OREA Residential Transactions 2

Question 1

In Ontario, what is the typical deposit amount in a residential transaction?

Accepted Answer

There is no standard — it is negotiable, but typically 5% of the purchase price

Answer

While there is no legally mandated amount, deposits in Ontario residential transactions are typically around 5% of the purchase price, though this is negotiable. A larger deposit shows stronger commitment and may make an offer more attractive to sellers.

Question 2

What is a 'seller's disclosure statement' in Ontario residential real estate?

Accepted Answer

A voluntary form (SPIS — Seller Property Information Statement) where the seller provides information about the property's condition and history

Answer

The SPIS (Seller Property Information Statement) is a voluntary form where sellers disclose information about the property's condition, renovations, environmental issues, and other relevant details. While not mandatory, it can help prevent disputes and protect both parties.

Question 3

In Ontario, what is the significance of the 'closing date' in a residential transaction?

Accepted Answer

It is the date when ownership is transferred, the purchase price is paid, and the buyer receives possession of the property

Answer

The closing date is when the transaction is completed: the transfer is registered, the purchase price (less the deposit) is paid to the seller, the seller's mortgage is discharged, and the buyer receives the keys and takes possession.

Question 4

What is the 'Toronto Municipal Land Transfer Tax' and who pays it?

Accepted Answer

An additional land transfer tax imposed by the City of Toronto on the buyer, in addition to the provincial land transfer tax

Answer

The City of Toronto imposes its own Municipal Land Transfer Tax on buyers in addition to the Ontario Land Transfer Tax. Toronto is currently the only municipality in Ontario with this additional tax, effectively doubling the land transfer tax for Toronto buyers.

Question 5

In Ontario, what is a 'pre-approval' for a mortgage?

Accepted Answer

A preliminary assessment by a lender indicating the amount a buyer can likely borrow, subject to property appraisal and final approval

Answer

A pre-approval is a lender's preliminary assessment of a buyer's creditworthiness and borrowing capacity. It indicates how much the buyer can likely borrow and may lock in an interest rate for a period. However, it is conditional on the lender approving the specific property.

Ontario Real Estate Practice Test

Ontario Real Estate Practice Test

OREA Residential Transactions 2