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real estate real estate Quiz on real, created by as arora on 25/11/2016.
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Quiz by as arora, updated more than 1 year ago
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Created by as arora about 9 years ago
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Question 1

Question
Consider a mortgage loan written for $178,000 at j2 = 10% with a 25 year amortization and monthly payments. Assuming that the payments are rounded to the next higher $10, what is the amount of the final payment.
Answer
  • $551.06
  • $1392.48
  • $1588.68
  • $207.52

Question 2

Question
Harry has been offered an investment opportunity that will pay him the following cash flows: 60 quarterly payments of $1200 and a lump sum of $25000 at the end of 60 quarters. If interest rates are currently 6% per annum, compounded annually, what is the maximum he should pay, rounded to the nearest dollar.
Answer
  • $80,605
  • $80,990
  • $57,489
  • $58,087

Question 3

Question
After a borrower has given a mortgage of real property, the borrower’s remaining interest is described at law as:
Answer
  • A collateral advantage.
  • The equity of redemption.
  • An equitable mortgage
  • (4) None of the above.

Question 4

Question
George is trying to obtain a mortgage loan for a commercial building that he is interested in purchasing. The commercial building has a lending value of $2,500,000 and yields an annual net operating income of 172,500. The lender requires a debt coverage ratio of 1.15 and a 70% loan to value ratio. The loan will be amortized over 20 years with annual payments with an interest rate of 5.5% per annum compounded annually. What will be the maximum loan that George can obtain given these lending conditions?
Answer
  • 1. $1,792,557.37
  • $1,875,000.00
  • $2,061,440.98
  • $1,750,000.00

Question 5

Question
Which of the following is/are examples of equitable mortgage? A. A mortgage disguised as a transfer of land, where the “sale” price is below market value. B. A mortgage which, for procedural reasons only, is unregisterable in the land title office. C. An agreement to execute a mortgage in the future under which the borrower has already received the principal amount. D. A mortgage registered second in priority to another mortgage.
Answer
  • A,B, and C
  • A and B
  • Only D.
  • All of the above

Question 6

Question
Brent Coats, the maker of Italian leather jackets, would like to expand his chain of B.C. Leather stores into the Okanagan. Unfortunately, Brent will need a large loan in order to make his dream come true. Charlie godchild has offered Brent a $165,000 loan, written at 11% per annum, compounded quarterly, with a 20 year amortization period, a four year term, and monthly payments rounded up to the next higher dollar. What will Brent’s outstanding balance be at the end of the term?
Answer
  • $153,444.22
  • $153,246.12
  • $158,232.00
  • $153.443.02

Question 7

Question
The total assessed value of all properties in the municipality of Upnorth, BC is $1,955,345,700. The municipality needs to raise $8,654,800 through its general tax on real properties to finance its anticipated expenditures this year. All classes of property will be taxed at the same rate. Other taxing authorities have set the following rates of taxes to be collected by the municipality of Upnorth; School 4.9455 Hospital 0.4437 Regional District 0.0987 Alan works in the Upnorth gold mine and purchased a home in Upnorth last year. Its assessed value is $78,915. If no other taxes are collected, what will be Alan’s gross taxes payable?
Answer
  • $782.37
  • $789.15
  • $433.08
  • $349.30

Question 8

Question
Mary Mulrooney has just purchased a home and has arranged for a mortgage loan of $68,000 to be advanced on the completion date, June 11. The loan will commence on July 1, and the payments will begin one month later, on August 1. The interest rate on the mortgage will be 9.75% per annum, compounded annually. What is the amount of the interest adjustment payment due on July 1? Assume that it is NOT a leap year.
Answer
  • $347.54
  • $364.96
  • $330.12
  • $67,654.23

Question 9

Question
Mike brought a house two years ago, at which time he arranged a $110,000 mortgage. This loan was written at a nominal rate of 9.5%, compounded semi-annually, with a ten year term and amortization period, and monthly payments. Today Mike has received an offer from Andre to buy his house for $50,000 cash plus assumption of his mortgage. If current mortgage rates are 12% per annum, compounded semi-annually, for eight year term mortgage, what is the market value of Andre’s offer?
Answer
  • $149,603.19
  • $137,758.18
  • $87,758.18
  • $99,603.19

Question 10

Question
How would prepaid expenses and income taxes payable be classified on the Balance Sheet?
Answer
  • Prepaid expenses – current assets; income taxes payable – noncurrent liabilities
  • Prepaid expenses – current assets; income taxes payable – current liabilities
  • Prepaid expenses – noncurrent assets; income taxes payable – noncurrent liabilities
  • Prepaid expenses – noncurrent assets; income taxes payable – current liabilities

Question 11

Question
Dan Danard wishes to purchases a house from a vendor who is willing to provide partial financing. Dan is offering an $88,000 downpayment with a mortgage of $142,000 at 4% per annum, compounded semi-annually. The loan is to be fully amortized with level monthly payments over 25 years. What is the market value of this offer if the market rate for similar mortgage loan is 6% per annum, compounded semi-annually?
Answer
  • $115,101.97
  • $204,746.21
  • $203,101.97
  • $230,000.00

Question 12

Question
Alomar and Carter Development Co. Have recently won the contract to build a new baseball stadium in Kelowna for the Little League World Series. The stadium is to be built over the next three years and will be able to hold over 7,000 fans. The company has received a construction loan in the amount of $2,500,000 written at the rate of 17% per annum, compounded monthly, with a 3 year term, a 25 year amortization period and annual interest only payments. What is the amount of annual interest only payments?
Answer
  • $466,586.30
  • $459,729.33
  • $425,000.00
  • $35,416.67

Question 13

Question
A vendor is willing to sell his house for $96,000. He demands 24 monthly payments, and payment of the outstanding balance in the amount of $75,000 with the 24th payment. He wishes to earn an effective annual rate of 15% on his money. What is the monthly payment required?
Answer
  • $1,955.72
  • $7,336.27
  • $1,008.85
  • $1,887.47

Question 14

Question
Roberto makes an offer of $546,000 to purchase a house in Vancouver, subject to obtaining an acceptable first mortgage. A lender, who has appraised the property at $536,000, requires a 75% loan-to-value ratio and a 32% gross debt service ratio. Net taxes are $6,365 per annum and Roberto has a gross income of $130,000 per year. What is the maximum amount this lender will advance if the rate is j2 = 5.75%, the amortization period is 25 years, and payments are to be made monthly?
Answer
  • $469,783.37
  • $554,500.00
  • $409,500.00
  • $402,000.00

Question 15

Question
Jim and Janice have just received an inheritance of $320,000. Their plans are to purchase a house with a $270,000 down payment after travelling around the world for five years. They have found a place to invest their money at 12.5% per annum compounded monthly for a five year term. What is the maximum amount of their inheritance they can use to purchase traveller’s cheques (which will be spent on their vacation) without sacrificing their $270,000 down payment
Answer
  • $144,988.54
  • $102,443.22
  • $175,011.46
  • $320,000.00

Question 16

Question
Jack and Jill have arranged a mortgage with a face value of $100,000, contract rate of j2 = 8.5%, an amortization period of 25 years, a term of 5 years, and monthly payments. However, the bank is advancing only $95,000 because the face value includes a $5,000 brokerage fee. What is the interest rate per annum, compounded annually, charged on the funds actually received by the borrower?
Answer
  • 9.65813529543%
  • 9.34953016056%
  • 10.0973469779%
  • 10.261654045%

