OREA Residential Transactions 3

Question 1

In Ontario, what is the 'direction regarding funds' in a closing?

Accepted 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

Answer

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?

Accepted Answer

A tax payable by foreign nationals and certain corporations purchasing residential property in designated areas of Ontario

Answer

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?

Accepted Answer

Vacant possession (unless otherwise agreed), all keys, garage door openers, alarm codes, and any fixtures and chattels included in the agreement

Answer

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?

Accepted Answer

Short-term financing that helps a buyer who is purchasing a new property before the sale of their existing property closes

Answer

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?

Accepted 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

Answer

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.

Ontario Real Estate Practice Test

Ontario Real Estate Practice Test

OREA Residential Transactions 3