that person, and such acceptance is deemed to be given when an adult enters voluntarily.
3. An occupier must take such care in all circumstances that is reasonable to see that all persons and their property coming on to his or her land must be safe in all manner of harm whatsoever.
4. An occupier’s duty of care applies in relation not only the condition of the premises, but also the activities on the premises and the conduct of third parties on the premises.

Answer 45

4. An occupier’s duty of care applies in relation not only the condition of the premises, but also the activities on the premises and the conduct of third parties on the premises.

Question 46

Yaletown Developments Ltd. Intends to purchase an old warehouse and redevelop it by splitting it into 12 condominium lofts. The company will invest $700,000 cash to purchase the warehouse and can get an interest accruing construction loan to cover the cost of redevelopment. Construction is expected to take 8 months. At the end of construction period, all of the lofts will be sold and the loan will be paid off, leaving Yaletown Developments with a cash flow of $775,000. If the project takes place as planned above, what effective annual yield will Yaletown Development earn on its investment?

1. 16.4945193220%
2. 10.7142857143%
3. 15.8645461051%
4. 15.3641521545%

Answer 46

1. 16.4945193220%

Question 47

Which one of the following factors would make a property owner eligible to apply for deferral of real property taxes?

1. The property owner is a member of parliament.
2. The property owner is a divorcee.
3. The property owner is a widower.
4. The property owner is a war veteran.

Answer 47

3. The property owner is a widower.

Question 48

Which one of the following statements is FALSE?

1. In an entirely residential condominium complex, a bylaw must be amended by a ¾ vote of the strata corporation.
2. If a rule conflicts with a bylaw, the bylaw prevails.
3. Subject to some exemptions, a bylaw may prohibit the rental of strata lots in the condominium complex.
4. Assuming the standard bylaws have not been amended, the strata council may pass rules with respect to the safety and cleanliness of individually owned strata lots.

Answer 48

4. Assuming the standard bylaws have not been amended, the strata council may pass rules with respect to the safety and cleanliness of individually owned strata lots.

Question 49

What will be the purchase price of a mortgage which will provide the purchaser with 60 payments of $950 plus an outstanding balance of $94,374.21 at the end of 60 months, if the purchaser of the mortgage requires an effective annual yield of 13%?

1. $93,611.84
2. $93,582.37
3. $92,922.78
4. $93,655.35

Answer 49

4. $93,655.35

Question 50

A Heritage Building:

1. is a one story house on a large lot
2. has large, covered verandas and rooflines reminiscent of barn construction
3. has angular roofs and broken rectangular walls.
4. are narrow lot houses

Answer 50

2. has large, covered verandas and rooflines reminiscent of barn construction

Question 51

An appeal regarding real property assessment can go from BC Supreme Court to:

1. Supreme Court of Canada
2. Property Assessment Appeal Board
3. BC Court of Appeal
4. Panel

Answer 51

3. BC Court of Appeal

Question 52

Joe purchaser approaches the owner of a house that is listed at a price of $150,000. Joe offers a cash down payment of $40,000 if the vendor will take back mortgage for the balance at a rate of J2=10%, to be fully amortized over 25 years with monthly payments. The current market rate is J2=14%. What is the market value of the offer?

1. $83,819.72
2. $96,583.72
3. $123,819.72
4. $154,299.93

Answer 52

3. $123,819.72

Question 53

Which of the following might be the subject of a real property appraisal?

1. air space rights
2. a life insurance policy
3. a diamond
4. all of the above

Answer 53

1. air space rights

Question 54

One Sunday, Alan and Kevin entered into an oral contract whereby Alan agreed to buy Kevin’s red Volkswagen van. Unfortunately, Kevin has two red Volkswagen vans. While Alan thought he was purchasing Kevin’s 1990 van, Kevin intended to sell Alan his 1975 van. Neither realized he other’s mistake until the completion date. Which of the following statements is true.

1. The contract is void because their misunderstanding is a common mistake.
2. Because the contract was made on Sunday, it is an illegal contract and thus void.
3. The contract is void because their misunderstanding is a mutual mistake.
4. The contract is unenforceable because it is not in writing.

Answer 54

3. The contract is void because their misunderstanding is a mutual mistake.

Question 55

Which of the following most accurately describes a building scheme?