Question 17

Question
Given the following information, calculate the purchaser’s balance due to complete: Price: $225,000 Deposit: $ 20,000 to Brokerage Financing: 1st mortgage of $80,000 to be assumed 2nd mortgage $44,000 to be arranged by purchaser. Taxes: Not paid, not due in amount of $1,600 Legal Fees: $700 Adjustment, Completion and Possession Dates: May 31st Note: It is not a leap year. There is NO property transfer tax exemption. PTT is payable.
Answer
  • $81,038.08
  • $92,288.08
  • $80,342.47
  • $83,542.47

Question 18

Question
Which of the following statements is/are TRUE? A. On the completion date of the sale of real property, the purchaser is usually entitled to the transfer of title. B. The total of the debit column on the vendor’s statement must be identical to the total of the credit column on the purchaser’s statement. C. The practice is to hold the vendor responsible for the taxes on the adjustment date itself. D. The adjustment date and the possession date must be the same day.
Answer
  • All of the above statements are true.
  • Only A and B are true
  • Only A is true.
  • None of the above statements are true

Question 19

Question
Yaletown Developments Ltd. Intends to purchase an old warehouse and redevelop it by splitting it into 12 condominium lofts. The company will invest $700,000 cash to purchase the warehouse and can get an interest accruing construction loan to cover the cost of redevelopment. Construction is expected to take 8 months. At the end of construction period, all of the lofts will be sold and the loan will be paid off, leaving Yaletown Developments with a cash flow of $775,000. If the project takes place as planned above, what effective annual yield will Yaletown Development earn on its investment?
Answer
  • 16.4945193220%
  • 10.7142857143%
  • 15.8645461051%
  • 15.3641521545%

Question 20

Question
Joe purchaser approaches the owner of a house that is listed at a price of $150,000. Joe offers a cash down payment of $40,000 if the vendor will take back mortgage for the balance at a rate of j2=10%, to be fully amortized over 25 years with monthly payments. The current market rate is j2=14%. What is the market value of the offer?
Answer
  • $83,819.72
  • $96,583.72
  • $123,819.72
  • $154,299.93

Question 21

Question
Which of the following statements is TRUE?
Answer
  • A licensee can protect him or herself from all liability for misrepresentation by having the vendor complete and sign a disclosure statement at the time the property is listed
  • A licensee will not be liable for the tort of fraudulent misrepresentation unless he or she has some expertise in the particular area.
  • A licensee will be vicariously liable to a purchaser for incorrect information given by the licensee to the vendor who passed the information on to the purchaser.
  • A licensee is not required to provide opinions to purchasers on areas outside his or her expertise; rather, it is the purchaser’s responsibility to seek the opinion of a qualified expert.

Question 22

Question
Depreciation expense is:
Answer
  • another name for capital cost allowance.
  • a deductible expense in computing income for purposes of income taxation
  • usually calculated on land by the straight-line method
  • none of the above.

Question 23

Question
A borrower approaches Ripley Finance Company about a mortgage on an income-producing property. The property produces an annual net operating income of $112,500. The lending value of the property is $880,000. Ripley will only lend to a maximum of 75% loan-to-value ratio, and requires a minimum debt coverage ratio of 1.125. Ripley’s terms are: j2 = 12%, a term and amortization period of 15 years, and monthly payments. Given these constraints, calculate the maximum allowable loan (rounded to the nearest dollar).
Answer
  • $624,912
  • $660,000
  • $976,426
  • $634,728

Question 24

Question
Barb Nelson has made an offer of $165,000 on a home in Vernon, subject to finding suitable financing. The Orchard Credit Union (OCU) has offered to give Barb a loan of 75% of the appraised value of the property, and hires John Johnson to appraise the property. John`s appraisal report states value of the property as $165,000, and on this information OCU lends Barb $123,750. Three months later, Barb defaults on the mortgage. The outstanding balance on the mortgage is $123,400. OCU obtains two independent appraisals of the property, both of which indicate that the value of the property was $120,000 at the time of sale. OCU later sells the property for $120,000. What actions could a, OCU and b, Barbara successfully take against John?
Answer
  • Neither OCU nor Barbra has an action against John.
  • OCU can sue John for breach of contract and Barbra can sue John for negligence.
  • OCU can sue John for breach of contract and Barbra has no action against John.
  • OCU can sue John for breach of contract and Barbra can also sue John for breach of contract.

Question 25

Question
A young administrative assistant has applied to her bank for a mortgage loan to enable her to purchase a house. Her income is $35,000 per year. The bank informs her that they will apply a 30% gross debt service ratio when calculating her maximum loan, and that current mortgage rates are 20% per annum, compounded monthly for 20 year term mortgages. Given that annual property taxes are $975.00, and mortgage payments are to be made monthly, what is the maximum mortgage loan the bank will grant?
Answer
  • $51,384.30
  • $50,308.24
  • $46,723.48
  • $45,346.54

Question 26

Question
Archie and Veronica have recently purchased a new home, partially financed by a mortgage loan. They would like to know the amount by which the principal is reduced during the five year term of their $175,000 mortgage written at j2=14% with a 25 year amortization. Assume the monthly payments are rounded to the next higher dollar and paid when due. The principal reduction is:
Answer
  • $170,000
  • $168,991.31
  • $6,008.69
  • $5,947.62

Question 27

Question
To stay competitive in today’s real estate industry, which of the following are computer peripheral devices that are invaluable to a real estate office?
Answer
  • Internet and World Wide Web.
  • Digital cameras and scanners.
  • Digital versatile discs (DVD) and compact disc recordable (CD-R).
  • All of the above.

Question 28

Question
What will be the purchase price of a mortgage which will provide the purchaser with 60 payments of $950 plus an outstanding balance of $94,374.21 at the end of 60 months, if the purchaser of the mortgage requires an effective annual yield of 13%?
Answer
  • $93,611.84
  • $93,582.37
  • $92,922.78
  • $93,655.35

Question 29

Question
Doug, an appraiser, is valuing a single family housing unit using market comparison method. A house recently sold for $235,000, comprised of a cash downpayment of $99,000 and a vendor supplied mortgage loan of $146,000 at 3.5% per annum, compounded semi-annually. The loan has an amortization period of 20 years, a term of 5 years and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 4.75% per annum, compounded semi-annually. What price should Doug use if he wishes to use this sale as comparable?
Answer
  • $138,710.56
  • $237,710.56
  • $140,131.72
  • $239,131.72

Question 30

Question
You have been asked to appraise an apartment building using the income method of appraisal. The building’s gross potential rent is $310,000 and operating expense to be $87,900. The market vacancy rate is 5%. The following 2 buildings, both similar to the subject property were sold recently. A B Gross Potential Income $312,800 $321,000 Vacancy 5% 5% Current Operating Expenses $88,200 $90,700 Sale Price $2,190,000 $2,380,000 Using the limited data found above, estimate the market value for the subject property (round to the nearest $100)
Answer
  • $1,821,800
  • $2,400,000
  • $2,285,000
  • $2,228,300

