Module 1 Lesson 6

Question 1

Contract

Answer 1

• A contract is a promise made by one person to another that the law will enforce.
  • In theory, to be enforceable, a contract requires: an understanding between the parties to the contract to
  create a legal obligation or duty, on one party to fulfill the promise and conferring a legal right on the other to
  demand its fulfillment.
  • The underlying intention of any contract is that it is binding on the parties. Contracts may exist in many forms,
  including oral contracts (word of mouth), letters, or legal documents. While it is a leading practice that all
  contracts be in writing to ensure clarity of understanding and enforceability, any contract for the acquisition or
  disposition of an interest in land must be in writing

Question 2

Requirements per the Statute of Frauds

Answer 2

The Statute of Frauds requires that certain contracts,
including real estate contracts, must be in writing to be
enforceable by law. In other words, verbal agreements
between parties regarding real estate are not
considered legally binding. Although written evidence
of a real estate contract is required, the Statute of
Frauds does not require that any particular form be
used for the written contract.

Question 3

Requirements per the vendors and purchasers act

Answer 3

An agreement must be complete and accurately
describe the subject of the agreement and the parties’
intentions to be considered enforceable. However,
given that no standard form of agreement exists for
the sale of land, certain required provisions are stated
in the Vendors and Purchasers Act. This Act specifies
several rights and obligations that are incorporated
into every agreement of purchase and sale.

Question 4

Every contract is deemed to include the following, unless otherwise stipulated:

Answer 4

• The seller is not bound to produce any abstract of
title, deed, copy of a deed, or other evidence of
title except as are in the seller’s possession or
control.
• The buyer shall search the title at the buyer’s own
expense and shall make any objections in writing
within 30 days from the making of the contract.
• The seller has 30 days in which to remove any
objection made to the title. If the seller is unable
or unwilling to remove any objection that the
buyer is not willing to waive, the seller may cancel
the contract and return any deposit made, but is
not otherwise liable to the buyer.
• Taxes, local improvements, insurance premiums,
rent, and interest shall be adjusted as at the date
of closing.
• The conveyance (legal process of transfering of
ownership from one party to another) shall be
prepared by the seller and the mortgage, if any,
by the buyer; the buyer shall bear the expense of
registration of the transfer/deed and the seller
shall bear the expense of the discharge of the
mortgage, if any.
• The buyer is entitled to possession or the receipt
of rent and profits upon the date of closing of the
transaction.

Question 5

Requirements per the Real estate and Brokers

Answer 5

REBBA includes various requirements for agreements
used to trade real estate (seller and buyer
representation agreements). The Code of Ethics requires that all agreements are reduced to writing at the earliest opportunity, signed by the brokerage, and submitted to the seller or buyer for signature. The Code also requires that specific content be set out in written agreements for the purpose of trading in real estate and that copies of representation agreements be immediately given to the seller or buyer. In terms of agreements for conveyancing real estate, the Code requires that registrants use their best efforts to ensure that such agreements are in writing and legible. Registrants must also use their best efforts
to ensure that all parties to an agreement receive a
copy as soon as possible and ensure that deposits and
other documents relating to the agreement (e.g.,
notice removing conditions) be delivered in
accordance with the agreement of purchase and sale.

Question 6

Types of agreements

Answer 6

• Agreements signed between the brokerage and the seller or buyer, such as a representation agreement
• Agreements signed between the brokerage and the seller or the buyer such as a seller or buyer customer
service agreement
• Agreements signed between the seller and buyer such as an agreement of purchase and sale
• Agreements signed between a landlord and a tenant such as an agreement to lease.

Question 7

Evidence of a contract

Answer 7

A contract is the legal relationship created between the parties.
A contract document is the written record and therefore a reflection of the mutual commitment agreed to by the contracting parties. A document, such as an agreement of purchase and sale is evidence of a contract.

Question 8

Parol Evidence rule

Answer 8

In the determination of contractual disputes, the courts have developed various legal principles and rules. The parol evidence rule provides that oral evidence is inadmissible in court to vary or contradict the terms of a written contract, except in a case of fraud or mistake.
There are exceptions, but a general rule when drafting contract documents (agreements) is that every term,
warranty, condition, or representation on which one or the other of the parties intends to rely should be
incorporated into the written document. In real estate, every party to the contract must agree in writing to any terms or additions to an agreement. Any changes to the original document need to be agreed to by the parties and in writing in order to be enforceable.

Question 9

Privity of Contract

Answer 9

The general rule is that only parties to a contract can enforce it or be bound by it. For instance, a brokerage (or its representative) is only a witness to the signing of a contract for a property sale. Being a witness to the contract does not make the brokerage a party to the contract. Only the seller and the buyer, who are parties to the contract can be considered as privy to the contract. Therefore, if a breach of contract occurs, any lawsuit will likely be between the seller and the buyer. However, depending on the conduct alleged by the plaintiff, brokerages and real estate salespersons may be added as parties to any litigation. Similarly, while the brokerage can sue the seller for a real estate commission, the salesperson would need the consent of the brokerage to sue individually, as the salesperson is not a party to the contract — they are only representing the brokerage.

Question 10

Offer and Acceptance

Answer 10

Without mutual agreement there is no contract. A contract is formed when the offer made by one party (the offeror)is accepted by the other party (the offeree). There are general rules concerning basic requirements for offer and acceptance.

An offer:
• Must be complete and definite in its terms
• Must remain open for acceptance for a reasonable period of time
• Must be communicated to the offeree
• Must be made to one or more persons or corporations, or to the public in general
• May be revoked or withdrawn prior to acceptance, subject to certain limitations

The offeree is free to reject or accept the offer. When the offeree decides to accept, they must keep in mind:
• The acceptance must be unconditional. Any change to the offer would be considered a counter offer.
• Acceptance of the offer by the offeree must be communicated to the party making the offer (offeror).
• Acceptance may be in the same manner used by the offeror (e.g., mail, email, fax).
• Acceptance must occur before a specified time limit if there is a time limitation placed by the offering party(s).

Question 11

Capacity of the Parties

Answer 11

The offeror and the offeree, as the parties to a contract, must have the legal capacity to enter into the contract at the time when the contract is made. In the absence of legal capacity, there cannot be a contract. The offeror and offeree can be a legal entity, such as a corporation or partnership, or an individual person, as long as they have the legal capacity to enter into a contract. While contracts are enforceable against anyone having legal capacity, some persons are deemed by law as either incapable of contracting or having only limited capacity to contract. In cases involving limited capacity, the contract may be considered voidable, until the individual goes to court to void it. As a salesperson, you should be able to determine whether the offeror and offeree have the legal capacity to form a contract.

Question 12

Corporations

Answer 12

A corporation usually has the rights, powers, and privileges to enter into contracts, unless its articles of incorporation or corporate bylaws do not contain empowering provisions. A corporation is a business entity created by statute law and established by
articles of incorporation. Two important considerations concerning corporations are: does the corporation exist, and if so, does it have the right to enter into such a contract? There should be proof that the person signing for the corporation has the authority to do
so.

Question 13

Partnership

Answer 13

A partnership exists when two or more individuals or entities pool their personal and financial resources to carry on a business with the view to profit. In a partnership, any partner may bind the other partners in a transaction during the ordinary course of business.

Question 14

Condominium/Co-operative

Answer 14

Condominium corporations and co-operatives are permitted to enter into contracts for the purchase and sale of real estate in line with incorporation documents or statutory regulations limiting the scope of such organizations.

Question 15

Non-profit organizations

Answer 15

Non-profit organizations may have the rights, powers, and privileges to enter into contracts for the purchase and sale of real estate.

Question 16

Essential elements of a contract

Answer 16

Offer and acceptance, capacity of the parties, consideration, Definite and clear, Lawful object, Genuine intention

Question 17

Consideration

Answer 17

A binding contract requires an exchange of something between the parties. The exchange is called consideration and consists of each party doing something for the other. In real estate transactions, consideration usually takes the form of the transfer of legal title in return for the payment of a sum of money. The buyer promises to give the seller the agreed sum of money on the completion date set out in the agreement and the seller, in return, promises to
transfer the legal title to the property to the buyer on that date.

Question 18

Value

Answer 18

Value is what either party receives of some worth. Interestingly, the court does not assess the adequacy or amount of this value, but only its existence. However, if the consideration was so minimal as to make the contract extremely one sided to one of the parties, the
courts might act based on the unfairness or unjustness of the amount of the agreement.

Question 19

Lawful

Answer 19

The consideration under the contract must be lawful. This means that a contract must have a lawful object or purpose. For example, if the seller and the buyer knowingly agree to transact business based on stolen money or goods, the contract does not have a lawful
purpose and is considered an illegal contract.

Question 20

Past Consideration

Answer 20

The consideration has to be a part of the current contract and any past promise not included in the current contract is not enforceable or binding. The consideration must be in the present or future, but not in the past. The date set for the completion is in the future when the seller will give the buyer the property in return for the money the buyer will pay. In real estate, the promise must be in writing and form part of the contract.