1. A set of restrictions on a development used by the developer in order to maintain a common overall look to a development.
2. A set of plans used by developers to protect purchasers’ rights to build according to their own tastes.
3. A set of restrictions that must be complied with if a developer is creating a subdivision of five or more lots.
4. A document filed with the disclosure statement on a conversion of an existing building to strata.

Answer 55

1. A set of restrictions on a development used by the developer in order to maintain a common overall look to a development.

Question 56

Mr. K. Cole purchased a property for $100,000 and financed part of the purchase price with a mortgage loan having a face value of $80,000, written at J4=10%, fully amortized over 25 years with monthly payments. His mortgage broker charged a brokerage fee of 4% of the face value, which was deduct he from the face value of the loan. What was the effective annual interest rate Mr. Cole paid on the funds advanced?

1. 10.449174257%
2. 10.381289062%
3. 10.828624428%
4. 10.964310493%

Answer 56

4. 10.964310493%

Question 57

A board of variance is:

1. a provincial board charged with the responsibility of seeing that actions by municipalities comply with the Local Government Act.
2. a board established by municipalities with the power to amend property assessments.
3. a board established by municipalities to determine whether a zoning bylaw creates undue hardships on property owners.
4. all of the above.

Answer 57

3. a board established by municipalities to determine whether a zoning bylaw creates undue hardships on property owners.

Question 58

Which one of the following statements is true with respect to a listing contract?

1. While the listing contract is a contract between the brokerage and the vendor, the purchaser is bound by some terms contained in the contract.
2. It is not necessary that an exclusive listing contains an expiry date.
3. Of the three basic listing agreements, an open listing provides the best protection for the brokerage in terms of claims for commission.
4. None of the above statements are true.

Answer 58

4. None of the above statements are true.

Question 59

Andrea Smith has promised to pay her son $20,000 three years from today. What is the present value of the $20,000 if the effective annual interest rate is 10%?

1. $20,000.00
2. $15,026.30
3. $14,834.89
4. $26,787.24

Answer 59

2. $15,026.30

Question 60

Archie and Veronica have recently purchased a new home, partially financed by a mortgage loan. They would like to know the amount by which the principal is reduced during the five year term of their $175,000 mortgage written at J2=14% with a 25 year amortization. Assume the monthly payments are rounded to the next higher dollar and paid when due. The principal reduction is:

1. $170,000.00
2. $168,991.31
3. $6,008.69
4. $5,947.62

Answer 60

3. $6,008.69

Question 61

Doug, an appraiser, is valuing a single family housing unit using the market comparison method. A house recently sold for $245,000, comprised of a cash down payment of $99,000 and a vendor supplied mortgage loan of $146,000 at 3.5% per annum, compounded semi-annually. The loan has an amortization period of 20 years, a term of 5 years and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 4.75% per annum, compounded semi-annually. What price should Doug use if he wishes to use this sale as comparable?

1. $138,710.56
2. $237,710.56
3. $140,131.72
4. $239,131.72

Answer 61

2. $237,710.56

Question 62

The practice of recognizing expenses as they are incurred, rather than when they are paid for, is a characteristic of:

1. the cost principle.
2. the recognition principle.
3. the matching principle.
4. the conservation principle.

Answer 62

3. the matching principle.

Question 63

An investment corporation purchased an apartment building on Jan. 31, 1997 for $2,300,000. Of that $2,300,000, $620,000 was attributed to the building and $1,680,000 to the land. Depreciation was to be claimed at $7,500 per year for the life of the building. The building component of the property was valued on Jan. 31, 2003, to be $980,000. What would be the net amount of the building appearing on the corporation’s Statement of Assets and Liabilities as at Jan. 31, 2003?

1. $980,000
2. $935,000
3. $575,000
4. $1,635,000

Answer 63

3. $575,000

Question 64

To qualify for a managing broker’s licence in B.C., a person must meet which of the following requirements?

1. submit personal financial statements for each licensee they intend to hire.
2. be of good reputation.
3. three years’ licensed experience in British Columbia.
4. all of the above are requirements for a managing broker’s licence.

Answer 64

2. be of good reputation.

