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ch1-10 Cheat Sheet (DRAFT) by

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


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
BC real estate associ­ation - PR
11 real estate boards: MLS, MLS access
RE Institute: advanced education


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


Balance Sheet:
note: purchase of assets by the business does not affect the owners equity
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
focus. ie: find a house before school starts
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


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


Contra­ctual Clauses apply when the borrower defaults
maturity date of the loan is pushed forward and lender demands to be paid out in full
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


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


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
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


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


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


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

CH3: Crown Land

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


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
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

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
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


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
Death, insanity, bankruptcy


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


Process of Forecl­osure
Demand letter
short time period to pay
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


mini roof extension that provides extra space
measure of the rate of electrical flow
measure of electrical potential or pressure of current flow
measure of power consum­ption


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

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 of­sources
CL: Permisisve
allowing to deteri­orate
CL: Amelio­rating
Statute Waste: Equitable

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
self help, injunc­tion, damages

CH5: Nuisance

Must have proof of physical damage
Interf­erence with use and enjoyment
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"
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


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
Letter of termin­ation by the principal
Insanity of the agent or the principal


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


Margin of Error
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)


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
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
- 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