Question 21

Definite and Clear

Answer 21

The terms of an agreement must be definite and clear. If the essential terms have not been agreed upon, a binding contract does not exist. If a vital and material condition of the contract is undetermined, no contract exists, but merely an undertaking to seek a contract at a future time. Details of the agreement must be defined specifically and agreed to by all parties to the agreement. For instance, a sale at a price to be fixed by subsequent negotiations between a seller and a buyer is not a concluded contract until these negotiations have resulted in an agreed price.

Question 22

Lawful Object

Answer 22

Lawful object is broadly defined as within the bounds of the law. If the object of the contract is illegal, for whatever reason, the contract is unenforceable. Examples of illegality or no lawful object would include contracts:
• Involving criminal activity, a direct violation of competition policy (Competition Act), or a deliberate evasion of
taxes (Income Tax Act), etc.
• Contrary to public policy or good morals;
• Injurious or prejudicial to the safety of the state or to the public service;
• Tending to pervert justice or abuse the legal process;
• In restraint of trade such as price fixing;
• In restraint of personal liberty or marriage; and
• For the commission of a criminal offence or civil wrong, or relating to gambling or wagering (unless authorized by means of provincial statutes).

Question 23

Genuine Intention

Answer 23

The agreement must have genuine intention. An agreement would be without genuine intention if one of the parties is induced to enter into the agreement by improper means and the document does not express what was intended. Inducements by improper means may be caused by different circumstances such as mistakes, misrepresentations, duress, or undue influence.

Question 24

Common Mistake

Answer 24

A common mistake occurs when both parties to the
contract know the intention of the other, accept it, but
are mistaken about an underlying fact.

Question 25

Mutual Mistakes

Answer 25

A mutual mistake arises when the parties

misunderstand each other and are at cross-purposes, or have a contrary understanding.

Question 26

Unilateral mistake

Answer 26

A unilateral mistake occurs when one party is mistaken

about a fundamental aspect of a contract.

Question 27

Innocent misrepresentation

Answer 27

An innocent misrepresentation is a statement by one
party of a fact that is wrong, but is honestly believed to
be true. If the victim of the misrepresentation is induced into a contract based on such a statement, they may refuse to complete the contract, attempt to have it set aside, and attempt to recover anything paid or delivered under it. They may also defend any action brought against them under the contract, but as a general rule cannot recover damages if the misrepresentation was innocent.

Question 28

Fraudulent misrepresentation

Answer 28

A fraudulent misrepresentation has three elements:

 The misrepresentation is made with the
knowledge of its falsity or with reckless disregard
for its truth.
 The purpose must have been to induce the other
party to enter a contract.
 The misrepresentation must have been relied on
to the other party’s prejudice.

Where such fraud exists, the deceived party may resist
enforcement of the contract and seek damages for the
conduct.

Question 29

Negligent misrepresentation

Answer 29

If there is a contractual relationship between the parties and a misrepresentation is made without reasonable verification of its accuracy, then the person who is misled may bring a lawsuit for damages. When it is clear that the statement was made with the intention that it be relied on and that the person did rely on it, then a claim for damages may arise. This could occur in situations where the buyer has relied on a real estate salesperson, who represents the seller.

Question 30

Duress and undue influences

Answer 30

Undue influence is the improper use of one person’s
power over another to induce that person into a
contract. The person claiming undue influence must
establish that the transaction was executed under
duress. The opposing party must establish that the
bargain was reasonable and fair and that no advantage was gained due to his or her position. For example, one party is knowledgeable and experienced while the other party is ill-informed and inexperienced, or a family member exerts pressure on another family member to accept an offer which is detrimental or not in their best interest.

Question 31

Failure to Disclose

Answer 31

The non-disclosure of material latent defects might
invalidate a contract. A latent defect is generally
described as a defect that is not easily observable. The
most serious of latent defects, often referred to as
material latent defects, are physical defects of the
property that render it dangerous or unfit for habitation. For example, if a seller is aware of a mould
infestation in the attic and the basement, that defect
would need to be disclosed to a buyer.

Question 32

A contract not fulfilling all requirements, may be one of the following:

Answer 32

• Void: The contract never came into existence
• Voidable: The contract was originally valid but capable of being rejected by the offended parties at a later time
• Illegal: The contract is not enforceable by the courts

Question 33

Void and Voidable Contracts

Answer 33

Illegal contracts are rare. As a salesperson, you may encounter void and voidable contracts. It is important for you to be able to distinguish between void and voidable contracts. A void contract does not legally exist (null at law, so it never came into existence), has no force or effect, not enforceable by either party, and does not contain any obligations for either party.
A voidable contract is enforceable, valid, and binding until rendered void. The offended party elects to either fulfill or to void the contract.

Question 34

Breach of a Contract

Answer 34

A breach is a failure to fulfill or perform an obligation under a contract by one of the contracting parties.
The breach of a contract may result in:
• Conferring a right of legal action on the party impacted by the breach
• Releasing the impacted party from further obligations to perform their side of the bargain

A breach may be considered to go to the root of the contract, this is called fundamental breach.
In the instance of a fundamental breach, the impacted party may:
• Accept the breach and treat themselves as released from further performance
• Accept the breach and start an action for damages against the party who has breached
• Treat the contract as still in effect, and waive the breach, or
• Seek other remedies, if available

If the breach does not go to the root of the contract, it may give rise to a right of the impacted party to sue for damages without an option to discharge the contract; this is sometimes referred to as a minor or compensable breach.

Question 35

Recession

Answer 35

Rescission involves the revocation or cancellation of a contract, the contract is set aside by the court.

Question 36

Damages

Answer 36

Damages involve compensation for losses incurred. The most common remedy is a monetary award to compensate an injured party for a loss suffered by reason of a breach. Every breach may give rise to this remedy, the amount of damages recoverable is the value that may fairly and reasonably be considered either:
• Arising naturally, (e.g., according to the usual course of events occurring from such
breach of contract itself); or
• As may be reasonably expected to have been in the contemplation of the parties at the time the contract was made.

Damages are financial compensation arising as a result of the breach. Therefore the injured
party in a damage action must prove the actual amount of their loss. They also have a
general duty to make reasonable efforts to mitigate that harm by taking steps, following the
breach, in order to reduce the extent of the loss.

Question 37

Quantum meruit

Answer 37

Quantum meruit, a reasonable sum for services rendered, is a determination by the courts that
directs payment to the claiming party.

Question 38

Specific Performance

Answer 38

Specific performance is an exceptional remedy. It is an order of the court directing the party in breach to carry-out a specific obligation. This is a discretionary remedy and not an absolute right. It may be awarded only where damages are not an adequate remedy, the
contract is fair and just, and the injured party acts promptly and fairly in making their claim.

Question 39

Injunction

Answer 39

Where the broken promise was to refrain from doing something, the court may award an injunction to restrain the offending party from doing that act. More simply put, an injunction is a court order stopping a party from doing something wrongful. The court will not compel the performance of a contract for personal service or employment, but may award an injunction to prevent the offending party from serving or performing elsewhere. Injunctive relief, is also a discretionary remedy, subject to the same conditions as specific performance.

Question 40

Termination of contract

Answer 40

• Performance
• Mutual agreement
• Impossibility of performance
• Operation of law
• Breach

Question 41

Performance

Answer 41

A contract may be discharged by performance of the contract, in which case the obligations of the performing party are fulfilled and the rights of the other party are satisfied.

Question 42

Mutual agreement

Answer 42

A contract may be discharged or voided by mutual agreement of the parties. In effect, the parties agree that their contract no longer binds them.

Question 43

Impossibility of performance

Answer 43

A contract may be discharged because of the impossibility of performance or frustration,
whereby unanticipated circumstances arising after the making of the contract are held to release the parties from their obligations.

Question 44

Operation of law

Answer 44

A contract may be discharged by operation of law, e.g., death of a party, bankruptcy of a party, unauthorized unilateral alteration of contractual terms.

Question 45

Breach

Answer 45

Breach or the breaking of the contract by one of the parties, results in conferring a right of legal action on the party injured by the breach.

Question 46

Electronic signatures in Real estate

Answer 46

Often the seller, the buyer, and the salesperson find it convenient and more efficient to complete transactions
online instead of dealing with physical paper or scanned documents. For instance, as a salesperson, you could negotiate and obtain acceptance of an agreement of purchase and sale from the sellers while they are on a vacation because of the use of electronic signatures. You could email the agreement, discuss the details with the seller, then have the negotiations completed using electronic signature software.

Question 47

What is the purpose of the Electronic Commerce Act?

Answer 47

The Electronic Commerce Act and its regulations govern the creation, recording, transmission, and storage of contracts electronically. The purpose of this act is to allow any legal relationship that requires paper documents to be considered legal and enforceable
when in an electronic format. It provides that a legal requirement for a document to be signed or endorsed can be satisfied by electronic signature.

Question 48

Which contract documents of a brokerage can

be signed electronically?

Answer 48

The Electronic Commerce Act permits brokerages to use an electronic signature for all agreements relating to trading, including representation agreements, agreements of purchase and sale, and agreement of lease.

Question 49

What happens if a party prefers a written signature

instead of an electronic signature?

Answer 49

If any party to an agreement insists on using written signatures instead of electronic signatures, a salesperson must oblige them. Electronic signatures can be used in an agreement only when all parties to an agreement consent to the use of electronic
signatures. While consent can be implied, to avoid misunderstandings, it is recommended that the consent be in writing. Mortgage providers and financial institutions may also insist on paper documents with written signatures.