Question 65

A borrower has arranged a loan of $32,000 at an interest rate of 17% per annum, compounded semi-annually with payments set at $1,575.00 per month. What is the period necessary to amortize the loan?

1. exactly 24.129764086 years
2. exactly 23.9705036885 years
3. approximately 2 years
4. approximately 20 years

Answer 65

3. approximately 2 years

Question 66

To stay competitive in today’s real estate industry, which of the following are computer peripheral devices that are invaluable to a real estate office?

1. Internet and World Wide Web.
2. Digital cameras and scanners.
3. Digital versatile discs (DVD’s) and compact discs recordable (CD-R).
4. All of the above.

Answer 66

2. Digital cameras and scanners.

Question 67

After an order nisi of foreclosure is granted to a petitioner and the respondent borrower fails to pay the amount due as required by the order, the petitioner may apply for:

1) an order absolute of foreclosure.
2) a judicial sale.
3) an equitable charging order.
4. either 1) or 2)

Answer 67

4. either 1) or 2)

Question 68

Under the Strata Property Act, a strata corporation can:

A. hire professional management personnel to manage building security and to perform other managerial duties.
B. create enforceable bylaws that contravene the Human Rights Code, provided it does so with ¾ vote.
C. prohibit the rental of units in a condominium project, subject to minor exemptions.
D. file a lien in the Land Title Office against a strata lot for money owing to the corporation.

1. B only
2. A, C and D
3. A and B
4. D only.

Answer 68

2. A, C and D

Question 69

Horold the borrower and Maude the lender sign a standard mortgage contract in which Harold promises to pay the installment of principal and interest as they fall due. One term of the mortgage allows Maude to exercise remedies of an ordinary creditor, separately from foreclosure application, in case of a default. This term is known as:

1. equity of redemption
2. creditor’s covenant
3. interesse termini
4. personal covenant

Answer 69

4. personal covenant

Question 70

Which of the following statements is TRUE?

1. A licensee can protect him or herself from all liability for misrepresentation by having the vendor complete and sign a disclosure statement at the time the property is listed.
2. A licensee will not be liable for the tort of fraudulent misrepresentation unless he or she has some expertise in the particular area.
3. A licensee will be vicariously liable to a purchaser for incorrect information given to the licensee by the vendor and who passed the information on to the purchaser.
4. A licensee is not required to provide opinions to purchasers on areas outside his or her expertise; rather, it is the purchaser’s responsibility to seek the opinion of a qualified expert.

Answer 70

4. A licensee is not required to provide opinions to purchasers on areas outside his or her expertise; rather, it is the purchaser’s responsibility to seek the opinion of a qualified expert.

Question 71

When a contract is executed under seal, the seal:

1. constitutes a written acceptance.
2. takes the place of the signature of the offeror and offeree.
3. stands in the place of consideration.
4. represents intention.

Answer 71

3. stands in the place of consideration.

Question 72

Where a licensee has complied strictly with the disclosure requirements of the Real Estate Services Act when purchasing property:

1. no conflict of interest and duty could exist.
2. the common law may still require further disclosure.
3. he or she may make a secret profit.
4. none of the above will be applicable.

Answer 72

2. the common law may still require further disclosure.

Question 73

Which one of the following statements regarding digital signatures is TRUE?

1. Digital signatures are used to authenticate the individual sending the message so as to insure the integrity of the data.
2. Digital signatures are codes recorded on to a CD to ensure copy protection and discourage multiple users.
3. Digital signatures are codes built into modems which notify receivers of where a message is coming from.
4. Digital signatures are tags in HTML that tell search engines information about your webpage.

Answer 73

1. Digital signatures are used to authenticate the individual sending the message so as to insure the integrity of the data.

Question 74

A fee simple owner in B.C. who is the victim of a fraudulent conveyance of his or her land will lose the right to have the transfer set aside when:

1. the transfer of the property to the dishonest person has been registered in the land title office.
2. 25 years have passed since the transfer.
3. the title to the property has been transferred to a good faith purchaser for valuable consideration.
4. a mortgage is registered against the property.

Answer 74

3. the title to the property has been transferred to a good faith purchaser for valuable consideration.

