part 2: chapter 11-18 Cheat Sheet by o1510

Option

Transa­ction with a subjective subject clause: buyer's repres­ent­ative may better protect the buyer by recording presence of separate consid­eration for the seller's promise to refrain from cancelling the agreement before the subject removal deadline

dependent on will/a­ctions of someone who is not a party to the contract. No party may unilat­erally waive.

fundam­ental term of contract.

injured party can terminate and/or sue for damages or specific perfor­mance

completed any time property is listed for sale. DOES NOT form a party of their contract unless agreed to.

Contains the obliga­tions of the vendor and purchaser with respect to purchase and sale

Protection of personal inform­ation: obtain consent for various use

warranty: breach allows to sue for damages but not terminate

note: if the parties to the contract do not consent in writing to the release of the deposit, then the brokerage cannot release the deposit from trust.

Record Keeping: receipt of funds, client info, large cash transa­ction, suspicious transa­ction, client identi­fic­ation, unrepr­esented parties and third party determ­ina­tion, penalties: criminal charges

Warran­ties: express or implied (verify implied)

When an agent acting within authority discloses he is acting as an agent enters into a contract with 3rd party, the parties to the contract are: PRINCIPAL + 3RD PARTY

Ratifi­cation: agents authority created retroa­ctively by principal

The licensee may advise the buyer that the offer exceeds the stated price in listing contract

Reasons to borrow funds

Invest the borrowed funds at a higher rate of interest than the borrowing rate

Save or release equity for activities

Regular and predic­table return on capital as specified in the loan contract

Primary Mortgage Market: sale of interests of land

Interest Rate Charged on a Mortgage Loan is Comprised of:

Inducement to accept risk on the capital resulting from an uncertain invest­ment; prime invest­ments will generally be granted a lower rate than higher risk

Elements Considered in Setting Rate

Admini­str­ative work

Amount of borrower's equity; rate being lower as the amount of equity increases

Interest Act: no limit on the rate of interest which can be charged in a mortgage. Borrower must be indivi­dual, rates must be determined

Mortgage Fraud Offences:

agent of seller to fraudu­lently conceal title info to induce a sale

Provincial Legisl­ation Over Mortgages: Business Practices and Consumer Protection Act

Mortgage Brokers Legisl­ation: registrar has power to invest­igate compla­ints, freeze funds

they make requir­ements which cause a site to become conami­nated

they must get approval from director of waste management within 10 days of purchase

5 c's of credit in notes

Reside­ntial property which is not owner occupied (income produc­ing), and all non reside­ntial property (predo­min­antly income produc­ing). Focus is on NOI. Applic­ation Factors Include:

Mortgage and real estate market conditions at time of applic­ation

Strength of the covenants of tenants resident in property

Income Constr­aint: safety margin ensures that the NOI can cover the mortgage payments by expressing the margin between the net operating income and mortgage payment as a percentage of NOI

s59 of the Law and Equity Act (preve­ntion of fraud)

EXCEPTIONS

indication of subject matter, money ahs been spent, reasonable reliance, deposi­t/p­rep­ayment given,

writing can be sufficient even though a term is left out or improperly stated

Doctrine of Merger

doesnt apply to: fraud, mutual mistake, condition, warranty,

if defici­encies are discov­ered, they must be acted upon before contract closing. Remedy: recession

seller executes a prescribed transfer form: seller has the right to convey title, buyer has quiet posses­sion, title is free from encumb­rance

Encumb­rance: judgement, mortgage, lien or any other claim which is registered against land

Builders Liens: claim registered against the title to land by a contra­cto­r/s­upplier of material

restit­ution (return deposit)

you cannot enforce contract against person who did not sign

Exclusive Listing

If the owner sells himself, he must still pay commission

Multiple Listing

Listing must be distri­buted to all members of the real estate board and placed on MLS

Open Listing

A commission is paid to the agent who is the effective cause of the sale

Brokerage promises to use best efforts to locate a ready, willing purchaser

Supply of Mortgage Funds: linked with capital market: competes for share

Demand of Mortgage Funds: activity of RE market and terms/­price of loan. UP when expanding economy

Charac­ter­istics of Mortgage Loans

CMHC: the only government mortgage insurance in canada

Instit­utional Lenders: banks, credit unions, trust and loan companies, life insurance companies

Govern­ment: insured by govt agencies, source of mortgage funds

note: by creating a m.loan, the borrower (MORTG­AGOR) pledges their property rights as collateral for the loan.

Assignment of Mortgage (transfer to another). Risks: payments

Property Law Act limits continuing liability of a vendor under a mortgage or agreement for sale under these circum­sta­nces:

Mortgage assumed or agreement for sale transf­erred is payable upon demand, no demand within 3 months: liability exting­uished

Novation and Impairment of Security

Impairing the Security: lender does something which prevents lender from being able to restore the property to original state to the borrower upon the borrower repaying mortgage debt.

maturity date of loan is pushed forward and lender demands to be paid out in full

in default of payment the lender will do payment and it will be added to the loan

gives lender complete discretion to use most suitable remedy

forecl­osure

Federal statute designed to hold businesses accoun­table for misleading advert­ising, enforced by Compet­ition Bureau

conspires to fix, maintain, increase, or control prices for product supply or sales, allocate territ­ories, eliminate supply of product

misleading advert­ising, price mainte­nance, sale above advertised price

Express Contract

Most common relati­onship

can be implied by conduct, not to common, "­bring me the buyer", agreeing to do something

Ratifi­cation

When the agent informs the principal of his actions and the principal accepts, the principal will be bound by the contract

Agency by Estoppel

Limited right. Agent CANNOT sign for anyone, seller gives [similar to] power of attorney

Lender: mortgagee

Implied Terms of A Mortgage

Option to Purchase the Property when Negoti­ated: clog on the equity of redemption and makes the contract void.

Stipul­ations for Collateral Advantage: mortgagee can give the borrower terms which benefit itself, but it has to extend outside of the mortgage (ie.buying their products)

Land Title Act: delivered and signed to both parties

Vendor "take back" Mortgage

Reverse Annuity Mortgage

Wrap Around Mortgage

Interest Act: if the document does not mention interest, no interest can be charged.

Forecl­osure: Process

Petition: BC Supreme court registry

Petitioner May Apply For:

Order of ABSOLUTE forecl­osure: enough equity in property, owner no longer liable, lender becomes registered owner, no further action can be taken against owner

2nd Mortgage: equitable mortgage