Question 50

What are the requirements for using an electronic

signature?

Answer 50

In order to use electronic signatures, as per Electronic Commerce Act, Sec. 11:
(a) the electronic signature must be reliable for the purpose of identifying the person; and
(b) the association of the electronic signature with the relevant electronic document must be reliable.
Other requirements for a signature include:
(a) the electronic signature meets the prescribed requirements, if any, as to method; and
(b) the electronic signature meets the prescribed information technology standards.

Question 51

Precautions and Policies for electronic signature

Answer 51

• Ensure that the places where the electronic signatures have to be made by the sellers and the buyers are identified in the document beforehand. Highlight only those specific fields where the concerned party needs
to sign.
• Ensure that the fields of date and time are also completed along with the signature by the signing party.
• Ensure that both options regarding how to accept or reject an offer presented electronically are explained to
the parties beforehand.
• Ensure the electronic documents are sent to the correct email address of the sellers and the buyers and
include a relevant subject line in the email.
• Ensure an acknowledgement of receipt is received from the concerned parties when the electronic documents are received.

Question 52

using electronic signature

Answer 52

The technology of electronic signature software provides for the following:
• Authentication: The ability to confirm the signature is from the person from whom it is supposed to be.
• Authorized use: The signature is permanent and tamper-proof to prevent fraudulent use of the signature.

Question 53

Ten principles of privacy

Answer 53

• Accountability
• Identifying purposes
• Consent
• Limiting collection
• Limiting use, disclosure and retention
• Accuracy
• Safeguards
• openness
• induvial access
• challenging compliance

Question 54

Accountability

Answer 54

An organization is responsible for personal information under its control and shall designate an individual or
individuals who are accountable for the organization’s compliance with the following principles.

Question 55

Identifying purposes

Answer 55

The purposes for which personal information is collected shall be identified by the organization at, or before the time, the information is collected.

Question 56

consent

Answer 56

The knowledge and consent of the individual are required for the collection, use or disclosure of personal information, except where inappropriate.

Question 57

Limiting collection

Answer 57

The collection of personal information shall be limited to that which is necessary for the purposes identified by the organization. Information shall be collected by fair and lawful means.

Question 58

Limiting use, disclosure and retention

Answer 58

Personal information shall not be used or disclosed for purposes other than those for which it was collected, except with the consent of the individual or as required by law. Personal information shall be retained only as long as necessary for the fulfilment of those purposes.

Question 59

accuracy

Answer 59

Personal information shall be as accurate, complete, and up-to-date as is necessary for the purposes for which it is to be used.

Question 60

Safeguards

Answer 60

Personal information shall be protected by security safeguards appropriate to the sensitivity of the information.

Question 61

Openness

Answer 61

An organization shall make readily available to individuals’ specific information about its policies and practices relating to the management of personal information.

Question 62

Individual Access

Answer 62

Upon request, an individual shall be informed of the existence, use, and disclosure of their personal information and shall be given access to that information. An individual shall be able to challenge the accuracy and completeness of the information and have it amended as appropriate.

Question 63

Challenging compliance

Answer 63

An individual shall be able to address a challenge concerning compliance with the above principles to the designated individual or individuals accountable for the organization’s compliance.

Question 64

PIPEDA identifies three information types:

Answer 64

• Personal information
• Sensitive Personal information
• Personal facts

Question 65

Personal information

Answer 65

Information about an identifiable individual; for example, including details easily associated
with a person; for example, name, residential address.

Question 66

Sensitive personal information

Answer 66

A subset of personal information dealing with sensitive data; for example, financial information and physical or mental condition.

Question 67

Personal facts

Answer 67

Non-identifiable facts; storage of personal facts is not regulated, provided information is anonymous. For example, the data in a demographic analysis may reveal the age-groups of people living in the neighbourhood, but the ages of individuals would be not be given as a personal fact.

Question 68

Responsibilities of a privacy officer is:

Answer 68

• To implement policies and procedures for handling, retention, and destruction of personal information at the brokerage
• To ensure adequate levels of security are set up to ensure safekeeping of data at the brokerage
• To ensure consumers can correct or add details, as well as access the information stored by the brokerage
• To include statements about the privacy provision in listing agreements, buyer representation agreements and other similar forms used by the brokerage

Question 69

Brokerage principles require a salesperson to: (under PIPEDA)

Answer 69

• State the purpose of obtaining information and get consent for using the information.
• Identify to consumers the intended uses of their personal information; for example, intention to include
buyers’ names on a mailing list.
• Collect only the information that is necessary for the uses identified.
• Disclose information only for the reason it was collected. Information collected is restricted to the stated purpose, unless further consent is obtained.
• Obtain the consent of the consumer for the collection and disclosure of information. Explicit written consent is the best, though the legislation does contemplate oral consent or consent expressed through conduct. The more sensitive the information, the greater the need for explicit consent. Consent may also be withdrawn.
• Maintain privacy of files and records, by safeguarding physical documents in locked cabinets and password
protecting electronic files.
• When no longer required, then the salesperson must return the information to the client or destroy the
information.

Question 70

Matrimonial home

Answer 70

The Family Law Act defines a matrimonial home as “every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home”.

Question 71

Spousal’s rights in a matrimonial home

Answer 71

According to the Family Law Act, there can be more than one matrimonial home (e.g., a home in the city and a home in the country) within Ontario. As a salesperson, you will need to understand the Family Law Act to be able to clarify the ownership of property. If there is any question as to the status of a matrimonial home, the seller should seek qualified legal advice. If a property is a designated matrimonial home, to avoid any issues regarding conflicting ownership, you must always ensure that all parties consent to the transaction. You need to obtain the signature of both spouses for all the legal documents, such as a listing agreement, and the agreement of purchase and sale. The party who owns the property will sign the documents as a seller and the non-owner will provide spousal consent. Consent of the non-titled spouse is required only for the matrimonial home, not the matrimonial property. Therefore, investment properties do not require consent of the non-owner spouse in order to sell the property.

Question 72

Rights of a common law spouse

Answer 72

As per the Family Law Act, spouses include common-law partners who have cohabited for more than three years, or who cohabitate and are the natural or adoptive parents of a child or children. Spouse also includes same-sex partners, as per the Family Law Act.

It is important to understand that spouses who live together and are not married may have a family home, but it is not considered a matrimonial home for the purposes of the Family Law Act. There is a fundamental difference in the legal status of family home and a matrimonial home. For instance, if one common-law spouse owns the family home, they can sell or mortgage it without the other common-law spouse’s permission, whereas this is expressly prohibited in the case of the matrimonial home of a legally married couple.

Question 73

Implementation of planning

Answer 73

The purposes of this Act are:
• To promote sustainable economic development in a healthy natural environment within the policy and by the means provided under this Act
• To provide for a land use planning system led by provincial policy
• To integrate matters of provincial interest in provincial and municipal planning decisions
• To provide for planning processes that are fair by making them open, accessible, timely, and efficient
• To encourage co-operation and co-ordination among various interests
• To recognize the decision-making authority and accountability of municipal councils in planning

Question 74

Types of municipalities

Answer 74

• Single-tier municipality
• upper tier ( in the two tier municipality)
• Lower-tier (in the two tier municipality)

Question 75

Single tier municipality

Answer 75

A single-tier municipality is one that assumes all municipal responsibilities set out under the Municipal Act and other provincial legislation. Some examples of single-tier municipalities are the City of Toronto, Ottawa, Sault Ste. Marie, Thunder bay, Greater Sudbury, Timmins, Windsor, London, Chatham-Kent, etc.

Question 76

Upper Tier

Answer 76

An upper-tier municipality is one formed by two or more lower-tier municipalities. Municipal responsibilities set out under the Municipal Act and other provincial legislation are split between the upper-tier and lower-tier municipalities. Upper-tier is typically the region, county, or district. Upper-tier municipalities are responsible for preparation, adoption, and revision of the Official Plan, and the process of dividing and developing land. Examples of upper-tier municipalities are counties such as the Wellington County, Grey County, Simcoe County, etc., or a regional municipality such as the Regional Municipality of York, Halton, Durham, Peel, Muskoka, Niagara, Waterloo, etc.

Question 77

Lower Tier

Answer 77

Lower-tier municipality is responsible for preparation, adoption, and revision of the Official Plan and the adoption of zoning bylaws, interim control bylaws, and other bylaws. Examples of lower-tier municipalities include the city of Cambridge, Mississauga, or the city of Brampton, the town of Richmond Hill, the town of The Blue Mountains, etc.