Question 31

Question
Which of the following heating systems offers rapid response to extreme outside temperature changes?
Answer
  • electric baseboard heating
  • electric heated hot water radiant unit
  • central gas fired forced hot air
  • central gas fired forced hot water

Question 32

Question
Four years ago, Gussy Dup brought a small apartment in a very fashionable district of New Yawk. Gussy felt his purchase was a bargain at $340,000, especially considering his sown payment was only $100,000 and he was able to obtain a mortgage for the remaining $240,000 at j2 = 5%, amortized over 25 years with annual payments. However, Gussy has now lost his job and must sell his apartment. He has received an offer of $50,000 cash plus assumption of the existing mortgage. The market rate for similar 21 year mortgages are j2 =3% Calculate the market value of the offer.
Answer
  • $297,634.92
  • $347,634.92
  • $311,197.81
  • $313,571.25

Question 33

Question
Ross is the registered owner of Hillside Farms. Chandler forges and registers a transfer of Hillside Farms to himself. Chandler then borrows $75000 from Friends Trust Co. The loan is secured against Hillside Farms by way of a mortgage and the mortgage is registered. Which one of the following statements is false? a. Friends Trust Co may obtain its $75000 back from the Assurance Fund b. Ross can recover Hillside Farms but the title to the property will remain encumbered by the Friends Trust Co. Mortgage. c. Ross can have Friends’ mortgage removed from title. d. Because Friends Trust Co. Dealt with Chandler, the registered owner in fee simple, the principle of indefeasibility will protect them.
Answer
  • only d is false
  • a and b are false
  • a, b, and d are false
  • all of the statements are false

Question 34

Question
Mr. K. Cole purchased a property for $100,000 and financed part of the purchase price with a mortgage loan having a face value of $80,000, written at j4=10%, fully amortized over 25 years with monthly payments. His mortgage broker charged a brokerage fee of 4% of the face value, which was deduct he from the face value of the loan. What was the effective annual interest rate Mr. Cole paid on the funds advanced?
Answer
  • 10.449174257
  • 10.381289062
  • 10.828624428
  • 10.964310493

Question 35

Question
Mrs. Susan Whirter has arranged a mortgage loan in the amount of $43,700 bearing interest at 11% per annum, compounded semi-annually. The loan has a 5-year amortization period and term. Monthly payments are agreed to be $1,000. Calculate the final payment required on this loan.
Answer
  • $ 706.62
  • $ 1,293.38
  • $ 944.56
  • $ 700.34

Question 36

Question
The practice of recognizing expenses as they are incurred, rather than when they are paid for, is a characteristic of:
Answer
  • the cost principle
  • the recognition principle.
  • the matching principle.
  • the conservation principle.

Question 37

Question
Given the following information, calculate the cash proceeds due to Vanessa, the vendor: Price: $150,000 Deposit: $ 15,000 to Brokerage Financing: 1st mortgage of $71,000 to be assumed 2nd mortgage $34,000 from purchaser’s father. Taxes: Unpaid and overdue in amount of $1,095 A penalty is owing of $105 Commission: 6% of sale price Legal Fees: $600 Adjustment, Completion and Possession Dates: August 31st Note: It is not a leap year.
Answer
  • $69,169.00
  • $69,538.00
  • $69,204.38
  • $74,169.00

Question 38

Question
A fully amortized loan to $30,000 has an amortization period of 5 years, j2=10%, and monthly payments rounded to the next higher $100. How many payments are required to fully pay off the loan and what would be the final payment.
Answer
  • 60 total payments with a final payment of $700
  • 52 total payments with a final payment of $667.38
  • 53 total payments with a final payment of $27.17
  • 53 total payments with a final payment of $672.83

Question 39

Question
Peter has put his house up for sale for $260,000. Harry and Sally has made an offer consisting of $95,000 cash and vendor supplied mortgage for the balance. The mortgage has 15 years amortization and monthly payments over 5 year term, at j2=11%. The market rate of similar mortgages is j2=12%. What is the market value of the offer?
Answer
  • $251,582.17
  • $254,483.01
  • $254,185.22
  • $320,672.01

Question 40

Question
In British Columbia there are three basic requirements for an easement. Which one of the following is not a requirement?
Answer
  • The easement must be negative in nature.
  • The easement must accommodate the dominant tenement.
  • There must be both dominant and servient tenements.
  • The easement must be capable of forming the subject matter of a grant.

Question 41

Question
Mario is arranging a third mortgage with Shady financiers, a local finance company. The loan amount is $22,000, the interest rate is 19.75 per annum compounded semi-annually, the amortization period is 15 years and the contractual term is 5 years. If the monthly payments are rounded up to the next higher $10, calculate the outstanding balance at end to the term.
Answer
  • $19,743.29
  • $19,826.90
  • $19,334.45
  • $41,826.9

Question 42

Question
Regan, a new appraiser has found a comparable which was recently sold for $273,000, comprised of $90,000 cast and 183,000 vendor supplied mortgage at 7% per annum compounded semi-annually, with monthly payment (rounded to the next higher dollar), sufficient to amortize the loan over 25 years. If the market rate of similar financing is 5% per annum compounded semi-annually, what would Regan regard as the sale price of the house, (round the answer to the nearest $100)?
Answer
  • $310,400
  • $152,000
  • $220,400
  • $242,000

Question 43

Question
Which one of the following rates is not equivalent to j2=11.5%
Answer
  • j52=11.193556791%
  • i q= 2.83481900602%
  • i sa= 5.75%
  • j12=11.2910546544%

Question 44

Question
Vince is a purchaser of residential property who borrows $89,300 at j2=17%. The loan will be fully amortized over 20 years with monthly payments. First monthly payment is due on July 1st. What amount will be advanced on May 15th if the borrower is to owe the face value of $89,300 on June 1st. Assume it is not a leap year.
Answer
  • $88,615.54
  • $88,623.96
  • $89,144.73
  • $88,996.86

Question 45

Question
Three years ago Harry Jamieson took out an interest only loan at the Bank of Shaquille. He originally borrowed $78,000 at the rate of 14.75% per annum, compounded semi-annually. Harry makes quarterly payment and has a five year term. What is the amount of Harry’s 13th payment?
Answer
  • $2,825.09
  • $2,876.25
  • $11,505.00
  • $11,300.36

Question 46

Question
A potential borrower with an annual income of $24,000 and net real property taxes of $1,000 per annum has been told by a mortgage lender that the largest loan available will be $52,171. What is the maximum gross debt service ratio allowed by the lender given that the loan has monthly payments and is to be written at 10% per annum, compounded semi-annually and amortized over 25 years?
Answer
  • 25%
  • 27.5%
  • 28.5%
  • 30%

Question 47

Question
Which of the following are necessary for Suzie, a trading service representative, to be liable for the tort of negligent misrepresentation? A. A statement of fact or opinion given negligently by Suzie. B. Reasonable reliance on the statement by the person whom it was given that was the detrimental to that party. C. A clear qualification by Suzie that she disclaims any liability for the accuracy of the statement. D. A pre-existing contractual relation between Suzie and the person she speaks to.
Answer
  • A of the above.
  • A, B and C
  • A, B and D
  • A and B

Question 48

Question
While inspecting a home that is to be used as security for a mortgage loan, you notice a lock of insulation in a number of areas that should be insulated. In noting this as an invisible defect, you would most likely consider it a defect:
Answer
  • due do omission.
  • due to design.
  • due to improper maintenance.
  • due to non-continuous vapour barrier.