Question 75

Which of the following are Chattels:

A. Rose bush

B. A refrigerator in the garage

C. Harwood flooring

D. a Lamp

1. A and B
2. B and D
3. C and D
4. D and A

Answer 75

2. B and D

Question 76

Under the common law of agency, which of the following statements is TRUE?

1. Where the agent does not disclose that she is an agent and enters into a contract with a third party, the principal can have no liability for the contract.
2. An agent who would not have capacity to enter a contract herself may be able to make a valid contract on her principal’s behalf.
3. An agency relationship is created when one person unilaterally acts on behalf of another.
4. An agency agreement that is not entirely in writing will never be enforceable.

Answer 76

2. An agent who would not have capacity to enter a contract herself may be able to make a valid contract on her principal’s behalf.

Question 77

Where a borrower feels that the amount of interest being charged is excessive, under which statute might relief be granted?

1. The Interest Act
2. The Business Practices and Consumer Protection Act
3. The Land Title Act
4. All of the above

Answer 77

2. The Business Practices and Consumer Protection Act

Question 78

A company has just bought a truck for $22,500. It is expected that the truck can be sold for $3,000 fifteen years from now. The current market value of the vehicle is $27,000. Using the straight-line method, what is the annual depreciation expense?

1. $1,300
2. $1,500
3. $1,600
4. $1,800

Answer 78

1. $1,300

Question 79

In which of the following situations would Ling NOT have committed a trespass to land?

a. thinking she is on her own farm, Ling walks across Peter’s farm by mistake
b. To cut down on travel time, Ling walks across Jed’s farm deliberately.
c. Tripping over a rake bounced from a passing vehicle, Ling angrily throws it onto Alex’s property.
d. Selling eggs door to door, Ling walks onto Scott’s property to reach the front door.

1. only c
2. only d
3. only a and d
4. only a, b and c

Answer 79

2. only d

Question 80

A Real Estate appraiser would NOT value:

1. an existing rental agreement of a warehouse.
2. the right to use airspace at the top of a highrise office building.
3. the legal interest in cattle on agricultural land.
4. a fee simple interest in a two-bedroom apartment.

Answer 80

3. the legal interest in cattle on agricultural land.

Question 81

Which one of the following is NOT required in a contract of purchase and sale?

1. the names of the parties
2. a description of the property being sold
3. the purchase price
4. the rate of commission payable

Answer 81

4. the rate of commission payable

Question 82

Lawson has rented his warehouse to Tyler who runs a moving and storage business. Which one of the following is NOT a remedy available to Lawson if Tyler fails to pay his rent?

1. Lawson can re-enter the premises and forfeit the rent payable for the balance of the rental period.
2. Lawson may seize the personal property of Tyler and sell it in order to pay the arrears of rent.
3. Lawson can sue Tyler for the rent as would any creditor.
4. Lawson can apply under the provisions of the Residential Tenancy Act for an arbitrator to be appointed.

Answer 82

4. Lawson can apply under the provisions of the Residential Tenancy Act for an arbitrator to be appointed.

Question 83

Which of the following are examples of legal non-confirming uses?

A. Zeke purchased Owen’s pet store five months after rezoning occurred.
B. Ingmar ran a successful bakery until a fire broke out and burned the building to the ground two years after rezoning occurred. Ingmar just finished rebuilding a new bakery at the same location.
C. Lydia sell tropical plants in her store, which is located in the rezoned area. In response to the growing demand for large tropical plants, Lydia constructed a 200 square foot greenhouse off the back of the store.
D. Amelia is a chiropractor with an office that occupies 50% of a building in the area which was rezoned. Due to the success of her practice, Amelia has expanded her office to occupy 75% of the building.

1. A and D
2. B and D
3. A, B and C
4. All of the above.

Answer 83

1. A and D

Question 84

An acquaintance of yours has approached you and wants to know why the bank, which may finance his purchase of a house, requires an appraisal. He claims that since an appraisal is not required for an investment in stocks, an appraisal should not be required for an investment in real property. Which one of the following statements provides the BEST reasoning for your support of the bank’s requirement?

1. The high turnover of real estate relative to stocks means that only an expert can keep up with changing values.
2. The local nature of the real estate market implies that the flow of information will be unlimited and easy to assemble.
3. It is difficult to find real properties that are very much alike.
4. All of the above statements are true.

