Ontario Real Estate Salesperson Licensing Exam (OREA/Humber) — Questions and Answers

Question 1: In Ontario, what is the principle of 'privity of contract' in real estate?

A privacy requirement for personal information
A privilege held by real estate lawyers
A confidentiality agreement between parties
The principle that only parties to a contract can enforce its terms or be bound by its obligations (Correct answer)

Correct answer: The principle that only parties to a contract can enforce its terms or be bound by its obligations

Privity of contract means that only the parties who are signatories to a contract can enforce its terms or be held liable under it. Third parties generally cannot sue on the contract or be sued under it, though exceptions exist (e.g., covenants running with the land).

Question 2: In Ontario, what is a 'life estate' and how does it affect property rights?

An estate that lasts for the life of the owner, after which it passes to a designated remainderman (Correct answer)
An estate that automatically renews every year
A permanent estate that can be inherited
A type of commercial lease

Correct answer: An estate that lasts for the life of the owner, after which it passes to a designated remainderman

A life estate grants ownership rights for the duration of a person's life. Upon the life tenant's death, the property passes to the remainderman (the person designated to receive it). The life tenant cannot sell the fee simple — only their life interest.

Question 3: What is the 'requisition date' in an Ontario residential transaction?

The date the buyer takes possession
The deadline by which the buyer's lawyer must raise any title concerns or defects with the seller's lawyer (Correct answer)
The date the mortgage is approved
The date the property is listed for sale

Correct answer: The deadline by which the buyer's lawyer must raise any title concerns or defects with the seller's lawyer

The requisition date is the deadline specified in the agreement by which the buyer's lawyer must submit written objections (title requisitions) regarding any defects or concerns with the property's title. The seller then has a specified time to resolve them.

Question 4: What is 'assignment' of a real estate contract in Ontario?

The transfer of one party's rights and obligations under a contract to a third party (Correct answer)
The same as listing a property for sale
The delegation of duties to a real estate agent
The registration of a mortgage

Correct answer: The transfer of one party's rights and obligations under a contract to a third party

Assignment occurs when a party to a contract transfers their rights (and sometimes obligations) to a third party. In real estate, a buyer might assign their Agreement of Purchase and Sale to another buyer before closing, subject to any restrictions in the contract.

Question 5: What is 'Teraview' in Ontario's land registration system?

A satellite mapping service
A property viewing platform for buyers
The electronic gateway software used by authorized users to search title, register documents, and conduct transactions in Ontario's land registration system (Correct answer)
A property management software

Correct answer: The electronic gateway software used by authorized users to search title, register documents, and conduct transactions in Ontario's land registration system

Teraview is the proprietary software application developed by Teranet that provides authorized users (primarily lawyers) with access to Ontario's electronic land registration system for title searching, document registration, and other property-related transactions.

Question 6: What is an 'abstract of title' in Ontario's Registry system?

A financial summary of the property's value
A brief description of the property's location
A summary of the property's architectural features
A condensed chronological summary of all documents registered against a property, including deeds, mortgages, liens, and other encumbrances (Correct answer)

Correct answer: A condensed chronological summary of all documents registered against a property, including deeds, mortgages, liens, and other encumbrances

An abstract of title is a summary of all documents that have been registered against a property in the Registry system, listed in chronological order. It allows a lawyer to trace the chain of title and identify any encumbrances.

Question 7: What is the significance of 'off-title' searches in Ontario real estate?

They are unnecessary in the Land Titles system
They uncover issues that may not appear on the registered title, such as zoning compliance, tax arrears, work orders, and utility easements (Correct answer)
They only check for environmental issues
They are optional searches performed after closing

Correct answer: They uncover issues that may not appear on the registered title, such as zoning compliance, tax arrears, work orders, and utility easements

Off-title searches are investigations beyond the title register that reveal important information about a property, including municipal zoning compliance, tax arrears, outstanding work orders, utility easements, and building permit status. They are essential even under the Land Titles system.

Question 8: What is the 'Land Registrar's' role in Ontario's land registration system?

To appraise properties for tax purposes
To administer the land registry office, accept or reject documents for registration, and maintain the accuracy of the land register (Correct answer)
To sell properties on behalf of the government
To represent buyers in real estate transactions

Correct answer: To administer the land registry office, accept or reject documents for registration, and maintain the accuracy of the land register

The Land Registrar is the official responsible for administering the land registry office, examining and accepting or rejecting documents submitted for registration, and maintaining the integrity and accuracy of the land register.

Question 9: What is the role of a 'lawyer's undertaking' in an Ontario real estate closing?

A personal promise by a lawyer to perform a specific act, breach of which can result in professional discipline (Correct answer)
A guarantee of the property's condition
A marketing strategy for law firms
A lawyer's opinion on the property's value

Correct answer: A personal promise by a lawyer to perform a specific act, breach of which can result in professional discipline

A lawyer's undertaking is a solemn professional promise to perform a specific act (such as registering a discharge of mortgage after closing). It is personally binding on the lawyer, and failure to fulfill an undertaking can result in professional discipline by the Law Society.

