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Cheatography

ch1-10 Cheat Sheet (DRAFT) by

This is a draft cheat sheet. It is a work in progress and is not finished yet.

CH2

a person appointed by a partne­rsh­ip/­cor­por­ation to represent it for all purposes under RESA: Managing broker
Managing Broker: 2 yrs licensed experience + licensing qualif­ica­tions
Licensing qualif­ica­tions: at least 19 years old, good reputation
Council: enforces, knowledge, licensing, invest­iga­tions, 16 members
Founda­tion: Law reform, Minister of Finance +4, educat­ion­/re­search, interest payable on trusts
E+OM Corp: assess­ments on licensees, insurance
VOLUNTARY
BC real estate associ­ation - PR
11 real estate boards: MLS, MLS access
RE Institute: advanced education

CH2

Occupiers Liability Act
Duty of Care: Children -> Invitee (economic interest) -> Licensee -> Trespasser (can still sue)
- owes reasonable standard of care
- more than 1 occupier, less duty to trespasser
- OLA made changes to common law
- does not extend to risks willingly assumed by visitors
- duty of care applies to: condition, activi­ties, 3rd party conduct: on premises

CH8

Balance Sheet:
Assets­/Li­abi­lit­ies­/Equity
 
note: purchase of assets by the business does not affect the owners equity
Income:
revenue - expenses = net
Straight line deprec­iation
(cost - salvage life) / est. life
CCA is deductible
Book value
original - deprec­iation

CH12: Negoti­ations

Nature of effective negoti­ation
 
both parties satisfied at conclu­sion, efficiency of negoti­ation, creative division for full value, preser­vation of relati­onship, minimal wasted resources
 
Prepar­ation principles
 
stay away from zero-sum, find creative solutions, don't go back and forth, make conces­sions when necessary
Interest
focus. ie: find a house before school starts
Positions
close the deal by date
Anchoring Effect
a psycho­logical phenomenon whereby negoti­ators make insuff­icient adjust­ments away from stated number
Dirty Tactics
 
recognize dirty tactic and and explicitly raise the issue with the other party
 
question it and argue against it
 
naming out loud
 
remain non emotional and focus on problem with the eye toward mutual resolution
 
do not personally attack the other party
 
take a break until such behaviour stops
What NOT to do (dirty tactics)
 
respond in kind, put up with it, ignore, make insults regarding a persons nature

CH12

Types of real estate agency contracts
Exclusive Listing
 
an exclusive right to sell for a specific period of time
 
if the owner sells himself, must still pay commission
 
If the owner uses 2nd agent to sell his property, two commis­sions could be payable
Multiple Listing
(offic­e/b­rok­erage listing)
 
Exclusive right to sell
 
Listing must be distri­buted to all members of the real estate board and placed on MLS
 
Not valid unless: signed, in writing and true copy has been delivered to all owners, has provision that it will expire on the certain date
Open Listing
 
The owner may employ a number of agents to find the purchaser
 
A commission is paid to the agent who is the effective cause of the sale
 
Owner can sell as well and no commission would be payabl­e(u­sually commercial listings)
 
Brokerage promises to use best efforts to locate a ready, willing and able purchaser

CH15

Contra­ctual Clauses apply when the borrower defaults
Accele­ration
maturity date of the loan is pushed forward and lender demands to be paid out in full
Omnibus
in default of payment the lender will do the payment and it will be added to the loan
Lender's Remedies
this gives lender complete discretion to choose most suitable remedy
Mortgage in Possession
forecl­osure

CH18

Federal
Airports, Oceans, Seaports, Railways, Fisheries, has NO interest in land between indivi­duals
Provincial
Agricu­ltural Land Commis­sion: can exclude, subdivide, pass regula­tions, allow non-farm use BUT can NOT add more land to it
Local
Municipal Subdiv­ision of the land, Building regula­tions, land use zoning, regional, local Improv­ement

CH19

Who Pays Property Taxes
fee simple owner, owner of a life estate, owner of an agreement for sale
 
