BC Real Estate Trading Services Exam cheat sheet

In British Columbia, trading services (renting, selling, buying, or leasing real estate for others) require licensing under the Real Estate Services Act (RESA) and supervision by the BC Financial Services Authority (BCFSA).

The Real Estate Services Act sets out licensee duties: act honestly and with reasonable care and skill, disclose material information, and avoid conflicts of interest; the Code of Ethics is embedded in the Council Rules.

Licensees must remit fees and file prescribed reports to BCFSA; failure to remit or to maintain required records is a disciplinary matter heard by the discipline committee.

Discipline penalties can include licence suspension or cancellation, fines, and orders to complete remedial education; the Superintendent may also impose administrative penalties for rule breaches.

A licensee must not provide real estate services for a person the licensee knows is unlicensed, and must not pay or offer to pay remuneration to an unlicensed person for real estate services.

Continuing education requirements include a prescribed number of verifiable and non-verifiable education hours per two-year licensing cycle; missing the deadline triggers suspension until completed.

Dual agency (representing both buyer and seller in the same trade) is prohibited; a licensee must designate one party as client and treat the other as an unrepresented party unless a separate licensee represents them.

A licensee must disclose in writing any personal interest in a trade (for example, buying a property listed by the brokerage) before providing services.

Fee simple is the highest estate in land, of potentially infinite duration; a life estate ends on the death of the measuring life and reverts or passes to the remainderman.

Interests in land include easements (a right to use another's land), covenants (restrictions enforceable in equity), and licences (personal permission, revocable, not an interest in land).

In BC, indefeasible title is registered under the Land Title Act; the registered owner holds title subject to statutory exceptions and overriding interests such as Crown claims, taxes, and easements noted on title.

Joint tenancy carries the right of survivorship and requires the four unities (time, title, interest, possession); tenancy in common has no survivorship and shares may be unequal.

A mortgage is a charge on land, not a transfer of title; the mortgagor retains possession and the mortgagee's remedies include foreclosure and judicial sale under the Law and Equity Act.

A lease for a term exceeding three years must be in writing and registered to bind third parties; a tenancy at will or periodic tenancy may arise without a written lease.

The Land Owner Transparency Act requires reporting of beneficial ownership of land in BC through a transparency declaration and transparency report filed with the Land Title Office.

A restrictive covenant runs with the land if it touches and concerns the land, the parties intended it to run, and it is registered; it may be discharged by court order or by agreement of affected owners.

Agency is a fiduciary relationship created by express agreement, implied conduct, or ratification; the agent owes duties of loyalty, disclosure, confidentiality, obedience to lawful instructions, and accounting.

In BC, before providing trading services a licensee must enter into a written service agreement with the client that sets out the services, the term, remuneration, and the agency relationship.

A designated agency model may be used: the brokerage represents the client, and a specific licensee is designated; other licensees in the brokerage may assist but must not disclose the client's confidential information.

An unrepresented party must receive a disclosure of the nature of the relationship and the limits on the licensee's duties before any information is shared.

The fiduciary duty of confidentiality survives the end of the agency relationship and continues indefinitely unless the client releases the information or a court orders disclosure.

A licensee must not act for a client whose interests conflict with the licensee's own interest, or for two clients with conflicting interests, without full written disclosure and informed consent where permitted.

Remuneration is set by agreement; a commission is earned when the service agreement's conditions for payment are satisfied (often on a ready, willing, and able buyer or on completion of the trade).

An agency relationship can be terminated by completion of the transaction, expiry of the term, mutual agreement, or revocation; termination does not extinguish accrued obligations such as confidentiality.

A contract of purchase and sale must identify the parties, the property, the price, and the terms; it must be in writing to be enforceable under the Law and Equity Act (subject to the doctrine of part performance).

A deposit is consideration for the contract and is usually held in trust by the brokerage; it is forfeited to the seller on the buyer's default if the contract so provides, subject to the seller's duty to mitigate.