Question 49

Question
Which of the following statements regarding building envelope systems are true? a. When a window is cracked, allowing a large amount of heat to escape from the home to the outside, it is known as a thermal broken window. b. Polystyrene insulation is sprayed into wall cavities and attics through small drilled holes. c. Window drafts can be alleviated by sealing the joints between the window and the wall with caulking. d. Cellulose Fibre made from shredded recycled newsprint, with chemicals added to prevent fungi and fire.
Answer
  • Only statements a and c are true.
  • Only statements c and d are true.
  • Only statements a, b and d are true.
  • All of the above statements are true.

Question 50

Question
Which one of the following is NOT a requirement to establish misrepresentation in contract law?
Answer
  • There must be an assertion of fact.
  • The assertion must be false.
  • The assertion must have been material to the formation of the contract.
  • The assertion must be in writing.

Question 51

Question
A local mortgage broker has arranged a mortgage in the amount of $240,000. The borrower has agreed to pay a brokerage fee of $8,999.82 which is to be added to the loan amount, giving a face value of $248,999.82 for the loan. The mortgage bears interest at a contract rate of 18% per annum, compounded quarterly. The mortgage has a term and amortization period of 25 years. The loan is to be repaid using monthly payments. The equivalent periodic interest rate, expressed as a rate per month on the funds advanced is:
Answer
  • 1.53649446786%
  • 1.42140087486%
  • 1.50410643789%
  • 1.67322516185%

Question 52

Question
You have been asked to calculate the Net Operating Income (NOI) of Hasselback Tower. The building has an effective gross income of $850,000, estimated monthly expenses of $7,600 and fixed annual expenses of $17,000. What is the NOI?
Answer
  • $825,400
  • $833,000
  • $758,800
  • $741,800

Question 53

Question
The abolition of the doctrine of notice by the Land Title Act is subject to the exception of:
Answer
  • innocent misrepresentation.
  • fraud.
  • breach of contract.
  • quantum meruit.

Question 54

Question
Which of the following statements regarding the management of individual loans is true?
Answer
  • The book value of a mortgage is an estimate of the amount that might be received if the existing mortgage was to be sold in an arm’s-length transaction under current conditions.
  • Individual borrowers have the right, under the terms of the Interest Act, to prepay all of the outstanding debt at any time after three years from the initiation of the mortgage.
  • Arrears (tardiness in making payments) and default (no payments being made) are not common on mortgage loans.
  • A mortgage is an asset that cannot be sold to other investors.

Question 55

Question
Which of the following statements about the fee simple estate are TRUE? A. The fee simple is a type of leasehold estate. B. If a fee simple owner dies without a will the property will escheat to the crown. C. The term fee simple indicates an estate that can be inherited without qualification. D. The fee simple estate was created by the Torrens system of registration.
Answer
  • B and C are true.
  • A and C are true.
  • Only C is true.
  • C and D are true.

Question 56

Question
Which of the following statements about the B.C. Torrens system are FALSE? A. The fact that a charge registered on title does not guarantee the validity of the charge. B. A caveat that is registered on title will be effective until the the party registered it removes it. C. documents must be in the form prescribed by statute law to be enforceable between the parties. D. Trustees are shown on title as the registered owners of an estate or interest in land with no indication of the existence of the trust.
Answer
  • A and C are false.
  • B, C and D are false.
  • A, C and D are false.
  • All of the above are false.

Question 57

Question
Jake Touche wants to purchase a house that is listed for $76,000. The bank’s appraiser estimates that the lending value of the property is $71,000. Jake’s gross annual income is approximately $28,000 per year. The bank applies a 70% Loan-to-Value ratio and a Gross Debt Service ratio of 30%. Property taxes amount to $1,200 per year. Assume that the lender demands a twenty-five year amortization period and monthly payments at j12 = 15%. How much can Jack borrow?
Answer
  • $49,700.00
  • $46,844.60
  • $54,652.04
  • $48,148.46

Question 58

Question
Bob Allen is considering a purchasing a property for one million dollars. He would like to finance the purchase with an interest only loan of $800,000, written at a contract rate of 12% per annum, compounded annually. If the term of the loan is ten years and payments are to be made at the end of each month, what will be the size of the payment?
Answer
  • $11,195.78
  • $8,000.00
  • $7,519.01
  • $7,591.04

Question 59

Question
Given that all other factors are identical, the shorter the term of the contract on a bonused, partially amortized mortgage:
Answer
  • the lower the effective annual yield.
  • the higher the effective annual yield.
  • the higher the required monthly payment.
  • the lower the outstanding balance at the term’s end.

Question 60

Question
Which one of the following does NOT form part of the definition of market value?
Answer
  • Value is a price that is reasonably expected to prevail.
  • Value is based on the personal opinion of the value to the owner.
  • Value is determined at a particular point in time.
  • The buyer and seller must be bargaining at arm’s length.

Question 61

Question
Mike has arranged for a $60,000 mortgage loan at 9.25% per annum, compounded semi-annually. Payments are to be made monthly for the year term. Payments are to begin December 1st, Mike would like the funds be advanced Oct. 13th. Calculate the size of the interest adjustment payment due on Nov. 1st. Assume that it is NOT a leap year.
Answer
  • $283.09
  • $268.16
  • $732.79
  • $762.54

Question 62

Question
Which of the following is NOT a procedure commonly used by a large institutional lender in order to reduce the risk associated with a particular mortgage loan?
Answer
  • reduction of the loan-to-value ratio
  • increase in the interest rate charged
  • reduction in the gross debt service ratio
  • all of the above methods are commonly used

Question 63

Question
When a mortgagor grants a mortgage subsequent to a first registered mortgage, the mortgagor has created:
Answer
  • an equitable mortgage.
  • a legal mortgage.
  • an assignment of the first mortgage.
  • none of the above.

Question 64

Question
Joe, a store keeper, asked Harry, a courier, to deliver some groceries for him, which Harry did. What is the result?
Answer
  • Joe does not have to pay Harry anything because Harry’s actions are past consideration.
  • Harry could bring an action under the Real Estate Services Act to force Joe to pay for the services.
  • Harry could recover a reasonable amount from Joe for his services under the principle of quantum meruit.
  • Harry could bring an action under s. 54 of the Law and Equity Act to force Joe to pay for the services.

Question 65

Question
Your brother Frank and his wife Helene are purchasing a new home. They have arranged financing from Helene’s wealthy aunt. The mortgage calls for an interest rate of 4% per annum, compounded annually. In order to calculate the monthly payment on the mortgage, they have asked for your help in calculate the equivalent interest rate per month. The equivalent interest rate per month is:
Answer
  • 0.3333333333%
  • 0.330589032%
  • 0.339512858%
  • 0.32737397822%

Question 66

Question
How much should Brent Coates be willing to pay for a property that is expected to sell for $250,000 in 5 years if he desires a yield of not less than j2 = 10%
Answer
  • $195,881.54
  • $196,385.82
  • $186,553.85
  • $153,478.31

Question 67

Question
A loan has a face value of $450,000, a term of 5 years, at an interest rate of 9% per annum, compounded annually with payments set at $12,000.00 per quarter. What is the period necessary to amortize the loan?
Answer
  • approximately 20 years
  • exactly 78.4757458906 years
  • approximately 20 quarters
  • None of the above.