Charities not exempt, NOT be liable for lease
Exemptions from taxation:
crown proper­ties, uni's, cemete­ries, some farms, municipal proper­ties, school, indian lands, hospitals
Home Owner Grant
only the owner/­occ­upier of the property is eligible
General Rate
(small­/bi­g)x1000
Real Property Tax
(tax rate x Property Value$­)/1000
Tax Deferral
widow/­wid­ower, 55 years or older, perman­ently disabled
Assessment Apeals
Property A. Rev. Pan -> PAApp. Board -> Supreme Court of BC -> Court of Appeal
Mill Rate
rate of tax per $1000 of net taxable value

CH21-23

Compar­ative Method
substi­tution, arms length, recent - stable condit­ions, similar - factors buyers­/se­llers
rating grid
subject property be the basis and all compar­ables adjusted to it
Cost Method
unusua­l/u­nique, last resort
infreq­uency of use:
the assumption that cost equals value is not necess­arily correct
 
note: land does not depreciate
Market Value
cost of improv­ement - deprec­iation + land value
Improv­ements based on:
current cost/m­odern equivalent
Curable Physical
can be fixed
Curable Functional
can be replaced cost effect­ively (ie bathroom fixtures)
Incurable Physical
cannot be fixed econom­ically (found­ation)
Incurable Functional
ie. narrow floor plan

CH21-23

Purchased after taxes
purchaser include sale date to dec31
Taxes to be paid in the future
purchaser pays entire amount, returns up to before purchase date to vendor

CH25

promot­ional mix
personal selling, advert­ising, public relations, sales promotion
Marketing mix
product, place, price, promotion
SMART mix
Specific, Measur­eable, Agreed upon, Realistic, Timeline attached
 

CH3: Crown Land

 
(based on common law, modified using LTR)
Fee Simple
Stated: remain­derman, Not Stated: revisioner
Strata
Leasehold
includes city, federal, 1st nations land
Life Estate (pur autre vie)
Rights:
 
Obliga­tions:
Cooper­ative Ownership
Joint Tenancy: TTIP unity, surviv­orship.
 
Tenants in Common: Unequal TTIP, $, will, if not specified its this one

CH3:

Interest in Land Less than Estates
Restri­ctive Covenants
negative in nature, runs with the land, binding
Building Scheme
Multiple Restri­ctive Cov., maintains uniformity in develo­pment, same vendor for all lots
Profits a Prendre
Right to profit from land
Easement
must be able to form a subjec­t(makes bounda­ries), benefits the land, release by express agreement from Dom.Te­nement

CH11: Contracts

condition precedent
 
may only be waived by the party who is benefit from the condition
 
to remove- must deliver written notice to each party before deadline
Protecting the Seller
 
pre-qu­ali­fic­ation of buyer
 
asking buyer to use his best efforts to satisfy conditions
 
time clause "72 hour clause­" (removal of conditions by specified time if better offer is received)
 
specific time on condition precedent (something that MUST occur)
 
Property Disclosure Statement a protection to lender

CH12: Law of Agency

Agent
has authority to represent and act on behalf of another person. Any person of sound mind can act as an agent. Not a party to the contract - does NOT need capacity
 
anyone in BC acting as an agent in relation to the provision of real estate services MUST BE LICENSED under the RESA
Agency Relati­onship
Express Contract
written or oral, most common relati­onship, mutual agreement by both parties
Implied Agency
an agency can be implied by conduct. Past con. is no con. applies
Ratifi­cation
An agent's authority can be granted retroa­cti­vely. When the agent informs the principal of his actions and the principal accepts, the principal will be bound by contract.
 