Conditions precedent (subject clauses) must be removed in writing before the deadline; if not removed, the contract may be terminated and the deposit returned.

A completion date is when title and funds transfer; a possession date is when the buyer takes occupation; these may differ and both must be stated clearly.

Adjustments (property taxes, utilities, strata fees) are prorated as of the completion date and shown on the statement of adjustments prepared by the notary or lawyer.

The standard residential contract includes a property disclosure statement and a title search; the buyer's remedies for misrepresentation include rescission and damages.

A real estate contract may be assigned only if it is assignable; the standard form usually requires the seller's written consent to an assignment.

The Property Transfer Tax return and the transparency declaration must be filed with the Land Title Office at registration, and the tax is payable on registration of the transfer.

The interest rate on a mortgage may be fixed or variable; a variable rate is tied to the lender's prime rate and changes with prime.

The amortization period is the time to repay the loan at the contracted payment; the term is the period the rate and conditions are guaranteed, and the two are not the same.

The annual percentage rate (APR) expresses the cost of borrowing including fees, expressed as a yearly rate, and is disclosed in the Cost of Borrowing disclosure statement.

The interest rate differential (IRD) penalty applies on early payout of a fixed-rate mortgage and is calculated as the difference between the contract rate and the current rate for the remaining term, times the balance and remaining term.

A down payment of at least 20% avoids mortgage default insurance; insured high-ratio mortgages require default insurance and are subject to the insurer's guidelines.

The gross debt service (GDS) ratio is annual housing costs (principal, interest, taxes, heating, and half of condo fees) divided by gross annual income; the total debt service (TDS) ratio adds all other debt payments.

A mortgage prepayment privilege allows a borrower to pay down a set percentage of the original principal each year without penalty; a closed mortgage restricts prepayment and an open mortgage permits it.

The stress test requires borrowers of uninsured mortgages to qualify at the greater of the contract rate plus 2% or the benchmark rate, whichever is higher.

The three approaches to value are the cost approach, the direct comparison (market) approach, and the income approach.

The direct comparison approach adjusts comparable sales for differences in time, location, size, condition, and features to derive an indicated value for the subject.

The cost approach estimates value as land value plus depreciated replacement or reproduction cost of improvements; it is most reliable for new or special-purpose properties.

The income approach capitalizes net operating income: value = net operating income / capitalization rate.

A comparative market analysis (CMA) is prepared by a licensee for pricing purposes and is not an appraisal; an appraisal is prepared by a licensed appraiser for a lender or court.

Market value is the most probable price in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller acting prudently and knowledgeably.

Highest and best use is the reasonably probable and legal use that is physically possible, appropriately supported, and financially feasible, and that results in the highest value.

Depreciation in appraisal is the loss in value from any cause, divided into physical deterioration, functional obsolescence, and external (economic) obsolescence.

A listing agreement must be in writing and must include the listing price, the term, the remuneration, and the services to be provided; it is a service agreement with the brokerage.

A seller must disclose known latent defects (those not discoverable by reasonable inspection) and must not conceal material facts; patent defects are discoverable on inspection and are the buyer's responsibility to find.

Advertising by a licensee must be accurate and must not be misleading; the brokerage's name must appear in advertising as required by the rules.

A buyer's agency agreement establishes the buyer as a client and sets out the term, the geographic area, and the remuneration arrangement.

A licensee must present all offers promptly and objectively; the seller has the right to accept, reject, or counter any offer.

Multiple representation rules require written disclosure and consent; a licensee cannot act for both parties in the same trade.

A material change in the property or the neighbourhood (for example, a pending zoning change or a stigmatizing event) must be disclosed if known to the licensee and material to the buyer's decision.

Marketing a property includes the listing on the MLS system, photography, and open houses; the seller's consent is required for the marketing plan and for the use of the property's images.