Answer 84

3. It is difficult to find real properties that are very much alike.

Question 85

When an agent acting within the scope of his authority and having disclosed that he is acting as an agent enters into a contract with a third party, the parties to that contract are:

1. the agent and the principal.
2. the principal and the third party.
3. the third party and the agent.
4. the principal, the agent and the third party.

Answer 85

2. the principal and the third party.

Question 86

Which of the following statements comparing condominiums and cooperatives is TRUE?

1. Cooperatives are generally easier to sell than condominiums.
2. The requirement for a disclosure statement may apply to condominiums and but not cooperatives.
3. Purchasers of both condominiums and cooperatives acquire ownership of a fee simple interest in land.
4. Where an existing building is being converted to either a condominium or a non-profit cooperative, the existing tenants are covered by the protections afforded by the B.C. Residential Tenancy Act.

Answer 86

4. Where an existing building is being converted to either a condominium or a non-profit cooperative, the existing tenants are covered by the protections afforded by the B.C. Residential Tenancy Act.

Question 87

Which of the following is NOT a consideration in the analysis performed by professional planners as a part of the planning process?

1. The establishment of long and short term goals, objectives or standards.
2. The testing of alternate courses of action.
3. The accommodation of developers’ interest.
4. The forecasting of future requirements or trends.

Answer 87

3. The accommodation of developers’ interest.

Question 88

Under the Land Title Act in British Columbia, a mortgage is registered on the title as:

1. a charge.
2. an agreement for sale.
3. a right to purchase.
4. a restrictive covenant.

Answer 88

1. a charge.

Question 89

Which one of the following does NOT result from the immobility of land?

1. the need for debt financing
2. a vulnerability to outside environmental factors
3. an inability to move a listed property to a better resale market
4. the necessity for owners to travel in order to take advantage of services provided by different parcels of land

Answer 89

1. the need for debt financing

Question 90

When a judge “distinguishes” a case on its facts, this means:

1. the judge decides that facts crucial to a former decision are not present in the case at hand, and does not follow the former decision.
2. the judge formally reports the case before him or her because it is a crucial decision.
3. the judge follows a former decision because the same facts exist in the case which is being decided.
4. None of the above.

Answer 90

1. the judge decides that facts crucial to a former decision are not present in the case at hand, and does not follow the former decision.

Question 91

Under the Local Government Act, a board of variance is:

1. established by every municipality that has adopted a zoning by-law.
2. comprised of board members who are appointed in accordance with the Local Government Act.
3. restricted to granting minor variances from zoning by-law requirements to applicants on the basis of “undue hardship” so long as the variance does not conflict with local government policy.
4. All of the above.

Answer 91

4. All of the above.

Question 92

Victor signed an exclusive listing agreement appointing Andrew as his agent in the sale of his country estate, Whiteacre, at a price of $500,000 cash. After 3 weeks and numerous open houses, Andrew obtained a cash offer of $450,000. Since Victor was away for a week and not wanting to lose what he now felt was an advantageous sale, Andrew signed the contract of purchase and sale as vendor on behalf of Victor who was shown as the principal. Subsequently, Victor, feeling the price was too low, refused to sign the transfer on the completion date.
Based on the above facts, which of the following statements is FALSE?

1. The contract cannot be enforced against Victor since a listing does not authorize a licensee to sell.
2. Andrew can be sued for damages for breach of warranty of authority.
3. The contract can be enforced against Andrew since he signed as vendor.
4. The contract cannot be enforced against Victor since Victor did not hold out Andrew as his agent to sell, but only as his listing agent

Answer 92

3. The contract can be enforced against Andrew since he signed as vendor.

Question 93

Which of the following is the main reason that interest accruing loans are normally written for short terms?

1. For long-terms, borrowers generally prefer to make periodic payments.
2. Total payments decline over the term of an interest accruing loan, so the sooner the loan is refinanced, the higher the potential return to the lender.
3. The lender’s return and original investment are at risk for the entire term of an interest accruing loan.
4. The outstanding balance of an interest accruing loan declines over the term of the loan, so it is prudent for the lender to keep the term short.

Answer 93

3. The lender’s return and original investment are at risk for the entire term of an interest accruing loan.

Question 94

Which one of the following is termed functional incurable obsolescence in a building?