Question 68

Question
Two years ago, Erma bought a beautiful lakefront estate for $750,000. Erma made the purchase with a $250,000 down payment and financed the remainder with a mortgage loan written at a contract rate of j2 = 12.5%, amortized over 20 years with monthly payments, and with a five year term. She now wants to sell the property and Ernie has made an offer of a $240,000 down payment and the assumption of the mortgage payments. If the current market interest rate for similar mortgages is j4 = 10%, what is the market value of Ernie’s offer?
Answer
  • $ 754,542.06
  • $ 800,099.28
  • $ 783,126.30
  • $ 514,542.06

Question 69

Question
A local mortgage broker arranged a mortgage in the amount of $210,000. The borrower has agreed to pay a brokerage fee in the amount of $7,200 which is to be added to the loan amount, giving a face value of $217,200 for the loan. The mortgage bears interest at a contract rate of 17 ¾% per annum, compounded semi-annually. The mortgage has an amortization period and term of 20 years and calls for monthly payments rounded to the next higher cent. If the mortgage is to be sold to an investor for $225,000 immediately after the loan is initiated, the investor will earn the following nominal interest rate, with semi-annual compounding:
Answer
  • 17.0265603822%
  • 16.354586295%
  • 16.452236868%
  • 17.7513197783%

Question 70

Question
What will be the purchase price of a mortgage which will provide the purchaser with 60 payments of $2,050 plus an outstanding balance of $125,550 at the end of 60 months, if the purchaser of the mortgage requires an effective annual yield of 13%?
Answer
  • $157,671.82
  • $159,709.05
  • $152,756.34
  • $155,870.08

Question 71

Question
Which of the following statements is TRUE?
Answer
  • The revenue principle holds that revenue would be recognized by an enterprise when it is received, not necessarily when it is earned.
  • The cost principle holds that when a business acquires an asset, the asset’s current market value (the cost to replace it) is the appropriate amount to record on the books of the enterprise.
  • The matching principle holds that the profit earned by a partnership must match the revenue earned less any expenses.
  • The consistency principle holds that once a business enterprise adopts one generally accepted accounting principle, the enterprise should follow the same principle in subsequent years.

Question 72

Question
You have been asked to calculate the Net Operating Income (NOI) of Opus Centre. The building has an effective gross income of $600,000, estimated monthly expenses of $2,600 and fixed annual expenses of $26,000. What is the NOI?
Answer
  • $542,800
  • $568,800
  • $574,000
  • $571,400

Question 73

Question
An offer of $235,000 is accepted, comprised of a cash downpayment of $55,000 subject to a vendor supplied mortgage of $180,000 at 14% per annum, compounded semi-annually. The loan has an amortization period of 25 years, a term of five years and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 19% per annum, compounded semi-annually. Mortgage payments are to be rounded up to the next higher dollar. The market value of the offer will be:
Answer
  • $152,861.21
  • $1235,000.00
  • $207,861.21
  • $192,158.76

Question 74

Question
Which of the following is an example of a void deed at common law?
Answer
  • a forged deed
  • a deed signed in circumstances where the party signing can plead non est factum
  • a deed given for illegal consideration
  • all of the above are examples of void deeds

Question 75

Question
Jacob Lipsey plans to pay $105,000 for a parking lot that he feels will sell at the end to 5 years for $135,000. What yield, expressed as a nominal rate with semi-annual compounding will Jacob earn?
Answer
  • 10.1799598805%
  • 5.15474967973%
  • 5.08997994025%
  • There is no possible solution for this problem

Question 76

Question
Gary Broker has arranged a mortgage for the Smiths in the amount of $110,000. The loan call for quarterly payments based on 25 year amortization period and a contract rate of 10% per annum, compounded annually and a 5 year term. Included in the face amount is Gary’s $2,200 commission and legal fees of $1,500. What is the cost of funds advanced to Smiths, expressed as an effective annual rate?
Answer
  • 10.4720599804%
  • 10.5414996612%
  • 10.9744747596%
  • 10.965581237%

Question 77

Question
The owner of a small building has applied for a loan at ABC Bank. The properly has a lending value of $500,000 and yielding a net operating income of $65,497 per year, where the lender requires a debt coverage ratio of 1.3 and a 70% loan-to-value ratio. The loan will be amortized over 10 years with annual payments and the interest rate is 13% per annum, compounded annually. What is the maximum 10 year loan the owner will be entitled to from ABC Bank, rounded to the nearest dollar?
Answer
  • $ 273,387
  • $ 268,832
  • $ 355,402
  • $ 350,000

Question 78

Question
Which one of the following items is NOT likely to be available to an appraiser valuing a commercial property?
Answer
  • current lease conditions at the time of sale of the property
  • the amount of any registered mortgages
  • the purchaser’s expected rent and expense forecasts
  • physical characteristics of the building

Question 79

Question
The Bridals borrow $210,000 written at J1=7%, with quaterly payments over 20 years and a 4 year term. Included in the face amount is a $2,200 fee and $1,500 legal expense. What is the effective annual rate on the funds advanced?
Answer
  • 6.82341%
  • 9.52430%
  • 7.36049%
  • 7.56615%

Question 80

Question
Archie and Betty have recently purchased a new home, partially financed by a mortgage loan. They would like to know the amount by which the principal is reduced during the five year term of their $135,000 mortgage written at j4=8% with a 25 year amortization. Assume the monthly payments are rounded to the next higher dollar and paid when due. The principal reduction is:
Answer
  • $10,500.99
  • $10,561.30
  • $51,728.86
  • $124,494.46

Question 81

Question
Acceptance of an offer is made:
Answer
  • in writing
  • orally
  • by performing the requirements of the offer
  • in the presence of witnesses

Question 82

Question
A voidable contract is:
Answer
  • one which never existed at all, even if the parties want it to exist.
  • a contract which one of the parties can cancel.
  • unenforceable.
  • one which offends against public policy or against a particular statute.

Question 83

Question
BCREA does NOT:
Answer
  • enforce the RE Services Act
  • provide continuing education
  • consult with government
  • do public relations

Question 84

Question
The principle on which the comparative method of appraisal is based is:
Answer
  • indefeasibility.
  • substitution.
  • capitalization.
  • accessibility.

Question 85

Question
XYZ company has arranged a mortgage in the amount of $120,000. The loan is to commence on May 1st, but the funds will be advanced on April 18th. The interest rate on the mortgage is 14% per annum, compounded semi-annually. What is the interest adjustment payment which is due on May 1st? Assume that t is not a leap year.
Answer
  • $579.74
  • $535.04
  • $576.95
  • $624.45

Question 86

Question
A developer of land not located in a municipality filed the necessary disclosure statement with the office of the B.C. Superintendent of Real Estate with respect to his 20 lot subdivision. After foreclosure proceedings the developer’s bank became the owner of the subdivision. The bank wishes to sell the lots on an individual basis. Which one of the following statements is TRUE?
Answer
  • Because the bank is selling more than 5 lots it should file a disclosure statement with the Superintendent’s office
  • A further disclosure statement is not necessary.
  • The disclosure statement filed by the developer will satisfactorily protect people who purchase lots from the bank.
  • Because there has been a foreclosure the bank is obligated to file a prospectus rather than a disclosure statement.

