Deck 25: Insurance Law

Question 1

Which is most correct? On closing, the purchaser's solicitor completes

A) a sub-search and executions search, while the vendor's solicitor delivers compliance certificates and cash.
B) a sub-search and executions search, while the vendor's solicitor delivers a deed and keys.
C) a sub-search, while the vendor's solicitor delivers a deed and keys.
D) a sub-search, while the vendor's solicitor delivers a deed, keys, and compliance certificates.

Answer 1

B

Question 2

Why are environmental audits conducted?

A) To ascertain whether the property is contaminated.
B) To estimate the clean-up costs.
C) To fulfill a condition precedent.
D) Environmental statutes have remediation requirements.
E) All of these are reasons to conduct an environmental audit.

Answer 2

A

Question 3

Bradford entered into a purchase and sale agreement with Frank, the vendor, to purchase a building lot for $45,000. Bradford arranged for a survey of the property, and the completed survey revealed that the width of the lot was narrower than the width stipulated in the purchase agreement. If the agreement described the dimensions of the lot using the words "more or less," the vendor would not be required to make an abatement of the purchase price if the difference was minor.

Answer 3

True

Question 4

Bradford entered into a purchase and sale agreement with Frank, the vendor, to purchase a building lot for $45,000. Bradford arranged for a survey of the property, and the completed survey revealed that the width of the lot was narrower than the width stipulated in the purchase agreement. Where the parcel of land actually owned by the vendor is less than the parcel which the vendor has agreed to sell, the purchaser may still take the land, but demand an abatement of the purchase price.

Question 5

Bradford entered into a purchase and sale agreement with Frank, the vendor, to purchase a building lot for $45,000. Bradford arranged for a survey of the property, and the completed survey revealed that the width of the lot was narrower than the width stipulated in the purchase agreement. If the discrepancy between the survey dimensions and the land described in the agreement is substantial, the purchaser may avoid the transaction.

Question 6

Leo engaged Raveen, a real estate agent, to sell his house and lot for him. Without disclosing the fact to Leo, Raveen arranged for his brother-in-law to offer to purchase the house at a relatively low price, because he knew Leo was anxious to sell the property. After the transaction closed, Leo discovered the true facts. Raveen would be liable to Leo for any difference between the market price of the property, and the price at which the property was sold, because Raveen failed to disclose the true circumstances concerning the offer made.

Question 7

Leo engaged Raveen, a real estate agent, to sell his house and lot for him. Without disclosing the fact to Leo, Raveen arranged for his brother-in-law to offer to purchase the house at a relatively low price, because he knew Leo was anxious to sell the property. After the transaction closed, Leo discovered the true facts. The relationship between Leo and Raveen is basically one of utmost good faith.

Question 8

Leo engaged Raveen, a real estate agent, to sell his house and lot for him. Without disclosing the fact to Leo, Raveen arranged for his brother-in-law to offer to purchase the house at a relatively low price, because he knew Leo was anxious to sell the property. After the transaction closed, Leo discovered the true facts. Leo would be entitled to recover the commission he paid to Raveen on the sale.

Question 9

The Torrens or Land Titles System

A) is more complicated from the purchaser's perspective than the Registry System.
B) is only marginally different from the Registry System.
C) differs from the Registry System in that the province guarantees the title as shown in the register.
D) eliminates the need for a purchaser's letter of requisitions.
E) provides the purchaser's solicitor with any outstanding executions as well as the chain of title.

Question 10

A survey will establish

A) encroachments by adjoining landowners.
B) the existence of easements over the land.
C) the accuracy of description of the land in prior deeds.
D) the physical boundary points and lines.
E) All of the responses are correct.

Question 11

Which of the following is most often completed by the real estate agent?

A) Prepare a written offer of purchase.
B) Conduct an expert property inspection.
C) Search the title to the property.
D) Where the property is a new dwelling, insure that the dwelling is registered under the new home warranty program.
E) Close the transaction.

Question 12

Bradford entered into a purchase and sale agreement with Frank, the vendor, to purchase a building lot for $45,000. Bradford arranged for a survey of the property, and the completed survey revealed that the width of the lot was narrower than the width stipulated in the purchase agreement. Under the terms of the contract, the vendor is obliged to provide the purchaser with a parcel of land as stipulated in the agreement.

Question 13

A search in the Sheriff's Office is required

A) to determine the vendor's title to the land.
B) to determine if executions have attached to the land.
C) to determine if the land is mortgaged to a third party.
D) to determine if tax arrears against the land exist.
E) to determine if the property conforms to zoning.

Question 14

The rarest of permitted actions of a real estate broker is to:

A) actively seek out purchasers and advertise the property at the agent's own expense.
B) inspect the property and value it for the purposes of establishing an offering price.
C) act as agent for both vendor and purchaser.
D) execute the purchase agreement on behalf of the vendor under a power of attorney.
E) prepare a written offer to purchase for the prospective purchasers to sign.