Question 10: What is the 'nemo dat' rule and how does it relate to land registration in Ontario?

A rule about mortgage interest rates
A rule about property taxation
A rule about construction permits
The principle that no one can give what they do not have — a person cannot transfer better title than they possess (Correct answer)

Correct answer: The principle that no one can give what they do not have — a person cannot transfer better title than they possess

The 'nemo dat quod non habet' rule means that a person cannot transfer a greater interest in property than they themselves hold. However, the Land Titles system modifies this principle through the concept of guaranteed title, which can override certain defects.

Question 11: Under REBBA 2002, what is a registrant's obligation when they receive an unsolicited offer while an existing offer is being considered?

Return the unsolicited offer to the buyer's agent
Reject the unsolicited offer until the first offer is resolved
Hold the offer until the existing offer's irrevocability period expires
Present the unsolicited offer to the seller as soon as practicable (Correct answer)

Correct answer: Present the unsolicited offer to the seller as soon as practicable

Under REBBA 2002, a registrant must present all offers, including unsolicited ones, to the seller as soon as practicable, unless the seller has provided written direction otherwise.

Question 12: What is a 'remainder interest' in Ontario property law?

The leftover proceeds after a property sale
The interest remaining on a mortgage
A future interest in property that takes effect after the termination of a prior estate, such as a life estate (Correct answer)
The interest earned on a deposit in trust

Correct answer: A future interest in property that takes effect after the termination of a prior estate, such as a life estate

A remainder interest is a future estate in property that becomes possessory upon the natural termination of a prior estate. For example, when a life tenant dies, the property passes to the remainderman who holds the remainder interest.

Question 13: What is the standard form 'Agreement of Purchase and Sale' used in Ontario residential transactions?

A government-issued contract form
The OREA Form 100, a standardized form used by real estate registrants for residential resale transactions (Correct answer)
A form issued by the Canadian Real Estate Association
A form created by each individual brokerage

Correct answer: The OREA Form 100, a standardized form used by real estate registrants for residential resale transactions

The OREA (Ontario Real Estate Association) Form 100 is the standardized Agreement of Purchase and Sale used for residential resale transactions in Ontario. It includes standard clauses and space for additional terms and conditions.

Question 14: What is the legal significance of a 'deposit' in an Ontario real estate transaction?

It is simply a goodwill gesture with no legal significance
It is refundable under all circumstances
It is paid directly to the seller immediately
It serves as consideration, evidence of good faith, and may be forfeited as liquidated damages if the buyer breaches the contract (Correct answer)

Correct answer: It serves as consideration, evidence of good faith, and may be forfeited as liquidated damages if the buyer breaches the contract

A deposit serves multiple purposes: it is part of the consideration, demonstrates the buyer's good faith and ability to complete the transaction, and may be forfeited to the seller as a form of liquidated damages if the buyer breaches the agreement without lawful excuse.

Question 15: In Ontario, what is 'electronic registration' and what are its requirements?

Scanning paper documents and emailing them to the registry
The process of registering legal documents affecting title electronically through Teranet's system, requiring authorized users with digital signatures (Correct answer)
Posting property listings online
Using a credit card to pay registration fees online

Correct answer: The process of registering legal documents affecting title electronically through Teranet's system, requiring authorized users with digital signatures

Electronic registration in Ontario allows authorized users (lawyers and their delegates) to register documents affecting title electronically through Teranet's e-registration system. Users must be authorized, use digital signatures, and comply with electronic registration requirements.

Question 16: A 'high-ratio mortgage' in Canada is defined as a mortgage where:

The borrower's down payment is less than 20% of the purchase price (Correct answer)
The interest rate is above the Bank of Canada prime rate
The mortgage amount exceeds $1 million
The amortization period exceeds 25 years

Correct answer: The borrower's down payment is less than 20% of the purchase price

A high-ratio mortgage occurs when the down payment is less than 20% of the purchase price, requiring mandatory mortgage default insurance under federal regulations.

Question 17: In Ontario, what is a 'transfer/deed of land' in the land registration context?

A property inspection report
A rental agreement
The legal document that conveys ownership of property from the seller (transferor) to the buyer (transferee) (Correct answer)
A mortgage application

Correct answer: The legal document that conveys ownership of property from the seller (transferor) to the buyer (transferee)

A transfer (formerly called a deed) is the legal document used to convey ownership of real property from the transferor (seller) to the transferee (buyer). In Ontario's electronic system, it is registered electronically as a 'transfer.'

Question 18: In Ontario, what is an 'application for absolute title' in the Land Titles system?

An application to upgrade a qualified or possessory title to absolute title, providing the highest level of title guarantee (Correct answer)
An application for property tax exemption
An application for a building permit
An application to register a new property

Correct answer: An application to upgrade a qualified or possessory title to absolute title, providing the highest level of title guarantee

An application for absolute title is the process by which a property with possessory or qualified title can be upgraded to absolute title, which provides the highest level of government guarantee. This typically requires evidence that the title is free from adverse claims.

Question 19: How does REBBA 2002 define a 'brokerage'?

