OREA Residential Transactions 3 — Questions and Answers
Question 1: In Ontario, what is the 'direction regarding funds' in a closing?
- Instructions from the bank about mortgage payments
- Written instructions from the seller directing how the sale proceeds should be distributed among the seller's lawyer, mortgage company, real estate brokerage, and the seller (Correct answer)
- A government directive about funding social housing
- The buyer's instructions for paying the deposit
Correct answer: Written instructions from the seller directing how the sale proceeds should be distributed among the seller's lawyer, mortgage company, real estate brokerage, and the seller
The direction regarding funds is a document where the seller instructs their lawyer on how to distribute the sale proceeds at closing. This typically includes paying off the existing mortgage, paying the real estate commission, and remitting the balance to the seller.
Question 2: What is the 'non-resident speculation tax' (NRST) in Ontario and who pays it?
- A tax on Canadians moving to Ontario from another province
- A tax payable by foreign nationals and certain corporations purchasing residential property in designated areas of Ontario (Correct answer)
- A tax on properties that are vacant for more than 6 months
- A tax on investment properties only
Correct answer: A tax payable by foreign nationals and certain corporations purchasing residential property in designated areas of Ontario
The NRST is an additional tax imposed on foreign nationals, foreign corporations, and taxable trustees who purchase residential property in Ontario. It is intended to address foreign demand in the housing market and is payable in addition to the regular land transfer tax.
Question 3: In Ontario, what must a seller provide to the buyer on closing day?
- Only the house keys
- Vacant possession (unless otherwise agreed), all keys, garage door openers, alarm codes, and any fixtures and chattels included in the agreement (Correct answer)
- A home warranty
- A financial statement of all expenses related to the property
Correct answer: Vacant possession (unless otherwise agreed), all keys, garage door openers, alarm codes, and any fixtures and chattels included in the agreement
On closing day, the seller must provide vacant possession of the property (unless tenants are part of the agreement), along with all keys, garage door openers, alarm codes, and any included fixtures and chattels. The property should be in the condition agreed upon.
Question 4: What is a 'bridge loan' or 'bridge financing' in Ontario real estate?
- A loan for building a bridge on the property
- Short-term financing that helps a buyer who is purchasing a new property before the sale of their existing property closes (Correct answer)
- A government subsidy for first-time homebuyers
- A long-term mortgage with a low introductory rate
Correct answer: Short-term financing that helps a buyer who is purchasing a new property before the sale of their existing property closes
Bridge financing is a short-term loan that covers the gap when a buyer's new property closes before their existing property is sold. It allows the buyer to access the equity in their current home to fund the new purchase until the sale proceeds are received.
Question 5: In Ontario, what is a 'title search period' in a residential real estate transaction?
- The time it takes to find a property to buy
- The time between the acceptance of the offer and the requisition date, during which the buyer's lawyer investigates the title and raises any concerns (Correct answer)
- The time required to register a new title
- The time to process a mortgage application
Correct answer: The time between the acceptance of the offer and the requisition date, during which the buyer's lawyer investigates the title and raises any concerns
The title search period is the window between acceptance of the agreement and the requisition date during which the buyer's lawyer examines title, conducts off-title searches, and raises any objections or concerns about the property's title or status.
Question 6: What are 'chattels' versus 'fixtures' in an Ontario residential purchase agreement?
- They are the same thing
- Chattels are movable items not permanently attached (e.g., curtains, portable appliances); fixtures are permanently attached items included with the property (e.g., light fixtures, built-in shelving) (Correct answer)
- Chattels are always included in the sale; fixtures never are
- The terms have no legal significance
Correct answer: Chattels are movable items not permanently attached (e.g., curtains, portable appliances); fixtures are permanently attached items included with the property (e.g., light fixtures, built-in shelving)
Chattels are movable personal property items not permanently attached to the property (curtains, freestanding appliances, furniture). Fixtures are items permanently attached that become part of the property (built-in cabinets, light fixtures, furnaces). The agreement should clearly specify which chattels are included.
OREA Residential Transactions 3
In Ontario, what is the 'direction regarding funds' in a closing?