If the seller says no, the agent will be respon­sible
Agency by Estoppel
seller gives all power to act on behalf (power of attorney). Where the principal acts in such a way as to lead a 3rd party to believe that the agent has authority to act on behalf of the principal. Limited right. Agent CANNOT sign for anyone

CH12

Termin­ation of Authority
 
The relati­onship is based on mutual consent, either party can terminate at will
 
Can be revoked orally/by conduct
 
Principal that is incons­istent with the commun­ication of authority would terminate
 
Frustr­ation
 
Death, insanity, bankruptcy

CH12

Principal duties to an agent
 
1. To pay commission
 
2. Duty to indemnify the agent
 
Commission is due when the title has been exchanged for money
 
If a seller and buyer conspired to wait for the listing to expire and finish the deal after, the brokerage will be entitled ot the commission
Agency Disclosure
Before assisting or repres­enting, agent must disclose
the nature of the repres­ent­ation the licensee will be providing
 
whether the licensee will be acting on behalf of any other person
 
whether the licensee will be accepting compen­sation from any other person
If the agent does NOT disclose that he is an agent
The 3rd party may sue either the agent or the principal to enforce the contract. Both the agent and principal will be liable if a dishonest act occurs

CH15

Process of Forecl­osure
Demand letter
short time period to pay
Petition
BC supreme court registry
1st Court Order
Order NISI (redem­ption period)
Petitioner may apply for:
 
Judicial Sale: not enough equity. Owner can still be liable, most common in BC
 
Order Absolute of Forecl­osure: enough equity in property. Owner is no longer liable. Lender becomes registered owner. No further action can be taken against the owner
Criminal Code
offence for a person or corpor­ation to enter into an agreement ot receive interest at a criminal rate (60%)
Interest Act
If the document does not mention interest, no interest can be charged. If document requires interest to be paid with no set amount -rate allowed by law is 5% (does not apply to companies)
Business Practices and Consumer Protection Act
The court can re-open a mortgage transa­ction under the consumer protection act if it believes the interest rate is harsh or incosi­onable

CH20

Dormer
mini roof extension that provides extra space
WATTS =
VOLTS x AMPS
Amperage
measure of the rate of electrical flow
Voltage
measure of electrical potential or pressure of current flow
Wattage
measure of power consum­ption

CH21

the "­subject of apprai­sal­" is..
the legal rights of ownership vested in a particular piece of real estate
Ceiling Price/­Sub­jective Value/to owner
highest buyer will pay
Sale Price/­Obj­ective Value/in exchan­ge/­market
Negotiated price between buyer and seller
Floor Price/­Sub­jective Value
Lowest price the seller will accept
lending value
a long term conser­vative estimate of the value of the interest in land pledged as security

CH24 Statement of Adjust­ments

Price
debit purchaser, credit vendor
RE Commission
n/a purchaser, debit vendor
Deposit to Brokerage
credit purchaser, n/a vendor
Deposit paid directly to vendor
credit purchaser, n/a vendor
1st Legal Mortgage
credit purchaser, n/a vendor
Equitable mortgage
credit purchaser, n/a vendor
Assumed mortga­ge/­Agr­eement for Sale
credit purchaser, debit vendor
Legal Fees/C­onv­eyance
debit purchaser, n/a vendor
Discha­rging existing mortgage
n/a purchaser, debit vendor
Security Deposit
credit purchaser, debit vendor
Property Transfer Tax
debit purchaser, n/a vendor
Purchasers share of taxes already paid by vendor
debit purchaser, credit vendor
Vendor's share of taxes not yet due
credit purchaser, debit vendor
Penalty due on overdue taxes
n/a purchaser, debit vendor
 

CH3: Waste

Common law waste: Voluntary
exploi­tation of nat.re­sources
CL: Permisisve
allowing to deteri­orate
CL: Amelio­rating
improv­ements
Statute Waste: Equitable
destru­ction

CH5: Trespass

Types of Trespass
 
Entry: voluntary without permission
 
Remaining: remains after right ends
 
Placing: object to be wrongfully placed
Includes: knowle­dgeable and unknow­led­geable trespasser
Occurs on someone elses property, damage not necess­ary­(ac­tio­nable "per se"), intent­ion­al/­direct act/vo­luntary
Indirect actions are NOT trespass
"No solici­tin­g:" trespass if occurs
Who can sue:
person in actual possession of property
Remedies:
self help, injunc­tion, damages