Question 15

On March 1^st, Sam enters into an offer to purchase with Geraldo to purchase his home. The closing date is June 15^th. On May 1^st, Sam discovers that the city is planning to re-zone the land next door as commercial. Sam is very unhappy and no longer wants the property. What legal/non-legal action might Sam take?

A) Sam may bring an action against Geraldo for misrepresentation.
B) Sam may fail to complete the transaction.
C) Sam may notify Geraldo of an anticipatory breach.
D) Sam may fail to complete the transaction of notify Gerald of an anticipatory breach.
E) Sam may take any of these actions.

Question 16

Not among a solicitor's customary searches are

A) execution searches.
B) zoning searches.
C) work order searches.
D) title searches.
E) unpaid Land Transfer Tax searches.

Question 17

A real estate agent is an agent for

A) the vendor at all times.
B) the purchaser at all times.
C) the vendor in listing, the purchaser in offering, and the vendor in counter-offering.
D) both parties at all times, in an agency of utmost good faith.

Question 18

Who has the obligation of searching the title to determine which encumbrances must be discharged?

A) Purchaser's realtor
B) Vendor's realtor
C) Purchaser's lawyer
D) Vendor's lawyer
E) Surveyor

Question 19

Lucy made an offer to purchase the Lucky Star Tavern that was accepted by the property owner. During the title search process her solicitor discovered that the property had been used 20 years previously as a gas station and shop. There were no gas pumps visible on the property when Lucy inspected it prior to making her offer to purchase. No record could be found of any removal of the underground tanks.

A) Lucy could avoid the contract to purchase the property.
B) Lucy may not order an environmental audit be performed on the property at this stage.
C) Lucy needed to make her offer to purchase conditional on a clean environmental audit in order to now avoid the contract.
D) If Lucy completes the transaction she can make the current landowner-vendor jointly responsible for the cost of cleaning up the property since the problem was discovered before closing.
E) All of the responses are true.

Question 20

Who has the obligation of discharging encumbrances from title prior to closing?

A) Purchaser's realtor
B) Vendor's realtor
C) Purchaser's lawyer
D) Vendor's lawyer
E) Surveyor

Question 21

Jared engaged Mackenzie as his lawyer to handle a real estate purchase on his behalf. Mackenzie examined the title to the property, and discovered that the land was subject to a registered outstanding mortgage in favour of Steven. The mortgage would be extinguished if the vendor gave Jared a deed to the land, as the mortgage is an agreement between Steven and the present owner.

Question 22

Following closing, should a third party show a legal right to ownership over the purchaser, the purchaser's first recourse is to the vendor in damages.

Question 23

Where a purchaser has viewed the property to his satisfaction before offering, but a survey reveals significantly less land than what was alleged by the vendor, the purchaser may accept it with abatement, or walk away from the sale.

Question 24

On closing, a purchaser obtains from the vendor a certificate as to writs of execution.

Question 25

In most cases a vendor must pay an agent his commission based on the sale price in the offer even if the prospective sale falls through.

Question 26

A real estate agent is bound by a duty of utmost good faith as he acts as agent for both parties as negotiations go back and forth.

Question 27

Jared engaged Mackenzie as his lawyer to handle a real estate purchase on his behalf. Mackenzie examined the title to the property, and discovered that the land was subject to a registered outstanding mortgage in favour of Steven. If Jared proceeded with the purchase without obtaining a discharge of the mortgage from Steven, Steven would be entitled to claim payment from Jared for the mortgage amount.

Question 28

A lawyer obtains on closing a Sheriff's Certificate with respect to Writs of Execution against a vendor. Explain why he or she might (or must) also obtain one as against his or her own clients, particularly if there is to be mortgage financing.

Question 29

Leo engaged Raveen, a real estate agent, to sell his house and lot for him. Without disclosing the fact to Leo, Raveen arranged for his brother-in-law to offer to purchase the house at a relatively low price, because he knew Leo was anxious to sell the property. After the transaction closed, Leo discovered the true facts. The transaction is valid.

Question 30

A "letter of requisition" is the purchaser's formal demand on closing that the vendor deliver the property up in return for payment.

Question 31

A lawsuit for monetary damages is the traditional remedy open to a purchaser should the vendor improperly attempt to rescind the Agreement of Purchase and Sale.

Question 32

Jared engaged Mackenzie as his lawyer to handle a real estate purchase on his behalf. Mackenzie examined the title to the property, and discovered that the land was subject to a registered outstanding mortgage in favour of Steven. If the purchase agreement did not provide for the assumption of the mortgage by Jared, the vendor of the property would be obliged to obtain a discharge of the mortgage before Jared would be required to complete the transaction.

Question 33

An offer contains a statement that: "the agent, for procuring this offer, will be paid by the vendor on the date fixed for completion of this sale, a commission of 6% of an amount equal to the above-mentioned sale price." This places the vendor in a materially better position than an offer which contains a statement that: "the agent, for procuring this offer, will be paid by the vendor on completion of this sale, a commission of 6% of the sale price."

Question 34

A solicitor's fee for handling a sale would exceed his fee for a purchase.