Question 78

Provincial Interests

Answer 78

• The conservation and management of ecological systems, agricultural resources, natural resources, mineral resource base, and spaces of architectural, cultural, historical, and archaeological significance
• The orderly development of safe and healthy communities ensuring the accessibility for persons with
disabilities to all facilities and services
• The adequate provision and efficient use of communication, transportation, sewage and water services, and waste management systems
• The adequate provision and distribution of educational, health, social, cultural and recreational facilities, housing, and employment opportunities
• The resolution of planning conflicts involving public and private interests and the promotion of sustainable
development
• The promotion of built form that encourages a sense of place and provides spaces that are safe, attractive, and vibrant

Question 79

The provincial policy statement is reviewed every five years. It includes the policies to:

Answer 79

• Support long-term planning for alternative and renewable energy sources such as wind power
• Discourage urban sprawl across Ontario by supporting intensification in appropriate areas and the efficient use of land and resources
• Support the protection of Ontario’s environment through enhanced policies, including stronger protection of the province’s water resources
• Protect the province’s natural heritage resources including habitats, provincially significant wetlands on the Canadian Shield, and coastal wetlands
• Promote development of affordable housing by requiring municipal targets
• Respond to concerns about the loss of farmland by prohibiting retirement lots and residential infilling on
prime agricultural lands
• Support and protect rural areas, by allowing development that is in keeping with the unique character of rural Ontario

Question 80

The official plan

Answer 80

The Official Plan contains:
• Goals, objectives, and policies concerning the management and direction of physical
change with due regard to the effects such changes have on the social, economic, and natural environment
• Details about where new housing, industry, offices, and shops will be located, what services like roads, watermains, sewers, parks, and schools will be needed and in what order, parts of the community will be developed
• Description of measures and procedures to attain these objectives and a description of such measures and procedures to inform the public and obtain views regarding amendments to the plan

Question 81

The purpose of the Official Plan

Answer 81

The Official Plan for a municipality is designed to provide a framework for future decision making and to respond in an organized fashion to trends and influences currently experienced within that municipality or anticipated in the future.

Question 82

The creation of the Official Plan

Answer 82

A formal process is followed in the preparation of an Official Plan, including input from citizens, to help ensure that future planning and development properly meet the needs of the municipality

Question 83

The approval process of the official plan

Answer 83

The plan typically requires provincial approval by the Ministry of Municipal Affairs and Housing before becoming official. However, certain Official Plans may not require such approval. For example, a regional government may be authorized by the Ministry to
approve local Official Plans within that region. Once approved, no development can take place within a municipality unless it is in general conformity with the policies and designations established in the Official Plan. The municipality can acquire land for the
purpose of developing any feature of the Official Plan, but it cannot physically undertake any public works unless such activities conform with the plan.

Question 84

The process and timeline for review of the official plan

Answer 84

An Official Plan amendment is a formal document that alters the current Official Plan, usually due to new situations that have arisen in the municipality. Changes to a plan are handled in much the same way as the plan itself. Changes may be needed because of new circumstances in the community or because of
requests made by property owners. An approved Official Plan can be reviewed at any time, but each local council is required to update its Official Plan not less than 10 years from the date the plan came into effect in the case of a new comprehensive Official Plan. In situations where an Official Plan is not being replaced in its entirety it should be updated at least every five years to ensure the plan is consistent with the provincial policy statements.

Question 85

Zoning Bylaws

Answer 85

Zoning bylaws are enacted by municipalities to identify the permitted use, building structure standards (e.g.,
minimum setbacks and lot coverage), and other necessary regulations (e.g., signage, noise, and parking) for properties. Zones are further divided into classifications (such as residential) and sub-classifications (such as single family), each with its own detailed standard. Existing properties or new developments must comply with the zoning bylaw of the municipality.

A zoning bylaw:
• Implements the objectives and policies of a municipality’s Official Plan
• Is the legal method of managing land use and future development
• Protects the community from conflicting and possibly dangerous land used

Question 86

Zoning designations

Answer 86

The zoning bylaw typically divides and classifies an entire municipality into a minimum of six general uses such as the following:
• Residential
• Commercial
• Industrial
• Institutional
• Open space
• Agricultural

Question 87

The impact of zoning designations on property development

Answer 87

As a salesperson, you need to be able to explain to the buyers of a property that the zoning designation determines how that property can be developed. For example, two properties may be on exactly the same lot size, but will have to be developed differently if they have different zoning designations, as each designation might have different requirements for front yard, rear yard, and side yard setbacks. Typically, height restrictions and maximum lot coverage is also detailed in the zoning designation.

Question 88

Sign Bylaw

Answer 88

Different municipalities have different sign bylaws
specifying the dimensions of an acceptable sign and
often mention the permissible distance of the sign
from a curb, an intersection, pedestrians, and cyclists.
Some signs like “no trespassing,” “open house,” or “for
sale” can be erected without obtaining a permit,
whereas other signs like promotional banners require
prior permit from the municipality. Some municipalities insist that real estate signage should be removed within specified number of days after the property is no longer for sale or lease. A local listing service located within a municipality may also have rules and regulations regarding what is permitted with the use of real estate signage.

Question 89

Parking Bylaw

Answer 89

Municipalities have bylaws and restrictions to govern
the parking of large commercial vehicles, recreational
vehicles and cars in a residential neighbourhood.
Municipality may have restrictions for parking on the
street or for overnight parking. Municipalities can also
prohibit parking on the boulevard and the driveway
apron.

Question 90

Noise Bylaw

Answer 90

This type of bylaw prohibits noise at any time that is
likely to disturb others, typically late night and early
morning. As per this type of bylaw, activities that cause
a lot of noise, such as construction, are limited to the
day time to minimize the disturbance to residents in
the neighbourhood. Municipalities may specify decibel
limits and timings for operating power equipment such
as lawn mowers, chain saws, or leaf blowers.

Question 91

Committee of adjustments

Answer 91

A Committee of Adjustment is appointed by the municipal council of a lower-tier municipality. The land division committee, appointed by a upper-tier municipality, performs similar functions at that level. In selected instances, the Ministry of Municipal Affairs and Housing may retain the right to grant consents; e.g., northern areas without municipal organization. The Committee of Adjustments has three functions:
• Granting of minor variances
• Providing consents to sever land
• Granting consents for the continuation of a non-conforming use
The Committee of Adjustment plays an important role in a municipality’s authority to control land use. As a
salesperson, you must be aware of the function of the committee and its scope of authority so that appropriate information can be given to clients and customers requiring land-use decisions.

Question 92

Minor Variance and rezoning

Answer 92

A minor variance, for planning purposes, is generally described as a small or insignificant variation or slight
modification concerning a particular property in relation to bylaws in force within a municipality.
A rezoning application is required when a property owner wants to use a property in a manner not permitted in the zoning bylaw, and applies to amend the zoning bylaw. The council of a municipality will only consider a zoning bylaw amendment if the proposed use is in keeping with the Official Plan.

Question 93

Steps for minor variances

Answer 93

The steps needed to apply for a minor variance are:
1. Pre-application consultation between the applicant and the municipal planners
2. Preliminary project review to identify the zoning bylaw requirements and prepare a list of the variances
required by the proposal.
3. Submit a completed application and the application fee.
4. Scheduling of hearing and posting of public notice sign.
5. Notice of public hearing and application details circulated to area property owners.
6. Committee of Adjustments hearing and decision.
7. Opportunity for a Third-Party appeal to the Local Planning Appeal Tribunal.
8. Committee of Adjustment decision final and binding.
9. Satisfying conditions of approval (if required).

Question 94

Steps for rezoning

Answer 94

The required steps to apply for rezoning or zoning bylaw amendment are:
1. Pre-application consultation between applicant and municipal planners
2. Submit complete application including relevant documents and the appropriate fee
3. Opportunity for motion for directions to Local Planning Approval Tribunal
4. Complete application decision
5. Application circulation
6. Technical response (impact of rezoning on municipal services, other government agencies, and the official
plan)
7. Community consultation (members of public invited to comment on the application)
8. Preliminary Report to Community Council (if applicable)
9. Response to applicant (e.g., reviews indicate that current municipal services will not support the
development proposed in the rezoning application)
Steps for Rezoning
10. Application revision and resubmission (e.g., applicant revises the application to be consistent with current municipal services)
11. Recirculation, consultation, further revisions, finalization, and staff report (if required)
12. Public meeting at Community Council (if applicable)
13. Council decision
14. Opportunity for third-party appeal to Local Planning Approval Tribunal
15. Official plan amendment (if necessary)/amended zoning bylaw in effect

Question 95

Non-conforming use and Non-conforming structures

Answer 95

Non-conforming uses or structures are considered legal because they complied with the zoning bylaws at the time they were established. Non-conforming structures have an implicit non-conforming right or the right to continue doing what was being done on the property earlier, even though it is no longer permissible in the zone. It’s important to note that the non-confirming right is lost if the non-conforming use is discontinued. After cessation, the non-conforming use cannot be re-established.

Question 96

Consent granting authority

Answer 96

Depending where the land is located, permission to sever lands usually rests with a local Land Division Committee or a Committee of Adjustments, which are appointed by the municipality or corporation responsible for overseeing the subject land under the Planning Act. The Minister of Municipal Affairs and Housing may also appoint such committees, or grant consents in certain areas of the province.

In Ontario’s two-tiered planning system, aside from a local Land Division Committee or Committee of Adjustments, consent authority may be assigned to a council committee, an appointed official, or to the council itself. It is important, when dealing with clients that intend to sever a property, for a salesperson to be able to determine where their clients will need to go to apply for the permission they are seeking. As a general guide the division of a property into two to three smaller lots is usually submitted to a Committee of Adjustment, while more significant land division, such as a plan of subdivision, will require submission to the local Land Division Committee.