Any individual who sells real estate
A government agency that regulates real estate
Only a corporation with at least 10 salespersons
A corporation, partnership, or sole proprietorship that is registered to trade in real estate (Correct answer)

Correct answer: A corporation, partnership, or sole proprietorship that is registered to trade in real estate

Under REBBA 2002, a brokerage is defined as a corporation, partnership, or sole proprietorship registered under the Act to trade in real estate. All salespersons and brokers must be employed by a registered brokerage.

Question 20: In Ontario real estate, what is a 'condition precedent' in an Agreement of Purchase and Sale?

A condition that only applies to commercial transactions
A mandatory clause required by RECO in all contracts
A condition that must be satisfied before the contract becomes binding, such as obtaining financing or a satisfactory home inspection (Correct answer)
A condition that must be fulfilled after closing

Correct answer: A condition that must be satisfied before the contract becomes binding, such as obtaining financing or a satisfactory home inspection

A condition precedent is a clause that must be fulfilled before the contract becomes firm and binding. Common conditions include financing approval, satisfactory home inspection, and sale of the buyer's existing home. If the condition is not met, the buyer can usually walk away.

Question 21: What is the purpose of a 'status certificate' under the Ontario Condominium Act?

To certify the building meets fire codes
To confirm the unit owner's identity
To verify the condominium's zoning designation
To provide financial and legal information about a condominium corporation and a specific unit (Correct answer)

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 22: In Ontario, what is 'undue influence' in the context of a real estate contract?

When one party uses their position of power or trust to unfairly pressure another party into entering a contract (Correct answer)
The effect of interest rates on property values
The influence of market conditions on property prices
Pressure from a real estate agent to make a quick decision

Correct answer: When one party uses their position of power or trust to unfairly pressure another party into entering a contract

Undue influence occurs when one party exploits a position of power, trust, or dominance over another to pressure them into a contract they would not have entered freely. Contracts entered under undue influence are voidable.

Question 23: What is a 'listing agreement' in Ontario residential real estate?

A rental listing contract
A written contract between the seller and a brokerage authorizing the brokerage to market and sell the property under specified terms, including the listing price and commission (Correct answer)
An agreement between two brokerages to share a listing
An agreement between the seller and the buyer

Correct answer: A written contract between the seller and a brokerage authorizing the brokerage to market and sell the property under specified terms, including the listing price and commission

A listing agreement authorizes the brokerage to act as the seller's agent in marketing and selling the property. It specifies the listing price, commission rate, term of the agreement, duties of the brokerage, and obligations of the seller.

Question 24: In Ontario, what is an 'option to purchase' in real estate?

The buyer's right to return the property after purchase
A type of conditional offer
A contract that gives the holder the right, but not the obligation, to purchase a property at a specified price within a specified time (Correct answer)
The seller's right to choose between multiple buyers

Correct answer: A contract that gives the holder the right, but not the obligation, to purchase a property at a specified price within a specified time

An option to purchase is a contract where the property owner grants another party the right to buy the property at an agreed price within a specified time. The option holder pays consideration for this right but is not obligated to exercise it.

Question 25: What is 'dower' and does it still apply in Ontario?

Dower is the right of children to inherit property
Dower is a type of property tax exemption for seniors
Dower is a spouse's right to one-third of the property and it still applies in Ontario
Dower was a wife's common law right to a life estate in her husband's lands, but it has been abolished in Ontario and replaced by Family Law Act provisions (Correct answer)

Correct answer: Dower was a wife's common law right to a life estate in her husband's lands, but it has been abolished in Ontario and replaced by Family Law Act provisions

Dower was a common law right giving a wife a life estate in one-third of her husband's lands. It has been abolished in Ontario and replaced by the spousal rights provisions under the Family Law Act, including matrimonial home protections.

Question 26: What is the minimum down payment required in Canada for a home purchase priced at $500,000?

10% of the purchase price
5% of the purchase price (Correct answer)
20% of the purchase price
15% of the purchase price

Correct answer: 5% of the purchase price

For homes priced at $500,000 or less in Canada, the minimum down payment required is 5% of the purchase price under federal mortgage rules.

Question 27: Under Ontario law, what is the 'Fraudulent Conveyances Act'?

It regulates the sale of vehicles
It governs electronic document fraud
It prevents real estate agents from misrepresenting property
It allows creditors to set aside transfers of property made with the intent to defraud creditors (Correct answer)

Correct answer: It allows creditors to set aside transfers of property made with the intent to defraud creditors

The Fraudulent Conveyances Act allows creditors to challenge and set aside transfers of property that were made with the intent to defeat, hinder, or defraud creditors. Such transfers can be declared void.

Question 28: In Ontario, what is 'adverse possession' and what are the requirements to claim it?

Temporarily occupying vacant land with a permit
Buying property at a discount
The acquisition of title to land through open, continuous, exclusive, and notorious possession for the statutory period, without the owner's permission (Correct answer)
A hostile takeover of a commercial property

Correct answer: The acquisition of title to land through open, continuous, exclusive, and notorious possession for the statutory period, without the owner's permission

Adverse possession requires open, continuous, exclusive, and notorious possession of land without the owner's permission for the statutory limitation period. The possessor must treat the land as their own. Note: this generally does not apply under the Land Titles system in Ontario.

