OREA Ontario Real Estate Law 2 — Questions and Answers
Question 1: In Ontario, what does 'caveat emptor' mean in the context of real estate?
- The seller must disclose all defects
- Buyer beware — the buyer is responsible for inspecting and investigating the property (Correct answer)
- The government guarantees the condition of the property
- The real estate agent guarantees the property's condition
Correct answer: Buyer beware — the buyer is responsible for inspecting and investigating the property
Caveat emptor ('buyer beware') is a common law principle meaning the buyer is generally responsible for inspecting the property and discovering defects before purchase. However, sellers must still disclose latent defects they know about.
Question 2: What is the purpose of a 'status certificate' under the Ontario Condominium Act?
- To certify the building meets fire codes
- To provide financial and legal information about a condominium corporation and a specific unit (Correct answer)
- To confirm the unit owner's identity
- To verify the condominium's zoning designation
Correct answer: To provide financial and legal information about a condominium corporation and a specific unit
A status certificate provides critical information about the condominium corporation including its financial health, reserve fund, pending lawsuits, rules, and any special assessments, as well as details specific to the unit being purchased.
Question 3: Under the Ontario Building Code Act, what is required before construction or renovation of a building?
- Only verbal approval from the municipality
- A building permit must be obtained from the local municipality (Correct answer)
- No permits are required for residential properties
- Only commercial buildings require permits
Correct answer: A building permit must be obtained from the local municipality
The Building Code Act requires that a building permit be obtained from the local municipality before commencing construction, renovation, or demolition of buildings. This ensures compliance with safety standards.
Question 4: In Ontario, what is the effect of a 'certificate of pending litigation' (CPL) on a property?
- It prevents any work on the property
- It serves as notice that there is a court action affecting the property, which may affect its marketability (Correct answer)
- It certifies that the property is free of liens
- It confirms the property has been inspected
Correct answer: It serves as notice that there is a court action affecting the property, which may affect its marketability
A CPL is registered on title to give public notice that a court action has been commenced that may affect the property. It can cloud the title and make it difficult to sell or mortgage the property until the litigation is resolved.
Question 5: Under Ontario law, what is 'adverse possession' and does it apply under the Land Titles system?
- It is the right to possess property during a lease and applies under both systems
- It is the acquisition of title through continuous possession, and it generally does not apply under the Land Titles system (Correct answer)
- It is another term for foreclosure and applies under both systems
- It only applies to commercial properties under both systems
Correct answer: It is the acquisition of title through continuous possession, and it generally does not apply under the Land Titles system
Adverse possession allows a person to acquire title to land by occupying it openly and continuously for a prescribed period. Under the Land Titles system in Ontario, adverse possession claims are generally barred, unlike under the Registry system.
Question 6: What is the purpose of the 'Environmental Protection Act' in relation to Ontario real estate?
- It regulates the energy efficiency of new buildings
- It addresses contamination, environmental assessments, and liability for environmental cleanup on properties (Correct answer)
- It only applies to agricultural land
- It sets landscaping requirements for residential properties
Correct answer: It addresses contamination, environmental assessments, and liability for environmental cleanup on properties
The Environmental Protection Act governs the discharge of contaminants, environmental orders, and cleanup liability. Property owners can be held responsible for environmental contamination, making environmental assessments critical in real estate transactions.
OREA Ontario Real Estate Law 2
In Ontario, what does 'caveat emptor' mean in the context of real estate?