Question 35

Describe the role, duties (and to whom they are owed) of a real estate agent in the course of listing a property for sale and conducting negotiations. A complete answer will contain the pitfalls an agent faces in light of general Common Law principles of agency.

Question 36

Livery of seisin has been replaced by delivery of keys.

Question 37

The appraisal and survey must be handed over to the purchaser as part of the document package on closing of the real estate transaction.

Question 38

Jared engaged Mackenzie as his lawyer to handle a real estate purchase on his behalf. Mackenzie examined the title to the property, and discovered that the land was subject to a registered outstanding mortgage in favour of Steven. If Jared wishes to purchase the property subject to Steven's mortgage, he would only pay the vendor the difference between the mortgage value and the purchase price.

Question 39

One would not normally expect to find a Bill of Sale as part of the closing documents on the sale of ten hectares of pasture lands.

Question 40

Describe the major steps a solicitor undertakes and completes in the course of handling a residential real estate purchase.

Question 41

In June of 1980, Bernie acquired a parcel of land consisting of 100 hectares, which he intended to farm as had many owners of the property before him. At the time he purchased the property, Bernie's lawyer told him that, in the course of her search of title to the property, she had found a deed to logging company registered in 1910. The deed was for a 15-metre wide strip of land, which appeared to lie on the same property that Bernie was purchasing. The deed seemed to be the result of purchase which had occurred in 1910, across the lands Bernie was going to buy (then owned by Smith), and continuing across the lands of the neighbours to both sides. Most likely, it had been purchased to build an access road into a forest. The road had never been built. In fact, there were no physical structures on the strip that had been constructed by the logging company.
The lawyer further explained that she had found another deed, dated in 1938, in which an owner of the lands named White had sold them to Green, but that the deed in that case was all-encompassing, and had included the strip in the description of the lands to be conveyed. There had been several further transactions up to the present owner from whom Bernie would be purchasing the lands. Bernie instructed his lawyer to continue with the purchase and close the deal. After closing, Bernie continued to farm the lands as had his predecessors, including the 15-metre strip.
In 1993 Bernie registered a sworn document on the title of the property in which he declared himself to be the owner in fee simple of the 15-metre strip. The successor to the logging company, upon becoming aware of the registration, wrote to Bernie threatening legal action to challenge his assertion to any rights in the strip
The land registration system of the province in which Bernie resided stipulated that there be a clear chain of title for 40 years.
Discuss the rights and liabilities, if any, of the various parties involved in the case. If the successor to the logging company took legal action, what would be the outcome?

Question 42

Outline from a legal perspective the differences one would expect to experience between a residential and a commercial real estate transaction.

Question 43

Victoria agreed to purchase a restaurant owned by Gordon. Victoria's intention was to remodel the restaurant on a particular theme and then turn around and resell it as a going concern. She had done this quite a number of times in the past and made her living this way. Victoria had given clear instructions to her solicitor that she wanted no title problems to arise that may haunt her later in her attempt to resell the property, and that she would "walk away from the deal" if there were any. About a month before closing, her solicitor discovered that the building that formed the restaurant encroached upon city lands to the extent of six centimetres. On hearing this, Victoria instructed her solicitor to inform Gordon that she had no intention of completing the transaction. Gordon immediately brought an action for specific performance to force Victoria to purchase the property, and was willing in so doing to either accept an abatement of the sale price or obtain a licence from the city renewable yearly at a very nominal cost (currently $5). It was, however, impossible for Gordon to obtain an actual deed for the six centimetres from the city at any cost. Discuss the questions of surveys, financing, and intentions of the parties, and discuss the arguments of the parties. Render a decision.

Question 44

Steven approached an agent of Any Lands Brokerage Ltd., Johnson, for his assistance in finding a home to purchase. Steven explained that the maximum monthly payment he could make under a mortgage was $1,100 and he wanted Johnson to find him a home with a mortgage he could assume such that the payment could not exceed this sum. Johnson did not have listings that suited Steven's needs, and as he was aware that Steven did not know where to turn, he offered to search the Multiple Listing Service for a suitable property. Steven asked him to do so. Any Lands Brokerage Ltd. was a member of the local Multiple Listing Service, and received the listing of cards for various properties that described their attributes, including the existing mortgages. Based on the information that was contained on the MLS cards, Johnson picked a house for Steven, which Steven later purchased. Johnson's attention had been drawn to this particular property as the listing card showed a mortgage which could be assumed at 8% with a monthly payment of $1,125 and a term that expired the next year. As matters turned out, the vendors were in receipt of a special mortgage rate and subsidy from the Canada Mortgage and Housing Corporation for as long as they occupied the premises and when the house was sold the mortgage rate would increase from 8% to 12 ¾%. A month after closing Steven discovered that the payment expected of him was, in fact, $1,600 per month rather than $1,100. Steven brought a suit against the agent, Johnson, and Any Lands Brokerage Ltd. for the difference of his payments for the remaining term of the mortgage. Discuss the issues raised in this case and the arguments upon which each party will rely.