Question 97

Consult and determine authority

Answer 97

Severance approval may rest with one of a number of
different governing bodies. Depending on the area, an
upper-tier or single-tier municipal council may grant
consents. An upper-tier municipality may delegate the
function to a committee of council or an appointed
officer.
Alternatively, it may delegate the authority to a lower tier municipality, a land division committee, or to a municipal planning authority. A single or lower-tier
municipality may also delegate its approval functions
to a committee of council, an appointed officer, or to a
Committee of Adjustment. In Northern Ontario, where
planning approval has not been assigned or delegated
to a municipality or planning board, the Minister of
Municipal Affairs grants consents.

Question 98

Complete application

Answer 98

The applicant must complete the applicable consent
application form, including sketches, and submit it to
the consent-granting authority. An application fee may
apply. An application should include the following:
• Name and address of owner
• Type and purpose of proposed transaction
• Name of person to which an interest in land is to
be transferred or leased
• Description of the property
• Detailed information concerning the land being
severed and the land being retained (e.g.,
dimensions, method of access, and provision of
water and sewage)
• Any previous application relating to the subject
land
• A sketch outlining boundaries of the land and any
abutting lands owned by the applicant
• A description of any previously severed lands
from the lot – natural (watercourses, slopes, and
banks) and artificial features (buildings, septic
tanks, etc.)
• Use of adjoining land
• Location of road allowances, streets, private roads and right-of-way
• Nature of any restrictive covenants or easements

Question 99

Application review

Answer 99

The consent-granting authority reviews the application.
If required, a public meeting is also held. In considering each application for land severance, the
consent-granting authority evaluates the merits of
each proposal against criteria, such as:
• Conformity with the Official Plan and compatibility with adjacent uses of land
• Conformity with the Provincial Policy Statement
(PPS) and conformity with any applicable provincial plan
• Compliance with local zoning bylaws
• Suitability of the land for the proposed purpose,
including the size and shape of the lot(s) being created
• Adequacy of vehicular access, water supply,
sewage disposal
• The need to ensure protection from potential
flooding

Question 100

Decision Issued

Answer 100

A decision is made by the consent granting body to
refuse, consent or grant provisional consent
(acceptance with conditions that must be complied
with). The decision is made within the 90-day
timeframe after all the required information is
received. Incomplete applications will face delays in
the process.

Question 101

Appeal Process (if applicable)

Answer 101

The decision is sent to the applicant and those
requesting notification.
Any person or public body may appeal the decision to
the Local Planning Appeal Tribunal. The tribunal or
local appeal body may dismiss the appeal without
holding a hearing or hold a hearing and make a final
decision.

Question 102

Issuing of certificate

Answer 102

If no appeal is filed, and the conditions of consent are
satisfied, then upon application, a deed for the newly
created lot is stamped with the consent of the
municipality and the deed is registered at the applicable Land Registry Office.

Question 103

Conditional consent for land severance

Answer 103

When severance consent is conditional, the time period of one year is typically given to satisfy the conditions. Some conditions for approval of consent might include requirements for re-grading the property, widening the roads, dedicating a portion of the property to parkland, preparation of a new survey, or rezoning (or minor variance) of the property to allow a new land use.

Question 104

Consult and determine authority

Answer 104

The approval body is typically an upper tier
municipality (region or district), the council of a city, or
certain counties identified in the Planning Act. A variety of other situations (e.g., towns, townships, and
territorial districts) fall to the Minister of Municipal
Affairs and Housing. In Northern Ontario, a planning
board may be the delegated authority. (Note: The
minister also has the right under the Act, with written
explanation, to revoke approval authority from
approval bodies detailed above.)

Question 105

Prepare a draft plan

Answer 105

The draft plan is generally viewed as the first official
step by a developer in the planning process leading to
a plan of subdivision. The developer creates a draft
plan in consultation with engineers, solicitors,
surveyors, and planning consultants. The resulting
detailed plan of the proposed project is commonly
referred to as the draft plan.
The Planning Act sets out various requirements for a
draft plan of subdivision including:
• Boundaries of the land proposed to be
subdivided
• Locations and names of proposed highways in
the plan or highways abutting the property
• Adjacent subdivisions and property in which the
applicant has an interest
• Proposed use, dimensions, and layout of
proposed lots and existing uses of adjoining
lands
• Natural and artificial features (e.g., buildings)
within, or adjacent to, the proposed subdivision
• Soil conditions and existing contours/elevations
• Existing or planned municipal services
• Nature and extent of restrictions affecting the
land, such as from the Conservation Authority

Question 106

Complete application

Answer 106

Each authority maintains application forms that
require information identified by the minister’s
regulation, as well as other information required by
the municipality. A 180-day time frame for approval
begins after the completed application is received.

Question 107

Approval authority (provide notices and hold public meetings)

Answer 107

The approval-granting authority ensures notices of the
application are sent to surrounding property owners,
and a public meeting may be held. Other agencies/bodies may also be consulted to
ensure compliance with the area and the availability of
services.
Examples of other agencies or bodies are:
• Clerks of the local municipality, county, region, and/or district having jurisdiction for the area being considered and, as applicable
• Conservation authorities
• Electric utilities, natural gas utilities, natural gas, or oil pipeline companies
• Local architectural conservation advisory committees
• The Niagara Escarpment Commission and federal parks commissions
• Chiefs of First Nation councils within one kilometre of the area covered by the proposed plan of subdivision

Question 108

Decision and notice of decision

Answer 108

Once all the information has been reviewed the
approval authority determines whether to approve the
draft plan of subdivision with conditions or refuse it.
Notice of the decision is sent to the applicant and those requesting notification. Notices of the application are routinely mailed to neighbouring land owners within a prescribed distance of the land. A direction requiring the posting of signs on the land that are clearly visible from a public highway or other accessible point is also standard procedure. A notice in a newspaper with circulation sufficient to provide reasonable notice to the public may be used in lieu of mailing, if an official of the approval authority agrees. The notice includes a description of the proposal plan, a map locating the property under proposal, a source of additional information, statements concerning appeal, and notification of a decision relating to the application.

Question 109

Appeal decision

Answer 109

If dissatisfied with the refusal of the request for a plan
of subdivision, an appeal may be filed. With some
restrictions, any qualifying person or public body may
appeal to the Local Planning Appeal Tribunal. You will
learn more about this later in this lesson.

Question 110

Final Plan Approval

Answer 110

After the draft plan approval, the applicant may
normally proceed with fulfilling of all conditions such
as the construction of roads in accordance with the
Surveys Act and the Land Titles Act. Subsequently, the
approval authority will issue the final approval of the
plan of subdivision, assuming that the plan conforms
with the approved draft plan and that any conditions
imposed have been or will be fulfilled. This process is
usually referred to as final plan approval with the plan
being referred to as the final plan. At that point, the
plan of subdivision may be tendered for registration in
the appropriate land registry office. If a final plan of
subdivision is not registered within a specified time
period, the approval authority may withdraw its
approval.
Upon completion of all requirements as set out in the
Planning Act and its regulations, the approval authority
forwards its decision along with various documents to
the Provincial Planning Services Branch of the Ministry
of Municipal Affairs and Housing.

Question 111

Final Plan Registration

Answer 111

The final step involves registration of the plan. Under
the Land Titles Act, a new plan parcel register is
created. This plan is prepared by a land surveyor
showing lots, blocks, or parcels of land intended to be
dealt with separately and that such separation has
been fully approved. The plan is registered in the land
registry office and must be in full compliance with the
Planning Act. Once a plan of subdivision receives final approval and registration, lots can be sold and transferred.

Question 112

Local Planning appeal tribunal

Answer 112

The Local Planning Appeal Tribunal was formerly known as the Ontario Municipal Board (OMB). It is an independent adjudicative tribunal that conducts hearings and makes decisions on land use planning issues, as well as other matters. It is part of the Environment and Land Tribunals Ontario, a cluster of tribunals that adjudicate matters related to land use planning, environmental and heritage protection, property assessment, land valuation, and other
matters.

Question 113

Purpose of local planning appeal tribunal

Answer 113

The Local Planning Appeal Tribunal is an administrative tribunal that hears cases in relation to a range of municipal planning, financial, and land matters. These include issues such as Official Plans, zoning bylaws, subdivision plans, consents and minor variances, land
compensations, development charges, electoral ward boundaries, municipal finances, aggregate resources, and other issues assigned by numerous Ontario statutes.

