Ontario Real Estate Salesperson Licensing Exam (OREA/Humber) — Questions and Answers

Question 1: In Ontario real estate, what is the legal effect of a 'counter-offer'?

It automatically extends the irrevocability period
It keeps the original offer alive while adding new terms
It terminates the original offer and creates a new offer that the other party can accept or reject (Correct answer)
It has no legal effect until signed by both parties

Correct answer: It terminates the original offer and creates a new offer that the other party can accept or reject

A counter-offer legally terminates the original offer. It creates a new offer with modified terms that the other party can accept, reject, or counter. The original offer cannot be revived without a new offer being made.

Question 2: What is the 'POLARIS' system in Ontario?

The Province of Ontario Land Registration Information System — the automated electronic database for property records (Correct answer)
A satellite-based property mapping system
A property appraisal system
A property listing service

Correct answer: The Province of Ontario Land Registration Information System — the automated electronic database for property records

POLARIS (Province of Ontario Land Registration Information System) is the electronic database that stores and provides access to property records in Ontario. It supports both title searching and electronic document registration.

Question 3: What is an 'interim closing' or 'interim occupancy' in Ontario new construction?

A partial refund of the deposit
A temporary rental agreement
A period when the buyer occupies the new home before final closing, paying occupancy fees to the builder instead of mortgage payments (Correct answer)
A construction delay penalty

Correct answer: A period when the buyer occupies the new home before final closing, paying occupancy fees to the builder instead of mortgage payments

Interim occupancy occurs in condominiums when the unit is ready but the condominium has not yet been registered. The buyer moves in and pays interim occupancy fees (estimated mortgage interest, property taxes, and common expenses) until final closing and registration.

Question 4: In Ontario, what is the role of the 'listing brokerage' in a residential transaction?

To represent the buyer exclusively
To represent the seller, market the property, arrange showings, present offers, and facilitate the transaction on behalf of the seller (Correct answer)
To appraise the property for the bank
To conduct the home inspection

Correct answer: To represent the seller, market the property, arrange showings, present offers, and facilitate the transaction on behalf of the seller

The listing brokerage represents the seller under a listing agreement, providing services including property marketing, arranging showings, receiving and presenting offers, negotiating on behalf of the seller, and facilitating the transaction through to closing.

Question 5: What is the standard maximum GDS ratio accepted by most institutional lenders in Canada?

28%
32% (Correct answer)
44%
40%

Correct answer: 32%

Most institutional lenders in Canada apply a maximum GDS ratio of 32%, meaning housing costs should not exceed 32% of gross monthly income.

Question 6: Under Ontario law, what is 'unjust enrichment' in a real estate context?

When a seller overprices their property
When a property increases in value due to market conditions
When one party is enriched at the expense of another without legal justification, potentially giving rise to a constructive trust (Correct answer)
When a tenant pays below-market rent

Correct answer: When one party is enriched at the expense of another without legal justification, potentially giving rise to a constructive trust

Unjust enrichment occurs when one party benefits at another's expense without legal justification. In real estate, this can arise when one person contributes to the acquisition or improvement of property owned by another, potentially resulting in a constructive trust.

Question 7: Mortgage default insurance (such as CMHC insurance) is designed to protect:

The borrower against unexpected interest rate increases
The buyer against undisclosed property defects
The lender against losses if the borrower defaults (Correct answer)
The seller against buyer non-performance on closing

Correct answer: The lender against losses if the borrower defaults

Mortgage default insurance protects the lender (not the borrower) by covering losses if the borrower defaults, which makes high-ratio lending less risky for financial institutions.

Question 8: Under REBBA 2002, what is a registrant's obligation regarding competing offers?

A registrant must convey all offers to their client as quickly as possible unless otherwise directed in writing (Correct answer)
Only the highest offer needs to be presented
Competing offers should be held until the first offer expires
The registrant may choose which offers to present to their client

Correct answer: A registrant must convey all offers to their client as quickly as possible unless otherwise directed in writing

Under REBBA 2002, registrants must present all competing offers to their client as soon as possible. A client may provide written direction to not present certain types of offers, but the default obligation is to present all.

Question 9: What is the significance of 'off-title' searches in Ontario real estate?

