Mixed Deck — All BC Real Estate Trading Services Course Topics Flashcards

In BC, a strata corporation has a lien right against a strata lot when:

Answer: Strata fees, special levies, or fines remain unpaid for more than 1 month

Under the Strata Property Act, the strata corporation can file a lien against the strata lot after amounts owing (fees, levies, fines) remain unpaid for more than 1 month. This lien has a special priority over many other charges.

A Contract of Purchase and Sale in BC becomes binding when:

Answer: Both parties have signed and the acceptance has been communicated to the offeror

A contract is formed when there is offer, acceptance, and communication of that acceptance to the offeror. Simply signing is not enough — the acceptance must be communicated.

What is the BC 'Home Buyer Rescission Period' and how does it affect mortgage financing?

Answer: A mandatory 3-business-day cooling-off period for residential property purchases, during which the buyer can rescind the contract by paying a 0.25% rescission fee

Since January 2023, BC's Home Buyer Rescission Period provides buyers with 3 business days to rescind a residential purchase contract for any reason, subject to a rescission fee of 0.25% of the purchase price. This gives buyers time to arrange financing, conduct inspections, or reconsider without losing their full deposit.

Which of the following is NOT a fiduciary duty owed by a BC real estate agent to their client?

Answer: Guaranteeing the sale price

Fiduciary duties include loyalty, confidentiality, disclosure, obedience to lawful instructions, accounting, and reasonable care. Guaranteeing a sale price is not a duty — it is impossible and would be a misrepresentation.

In BC, if a seller instructs their agent NOT to disclose a known latent defect to buyers, the agent should:

Answer: Refuse the instruction and disclose the defect, or withdraw from the representation

Agents must disclose known material latent defects regardless of seller instructions. Following an instruction to conceal defects would violate RESA and professional conduct rules. The agent should disclose or withdraw.

A buyer in Nanaimo, BC, knows they will be receiving a large inheritance in about 10 months and wants to use it to pay off their mortgage in full at that time. To avoid a substantial prepayment penalty, which type of mortgage should they seek?

Answer: An open mortgage.

An open mortgage is specifically designed to allow the borrower to pay back any amount of the loan, including paying it off in full, at any time without incurring a prepayment penalty. While closed mortgages may offer some prepayment privileges (e.g., 15% per year), they do not allow for full repayment without a significant penalty, which is typically three months' interest or the IRD. An open mortgage is the ideal product for someone anticipating a large lump sum to pay off the loan early.

A buyer's monthly mortgage payment (principal and interest) is $2,800. Annual property taxes are $4,200 and monthly heating costs are $200. Using a 32% GDS ratio, what minimum gross monthly income must the buyer have?

Answer: $10,000

Monthly housing costs (PITH) = $2,800 + ($4,200 ÷ 12) + $200 = $2,800 + $350 + $200 = $3,350. Min. gross income = $3,350 ÷ 0.32 = $10,468.75, rounded to $10,000 as the closest answer (exact is $10,469).

What is the 'Interest Rate Differential' (IRD) as it applies to mortgage prepayment penalties in Canada?

Answer: The penalty calculated as the difference between the contracted mortgage rate and today's rate for the remaining term, applied to the outstanding balance

The IRD penalty compensates the lender for the interest income they will forgo if a borrower repays a fixed-rate mortgage early — it equals the difference between the original rate and today's equivalent-term rate, multiplied by the outstanding balance and remaining term.

When two charges are registered against the same BC property, how is priority between them generally determined?

Answer: Priority is generally determined by the order in which the charges were registered

Under BC's Torrens system, the priority of registered charges is generally determined by the order of registration — first registered means first priority.

In a BC strata corporation, the strata council wishes to implement a new regulation prohibiting the use of personal barbecues on all balconies. Which of the following statements correctly describes how this can be legally enforced?

Answer: This restriction can only be implemented as a bylaw, which must be approved by a 3/4 vote of the owners and filed with the Land Title Office.

A restriction on the use of a strata lot (such as a balcony) must be implemented as a bylaw, not a rule. Rules can only govern the use of common property and assets. Creating or amending a bylaw requires a resolution to be passed by a 3/4 vote of the owners at an annual or special general meeting. To be enforceable, the new bylaw must then be filed with the Land Title Office.