Question 114

Area of jurisdiction regarding first appeals

Answer 114

Local Planning Appeal Tribunal accepts first and second appeals regarding various issues.
The jurisdiction for first appeals includes:
• Appeals of a council decision to adopt or amend an Official Plan
• Appeals of a decision by an approval authority to approve a decision adopting or amending an Official Plan
• Appeals of a council decision to refuse a private amendment to an Official Plan a nondecision (not deciding within 210 days) of a private amendment application
• Appeals of a council decision to refuse a private amendment to a municipal zoning bylaw or non-decision of a private amendment application
• Appeals of a decision by a council to adopt a zoning bylaw or zoning bylaw amendment
• Appeals of a non-decision by an approval authority
• Appeals of a non-decision on a subdivision

Question 115

Area of jurisdiction regarding second appeals

Answer 115

The jurisdiction for second appeals includes:
• Appeals on all issues that can have a first appeal
• Appeals of a non-decision of a site plan application by council or requirements imposed on a site plan application by the municipality/county or by the regional metropolitan/district municipality
• Appeals of a Committee of Adjustment decision to approve or refuse a minor variance application
• Appeals of a decision to approve or refuse a consent/severance application, conditions imposed or changed for a consent/severance application or a non-decision of a consent/severance application by an approval authority

Question 116

Purpose of local planning appeal support center

Answer 116

The Local Planning Appeal Support Centre established under the Local Planning Appeal Support Centre Act, 2017, helps people understand and navigate the land use planning and appeal process in Ontario. The mandate of the Support Centre is to:
• Establish and administer a cost-effective and efficient system for providing support services to eligible individuals with respect to matters governed by the Planning Act that are under the jurisdiction of the Local Planning Appeal Tribunal
• Establish policies and priorities for support services based on its financial resources
• Provide services that include:
o Information on land use planning
o Guidance on Tribunal procedures
o Advice or representation
o Other services prescribed by regulations

Question 117

Federal Government

Answer 117

• Selective involvement
• Primary concerning
• Airport facilitates and ocean/fisheries

Question 118

Provincial Government

Answer 118

Responsibilities for overall provincial planning, establishes planning policies while delegating many responsibilities to municipalities

Question 119

Municipal Government

Answer 119

various defined areas of responsibilities. Responsibilities are set out in the municipal act, 2001. Increasing authority has been granted to municipalities over the past decades.

Question 120

Municipalities spheres of influence

Answer 120

1. Public Utilities
2. Waste Management
3. Transportation Systems (Other than Highways)
4. Highways (Public Roads) Including Parking & Traffic
5. Culture, Parks, Recreation, & Heritage
6. Drainage & Flood Control (Except Storm Sewers)
7. Structures (Including Fences and Signs)
8. Parking (Other than Highways)
9. Animal Control
10. Economic Development Services

Question 121

Sign Bylaw

Answer 121

Placing ”for sale” signs and ”open house” signs may not require a permit, however a salesperson
must adhere to the municipalities rules and regulations as it pertains to the placement of signs or the length of time a sign may remain on a property.

Question 122

Fence Bylaw

Answer 122

Some municipalities prohibit the use of barbed wire fences and specify the height of fence that can be used in a front yard or the side and rear yards.

Question 123

Floodplain management bylaw

Answer 123

If the municipality has flood prone zones, it may enact special guidelines for flood management, like specifying the construction ground level and the maximum depth of a house.

Question 124

Nosie Bylaw

Answer 124

Municipalities may require the property owners to meet various standards in the control of noise, vibration, odour, dust, and outdoor illumination.

Question 125

Building energy standards

Answer 125

Municipalities may establish building energy standards and may provide incentives for energy conservation programs for commercial and residential property owners.

Question 126

Fill Bylaw

Answer 126

Municipalities may regulate the placing and extraction of fill, the storage and removal of topsoil and
any alterations to the grade of land.

Question 127

Sewage bylaw or solid waste bylaw

Answer 127

Municipalities may regulate permissible sewage and create guidelines for materials recycling or composting.

Question 128

Role of FINTRAC

Answer 128

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit. It assists in detecting, preventing and deterring money laundering and terrorist financing. FINTRAC was established by a law, called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations, and it functions within its scope.

Question 129

FINTRAC fulfills its mandate by:

Answer 129

• Receiving financial transaction reports and voluntary information on money laundering and terrorist financing, according with the PCMLTFA and its regulations and safeguarding personal information under its control
• Ensuring compliance of reporting entities, such as real estate salespersons and brokerages, with the PCMLTFA and its regulations
• Generating financial intelligence on money laundering, terrorist financing, and security threats to Canada
• Researching and analyzing data from various sources on trends and patterns in money laundering and
terrorist financing
• Maintaining a registry of money services businesses in Canada
• Enhancing public awareness and understanding of money laundering and terrorist financing

Question 130

Understand your client

Answer 130

The first component of the Know your Client obligation
is to understand your client. It is necessary to understand your client to effectively
identify irregular or suspicious transactions or
activities.
Take steps like the following:
• Ask how they found you/your brokerage.
• Learn about their family.
• Determine how they are connected to the
community.
• Find out what they do for a living.

Question 131

Ascertain client identity

Answer 131

1) Single process method:
• Use a photo ID issued by a federal, provincial,
or territorial government (or a foreign-issued
driver’s license or passport).
• View the original ID in front of your client to
compare the client and photo.
• Record client name, ID type and number,
issuing jurisdiction, date of expiry, and date
verified.
2) Credit file method:
Use a Canadian credit file that has been in
existence for a minimum of three years. The
credit file must be from a valid Canadian credit
reporting agency, such as Equifax or TransUnion.
You must:
• Confirm the name, address, and date of birth
match what the client told you.
• Record the client identification information,
such as the credit file, the number of the
person’s credit file, and the date verified.
3) Dual process method:
Use two independent and reliable sources to
confirm client identity. Confirm two of the three
Ascertain client identity following categories of information, each with a different source document or information:
• Name and address – With a document or
information issued by the Canadian government
(CRA document) or by other Canadian sources
(T4, Record of Employment, Investment Account/
RRSP/GIC statement).
• Name and date of birth – With a document or
information issued by the Canadian government
(e.g., original birth certificate, marriage certificate)
or issued by other Canadian sources (e.g., home/
auto/life insurance documents).
• Name and financial account – With credit
card/bank/loan account/mortgage statement or a
cleared cheque.

Question 132

Ascertain client identity- working with foreign clients

Answer 132

If you’re working with a foreign client (who you can’t
meet in person to identify and who also doesn’t have
three years of a Canadian credit file or documents
issued by a Canadian government or Canadian source),
have an agent/mandatary act on your behalf.
Record the full name of the agent, mandatary, or entity
that identified your client, the written agreement with
agent, mandatary or entity, identification method
used, information gathered according to the method
used, date verified, and the date you referred their
verification.

Question 133

ascertain client identity- business relationships

Answer 133

A business relationship must be established if within
five years, for the same client (individual or
corporation), you conduct two transactions or
activities, both of which require you to ascertain the
client’s identity. Best practice is to establish the
business relationship within 30 days of the second
transaction.

Question 134

Determine Third party involvement

Answer 134

The third component of the Know your Client
obligation is to determine third-party involvement.
A third party is an individual who you are not
interacting directly with, but who is providing the
instructions or supplying the funds for a real estate
purchase. To determine if there is third-party
involvement, you can:
• Ask the individual you’re dealing with if they are
conducting this deal on their own, or on
someone else’s behalf.
• Obtain the third party’s name, address, and:
o If a person – date of birth and principal
business.
o If an entity – principal business.
o If a corporation – principal business and
incorporation number and place of issue.
• Record the relationship between the client and
the third party.

Question 135

Three types of reporting you’re responsible for

Answer 135

• Suspicious Transaction reporting (STR)
• Large Cash Transaction reporting (LCTR)
• Terrorist Property reporting (TPR)

Question 136

Suspicious Transaction Reporting

Answer 136

• You only need reasonable grounds to suspect
that a financial transaction is related to money
laundering or terrorist financing to submit a
Suspicious Transaction Report, or STR.
“Reasonable grounds” means you can explain
your reasons for being suspicious that money
laundering or terrorist financing is possibly
happening, but your reasons do not need to be
verified or confirmed.
• You can submit an STR for any type of real estate
transaction, completed or attempted whether or
not it not involves cash.
• You must submit an STR to FINTRAC, usually
through your brokerage’s Compliance Officer,
within 30 days of determining that a transaction
is suspicious.

Question 137

Large Cash Transaction Reporting

Answer 137

You must submit a Large Cash Transaction Report, or
LCTR, if you receive over $10,000 in a single transaction OR multiple amounts from (or at the instruction of) the same source, in a 24-hour period, totaling over $10,000. The LCTR must be submitted to FINTRAC, usually through your brokerage’s Compliance Officer within 15 days of the transaction.

Question 138

Terrorist Property Reporting (TPR)

Answer 138

Terrorist property reporting, or TPR, is required when
you know or believe property is owned, or controlled
by or on behalf of, a terrorist or terrorist group. Listed
terrorist entities can be found on Public Safety Canada
website or the Office of the Superintendent of
Financial Institutions website. You must disclose this information to the RCMP or CSIS and submit the TPR report to FINTRAC without delay. You must also submit a STR if there is a real estate transaction, completed or attempted.