They are unnecessary in the Land Titles system
They uncover issues that may not appear on the registered title, such as zoning compliance, tax arrears, work orders, and utility easements (Correct answer)
They only check for environmental issues
They are optional searches performed after closing

Correct answer: They uncover issues that may not appear on the registered title, such as zoning compliance, tax arrears, work orders, and utility easements

Off-title searches are investigations beyond the title register that reveal important information about a property, including municipal zoning compliance, tax arrears, outstanding work orders, utility easements, and building permit status. They are essential even under the Land Titles system.

Question 10: In Ontario, what is 'electronic registration' and what are its requirements?

Using a credit card to pay registration fees online
Posting property listings online
Scanning paper documents and emailing them to the registry
The process of registering legal documents affecting title electronically through Teranet's system, requiring authorized users with digital signatures (Correct answer)

Correct answer: The process of registering legal documents affecting title electronically through Teranet's system, requiring authorized users with digital signatures

Electronic registration in Ontario allows authorized users (lawyers and their delegates) to register documents affecting title electronically through Teranet's e-registration system. Users must be authorized, use digital signatures, and comply with electronic registration requirements.

Question 11: How does REBBA 2002 define a 'brokerage'?

Only a corporation with at least 10 salespersons
A corporation, partnership, or sole proprietorship that is registered to trade in real estate (Correct answer)
A government agency that regulates real estate
Any individual who sells real estate

Correct answer: A corporation, partnership, or sole proprietorship that is registered to trade in real estate

Under REBBA 2002, a brokerage is defined as a corporation, partnership, or sole proprietorship registered under the Act to trade in real estate. All salespersons and brokers must be employed by a registered brokerage.

Question 12: What is the legal significance of a 'deposit' in an Ontario real estate transaction?

It is simply a goodwill gesture with no legal significance
It is paid directly to the seller immediately
It is refundable under all circumstances
It serves as consideration, evidence of good faith, and may be forfeited as liquidated damages if the buyer breaches the contract (Correct answer)

Correct answer: It serves as consideration, evidence of good faith, and may be forfeited as liquidated damages if the buyer breaches the contract

A deposit serves multiple purposes: it is part of the consideration, demonstrates the buyer's good faith and ability to complete the transaction, and may be forfeited to the seller as a form of liquidated damages if the buyer breaches the agreement without lawful excuse.

Question 13: In Ontario, what is the significance of 'insurance' during a residential real estate transaction?

The buyer must arrange property insurance before closing, and proof of insurance is typically required by the mortgage lender before funds are advanced (Correct answer)
Insurance is optional and not relevant to the transaction
Insurance is only needed after the first year of ownership
The seller's insurance automatically transfers to the buyer

Correct answer: The buyer must arrange property insurance before closing, and proof of insurance is typically required by the mortgage lender before funds are advanced

The buyer must arrange property insurance before closing. Mortgage lenders require proof of adequate insurance before advancing mortgage funds. The seller's insurance does not transfer — the buyer must obtain their own policy to protect against loss or damage.

Question 14: In Ontario, what is the concept of 'notice' in land registration?

A letter sent to neighbours about a property sale
A municipal notice about zoning changes
The principle that registration of a document provides constructive notice to the world of the interest claimed, and knowledge of an unregistered interest may constitute actual notice (Correct answer)
A notification from RECO about registration renewal

Correct answer: The principle that registration of a document provides constructive notice to the world of the interest claimed, and knowledge of an unregistered interest may constitute actual notice

Notice in land registration can be constructive (through registration on title) or actual (personal knowledge). Once a document is registered, the world is deemed to know about it. A person who has actual knowledge of an unregistered interest may also be affected by it.

Question 15: In Ontario, what is a 'Buyer Representation Agreement' (BRA)?

A rental agreement with an option to purchase
A purchase contract between buyer and seller
A financial agreement between the buyer and a lender
A written agreement between a buyer and a brokerage that establishes the brokerage as the buyer's representative, including terms of service and commission (Correct answer)

Correct answer: A written agreement between a buyer and a brokerage that establishes the brokerage as the buyer's representative, including terms of service and commission

A BRA formalizes the relationship between a buyer and a brokerage. It specifies the type of properties sought, the geographic area, the term of the agreement, the commission or remuneration, and the duties and obligations of both parties.

Question 16: What is a 'parcel register' in Ontario's land registration system?

The official record maintained for each property that lists the owner and all registered interests affecting the property (Correct answer)
A register of all parcels available for sale
A shipping register for real estate documents
A registry of all real estate agents

Correct answer: The official record maintained for each property that lists the owner and all registered interests affecting the property

The parcel register is the central record for each property in the Land Titles system. It identifies the current owner, the legal description, and lists all registered interests (charges, easements, liens) affecting the property. It is the definitive record of title.