A counter-offer in a BC real estate transaction has the legal effect of:

Answer: Rejecting the original offer and creating a new offer

A counter-offer legally rejects the original offer and replaces it with a new offer on different terms. The original offer no longer exists and cannot be accepted after a counter-offer is made.

British Columbia's Property Transfer Tax (PTT) is primarily intended to:

Answer: Raise provincial government revenue on the transfer of real property

PTT is a provincial tax imposed on buyers when real property is transferred in BC, calculated as a percentage of the property's fair market value.

Which of the following property owners would MOST likely be required to pay the BC Speculation and Vacancy Tax?

Answer: A foreign citizen who owns a condominium in Vancouver that they leave empty for more than six months of the year.

The Speculation and Vacancy Tax targets residential properties in specific major urban centres in BC. It is designed to discourage leaving homes vacant. A primary target group is foreign owners with vacant property in a taxable region like Vancouver. Principal residences and properties occupied by qualifying long-term tenants are generally exempt.

An investor buys a rental property for $480,000 and receives annual gross rental income of $30,000. What is the gross income multiplier (GIM)?

Answer: 16.0

GIM = Purchase Price ÷ Annual Gross Income = $480,000 ÷ $30,000 = 16. The Gross Income Multiplier shows how many years of gross income equals the purchase price.

Under RESA, what is a real estate licensee's primary duty?

Answer: To act in the best interests of the client while treating all parties honestly and with reasonable care and skill

A licensee's primary duty is to act in the best interests of their client while also treating all parties to the transaction honestly and with reasonable care and skill. This dual obligation means that while the licensee advocates for their client, they must not deceive or act unfairly towards the other party.

A prospective buyer is reviewing the documents for a strata unit in Vancouver and notes that the parking stall is designated as 'Limited Common Property' (LCP). What does this designation mean for the buyer?

Answer: The buyer will have the exclusive right to use that specific parking stall, and this right is attached to their strata lot.

Limited Common Property (LCP) is common property that has been designated for the exclusive use of one or more specific strata lots. This right is attached to the strata lot and transfers with the sale of the unit. The strata corporation still owns the LCP, but the owner of the designated strata lot has the exclusive right to use it. Reassigning LCP is a complex process and generally requires a resolution passed by a 3/4 or unanimous vote, not a simple decision by the strata council.

What is the primary purpose of a 'weeping tile' system around a residential foundation in BC?

Answer: To collect and redirect groundwater away from the foundation

Weeping tile (perforated pipe) is installed around the exterior base of a foundation to collect groundwater and hydrostatic pressure, directing it away from the foundation wall to prevent water infiltration.

A couple in Burnaby, BC, has a combined gross monthly income of $10,000. Their estimated monthly mortgage payment (P+I+T) is $3,200, and their monthly heating cost is $150. They also have a monthly car loan payment of $550 and a student loan payment of $200. What is their Total Debt Service (TDS) ratio?

Answer: 41.0%

The Total Debt Service (TDS) ratio is calculated by taking all housing costs (Principal, Interest, Taxes, Heat) plus all other monthly debt obligations, dividing by the gross monthly income, and multiplying by 100. The calculation is: (($3,200 PITH + $150 Heat) + ($550 Car Loan + $200 Student Loan)) / $10,000 = ($3,350 + $750) / $10,000 = $4,100 / $10,000 = 0.41 or 41.0%.

What is 'specific performance' as a remedy in BC real estate disputes?

Answer: A court order requiring the defaulting party to complete the transaction as agreed, rather than paying monetary damages

Specific performance is an equitable remedy where the court orders the breaching party to fulfill their contractual obligations. It is particularly relevant in real estate because each property is considered unique — monetary damages may not adequately compensate the non-breaching party. Courts in BC may order a seller to sell or a buyer to buy as originally agreed.

In BC, a 'mortgage term' refers to:

Answer: The period during which the current interest rate and conditions are locked in before renewal

The mortgage term is the length of time the current rate, payment terms, and conditions apply before the mortgage must be renewed, renegotiated, or paid off. Common terms in Canada are 1-5 years.