Question 139

Client information records

Answer 139

• Keep records for all clients—individuals, corporations, and entities
• Use your branch template
• Keep records for five years

Question 140

Receipt of funds records

Answer 140

• Keep records of all funds you receive (in cash or in another form) for a real estate trade
• Use your branch template
• Keep records for five years

Question 141

Records of all submitted reports (STRs, LCTRs, or TRPs)

Answer 141

• Keep records of any submitted STRs and LCTRs for five years
• There’s no timeframe for keeping records of submitted TPRs

Question 142

unrepresented party records

Answer 142

• Take reasonable measures to ascertain the identity of an unrepresented party (i.e., a seller or buyer who is not working with a brokerage) and confirm the existence of any unrepresented entities
• Keep a record of measures taken to determine their identity/confirm their existence, and the dates you did this
• You are not required to keep client information records for an unrepresented party

Question 143

Records of reasonable measures taken

Answer 143

• Keep a record when reasonable measures were taken but unsuccessful (for example, you were unable to make a conclusive determination on an unrepresented party’s existence)
• Record measures you have taken, the dates, and reasons why you were unsuccessful

Question 144

Additional obligations under PCMLTFA

Answer 144

In addition to ensuring its salespersons comply with the three obligations (Know Your Client, Reporting, and
Recordkeeping), the brokerage has five additional obligations under the PCMLTFA and its Regulations. These are:
• Name a compliance officer
• Have written compliance policies and procedures
• Provide training to everyone acting on its behalf
• Complete a written risk assessment, and
• Carry out a two-year program effectiveness review

Question 145

Name a compliance officer

Answer 145

The brokerage must appoint an individual who has the
appropriate knowledge to be the Compliance Officer. It is usually the managing broker but may also be
administrative staff.

Question 146

Have written compliance policies and procedures

Answer 146

The brokerage must have documented compliance
policies and procedures that specify how the
compliance program works. These policies and
procedures are tailored to the brokerage’s particular
situation – for example, the type of business it does, its
client base, its geographical location, and so on. The
policies and procedures are used to guide decisions
and actions to help ensure the brokerage and
salespersons meet their obligations.

Question 147

Providing training

Answer 147

The brokerage must provide training to everyone
acting on its behalf and keep a record of all training
events, attendees, minutes, and material. The training
must address all obligations and include an overview,
specifics, frequency, and method for each. While the
training program must be documented, the delivery
modes for the training can vary – for example webinar,
live classroom, in writing (e.g., an email or memo) –
and so on.

Question 148

Complete a written risk assessment

Answer 148

The written risk assessment is an analysis of potential
threats and vulnerabilities to money laundering and
terrorist financing that the brokerage faces. Although
available worksheets can be used, the risk assessment must be customized and relevant to each brokerage. The brokerage also needs to implement mitigation strategies associated with the risks and document the
process and the results.

Question 149

Carry out a two-year program effectiveness review

Answer 149

At least every two years, a program effectiveness
review must be carried out by the brokerage. It needs
to check for the effectiveness of the compliance
program, not just its existence. It also needs to identify
any gaps, so the realities of the day-to-day operations
can be adjusted. Completing this review helps ensure
the brokerage is up to date with new regulations,
changes to business lines, new risks, and so on.

Question 150

Penalties for non-compliance

Answer 150

FINTRAC penalties for non-compliance can include:
• Failure to report suspicious transactions: up to $2
million and/or five years imprisonment.
• Failure to report a large cash transaction or an
electronic funds transfer: up to $500,000 for the
first offence, up to $1 million for subsequent
offences.
• Failure to meet record-keeping requirements: up
to $500,000 and/or five years imprisonment.
• Failure to provide assistance or provide
information during compliance examination: up
to $500,000 and/or five years imprisonment.
• Disclosing the fact that a suspicious transaction
report was made, or disclosing the contents of
such a report, with the intent to prejudice a
criminal investigation: up to two years
imprisonment.

Question 151

Administrative Monetary Penalties (AMPs)

Answer 151

• Violations are classified by degree of importance
with the following Administrative Monetary
Penalties (AMP) ranges: Minor violation: from $1
to $1,000 per violation
• Serious violation: from $1 to $100,000 per
violation
• Very serious violation: from $1 to $100,000 per
violation for an individual, and from $1 to
$500,000 per violation for an entity (e.g.
corporation)
Multiple violations can result in total amounts above
these limits.

Question 152

Declaration for creation of condominium

Answer 152

The declaration contains both required and optional information as set out in the Condominium Act. Required information includes:
• Statement that the Condominium Act governs the corporation
• Consent of registered mortgagees
• Proportionate share of common elements appurtenant to each unit
• Proportionate contribution of unit owners to common expenses
• Corporation address for service
• Common elements for designated units (exclusive use common element), if applicable
• Any conditions required by approving authority

Question 153

Description for creation of the condominium

Answer 153

The description contains a series of plans, surveys, and specifications describing the property and structures, together with certificates attesting to compliance and accuracy. Documentation will vary based on the individual project and typically includes:
• Plan of survey
• Architectural plans and Certificate of Architect
• Unit boundaries
• Unit shape, dimension, and location
• Structural plans (if any) and Certificate of Engineer
• Certificate of Ontario Land Surveyor
• All interests appurtenant to the land that is included in the property

Question 154

Invoking the condominium act

Answer 154

The Condominium Act is legislation that regulates most aspects of a condominium’s formation, purchasing, and governance. Each condominium document has to be based on this Act. The Condominium Act is invoked by the declarant through the registration process.
The declarant is the individual who holds the freehold or leasehold interest in the land on which the condominium sits. The declaration to the invocation of the Act must receive consent from the registered encumbrancers against the property, such as mortgagees and lien holders.

Question 155

Forming and naming of a condominium corporation

Answer 155

A corporation without share capital is automatically formed upon incorporation in which members are the unit owners. The declaration serves as notice of the creation of the corporation and describes the property in specific terms. The land registrar for the applicable land registry office gives the corporation a name and a sequential number.

Question 156

Residential condominium conversion projects

Answer 156

The conversion of warehouses and other industrial structures into residential condominium lofts that incorporate some of the building’s more interesting features (e.g., large windows, framing, brick walls) into the design are becoming more popular as municipalities look to repurpose existing building stock. The industry term for these types of developments is residential condominium conversion projects. The Ontario New Home Warranties Plan Act has been amended to include protection for converted buildings (previously not included in the Provincial Warranty). This amendment provides more protection to buyers of these condominiums. The extension of provincial warranty coverage to eligible conversion projects is part of the Provincial Warranty Authority and the provincial government’s commitment to enhance consumer protection. Provincial warranty coverage applies to projects where an agreement of purchase and sale of units (or proposed units) in a conversion
project is signed on or after January 1, 2018

Question 157

Condominium Authority

Answer 157

To streamline disputes between the condominium owners and the board, the Protecting Condominium Owners Act, 2015 created two new independent authorities, the Condominium Authority of Ontario and the Condominium Management Regulatory Authority of Ontario. The role of the Condominium Authority of Ontario includes providing:
• Affordable access to quicker, accessible, and lower cost resolution of disputes primarily between corporations and owners
• Self-help tools, case management, and mediation to prevent easy-to-resolve disputes from being tied up in
costly and time-consuming legal proceedings
• Education and awareness for condominium owners about their rights and responsibilities, and the basics of condominium living and how it differs from other freehold ownership
• Education for condominium directors
• A registry of all condominium corporations in Ontario, including their boards of directors and contact
information
• A guide for condominium buyers, setting out unit owners’ roles and responsibilities

Question 158

Mandatory Training for condominium board

Answer 158

Condominiums are operated by a board of directors on behalf of the unit owners. Directors are required to
complete mandatory training established and conducted by the Condominium Authority of Ontario. The mandatory training requirements are as follows:
• Directors appointed, elected, or re-elected on or after November 1, 2017, have to complete the training
program provided by the Condominium Authority of Ontario within six months of the date of their
appointment, election, or re-election.
• Directors do not have to re-take the training if they have completed the Condominium Authority of Ontario
Director Training Program within the preceding seven years.
• Training courses completed through any organization other than the Condominium Authority of Ontario
cannot be applied to these new director training legal requirements.
• Directors appointed by a developer or elected by owners to the pre-turnover board (that is controlled by the developer) are exempt from the mandatory training requirement. Once a turn-over meeting has been held,
the newly elected and/or appointed directors must complete the Condominium Authority of Ontario’s
mandatory training within six months.

Question 159

Condominium reserve Fund

Answer 159

The Condominium Act, 1998 requires that all condominiums have a reserve fund. A reserve fund is a special account with a regulated financial institution such as a bank, loan and trust corporation, or credit union. This account must be separate from the condominium’s operating fund, and it is used to pay for major repairs and replacements to the condominium’s common elements as the property ages (e.g., roof, exterior of the building exterior finishes, roads,
sidewalks, electrical, heating and plumbing systems, and recreational/parking facilities). A portion of each owner’s monthly common expenses fee is required to be deposited into the reserve fund every month. Interest or other income from the reserve fund forms part of that fund. If repair costs to common elements exceeds the amount in reserve, a special assessment may be required to meet such expenses. Repayment terms can vary considerably but, essentially, the unit owners are required to contribute a specified sum in addition to normal monthly common expenses.
In the event the funds fall below the required level set out in the regulation, a third-party opinion on whether a
special study should be conducted regarding the adequacy of the funds is required. Corporations are required to undertake reserve fund studies in accordance with prescribed time limits. The initial reserve fund study is required to be completed during a condominium’s first year of incorporation, with regular follow-up studies required every three years thereafter.