1. worn carpeting
2. no air conditioning
3. narrow hallways
4. poor landscaping

Answer 94

3. narrow hallways

Question 95

Common law duress consists of:

1. breaching a contract term during performance.
2. changing the terms of a contract.
3. actual or threatened violence or imprisonment.
4. undue influence.

Answer 95

3. actual or threatened violence or imprisonment.

Question 96

With respect to the foundation of a residential building, damproofing is:

1. a material used to eliminate the penetration of frost in the concrete slab.
2. a material applied to foundation walls to seal minor capillary pores in the concrete.
3. a plastic vapour barrier placed under concrete footings.
4. a plastic pipe laid alongside the concrete foundation wall.

Answer 96

2. a material applied to foundation walls to seal minor capillary pores in the concrete.

Question 97

The purpose of the Real Estate Development Marketing Act is to protect the public by requiring developers to:

1. meet any preliminary requirements or approvals applicable to the type of property being marketed.
2. assure the purchaser’s title upon purchase.
3. prepare and file a disclosure statement in the form required.
4. All of the above are purposes of the Real Estate Development Marketing Act.

Answer 97

4. All of the above are purposes of the Real Estate Development Marketing Act.

Question 98

In establishing the actual value of a residential property for tax assessment purposes, the Assessor may consider:

1. the present use of the property.
2. the location of the property.
3. the rental value of the property.
4. a comprehensive list of factors including all of those mentioned above.

Answer 98

4. a comprehensive list of factors including all of those mentioned above.

Question 99

A borrower approaches Ripley Finance Company about a mortgage on an income-producing property. The property produces an annual net operating income of $112,500. The lending value of the property is $880,000. Ripley will only lend to a maximum of 75% loan-to-value ratio, and requires a minimum debt coverage ratio of 1.125. Ripley’s terms are: J2 = 12%, a term and amortization period of 15 years, and monthly payments. Given these constraints, calculate the maximum allowable loan (rounded to the nearest dollar).

1. $624,912
2. $660,000
3. $976,426
4. $634,728

Answer 99

2. $660,000

Question 100

In residential building construction, the term “dormer” refers to:

1. roof extensions used to provide extra floor area and windows for the upper level.
2. the structural member, usually wood, placed at the top of window openings.
3. a roof style commonly known as a hip roof.
4. a component of a septic waste water system.

Answer 100

1. roof extensions used to provide extra floor area and windows for the upper level.

Question 101

What is the nominal rate of interest, compounded semi-annually that is equivalent to 11.5% per annum, compounded monthly?

1. 5.8895333892%
2. 12.830625%
3. 11.7790667784%
4. 11.233678675%

Answer 101

3. 11.7790667784%

Question 102

Which of the following statements about federal legislation governing mortgage interest rates is TRUE?

1. The Interest Act requires that the rate of interest chargeable under a mortgage be “reasonable”, in the prevailing market for funds.
2. The Criminal Code defines a criminal rate of interest as an effective annual rate in excess of 50%.
3. Section 10 of the Interest Act creates the right to tender prepayment of a mortgage after 5 years provided that the borrower is not a corporation, and the mortgage is not for a business purpose.
4. The Interest Act provides that if a mortgage agreement does not specify the rate of interest chargeable, the rate allowed by law is 5%.

Answer 102

4. The Interest Act provides that if a mortgage agreement does not specify the rate of interest chargeable, the rate allowed by law is 5%.

Question 103

Larry and Theresa orally agree that Theresa will lease 10 acres of farmland owned by Larry for 5 years. As part of the agreement, Larry agrees to build a barn which he does at a cost to him of $10,000. Which one of the following statements is true?

1. The lease agreement is not enforceable by Larry because it is neither in writing nor signed by Theresa as is required by section 59 of the Law and Equity Act.
2. Section 59 of the Law and Equity Act does not apply to lease agreements.
3. The lease agreement may be enforceable by Larry because he has altered his position by spending $10,000 on a new barn in reliance on the lease.
4. The lease agreement is void because it is not in writing.

Answer 103

3. The lease agreement may be enforceable by Larry because he has altered his position by spending $10,000 on a new barn in reliance on the lease.