Question 17: A mortgage discharge in Ontario refers to:

The transfer of a mortgage obligation from one lender to another
The formal removal of a mortgage from property title after the debt is fully repaid (Correct answer)
The early termination of a mortgage prior to the end of the agreed term
The cancellation of a mortgage application before funding

Correct answer: The formal removal of a mortgage from property title after the debt is fully repaid

A mortgage discharge is the legal process of removing the lender's charge from property title once the mortgage debt has been fully repaid, confirming the lender's security interest has been extinguished.

Question 18: Under REBBA 2002, which of the following best describes 'customer service'?

No services are provided — the person acts entirely on their own
Only showing properties without discussing pricing
Providing information and assistance without fiduciary obligations (Correct answer)
Providing full representation and advocacy

Correct answer: Providing information and assistance without fiduciary obligations

A customer receives information and services from a registrant but does not enter into a representation agreement. The registrant owes honesty and fair dealing but not the full fiduciary duties owed to a client.

Question 19: What is a 'waiver' in the context of conditions in an Ontario Agreement of Purchase and Sale?

A document that releases the real estate agent from liability
A mandatory government form
The voluntary relinquishment of a condition by the party for whose benefit the condition was inserted (Correct answer)
The automatic removal of all conditions at closing

Correct answer: The voluntary relinquishment of a condition by the party for whose benefit the condition was inserted

A waiver occurs when the party benefiting from a condition voluntarily gives up the right to that condition, making the contract firm and binding without that condition being fulfilled. For example, a buyer might waive a financing condition if they secure funds from another source.

Question 20: Which of the following best describes the 'amortization period' in mortgage financing?

The total time required to fully repay the mortgage (Correct answer)
The length of time the current mortgage agreement is in force
The number of days between scheduled mortgage payments
The period during which the interest rate remains fixed

Correct answer: The total time required to fully repay the mortgage

The amortization period is the total time required to fully repay the mortgage loan, typically 20 to 25 years for insured mortgages in Canada.

Question 21: What is a 'legal description' of property in Ontario's registration system?

The precise identification of a property's boundaries and location using lot and plan numbers, metes and bounds, or PIN, as recorded in the land registration system (Correct answer)
A description of the building on the property
The property's street address
A general description of the neighbourhood

Correct answer: The precise identification of a property's boundaries and location using lot and plan numbers, metes and bounds, or PIN, as recorded in the land registration system

A legal description precisely identifies a property using methods such as lot and plan numbers (in a registered plan of subdivision), metes and bounds (bearings and distances), or the Property Identification Number (PIN). The street address alone is not a legal description.

Question 22: In Ontario, what is 'title insurance' and why is it important?

An insurance policy that covers the real estate agent's errors
An insurance policy that protects against losses arising from defects in title, including fraud, forgery, encroachments, and survey issues (Correct answer)
Insurance that covers the building against fire damage
Insurance required only for commercial properties

Correct answer: An insurance policy that protects against losses arising from defects in title, including fraud, forgery, encroachments, and survey issues

Title insurance protects property owners and lenders against financial losses arising from title defects that were not discovered during the title search. It covers issues like fraud, forgery, encroachments, zoning violations, and survey errors.

Question 23: Which of the following best describes a vendor take-back (VTB) mortgage?

The buyer obtains financing from a third-party chartered bank
The seller provides financing directly to the buyer as part of the property transaction (Correct answer)
A government agency provides subsidized mortgage financing to the buyer
The buyer assumes the seller's existing mortgage

Correct answer: The seller provides financing directly to the buyer as part of the property transaction

In a vendor take-back mortgage, the seller acts as the lender, providing some or all of the financing to the buyer, which is recorded as a mortgage on the property.

Question 24: In Ontario, what is a 'license' in property law and how does it differ from an easement?

A license can only be granted by the government
A license is a personal, revocable permission to use land that does not create an interest in land, while an easement creates a lasting property interest (Correct answer)
A license and an easement are the same thing
A license provides more permanent rights than an easement

Correct answer: A license is a personal, revocable permission to use land that does not create an interest in land, while an easement creates a lasting property interest

A license is personal permission to use someone's land that is revocable and does not create a property interest (it cannot be registered on title). An easement creates a property interest that runs with the land and binds future owners.