Question 87

Question
In residential building construction, the term “rafter” refers to:
Answer
  • roof extensions used to provide extra floor area and windows for the upper level.
  • the supporting structure over an exterior opening.
  • the structural member that supports the roof deck..
  • None of the above.

Question 88

Question
Three years ago Jim bought a house at which time he arranged a mortgage in the amount of $120,000. The loan was written at a rate of 9.75% per annum compounded semi-annually, with a 5 year term, 25 year amortization period and monthly payments. Jim has just received an offer from Alice to buy his house. Alice offers to provide $25,000 cash and to assume the existing financing for the remainder of the term. If current lending rates for 2 year term mortgages are 12.75% per annum, compounded semi-annually, what is the market value of Alice’s offer?
Answer
  • $135,171.62
  • $110,171.62
  • $132,556.52
  • $137,055.66

Question 89

Question
A prospective purchaser signs an offer on a property for $250,000 and mentions to the listing licensee that she would be willing to pay as much as $270,000 for the property if necessary. The listing licensee presents the offer to the vendor without mentioning that the purchaser may be willing to increase the offer. The vendor accepts the offer of $250,000. Since it is not a dual agency situation, this fact pattern is:
Answer
  • an example of the agent’s ethical obligation to deal fairly with the purchaser at all times.
  • a breach of the agent’s legal and ethical duty of full disclosure to her principal.
  • acceptable conduct on the part of the agent.
  • an example of the agent’s duty not to make a secret profit.

Question 90

Question
A potential purchaser is aware of the asking price for a particular house listed for sale. Which of the following statements is normally TRUE? A. The probable sale price will be equal to or above the floor price. B. The probable sale price will be equal to or above the vendor’s “value to owner”. C. The ceiling price will be equal to or above the asking price. D The ceiling price will be equal to or below the asking price.
Answer
  • Only A is true
  • Only C is true
  • A, B, and D are true
  • A, B, and C are true

Question 91

Question
Which of the following statements concerning negligence is false?
Answer
  • Where the type of damage suffered by a plaintiff in a negligence action is found not to be reasonably foreseeable, the plaintiff can still recover damages based upon equitable principles of fairness.
  • Where the plaintiff in a negligence action is found to be a person whom the defendant ought to have foreseen as someone likely to be injured by the defendant’s conduct, a duty of care owed by the defendant to the plaintiff exists.
  • Where a duty of care exists, the relevant standard of care will be that which a reasonable person would take in all the circumstances of the case.
  • Where an employee is negligent in the performance of his or her duties of employment, the employer will be liable for any foreseeable damages under the principles of vicarious liability.

Question 92

Question
Calculate the cash proceeds of sale to the vendor. Price: $195,000 Deposit to brokerage: $ 15,000 Financing: 1st mortgage of $71,000 to be assumed 2nd mortgage of $34,000 has been arranged Taxes: Not due in the amount of $1,500. These will be paid by the conveyancer. Commission: 6% of sale price Conveyancing Fees: $600 Adjustment, completion and possession dates: June 30st Note: Assume that it is NOT a leap year.
Answer
  • $ 96,560.27
  • $ 111,539.73
  • $ 111,560.27
  • $ 110,960.27

Question 93

Question
Buster, the proprietor of “Buster’s tofu Burgers”, wanted to expand his restraurant premises. Lynne Thomas, the owner of large bakery, offered to lend Buster $75,000 in form of a mortgage on Buster’s building. Mortgage was for 10 year term, and contained a clause obliging Buster to purchase all hamburgers for twelve year period from Lynne’s bakery. Which of the following statements is False?
Answer
  • An agreement such as Lynne and Buster’s concerning the buns can be referred to as a product agreement.
  • Any collateral agreement that extents beyond the term of the mortgage will be void as representing a clog on equity of redemption.
  • If the terms of a product agreement are viewed by the court as unduly restrictive, they may be held void as an unreasonable restraint of trade.
  • Where an agreement to purchase goods contained in a mortgage extends beyond the term of the mortgage, the agreement will be enforceable if it is reasonable between the parties.

Question 94

Question
Mr. Crawford’s house in Parksville, B.C. has been assessed at $260,500 for property tax purposes. The following tax rates have been set by the municipality and other taxing authorities: General Tax Rate 4.05 School Tax Rate 3.15 Hospital District Tax Rate 0.125 Regenal Rate 0.185 What will be Mr. Crowford’s gross taxes payable on this property?
Answer
  • $1,952.60
  • $ 1,055.03
  • $ 1,956.36
  • 1,875.60

Question 95

Question
Which of the following does not help maintain the optimal level of openness in the negotiation process?
Answer
  • Discussing the issues one issue at a time and not as a bundle
  • Beginning the negotiations by communicating the less pertinent issues first
  • Ensuring the both parties have equal information about each other
  • All of the above help maintain the optimal level of openness in the negotiation process.

Question 96

Question
George is trying is to obtain a mortgage on a commercial building. Lending value of the property is $2,500,000 and yields an annual net operating income of $172,500. Lender requires a debt coverage ratio of 1.15 and 70% loan to value ratio. Loan will be amortized over 20 years with annual payment and written at j1 = 5.5%. What is the maximum loan allowable?
Answer
  • $1,792,553.57
  • $1,875,215.00
  • $2,496,418.00
  • $1,750,000.00

Question 97

Question
A lease of real property is a contract by which the landlord conveys:
Answer
  • an easement to the tenant.
  • exclusive possession to the tenant.
  • a licence to occupy to the tenant.
  • none of the above

Question 98

Question
How much should Lisa an investor be willing to pay for a property that she expects to sell for $256,000 in five years if he desires a yield of not less than j2 = 8%?
Answer
  • $172,944.43
  • $187,898.24
  • $184,865.84
  • $210,413.34

Question 99

Question
Simon is the holder of a life estate in Blackacre. Saul is the remainderman. For which of the following acts would Simon be liable to pay damages to Saul as the remainderman? A. Simon build a fence around a large vegetable garden. B. Simon allows the tool shed to fall into state of disrapair. C. Simon tears down a guest house with the intention to rebuilding but does not get around to it. D. Simon sells his life estate in Blackacre in order to settle a gambling debt.
Answer
  • A B and C
  • B C and D
  • C and D
  • Only C

Question 100

Question
Which of the following statements is/are TRUE? A. Real property markets are national by nature, due to the immobility of real property. B. The presence of a special purchaser in a sales transaction will greatly extend the range of possible bids. C. The neighbourhood an appraiser should consider when doing an appraisal may not be limited to the subdivision in which the property is located. D. In British Columbia, anyone may undertake appraisal work and charge a fee for the appraisal services.
Answer
  • Only statement C and D is true.
  • Only statements A and B are true.
  • Only statements B, C and D are true.
  • All of the above statements are true.

Question 101

Question
The marketing mix consists of:
Answer
  • Product, place price and preference
  • People, place, price and position
  • Personal selling, publicity, price and promotion
  • Product, place, price and promotion

Question 102

Question
Which one of the following statements is false regarding successful negotiations?
Answer
  • Honed negotiation skills are essential for handling all aspects of a client’s real estate transactions.
  • Learned negotiation skills can be used in one’s personal and professional life.
  • Reading about negotiation skills is not sufficient to master the skills, as practice is required as well.
  • Practice through trial and error is the best way to internalize learned negotiations skills.