Question 29: In Ontario, what is the difference between 'void' and 'voidable' contracts in real estate?

There is no difference
A void contract has no legal effect from the beginning; a voidable contract is valid until one party chooses to set it aside (Correct answer)
A voidable contract is more serious than a void contract
Both types require court approval to enforce

Correct answer: A void contract has no legal effect from the beginning; a voidable contract is valid until one party chooses to set it aside

A void contract has no legal force from its inception — it is as if the contract never existed (e.g., a contract for an illegal purpose). A voidable contract is valid and enforceable but can be set aside at the option of one party (e.g., due to misrepresentation or lack of capacity).

Question 30: How does 'tenancy in common' differ from 'joint tenancy' in Ontario?

In tenancy in common, owners can hold unequal shares and there is no right of survivorship — each owner's share passes through their estate (Correct answer)
There is no difference between them
Tenancy in common is only for commercial properties
Tenancy in common requires equal ownership shares

Correct answer: In tenancy in common, owners can hold unequal shares and there is no right of survivorship — each owner's share passes through their estate

Tenancy in common differs from joint tenancy in two key ways: owners can hold unequal shares, and there is no right of survivorship. When a tenant in common dies, their share passes through their estate to their heirs, not to the other co-owners.

Question 31: What is the 'Development Charges Act' and how does it affect new real estate development in Ontario?

It allows municipalities to impose charges on new development to pay for infrastructure needed to serve that development (Correct answer)
It charges a fee for listing properties for sale
It regulates interest rates on development loans
It only applies to government construction projects

Correct answer: It allows municipalities to impose charges on new development to pay for infrastructure needed to serve that development

The Development Charges Act allows municipalities to collect fees from developers when new development occurs to fund the infrastructure (roads, sewers, water systems, parks) needed to support the growth.

Question 32: A mortgage discharge in Ontario refers to:

The early termination of a mortgage prior to the end of the agreed term
The cancellation of a mortgage application before funding
The formal removal of a mortgage from property title after the debt is fully repaid (Correct answer)
The transfer of a mortgage obligation from one lender to another

Correct answer: The formal removal of a mortgage from property title after the debt is fully repaid

A mortgage discharge is the legal process of removing the lender's charge from property title once the mortgage debt has been fully repaid, confirming the lender's security interest has been extinguished.

Question 33: What is an 'entire agreement clause' in an Ontario real estate contract?

A clause that lists all the properties included in the sale
A clause that prevents any amendments to the contract
A clause requiring all parties to attend closing
A clause stating that the written contract contains the complete agreement between the parties, superseding all prior negotiations and agreements (Correct answer)

Correct answer: A clause stating that the written contract contains the complete agreement between the parties, superseding all prior negotiations and agreements

An entire agreement clause declares that the written contract constitutes the whole agreement between the parties. It supersedes all prior oral or written negotiations, representations, and agreements, reinforcing the parol evidence rule.

Question 34: Under Ontario law, what remedies are available to a buyer if the seller breaches an Agreement of Purchase and Sale?

Only monetary damages
The buyer can only cancel the contract
No remedies are available — the buyer must find another property
Specific performance, monetary damages, rescission, or a combination depending on the circumstances (Correct answer)

Correct answer: Specific performance, monetary damages, rescission, or a combination depending on the circumstances

When a seller breaches the agreement, the buyer may seek specific performance (forcing the sale), monetary damages (compensation for losses), rescission (canceling the contract and returning the parties to their original positions), or a combination of remedies.

Question 35: In a typical Ontario residential real estate transaction, what is the correct order of steps?

Financing, listing, closing, offer
Inspection, offer, listing, closing
Listing, showing, offer and negotiation, acceptance, conditions fulfilled, closing (Correct answer)
Closing, offer, negotiation, inspection

Correct answer: Listing, showing, offer and negotiation, acceptance, conditions fulfilled, closing

A typical residential transaction follows this sequence: the property is listed for sale, shown to prospective buyers, an offer is made and negotiated, the offer is accepted (possibly with conditions), conditions are fulfilled or waived, and the transaction closes.

Question 36: In Ontario, what is 'frustration' of a real estate contract?

When an unforeseen event beyond the parties' control makes performance of the contract impossible or fundamentally different from what was agreed (Correct answer)
A negotiation tactic used by buyers
The emotional stress of a difficult transaction
A delay in the closing process

Correct answer: When an unforeseen event beyond the parties' control makes performance of the contract impossible or fundamentally different from what was agreed

Frustration occurs when an unforeseen event (such as the destruction of the property by fire before closing) makes performance impossible or radically different from what was contemplated. The contract is discharged and both parties are released from their obligations.

Question 37: In Ontario, what is the 'Clean Water Act' and its impact on real estate?

It regulates swimming pool water quality
It requires all properties to have water filtration systems
It protects drinking water sources and may impose restrictions on land use in designated vulnerable areas (Correct answer)
It only applies to waterfront properties

Correct answer: It protects drinking water sources and may impose restrictions on land use in designated vulnerable areas

The Clean Water Act protects municipal drinking water sources by establishing source protection plans. Properties within designated vulnerable areas may face land use restrictions that affect development potential and property value.

