OREA Ontario Real Estate Law 3 — Questions and Answers
Question 1: In Ontario, what is the 'Land Transfer Tax' and when is it payable?
- An annual tax on property ownership
- A tax payable by the buyer upon registration of the transfer of property (Correct answer)
- A tax payable by the seller when listing the property
- A federal tax applied to all property transactions
Correct answer: A tax payable by the buyer upon registration of the transfer of property
The Ontario Land Transfer Tax is a provincial tax payable by the buyer at the time of registration of the property transfer. The amount is calculated based on the purchase price using a graduated rate structure.
Question 2: Under Ontario law, what is the effect of a 'right of first refusal' on a property?
- It forces the owner to sell to the holder at a set price
- It gives the holder the right to match any third-party offer before the property is sold to someone else (Correct answer)
- It prevents the property from being sold for a specified period
- It guarantees the holder a reduced purchase price
Correct answer: It gives the holder the right to match any third-party offer before the property is sold to someone else
A right of first refusal gives the holder the opportunity to match a bona fide third-party offer before the property owner can sell to that third party. It does not set the price — it simply gives the holder a matching right.
Question 3: What is the 'Growth Plan for the Greater Golden Horseshoe' and how does it affect real estate?
- It is a marketing plan for real estate developers
- It is a provincial plan that directs growth, density, and land use patterns in the Greater Golden Horseshoe region (Correct answer)
- It regulates mortgage interest rates in the GTA
- It only affects agricultural properties
Correct answer: It is a provincial plan that directs growth, density, and land use patterns in the Greater Golden Horseshoe region
The Growth Plan is a provincial policy framework that guides land use planning and development in the Greater Golden Horseshoe region, directing growth to built-up areas, setting density targets, and protecting agricultural and natural areas.
Question 4: Under Ontario's Mortgages Act, what is the difference between 'foreclosure' and 'power of sale'?
- They are the same process with different names
- Foreclosure requires a court process and the lender takes title; power of sale is a contractual remedy allowing sale without full court proceedings (Correct answer)
- Power of sale is only available for commercial properties
- Foreclosure is faster than power of sale
Correct answer: Foreclosure requires a court process and the lender takes title; power of sale is a contractual remedy allowing sale without full court proceedings
Foreclosure is a court-supervised process where the lender obtains ownership of the property. Power of sale is a contractual right in the mortgage that allows the lender to sell the property without going through full court proceedings, which is more common in Ontario.
Question 5: In Ontario, what is the significance of the 'Escheats Act' in real estate?
- It governs escrow accounts for deposits
- It provides that property of a person who dies without heirs reverts to the Crown (Correct answer)
- It sets rules for property tax escrow
- It governs estate administration
Correct answer: It provides that property of a person who dies without heirs reverts to the Crown
The Escheats Act provides that when a person dies without a will and without any heirs, their property reverts (escheats) to the Crown (provincial government). This ensures property is never truly ownerless.
Question 6: What is the role of the 'Ontario Heritage Act' in real estate transactions?
- It reduces property taxes for old buildings
- It protects culturally significant properties and may impose restrictions on alterations or demolition of designated heritage properties (Correct answer)
- It only applies to government-owned properties
- It provides grants for home renovations
Correct answer: It protects culturally significant properties and may impose restrictions on alterations or demolition of designated heritage properties
The Ontario Heritage Act allows municipalities to designate properties of cultural heritage value. Designated properties face restrictions on alterations and demolition, which can significantly affect development plans and property use.
OREA Ontario Real Estate Law 3
In Ontario, what is the 'Land Transfer Tax' and when is it payable?