Question 103

Question
Which of the following lists accurately describes the correct criteria, as agreed upon negotiation experts, for a successful negotiation?
Answer
  • Efficiency, a zero-sum game, minimal wasted resources, preservation of the relationship.
  • Efficiency, satisfaction of both parties, distributive results, minimal wasted resources.
  • Efficiency, satisfaction of both parties, minimal wasted resources, preservation of relationship.
  • Efficiency, a zero-sum game, satisfaction of both parties, preservation of the relationship.

Question 104

Question
Which of the following does not help maintain the optimal level of openness in the negotiation process?
Answer
  • Discussing the issues one issue at a time and not as a bundle
  • Beginning the negotiations by communicating the less pertinent issues first
  • Ensuring the both parties have equal information about each other
  • All of the above help maintain the optimal level of openness in the negotiation process.

Question 105

Question
Thepurposeofacodeofethicsisto: A. provide guidelines to ensure that human actions are morally fair as well as lawful. B. replace the rigidity of the legal system for professionals. C. provide a remedy through the courts to people who have been wronged by a professional. D. maintain the reputation of the profession in the eyes of the public.
Answer
  • A and D only.
  • A and B only.
  • B and C only.
  • All of the above.

Question 106

Question
Which of the following statements about the criminal offence of misleading advertising in section 52 of the Competition Act is FALSE?
Answer
  • The offence involves the making of a representation to the public that is false or misleading in a material respect, for the purpose of promoting any business interest.
  • To escape liability, one must show that he or she honestly believed that the representations were not false or misleading and exercised due diligence in making sure that was the case.
  • A “representation” to the public includes print and digital representations, but not oral representations.
  • The requirement that the representation be false in a material respect refers to the whether the representation would have a real effect on an ordinary consumer's buying decision.

Question 107

Question
Section 52 of the Competition Act prohibits false or misleading advertising and creates an offence punishable by imprisonment or a fine. Which of the following statements is NOT true concerning this offence?
Answer
  • This offence punishes misleading statements in various forms, including oral and written.
  • All false advertisements made to the public will constitute an offence under the provisions of the Competition Act, even if the misrepresentation is not misleading in a material respect.
  • Both the general impression of the representation as well as its literal meaning are relevant in determining whether a breach of the Act has taken place.
  • The person making the representation can escape liability if he or she can show that they honestly believed the statement was not false or misleading and exercised due diligence in making sure that was the case.

Question 108

Question
Section 52 of the Competition Act is a criminal offence that prohibits misleading advertising. Which of the following statements concerning this offence is FALSE?
Answer
  • A person or company can be found guilty under section 52 when the general impression conveyed by an advertisement is misleading, even though every part of their advertisement is true in a literal sense.
  • To constitute an offence under this section, the representation must be false or misleading in a material respect.
  • The standard applicable in determining whether a statement is misleading or not is whether a consumer was actually mislead or deceived.
  • Someone accused under section 52 can avoid conviction if they show that they honestly believed that the representation was not false or misleading and that they exercised due diligence in making sure that was the case.

Question 109

Question
Section 52 of the Competition Act prohibits false or misleading advertising. Consider the following statements about that offence. A. An element of the offence is a “representation to the public”, which could include statements made by a licensee over the phone to a purchaser of real estate. B. For a misrepresentation to be contrary to the Act it must be false or misleading in a material respect. C. The Competition Act applies to both oral and written representations. D. To avoid liability under section 52, the person accused of the offence must show that he or she honestly believed that the representation was not false or misleading and exercised due diligence in making sure that was the case. Which of the following is correct?
Answer
  • All of the above statements are true.
  • Only B, C, and D are true.
  • Only B and D are true.
  • Only A, B, and C are true.

Question 110

Question
Consider the following four properties: A. a pulp mill in Squamish B. a small single-family house in the central business district of Vancouver C. a multi-unit apartment complex in Burnaby D. a residential condominium in Victoria Which appraisal approach/method would be most suitable to appraise each of these properties?
Answer
  • A) market comparison; B) income; C) cost; D) residual
  • A) cost; B) market comparison; C) residual; D) income
  • A) income; B) residual; C) market comparison; D) cost
  • A) cost; B) residual; C) income; D) market comparison

Question 111

Question
The book value of an asset can be best defined as:
Answer
  • the purchase price of that asset less any depreciation taken to date.
  • the price for which a similar asset could currently be purchased in the market.
  • the price for which that asset could be sold.
  • a value which is subjectively arrived at by an appraiser.

Question 112

Question
A company pays $97,635 for an asset on which the Income Tax Act allows capital cost allowance at 5% per year. The asset is expected to have a useful life of 25 years and will have no salvage value at the end of this time. Calculate the depreciation expense for accounting purposes for the asset's third year if the accountant chooses to use straight-line depreciation.
Answer
  • $3,913.40
  • $4,185.49
  • $4,521.72
  • $3,905.40

Question 113

Question
With respect to the foundation of a residential building damproofing is:
Answer
  • a material used to eliminate the penetration of frost in the concrete slab.
  • a material applied to foundation walls to seal minor capillary pores in the concrete.
  • a plastic vapour barrier placed under concrete footings.
  • a plastic pipe laid alongside the concrete foundation wall.

Question 114

Question
In residential building construction, the term “dormer” refers to:
Answer
  • a roof style commonly known as a hip roof.
  • a component of a septic waste water system.
  • the structural member, usually wood, placed at the top of window openings.
  • roof extensions used to provide extra floor area and windows for the upper level.

Question 115

Question
In BC, a lender who holds a mortgage registered as a charge on an otherwise clear title to a borrower's land has:
Answer
  • the equitable right to redeem the mortgage.
  • the right to retain the mortgagor's duplicate certificate of title to the mortgaged land until the loan is repaid in full.
  • priority over every other subsequent creditor and lienholder in respect of the mortgaged land.
  • an interest in land created by contract.

Question 116

Question
When a mortgagor grants a mortgage subsequent to a first registered mortgage, the mortgagor has created:
Answer
  • an equitable mortgage.
  • a vendor take-back mortgage.
  • an assignment of the first mortgage.
  • a legal mortgage.

Question 117

Question
After a borrower has given a mortgage of real property, the borrower's remaining interest is described at law as:
Answer
  • a right of foreclosure.
  • a common law mortgage.
  • the equity of redemption.
  • an equitable mortgage.

Question 118

Question
In a mortgage contract, the promise by the borrower to pay the installments of principal and interest as they fall due entitles the lender to exercise the remedy of an ordinary creditor, separately from a foreclosure application, in the case of default. This promise is known as:
Answer
  • the equity of redemption.
  • a collateral advantage.
  • the insurance covenant.
  • the personal covenant.

Question 119

Question
Which one oft he following is NOT a provision of the Interest Act?
Answer
  • No interest rate higher than 25% shall be provided for in a mortgage document.
  • The interest rate on arrears under a mortgage may not exceed the rate payable on the principal monies not in arrears.
  • If a mortgage document calls for interest without specifying the rate, then the rate of interest specified by law is 5% per annum.
  • Where a mortgage requires blended payments of principal and interest, the mortgage document must contain a statement of the interest rate calculated “yearly or half-yearly not in advance”.