Question 25: What happens if a brokerage closes or is terminated under REBBA 2002?

RECO takes over all active listings automatically
The Broker of Record must ensure all trust funds are properly disbursed and records are transferred or retained (Correct answer)
Clients must find new representation on their own
All ongoing transactions are automatically cancelled

Correct answer: The Broker of Record must ensure all trust funds are properly disbursed and records are transferred or retained

When a brokerage closes, the Broker of Record has a continuing obligation to ensure all trust funds are properly disbursed, all parties to pending transactions are notified, and records are retained for the required period.

Question 26: What is 'tender' in Ontario real estate contract law?

The unconditional offer to perform one's obligations under the contract, typically by being ready, willing, and able to close on the closing date (Correct answer)
A deposit paid at the time of offer
A request for proposals from contractors
A type of bidding process for commercial properties

Correct answer: The unconditional offer to perform one's obligations under the contract, typically by being ready, willing, and able to close on the closing date

Tender means presenting oneself as ready, willing, and able to complete the transaction on the closing date. If one party tenders and the other fails to close, the tendering party can pursue legal remedies for breach of contract.

Question 27: Under REBBA 2002, what are the requirements for a brokerage's trust account?

Trust accounts are only required for transactions over $100,000
Any bank account can serve as a trust account
The trust account can be located in any Canadian province
The trust account must be maintained at a recognized financial institution in Ontario, clearly designated as a trust account (Correct answer)

Correct answer: The trust account must be maintained at a recognized financial institution in Ontario, clearly designated as a trust account

A brokerage's trust account must be maintained at a recognized financial institution in Ontario, clearly designated as a trust account, and separate from the brokerage's operating funds.

Question 28: In Ontario's Land Titles system, what is the 'Land Titles Assurance Fund'?

A government fund that compensates persons who suffer loss due to errors or omissions in the Land Titles register (Correct answer)
A fund for first-time homebuyers
A deposit protection fund managed by RECO
An insurance fund for real estate agents

Correct answer: A government fund that compensates persons who suffer loss due to errors or omissions in the Land Titles register

The Land Titles Assurance Fund provides compensation to persons who suffer financial loss because of an error, omission, or misdescription in the Land Titles register. It supports the government's guarantee of title accuracy.

Question 29: The Gross Debt Service (GDS) ratio measures:

Monthly housing costs as a percentage of gross monthly income (Correct answer)
The spread between the mortgage rate and the prime rate
The loan-to-value ratio of the mortgage
Total monthly debt obligations as a percentage of net income

Correct answer: Monthly housing costs as a percentage of gross monthly income

The GDS ratio measures housing costs—principal, interest, property taxes, and heating—as a percentage of gross monthly income, with most lenders capping it at 32%.

Question 30: What is an 'encroachment' in Ontario property law?

When a structure or improvement on one property extends onto an adjacent property without permission (Correct answer)
A legal right to extend your property boundary
A type of property easement
A zoning violation

Correct answer: When a structure or improvement on one property extends onto an adjacent property without permission

An encroachment occurs when a building, fence, driveway, or other structure on one property physically extends beyond the property boundary onto an adjacent property. Encroachments can lead to disputes and may need to be resolved before a property sale.

Question 31: In Ontario, what is a 'condition subsequent' in a real estate contract?

A condition that, if it occurs after the contract is formed, terminates the contract or an obligation under it (Correct answer)
A post-closing inspection requirement
A condition that must be met before the offer is made
The same as a condition precedent

Correct answer: A condition that, if it occurs after the contract is formed, terminates the contract or an obligation under it

A condition subsequent is an event that, if it occurs after the contract has become binding, terminates a party's obligations. Unlike a condition precedent (which must be met before the contract is binding), a condition subsequent dissolves an already-binding contract.

Ontario Real Estate Salesperson Licensing Exam (OREA/Humber)

The Ontario real estate salesperson licensing exam tests knowledge of real estate law, land registration, mortgage financing, contract law, and regulatory frameworks (TRESA/REBBA) required to practice as a licensed real estate salesperson in Ontario.

Questions

40 min

Time Limit

75%

To Pass

Checking for saved progress...

Exam Rules

You can skip questions and return to them later
Flag questions for review before submitting
No feedback shown until you submit the entire exam
Unanswered questions count as wrong — answer everything
10 pretest questions are mixed in and don't affect your score
Timer auto-submits when time runs out
Your progress is auto-saved every 30 seconds