Question 38: What is the 'POLARIS' system in Ontario?

A satellite-based property mapping system
The Province of Ontario Land Registration Information System — the automated electronic database for property records (Correct answer)
A property listing service
A property appraisal system

Correct answer: The Province of Ontario Land Registration Information System — the automated electronic database for property records

POLARIS (Province of Ontario Land Registration Information System) is the electronic database that stores and provides access to property records in Ontario. It supports both title searching and electronic document registration.

Question 39: What is 'novation' in Ontario real estate contract law?

A minor amendment to the contract terms
A new type of mortgage product
A type of property renovation
The substitution of a new contract for an existing one, or the substitution of a new party for an original party, with the consent of all parties (Correct answer)

Correct answer: The substitution of a new contract for an existing one, or the substitution of a new party for an original party, with the consent of all parties

Novation is the creation of a new contract that replaces an existing one, or the substitution of one party with another. Unlike assignment, novation requires the consent of all parties and completely extinguishes the old contract.

Question 40: In Ontario, what is the 'first to register' rule?

When two competing interests exist, the one registered first on title generally takes priority over the one registered later (Correct answer)
The first real estate agent to list the property gets the commission
The first offer received must be accepted
The first person to visit a property gets the first right to buy

Correct answer: When two competing interests exist, the one registered first on title generally takes priority over the one registered later

The first to register rule (priority of registration) means that when two or more competing interests exist for the same property, the interest registered first on title takes priority. This makes timely registration critically important.

Question 41: What is 'tender' in Ontario real estate contract law?

A request for proposals from contractors
A deposit paid at the time of offer
The unconditional offer to perform one's obligations under the contract, typically by being ready, willing, and able to close on the closing date (Correct answer)
A type of bidding process for commercial properties

Correct answer: The unconditional offer to perform one's obligations under the contract, typically by being ready, willing, and able to close on the closing date

Tender means presenting oneself as ready, willing, and able to complete the transaction on the closing date. If one party tenders and the other fails to close, the tendering party can pursue legal remedies for breach of contract.

Question 42: How does the Registry system differ from the Land Titles system in Ontario?

The Registry system is newer than the Land Titles system
The Registry system provides stronger title guarantees
The Registry system records documents affecting title without guaranteeing ownership; the Land Titles system guarantees title (Correct answer)
There is no practical difference between the two systems

Correct answer: The Registry system records documents affecting title without guaranteeing ownership; the Land Titles system guarantees title

Under the Registry system, documents affecting title are recorded chronologically, but the government does not guarantee who owns the property. The buyer must search the chain of title to verify ownership. The Land Titles system provides government-guaranteed title.

Question 43: In Ontario, what is 'substantial performance' in real estate contract law?

Completing the transaction ahead of schedule
When a party has performed the essential terms of the contract with only minor deviations, entitling them to enforce the contract with an adjustment for the deficiency (Correct answer)
Completing 100% of the contract terms
A performance review of the real estate agent

Correct answer: When a party has performed the essential terms of the contract with only minor deviations, entitling them to enforce the contract with an adjustment for the deficiency

Substantial performance occurs when a party has completed the essential elements of the contract but with minor, non-material deviations. The substantially performing party can enforce the contract but the other party may claim damages for the deficiency.

Question 44: What is the purpose of a 'holdback' in an Ontario residential transaction?

The seller's down payment on a new property
Government taxes withheld at closing
A portion of the purchase price retained by the buyer's lawyer to ensure specific conditions or repairs are completed (Correct answer)
Money held by the real estate agent as commission

Correct answer: A portion of the purchase price retained by the buyer's lawyer to ensure specific conditions or repairs are completed

A holdback is a portion of the purchase price retained by the buyer's lawyer (typically in trust) to ensure certain conditions are met, such as completion of repairs, removal of items, or resolution of title issues. It protects the buyer's interests.

Question 45: In Ontario, what is 'accretion' in property law?

The gradual and imperceptible addition of land by natural forces, such as soil deposited by water along a shoreline (Correct answer)
The process of obtaining a building permit
The accumulation of unpaid property taxes
The appreciation of property value over time

Correct answer: The gradual and imperceptible addition of land by natural forces, such as soil deposited by water along a shoreline

Accretion is the gradual increase in land area through natural processes, such as the slow deposit of soil along a waterfront. The additional land generally becomes the property of the adjacent landowner. It must be gradual — sudden changes are treated differently.

Question 46: What is a 'seller's disclosure statement' in Ontario residential real estate?

A mandatory government form required for all sales
A financial statement showing the seller's income
A document disclosing the seller's reason for selling
A voluntary form (SPIS — Seller Property Information Statement) where the seller provides information about the property's condition and history (Correct answer)

Correct answer: A voluntary form (SPIS — Seller Property Information Statement) where the seller provides information about the property's condition and history

The SPIS (Seller Property Information Statement) is a voluntary form where sellers disclose information about the property's condition, renovations, environmental issues, and other relevant details. While not mandatory, it can help prevent disputes and protect both parties.