Question 160

rules, regulation and bylaws

Answer 160

A salesperson should be aware of rules impacting
condominiums being marketed, as they can directly
impact the buyer. Bylaws are documented standard procedures and requirements regarding a condominium’s internal operations that involve governance; e.g., establishing procedures for borrowing funds, electing directors, setting director remuneration, and other regulatory matters. Bylaws are made, amended, or repealed by the board of directors and must be consistent with the Act and the declaration. Bylaws are not effective unless
the owners of the majority of units vote in favour. A
copy must be registered in the land registry office.
Registered bylaws made by the declarant (e.g., the
owner/developer) are valid until replaced.
As a salesperson, you will often discuss key provisions of the Condominium Act with sellers and buyers. You
should, therefore, understand these provisions, and how they will affect your activities as a salesperson. Rules that will affect a potential buyer’s enjoyment of the property, how the budget and common expenses are calculated, and updates to the reserve fund, are discussed below. The following six tabs contain information about how the key provisions in the Condominium Act affect a salesperson. You must review any or all of the tabs before moving forward.
Rules are passed by the directors in order to promote
the safety, security, and welfare of owners, as well as
the property and assets of the corporation. Rules also
prevent unreasonable interference with the use and
enjoyment of the units and common elements.

Question 161

Board of Directors duties

Answer 161

The board of directors can make, amend, or repeal
rules that are reasonable concerning the common
elements. The board must provide owners with a copy
of the rules (made, amended, or repealed), the
effective date and notice that they may requisition a
meeting. Rules are not effective until approved by the
owners at a requisitioned meeting within 30 days. If no
meeting is requisitioned within that period, the rules
become effective.

Question 162

Adequacy of reserve funds

Answer 162

The purpose of a reserve fund study is to ensure there
are adequate funds available for the corporation to
make any necessary repairs to, or replacement of,
common element components. Corporations are
required to undertake reserve fund studies in
accordance with prescribed time limits. Adequacy of
reserve funds, that are formed by contributions from
all condominium owners, is determined through a
performance audit.

A performance audit involves detailed examination
and scrutiny of the common elements and the reserve
fund typically by a combination of qualified engineers
and accountants. This engineering portion of the audit
includes inspecting major building components,
reviewing condominium documentation, and
conducting a survey of owners concerning damage or
defects. The financial portion will predict the amount
of funds required to be allocated to the reserve fund
each year in order to pay for the repairs noted by the
report. The auditors then prepares and submits a
written report to the board of directors

Question 163

Common Expenses

Answer 163

Common expenses are the fees payable by every unit
owner to satisfy the requirements of the condominium
corporation budget each year. Any default in paying common expenses can result in a lien being registered against the owner’s unit (including legal costs and other expenses), which can be enforced in the same manner as a mortgage. No owner is exempt from this requirement, even if they have waived or abandoned the right to use the common elements, are making a claim against the corporation, or are restricted from using such common elements.

Question 164

Status Certificate

Answer 164

The status certificate provides fundamental
information for a buyer. A salesperson should be
familiar with all aspects of the status certificate. This
certificate contains information regarding the status of
the individual unit and the overall operational, legal,
and financial dimensions of the condominium
corporation. The corporation is required to give each person, a status certificate with respect to a unit in the
corporation if requested. The certificate must be provided within 10 calendar days by the corporation to anyone who requests this document, for a fee not exceeding $100, including taxes.

Question 165

Restriction to owner alterations and additions

Answer 165

Alterations and additions to common elements
(particularly exclusive use common elements) have
proven troublesome in the resale market.
While the Condominium Act is quite specific regarding
approval processes and required agreements, changes
to balconies, privacy fences/decking, and interior
renovations in older condominiums may lack such
approvals. In some instances, documentation
regarding ownership and ongoing repair
responsibilities may be vague or non-existent. Such
issues can pose problems at closing, if not addressed
in advance. A salesperson may prefer to include the
representation and warranty clause regarding the
alterations made to the condominium in such
situations, to confirm that any alterations to the unit
or common elements comply with, and have consent
of, the condominium corporation.
Some condominium corporations may also have rules
such as:
• No outside installations; e.g., antennae,
clotheslines, satellite dishes or other exterior
telecommunication/radio devices
• No alterations with respect to the unit, exclusive
use common areas or common elements
requiring condominium corporation consent can
be made without the appropriate written consent
• No temporary structures or incidental permanent
outside structures or improvements
• No awnings, canopies or shutters, unless
approved by the corporation

Question 166

Code of ethics for condominium managers

Answer 166

Condominium managers must act ethically as they execute functions on behalf of the condominium corporation. The Code of Ethics in the Condominium Management Services Act details the general obligations of condominium managers and condominium management companies, in terms of professionalism, reliability, and quality of service.
Some of the requirements covered by the Code of Ethics include:
• Treating people fairly, honestly, and with integrity
• Not engaging in acts of discrimination or harassment
• Providing reasonable accommodations for people with disabilities
• Providing reliable and responsive service while demonstrating knowledge, skill, and competence
• Keeping accurate records
• Being financially responsible
• Making best efforts to prevent error, fraud, or any unethical practices
• Not accepting gifts from any person or company if a reasonable person might believe that the gift will
influence the condominium manager when providing management services
• Not interfering with the reasonable use and enjoyment of common elements, the units or assets of the client
• Promoting and protecting best interest of clients

Question 167

Under the residential tendencies act

Answer 167

• Rent is negotiated prior to occupancy with the landlord.
• No charge of rent, or increase of rent, is allowed greater than the lawful rent permitted. Lawful rent for a new tenant is the first rent charged to that new tenant, subject to certain qualifications outlined in the Act, such as specific provisions relating to rent premiums and discounts.

Question 168

Under the commercial tendencies act

Answer 168

commercial rents are predominately determined by the terms of the lease agreement, which may contain multiple rent formulations. Base rent (often referred to as minimum rent) is the basic rent payable by the tenant under a lease. This is different from additional rents associated with operating costs and
from percentage rent.

Question 169

Security Deposit

Answer 169

Under the Residential Tenancies Act, the landlord cannot demand a security deposit over and above any rent deposit requested. Any reference to a security deposit is automatically deemed to be a rent deposit for the purposes of the Act.

Security deposit under the Commercial Tenancies Act is negotiable.

Question 170

Rent deposit

Answer 170

Under the Residential Tenancies Act, the landlord can collect a rent deposit from a new tenant on or before the start of a new tenancy. If the tenant pays rent by the month, the deposit cannot be more than one month’s rent and if the tenant pays rent by the week, the deposit cannot be more than one week.
• A salesperson should be aware of certain important requirements regarding rent deposits:
o A tenant is not required to provide a landlord with postdated cheques or agree to automatic debit
payments from an account, to a credit card or similar automatic withdrawal for rent payment. Any
landlord stipulation to that effect in a tenancy agreement is in violation of the Act.
The landlord must provide receipts relating to rents and rent deposits upon the tenant’s request.
Under the Commercial Tenancies Act, rent deposits are permitted without restriction. The amount of a security
deposit can exceed the amount of one month’s rent.

Question 171

Rent increase

Answer 171

Under the Residential Tenancies Act:
• The landlord must give at least 90 days’ notice on an approved form for any rent increase. This includes an
increase involving higher operating costs or capital expenditures.
• No landlord may increase the rent by more than the guideline, except in accordance with the Act.

Under the Commercial Tenancies Act:
• Most commercial tenancy agreements outline in detail issues such as the amount of rent charged, and
frequency of rental fee increases. The Commercial Tenancies Act does not regulate rent increases, as is the case with residential tenancies under the Residential Tenancies Act.
• There are no restrictions on the rent increase.

Question 172

Dispute resolution

Answer 172

Under the Residential Tenancies Act:
• The Landlord and Tenant Board provides information about the Act and resolves disputes between landlords
and tenants.
• Upon receipt of an application, the Landlord and Tenant Board may resolve a dispute through mediation in an effort to settle the dispute.
• Failing settlement, a hearing will be conducted to decide the dispute. Under the Commercial Tenancies Act, depending on the dollar amount in dispute, conflict resolution may be commenced at the Superior Court of Justice or the Small Claims Court branch of the Superior Court of Justice.

Question 173

End of lease

Answer 173

Under the Residential Tenancies Act:
• At the end of the lease period, the lease automatically converts to a month-to-month periodic tenancy.
• Termination of a tenancy agreement is only possible in accordance with the Act. A notice of termination must identify the rental unit, the date of the tenancy termination and be signed by the person giving the notice or their agent. When the landlord is the terminating party, the notice must also set out the reasons and details for the termination.
• The Act outlines required notices, specifically the length of the notice period, to be used based on a range of circumstances. A notice of termination is not required if the tenant and landlord agree to terminate.
• The landlord may proceed with a notice of termination either before the end of the tenancy period or at the
end of the term, based on specific reasons listed in the Act.
Under the Commercial Tenancies Act:
• Under the Commercial Tenancies Act, the landlord or tenant may terminate a month-to-month tenancy with a
minimum one-month written notice.
• Fixed-term tenancy agreements specify the length or term of the lease. Under the Act, once the tenancy ends, the tenant no longer has the right to occupy the premises. If a tenant continues to occupy the rental premises after the landlord has requested that the tenant move out, that tenant may be subject to a penalty of two months’ rent for every month they remain on the premises, plus applicable costs. In addition to imposing a financial penalty, the landlord may also apply to the Ontario Superior Court of Justice to obtain an eviction order.