Zoning bylaws regulate the use, density, height, and siting of land; a non-conforming use is a lawful use that predates the current bylaw and may continue subject to the bylaw's terms.

A development permit may be required for form and character, and a building permit is required for construction; both are separate from zoning approval.

The Agricultural Land Reserve restricts subdivision and non-farm use; the Agricultural Land Commission must approve certain changes.

A strata corporation is created by a strata plan registered in the Land Title Office; owners own their strata lot and share common property as tenants in common.

Strata bylaws and rules govern use and behaviour; the strata corporation must hold an annual general meeting and maintain a contingency reserve fund.

A depreciation report is a strata corporation's assessment of the common property's condition and the expected costs of repair and replacement over time.

A cooperative is a corporation in which members own shares and receive a lease or occupancy agreement for a unit; the cooperative, not the member, holds title to the land and building.

A bare land strata lot consists of land and the owner holds title to the lot; a building strata lot includes the unit and the owner holds title to the unit.

The property transfer tax in BC is 1% on the first $200,000 of fair market value, 2% on the portion from $200,000 to $2,000,000, and 3% on the portion above $2,000,000 (with an additional 2% for residential properties over $3,000,000).

The additional property transfer tax applies to certain foreign purchasers of residential property in specified areas; the rate and the applicable regions are set by regulation.

The first-time home buyer's exemption may exempt the buyer from property transfer tax up to a threshold, subject to residency and occupancy conditions.

Closing costs include legal fees, title insurance, property transfer tax, adjustments, and the lender's appraisal and registration fees.

The GST applies to new residential construction and to commercial properties; resale residential properties are generally exempt from GST.

The annual property tax is calculated by applying the mill rate to the assessed value; one mill equals $1 of tax per $1,000 of assessed value.

A commission is calculated as a percentage of the sale price; for example, 7% on the first $100,000 and 2.5% on the balance is a common residential structure.

The loan-to-value ratio is the loan amount divided by the property's value; a higher ratio means less equity and typically requires default insurance.

Net operating income (NOI) is effective gross income minus operating expenses; it excludes debt service, income taxes, capital expenditures, and depreciation.

The capitalization rate is NOI divided by the property's value or price; a lower cap rate indicates a lower expected return and generally a higher price relative to income.

The gross rent multiplier is the sale price divided by gross annual rent; it is a quick screening tool and ignores operating expenses.

A net lease requires the tenant to pay some or all operating expenses; a triple net lease requires the tenant to pay taxes, insurance, and maintenance.

A commercial lease should address the term, rent escalations, the tenant's improvement allowance, the option to renew, and the assignment and subletting provisions.

Cash-on-cash return is the annual before-tax cash flow divided by the cash invested; it measures the return on the investor's equity.

A due diligence period in a commercial purchase allows the buyer to review leases, environmental reports, and the building's condition before removing conditions.

The debt coverage ratio is NOI divided by annual debt service; lenders typically require a ratio above a set minimum to approve commercial financing.

Trust funds (deposits and other money held for clients) must be deposited into a pooled trust account at a designated financial institution and must not be mixed with the brokerage's own funds.

A brokerage must maintain records of all trust transactions, reconcile the trust account monthly, and retain records for the period required by the rules.

The brokerage must keep a separate commission trust account or otherwise account for remuneration earned; trust funds may be withdrawn only for the purpose for which they were held.

Errors and omissions insurance is required for licensees and covers claims arising from professional services, subject to policy limits and exclusions.

A licensee must report to the brokerage any known or suspected fraud, misappropriation, or trust shortage, and the brokerage must report to BCFSA.

A conflict of interest must be disclosed in writing and managed; a licensee must not use confidential client information for personal benefit.

A brokerage must have written policies for privacy protection under the Personal Information Protection Act and must obtain consent for the collection and use of personal information.

Records must be legible, complete, and retrievable; the brokerage must retain contracts, service agreements, and disclosure documents for the prescribed period.