Question 47: What restrictions does REBBA 2002 place on a registrant who is buying or selling their own property?

The registrant can act without disclosure if using a different brokerage
Only verbal disclosure is required
No restrictions apply when dealing with personal property
The registrant must disclose their registration status to all parties in writing before any offer is made (Correct answer)

Correct answer: The registrant must disclose their registration status to all parties in writing before any offer is made

When a registrant is personally buying or selling property, they must disclose in writing to all parties that they are registered under REBBA 2002, even if they are not acting in a professional capacity.

Question 48: Mortgage default insurance (such as CMHC insurance) is designed to protect:

The lender against losses if the borrower defaults (Correct answer)
The seller against buyer non-performance on closing
The buyer against undisclosed property defects
The borrower against unexpected interest rate increases

Correct answer: The lender against losses if the borrower defaults

Mortgage default insurance protects the lender (not the borrower) by covering losses if the borrower defaults, which makes high-ratio lending less risky for financial institutions.

Question 49: What is the 'Growth Plan for the Greater Golden Horseshoe' and how does it affect real estate?

It only affects agricultural properties
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 is a marketing plan for real estate developers

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 50: What is 'mutual mistake' in Ontario real estate contract law?

When both parties forget the closing date
When both agents provide incorrect information
When both parties make a typo in the contract
When both parties share a fundamental misunderstanding about a material fact in the contract, which may render the contract void or voidable (Correct answer)

Correct answer: When both parties share a fundamental misunderstanding about a material fact in the contract, which may render the contract void or voidable

Mutual mistake occurs when both parties are mistaken about the same fundamental fact (such as the identity of the property or its essential characteristics). If the mistake is about something fundamental, the contract may be void; if about a less essential matter, it may be voidable.

Question 51: Under REBBA 2002, what is the difference between a 'broker' and a 'salesperson'?

There is no difference — the terms are interchangeable
A broker has completed additional education and can manage a brokerage; a salesperson works under a broker (Correct answer)
A broker only handles commercial properties
A salesperson can operate independently while a broker cannot

Correct answer: A broker has completed additional education and can manage a brokerage; a salesperson works under a broker

Under REBBA 2002, a broker has completed additional education beyond salesperson requirements and is eligible to manage or operate a brokerage. A salesperson must work under a brokerage and cannot operate independently.

Question 52: In Ontario, what is the significance of 'insurance' during a residential real estate transaction?

Insurance is optional and not relevant to the transaction
The buyer must arrange property insurance before closing, and proof of insurance is typically required by the mortgage lender before funds are advanced (Correct answer)
Insurance is only needed after the first year of ownership
The seller's insurance automatically transfers to the buyer

Correct answer: The buyer must arrange property insurance before closing, and proof of insurance is typically required by the mortgage lender before funds are advanced

The buyer must arrange property insurance before closing. Mortgage lenders require proof of adequate insurance before advancing mortgage funds. The seller's insurance does not transfer — the buyer must obtain their own policy to protect against loss or damage.

Question 53: What is the 'non-resident speculation tax' (NRST) in Ontario and who pays it?

A tax on Canadians moving to Ontario from another province
A tax on investment properties only
A tax payable by foreign nationals and certain corporations purchasing residential property in designated areas of Ontario (Correct answer)
A tax on properties that are vacant for more than 6 months

Correct answer: A tax payable by foreign nationals and certain corporations purchasing residential property in designated areas of Ontario

The NRST is an additional tax imposed on foreign nationals, foreign corporations, and taxable trustees who purchase residential property in Ontario. It is intended to address foreign demand in the housing market and is payable in addition to the regular land transfer tax.

Question 54: In Ontario, what is a 'reference plan'?

A floor plan for a building
A marketing plan for a real estate listing
A survey plan registered in the land registry office that identifies specific parts of a property using 'parts' for legal description purposes (Correct answer)
A plan for future development

Correct answer: A survey plan registered in the land registry office that identifies specific parts of a property using 'parts' for legal description purposes

A reference plan (R-plan) is a survey plan registered in the land registry office that identifies and numbers specific portions (parts) of a property. It is used to create legal descriptions for easements, rights-of-way, or portions of land being transferred.

Question 55: In Ontario, what is an 'indemnification clause' in a real estate contract?

A clause that identifies the property boundaries
A clause where one party agrees to compensate the other for specified losses or liabilities that may arise (Correct answer)
A clause that insures the property against damage
A clause that reduces the purchase price

Correct answer: A clause where one party agrees to compensate the other for specified losses or liabilities that may arise

An indemnification clause is a contractual provision where one party agrees to hold the other harmless and compensate them for specified losses, damages, or liabilities. In real estate, it may cover issues like environmental contamination or undisclosed defects.

Question 56: What happens to deposits received by a brokerage under REBBA 2002?

They can be held in any account at the broker's discretion
They must be deposited into the brokerage's general operating account
They must be forwarded directly to the seller immediately
They must be placed into a trust account within 5 business days (Correct answer)

Correct answer: They must be placed into a trust account within 5 business days

REBBA 2002 requires that all deposits received in connection with a trade must be deposited into the brokerage's real estate trust account within 5 business days of receipt.

