OREA Residential Transactions 1 — Questions and Answers
Question 1: In a typical Ontario residential real estate transaction, what is the correct order of steps?
- Closing, offer, negotiation, inspection
- Listing, showing, offer and negotiation, acceptance, conditions fulfilled, closing (Correct answer)
- Inspection, offer, listing, closing
- Financing, listing, closing, offer
Correct answer: Listing, showing, offer and negotiation, acceptance, conditions fulfilled, closing
A typical residential transaction follows this sequence: the property is listed for sale, shown to prospective buyers, an offer is made and negotiated, the offer is accepted (possibly with conditions), conditions are fulfilled or waived, and the transaction closes.
Question 2: What is the standard form 'Agreement of Purchase and Sale' used in Ontario residential transactions?
- A government-issued contract form
- The OREA Form 100, a standardized form used by real estate registrants for residential resale transactions (Correct answer)
- A form created by each individual brokerage
- A form issued by the Canadian Real Estate Association
Correct answer: The OREA Form 100, a standardized form used by real estate registrants for residential resale transactions
The OREA (Ontario Real Estate Association) Form 100 is the standardized Agreement of Purchase and Sale used for residential resale transactions in Ontario. It includes standard clauses and space for additional terms and conditions.
Question 3: In Ontario, what is the purpose of a 'home inspection' in a residential transaction?
- To determine the property's market value
- To assess the physical condition of the property, including its structural, mechanical, and electrical systems, and identify potential defects (Correct answer)
- To verify the property's zoning classification
- To check the property's title status
Correct answer: To assess the physical condition of the property, including its structural, mechanical, and electrical systems, and identify potential defects
A home inspection is a visual examination of the property's physical condition by a qualified inspector. It covers the structure, roof, plumbing, electrical, HVAC, and other systems, helping the buyer make an informed decision about the purchase.
Question 4: What is the role of a 'buyer's lawyer' in a residential real estate transaction in Ontario?
- To negotiate the purchase price
- To conduct title searches, review the agreement, prepare closing documents, and protect the buyer's legal interests (Correct answer)
- To arrange the home inspection
- To qualify the buyer for a mortgage
Correct answer: To conduct title searches, review the agreement, prepare closing documents, and protect the buyer's legal interests
The buyer's lawyer performs critical functions including searching title, reviewing the Agreement of Purchase and Sale, examining the survey, conducting off-title searches, preparing closing documents, registering the transfer, and disbursing funds at closing.
Question 5: In Ontario, what adjustments are typically made at closing in a residential transaction?
- Only the purchase price is exchanged
- Property taxes, utilities, fuel oil, and other costs are prorated between buyer and seller as of the closing date (Correct answer)
- No adjustments are necessary — the purchase price covers everything
- Only the real estate commission is adjusted
Correct answer: Property taxes, utilities, fuel oil, and other costs are prorated between buyer and seller as of the closing date
At closing, a 'statement of adjustments' prorates costs between buyer and seller. Common adjustments include property taxes (prepaid or in arrears), fuel oil, utility deposits, and any prepaid or owing amounts, all calculated as of the closing date.
Question 6: What is the 'requisition date' in an Ontario residential transaction?
- The date the property is listed for sale
- The deadline by which the buyer's lawyer must raise any title concerns or defects with the seller's lawyer (Correct answer)
- The date the mortgage is approved
- The date the buyer takes possession
Correct answer: The deadline by which the buyer's lawyer must raise any title concerns or defects with the seller's lawyer
The requisition date is the deadline specified in the agreement by which the buyer's lawyer must submit written objections (title requisitions) regarding any defects or concerns with the property's title. The seller then has a specified time to resolve them.
OREA Residential Transactions 1
In a typical Ontario residential real estate transaction, what is the correct order of steps?