CH5: Nuisance

Must have proof of physical damage
Interf­erence with use and enjoyment
Defense:
unavoi­dable as authorized by statute
 
damage is trifling

CH5: Negligence

duty of care, breach of standard of care, reasonable result - forese­eable damages (in the course of business)
 
 
not verifying listing agreement
 
not done title search
 
fails to disclose material facts
 
doesn't recommend to insert clauses in offer
Vicarious Liability
Fiduciary Duty
 
loyalty to client, full disclo­sure, duty of utmost good faith, advant­ageous price
Negligent Misrep­res­ent­ation
 
careless (without thought)
 
contra­ctual relati­onship not necessary
 
reasonably relied on
 
damage must result
Fraudulent Misrep­res­ent­ation
 
knowledge of false statement
 
does not need to be expert
 
sued under Tort/C­ontract law
Refuse to give advice
Clear Qualif­ication "do not rely on my opinio­n"
Defense
 
not reasonably forese­eable that the person would take the advice
Errors in drafting agreement:
licensee must be able to correctly draft documents

CH12: Law of Agency

Actual Authority
when documents are signed, the seller agrees to these author­ities
 
Express Authority
How long/m­uch­/co­mmi­ssion
  
Is created an limited by the terms of the contract. Promis to pay commission must be supported by consid­eration (Listing Agreement)
 
Implied Author­ity­/Agency
Every agent has implied authority to do anything necessary for carrying out teh express authority granted (ie. enter the property with buyer). The goal is to sell
  
Rolls Royce question: buy everything to get the car
 
Usual or Customary Authority
The agent is governed by what is usual in the trade (collect deposit)
Apparent Authority
Similar to agency by estoppel (parenting over someone's listing
Where the 3rd party would reasonably consider, from the conduct of the principal and the agent, that the agent did in fact possess authority

CH12

MLS
a site that pulls together inform­ation on real estate related topics with a focus on real estate listings
 
MLS contract must be in writing
 
Managed by real estate boards
 
Distri­buted to all members of RE board
DUAL Agency
listing agent represents also a buyer
 
or agents from the same brokerage
 
Dual agent owes full duties to each client, but keep inform­ation confid­ential in 3 areas: the price, motiva­tion, personal inform­ation
Termin­ation of Agency Contract
 
Death of one of the parties
 
Frustr­ation
 
Letter of termin­ation by the principal
 
Insanity of the agent or the principal

CH18

Planning Process
long/short term goals
 
testing courses of action
 
foreca­sting future requir­eme­nt/­trends
Planning Process
official community plans, non conforming use and board of variance, zoning bylaw, rezoning, subdiv­ision
Legal Non-Co­nfo­rming Use
Lost after 6 months of discon­tinued use (90 days in VAN), cannot make altera­tion, Damage beyond 75% of value cannot be rebuilt
Zoning bylaw Restri­ctions
1. Height 2. Density 3. Set Backs 4.Site Area 5.Home occupa­tions 6.Signage 7.Number of buildings 8.Parking
Zoning Bylaw has three parts
map, definition of key terms, schedule of regula­tions
Rationale of Regulation
Public health and safety, Protect Property Values, Conven­ience and appear­ance, conserve natural resources

CH21

Margin of Error
10%
Factors Affecting Value
house/­lot­/lo­cation, neighb­our­hood, local economy, regional economy, prov/nat economy, "­special purcha­ser­" (extension of bids), Highest and best use
LT Trends
shift in age compos­ition, government programs affecting RE, supply and cost of raw materials
ST Trends
consumer pessim­ism­/op­timism, change in interest rates (mortgage, bonds, loans)

CH21-23

Income Method
appraiser looks at:
current lease condition at teh time of the sale, registered mortgages, physical charac­ter­istics of the building
 
not the expected rent forecast!
 
based on economic factors, no deprec­iation is used
Yield=
net operating income­/sale price
CAPita­liz­ation Yield
an average yield of all buildings being compared
Sale Price =
NOI(su­bje­ct)/Cap Yield
Gross Potential Revenue
- Vacancy & Bad debt = G. Realized Revenue
GRR
- Expenses = Net Operating Income
Replac­ement Reserves
Provides for a periodic replac­ement of building components that wear out more rapidly than the building itself
 
replaces the equipment with relatively short lives such as stoves, refrig­era­tors, washing machines, carpeting