Question 57: What is the 'Construction Act' (formerly Construction Lien Act) and how does it protect contractors in Ontario?

It only regulates construction safety standards
It provides grants for construction projects
It sets construction timelines for new buildings
It allows contractors, subcontractors, and material suppliers to register a lien against a property for unpaid work or materials (Correct answer)

Correct answer: It allows contractors, subcontractors, and material suppliers to register a lien against a property for unpaid work or materials

The Construction Act provides contractors, subcontractors, and material suppliers with the right to register a lien against property when they have not been paid for work performed or materials supplied. It also establishes holdback requirements and prompt payment provisions.

Question 58: In Ontario, what is a 'condominium description' in the context of land registration?

A document registered to create a condominium corporation, including unit boundaries, common elements, and proportionate shares (Correct answer)
A marketing description of a condominium unit
A lease agreement for a condominium unit
A building inspection report for a condominium

Correct answer: A document registered to create a condominium corporation, including unit boundaries, common elements, and proportionate shares

A condominium description is the foundational document registered under the Condominium Act that creates the condominium corporation. It defines unit boundaries, identifies common elements, and establishes each unit's proportionate share of common expenses and common elements.

Question 59: The maximum Total Debt Service (TDS) ratio most institutional lenders in Canada will accept is:

36%
44% (Correct answer)
32%
50%

Correct answer: 44%

Most institutional lenders accept a maximum TDS ratio of 44%, meaning total monthly debt obligations—including housing costs and all other debts—should not exceed 44% of gross income.

Question 60: What is the 'buyer's obligation' regarding closing funds in Ontario?

The buyer must provide the balance of the purchase price (less the deposit) to their lawyer, typically by certified cheque or wire transfer, before the closing date (Correct answer)
Payment by personal cheque on closing day
Cash payment at the closing table
Payment in installments over 30 days

Correct answer: The buyer must provide the balance of the purchase price (less the deposit) to their lawyer, typically by certified cheque or wire transfer, before the closing date

The buyer must arrange for the balance of the purchase price (purchase price minus the deposit and any adjustments) to be available to their lawyer before closing, typically through certified cheque or wire transfer. This ensures funds are guaranteed and available for closing.

Question 61: In Ontario, what does 'registration' of a document on title accomplish?

It provides notice to the world of the interest claimed and establishes priority over subsequent registrations (Correct answer)
It makes the document legally valid between the parties
It replaces the need for a lawyer to review the document
It guarantees the document is accurate

Correct answer: It provides notice to the world of the interest claimed and establishes priority over subsequent registrations

Registration gives constructive notice to the world that the interest exists. In both the Registry and Land Titles systems, registered interests generally take priority over unregistered interests, and earlier registrations take priority over later ones.

Question 62: In mortgage financing, a 'blended payment' refers to:

A payment applied solely toward the outstanding interest balance
A regular payment that combines both principal repayment and interest (Correct answer)
A payment amount that changes with fluctuations in the prime rate
A payment structure combining two separate mortgage loans

Correct answer: A regular payment that combines both principal repayment and interest

A blended payment combines principal repayment and interest into one consistent payment amount, which remains constant throughout the term of a fixed-rate mortgage.

Question 63: Under Canada's mortgage stress test (OSFI B-20 guidelines), uninsured mortgage applicants must qualify at:

The prime rate plus 0.5%
The Bank of Canada overnight lending rate
Exactly the contract rate negotiated with the lender
The higher of the contract rate plus 2% or the OSFI minimum qualifying rate (Correct answer)

Correct answer: The higher of the contract rate plus 2% or the OSFI minimum qualifying rate

The B-20 stress test requires uninsured mortgage applicants to qualify at the higher of their contract rate plus 2% or OSFI's minimum qualifying rate, ensuring borrowers can handle rate increases.

Question 64: In Ontario's Land Titles system, what is the 'Land Titles Assurance Fund'?

An insurance fund for real estate agents
A government fund that compensates persons who suffer loss due to errors or omissions in the Land Titles register (Correct answer)
A fund for first-time homebuyers
A deposit protection fund managed by RECO

Correct answer: A government fund that compensates persons who suffer loss due to errors or omissions in the Land Titles register

The Land Titles Assurance Fund provides compensation to persons who suffer financial loss because of an error, omission, or misdescription in the Land Titles register. It supports the government's guarantee of title accuracy.

Question 65: What is the maximum amortization period permitted for a standard insured (high-ratio) mortgage in Canada?

30 years
40 years
25 years (Correct answer)
35 years

Correct answer: 25 years

The maximum amortization period for most insured mortgages in Canada is 25 years, as required by federal mortgage insurance rules.

Question 66: What is the maximum loan-to-value (LTV) ratio for a conventional (uninsured) mortgage in Canada?

80% (Correct answer)
90%
95%
85%

Correct answer: 80%

A conventional mortgage requires a minimum down payment of 20%, resulting in a maximum loan-to-value ratio of 80% and no requirement for mortgage default insurance.