Question 120

Question
Which of the following are examples of equitable mortgages? A. a mortgage disguised as a transfer of land, where the “sale” price is below market value B. a mortgage which, for procedural reasons only, is unregistrable in the land title office C. an agreement to execute a mortgage in the future under which the borrower has already received the principal amount D. a mortgage registered second in priority to another mortgage
Answer
  • A,BandC
  • All of the above
  • A and B
  • Only D

Question 121

Question
John makes the following offer to Mary. “I will pay you $500 to put a new rose bed in my garden.” If Mary accepts, what is the result?
Answer
  • There is no contract because there is no consideration.
  • The promise to pay is past consideration and therefore no contract exists.
  • An enforceable contract has been formed if an intention to create a legal relationship exists.
  • There is no contract because the contract is not in writing.

Question 122

Question
S, a seller, offers to sell a property to A for $50,000. The offer is to remain open for acceptance until noon the next day. At 11:00 a.m. (the next day) B offers to purchase the same property and S accepts. At 11:30, A accepts the original offer. Which of the following statements is TRUE?
Answer
  • S has entered into a contract with both A and B.
  • S could have revoked the offer to A and avoided the problem.
  • Both A and B are entitled to contractual remedies against S under this scenario.
  • All of the above three statements are true.

Question 123

Question
A “subjectto” clause in a contract of purchase and sale is correctly known as a:
Answer
  • condition precedent.
  • warranty.
  • condition subsequent.
  • penalty clause.

Question 124

Question
A real estate appraiser would NOT value:
Answer
  • an existing rental agreement of a warehouse.
  • the right to use airspace at the top of a high-rise office building.
  • the legal interest in cattle on agricultural land.
  • a fee simple interest in a two-bedroom apartment.

Question 125

Question
Where an offer has been made by post, an acceptance by post will be effective:
Answer
  • when posted.
  • when received.
  • when received, provided it is not lost in the mail.
  • when posted, provided it is not lost in the mail.

Question 126

Question
A counter-offer has the effect in law of:
Answer
  • leaving the original offer open for acceptance if the counter-offer is refused.
  • terminating the original offer so that later it cannot be accepted.
  • terminating all negotiations at that time.
  • accepting the original offer.

Question 127

Question
In which of the following situations will a contract with an infant be enforceable against the infant?
Answer
  • The contract is affirmed by the infant after he or she reaches 19 years of age.
  • The infant performs or partly performs the contract after reaching his or her 19th birthday.
  • The infant does not repudiate the contract within a year after reaching his or her 19th birthday.
  • The contract is enforceable against the infant in all of the above situations.

Question 128

Question
An offer is released or expires when one or more of the following occurs:
Answer
  • The offeror decides to revoke his or her oral offer and mails a written revocation to the offeree before acceptance.
  • No time limit is specified in the offer but a reasonable time has passed without acceptance by the offeree.
  • The offeror dies or becomes insane before the offeree accepts the offer.
  • An offer is revoked by the offeror and the revocation communicated to the offeree before acceptance.

Question 129

Question
Frank sends a letter to Joe saying, “I will sell you 200 dozen widgets for $1,200.” Before Joe receives the letter, he sends an email to Frank offering to buy “200 dozen widgets for $1,200.” Given this information, which of the following statements is true?
Answer
  • Frank and Joe have formed a binding and enforceable contract.
  • Because the requirement of writing contained in section 59 of the Law and Equity Act has not been complied with, a contract has not been formed.
  • There has not been a valid offer and acceptance and therefore a contract has not been formed.
  • Both (2) and (3) are true.

Question 130

Question
The selling price of a property is $175,000. The buyer has applied to a lender for mortgage funds and been told that the maximum loan he can obtain is $122,500. The lender's appraiser feels that a long-term conservative estimate of the property's value is $153,125. Which one of the following statements is TRUE?
Answer
  • The lending value of this property is $122,500.
  • The lending value of this property is $175,000
  • The loan-to-value ratio on this loan is 70%.
  • The loan-to-value ratio on this loan is 80%.

Question 131

Question
Which one of the following is NOT a required characteristic of an offer?
Answer
  • It must be made in clear and unambiguous terms.
  • It must demonstrate a serious intention to be bound.
  • it must be made in writing in order to be enforceable against the offeror.
  • The terms stated must be clear enough that both offeror and offeree clearly understand the extent of their obligations.

Question 132

Question
If an offer is made by mail and the acceptance is mailed,when is the acceptance effective?
Answer
  • when it is received by the offeree
  • when it is received by the offeror
  • when it is posted
  • from the date and time of the postmark on the envelope

Question 133

Question
On March 7, Allan contracts, in writing, to sell his home to Bob for the price of $100,000. The sale is to complete on March 31. On March 8, the house is destroyed. Accordingly, there has been:
Answer
  • a mutual mistake.
  • a frustration of the contract.
  • a common mistake.
  • a rescission of the contract.

Question 134

Question
Charlotte offered to sell her property to Dennis for $180,000. Dennis wired, “Send lowest cash price - will give $165,000 cash”. Charlotte replied, “Cannot reduce price”. Dennis then accepted the original offer but Charlotte refused to sell claiming that there was no contract. Which of the following statements is TRUE?
Answer
  • Because Dennis' first wire was a counter-offer, and therefore a refusal of Charlotte's offer, there is no contract.
  • Charlotte's reply to Dennis' first wire was, in effect, a counter-offer on the same terms as her original offer.
  • Charlotte may successfully claim that her initial price of $180,000 was an “invitation to treat” and therefore she was entitled to refuse Dennis' offer to pay that amount.
  • Options (1) and (3) are both true.

Question 135

Question
A property is located in an area where most of the houses are connected to the sewer. The fact that the property in question is only connected to a septic tank creates a situation known as:
Answer
  • a patent defect.
  • caveat emptor.
  • a latent defect.
  • the Hedley Byrne principle.

Question 136

Question
Bernadette has agreed to purchase Steve's home for $438,000. However, before the sale completes she discovers that she has been the subject of an innocent misrepresentation which materially affects the contract. Bernadette may go to court and ask for the application of which of the following legal principles?
Answer
  • revocation
  • rectification
  • rescission
  • None of the above

Question 137

Question
On January 1 Abdul placed an advertisement on CQXR radio station offering squash lessons for $30 per hour. Lois heard the ad and phoned Abdul on January 3 and said “I want to take squash lessons but I'm a student, do you give a lower rate to students?” Abdul said that he only had one rate of $30 per hour. Lois said she would phone back. On January 5 Lois phoned Abdul and said she accepted Abdul's offer. Which of the following statements concerning Abdul and Lois is true?
Answer
  • The January 1 advertisement was an offer which Lois accepted on January 5.
  • The January 1 advertisement was an offer and Lois' telephone call on January 3 was a counter-offer.
  • Lois' January 3 call was a request for information and Abdul's response on January 3 was an offer.
  • Lois' January 3 call was a counter-offer and Abdul's response on January 3 was a second counter-offer.

Question 138

Question
Where no time period is stipulated in an offer, the offer:
Answer
  • will lapse in 24 hours' time.
  • will lapse after a reasonable time.
  • will lapse in 2 hours' time.
  • will not lapse but rather, it must be revoked by the offeror.
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