Question 67: What is the 'doctrine of indefeasibility' in Ontario's Land Titles system?

A doctrine about lease renewals
A principle of environmental protection
The principle that a registered owner's title cannot be defeated except in limited circumstances specified by the Act, such as fraud (Correct answer)
A doctrine about property tax exemptions

Correct answer: The principle that a registered owner's title cannot be defeated except in limited circumstances specified by the Act, such as fraud

The doctrine of indefeasibility means that a registered owner's title is conclusive and cannot be challenged except in specific circumstances defined by the Land Titles Act, such as fraud by the registered owner. This provides certainty and security of title.

Question 68: In Ontario, what is a 'representation agreement' in the context of real estate contracts?

A contract between two real estate agents
A listing agreement between the seller and buyer
A power of attorney for property
An agreement between a brokerage and a client that outlines the terms under which the brokerage will represent the client in buying or selling property (Correct answer)

Correct answer: An agreement between a brokerage and a client that outlines the terms under which the brokerage will represent the client in buying or selling property

A representation agreement (either a listing agreement for sellers or a buyer representation agreement for buyers) formalizes the relationship between the client and the brokerage, specifying the scope of services, commission, term, and obligations of both parties.

Question 69: What is an 'encumbrance' in the context of Ontario land registration?

A government subsidy for property development
Any claim, lien, charge, or liability attached to and binding on the property, such as a mortgage, easement, or restrictive covenant (Correct answer)
A type of property insurance
A structural problem with the building

Correct answer: Any claim, lien, charge, or liability attached to and binding on the property, such as a mortgage, easement, or restrictive covenant

An encumbrance is any right or interest held by someone other than the property owner that affects the title or use of the property. Common encumbrances include mortgages, easements, liens, restrictive covenants, and leases.

Question 70: In Ontario, what is the concept of 'notice' in land registration?

The principle that registration of a document provides constructive notice to the world of the interest claimed, and knowledge of an unregistered interest may constitute actual notice (Correct answer)
A municipal notice about zoning changes
A letter sent to neighbours about a property sale
A notification from RECO about registration renewal

Correct answer: The principle that registration of a document provides constructive notice to the world of the interest claimed, and knowledge of an unregistered interest may constitute actual notice

Notice in land registration can be constructive (through registration on title) or actual (personal knowledge). Once a document is registered, the world is deemed to know about it. A person who has actual knowledge of an unregistered interest may also be affected by it.

Question 71: What is a 'plan of subdivision' in Ontario's land registration system?

A survey plan registered with the land registry office that divides a large parcel of land into individual lots, blocks, and streets (Correct answer)
A landscape design plan
A marketing brochure for a development
A floor plan for a condominium unit

Correct answer: A survey plan registered with the land registry office that divides a large parcel of land into individual lots, blocks, and streets

A plan of subdivision is a survey plan approved under the Planning Act and registered in the land registry office that divides a larger parcel of land into individual lots and blocks, with streets and other features clearly shown. Each lot receives its own legal description.

Question 72: In Ontario, which legislation governs the transfer of land and the registration of interests in real property?

The Planning Act only
The Registry Act and the Land Titles Act (Correct answer)
The Condominium Act only
The Municipal Act

Correct answer: The Registry Act and the Land Titles Act

Ontario has two systems for recording interests in land: the Registry system (governed by the Registry Act) and the Land Titles system (governed by the Land Titles Act). The province has been transitioning all properties to the Land Titles system.

Question 73: What is 'staging' a home in Ontario real estate and why is it important?

A legal requirement before listing a property
The process of preparing and decorating a home to make it more attractive to potential buyers, potentially increasing the sale price and reducing time on market (Correct answer)
The process of building a model home in a new subdivision
The process of constructing a temporary stage for an open house performance

Correct answer: The process of preparing and decorating a home to make it more attractive to potential buyers, potentially increasing the sale price and reducing time on market

Home staging involves arranging furniture, decor, and accessories to showcase a property's best features. While not legally required, staging can help buyers visualize living in the space, potentially leading to higher offers and faster sales.

Question 74: Under REBBA 2002, what is 'dual agency' now commonly referred to as in Ontario?

Shared brokerage
Multiple representation (Correct answer)
Co-brokerage
Joint agency

Correct answer: Multiple representation

In Ontario under REBBA 2002, when a brokerage represents both the buyer and seller in the same transaction, it is referred to as 'multiple representation.' Both parties must provide informed written consent.

Question 75: In Ontario, what is the effect of a 'certificate of pending litigation' (CPL) on a property?

It confirms the property has been inspected
It certifies that the property is free of liens
It serves as notice that there is a court action affecting the property, which may affect its marketability (Correct answer)
It prevents any work on the property

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.

Ontario Real Estate Salesperson Licensing Exam (OREA/Humber)

The Ontario real estate salesperson licensing exam tests knowledge of real estate law, land registration, mortgage financing, contract law, and regulatory frameworks (TRESA/REBBA) required to practice as a licensed real estate salesperson in Ontario.

Questions

150 min

Time Limit

75%

To Pass

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