BC Real Estate Trading Services Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Real Estate Services Act

The BC statute that governs licensing, brokerage operations, trust accounts, and discipline for real estate licensees; it establishes the regulatory framework administered by BCFSA.

Dual agency prohibition

A licensee may not represent both the buyer and the seller in the same trade; one party must be a client and the other an unrepresented party or separately represented.

Fee simple estate

The highest and most complete estate in land, of potentially infinite duration, subject only to government and statutory restrictions and to interests registered against title.

Joint tenancy

Co-ownership with the right of survivorship, requiring unity of time, title, interest, and possession; on death the deceased's share passes to the surviving joint tenants.

Indefeasible title

The registered title under the BC Land Title Act that is conclusive evidence of ownership, subject to statutory exceptions and overriding interests such as taxes and Crown claims.

Fiduciary duty

The duty an agent owes a client, including loyalty, confidentiality, full disclosure, obedience to lawful instructions, and accounting for money and property entrusted.

Designated agency

A model in which the brokerage represents the client and designates a specific licensee to act, while other licensees in the brokerage must not disclose the client's confidences.

Unrepresented party

A person receiving trading services who is not a client of the brokerage; the licensee must disclose the limits of the relationship and must not provide advice to that party.

Subject clause

A condition precedent in a contract of purchase and sale that must be removed in writing by a stated deadline; if not removed, the contract may terminate and the deposit return.

Statement of adjustments

A closing document prepared by the notary or lawyer that prorates property taxes, utilities, and strata fees as of the completion date and shows the final funds owed.

Deposit forfeiture

On the buyer's default, the deposit is paid to the seller as agreed in the contract, subject to the seller's duty to mitigate and to any court order.

Amortization versus term

Amortization is the total period to repay the loan at the contracted payments; the term is the period the rate and conditions are guaranteed before renewal.

Interest rate differential

A penalty on early payout of a fixed-rate mortgage, calculated as the difference between the contract rate and the current rate for the remaining term, applied to the balance.

Gross debt service ratio

Annual housing costs including principal, interest, taxes, heating, and half of condo fees, divided by gross annual income; lenders use it to assess mortgage affordability.

Direct comparison approach

A valuation method that adjusts recent comparable sales for differences in time, location, size, condition, and features to indicate the subject property's market value.

Capitalization rate

The rate used to convert net operating income into an indicated value; value equals net operating income divided by the capitalization rate.

Highest and best use

The reasonably probable, legally permissible, physically possible, and financially feasible use of a property that produces the highest value.

Latent defect

A defect not discoverable by reasonable inspection that the seller knows of and must disclose; patent defects are discoverable and are the buyer's responsibility to find.

Listing agreement

A written service agreement between a seller and a brokerage that sets out the services, the list price, the term, and the remuneration for marketing the property.

Material change disclosure

A licensee's duty to disclose a known change in the property or neighbourhood that would be material to a reasonable buyer's decision to purchase.

Non-conforming use

A lawful use of land that predates and does not comply with the current zoning bylaw; it may generally continue subject to the bylaw's conditions.

Strata corporation

The legal entity created by registering a strata plan, responsible for managing common property, holding meetings, and maintaining bylaws and a contingency reserve fund.

Cooperative ownership

A housing model in which the cooperative corporation holds title to the land and building, and members own shares and receive an occupancy agreement for a unit.

Property transfer tax

A BC tax payable on registration of a transfer, calculated on fair market value using graduated rates, with exemptions for qualifying first-time buyers and other categories.

Mill rate

The property tax rate applied to assessed value; one mill equals one dollar of tax for every one thousand dollars of assessed value.

Loan-to-value ratio

The loan amount divided by the property's value; higher ratios indicate less borrower equity and typically require mortgage default insurance.

Net operating income

Effective gross income minus operating expenses, excluding debt service, income taxes, capital expenditures, and depreciation; it is the basis for the income approach.

Triple net lease

A commercial lease in which the tenant pays base rent plus its share of property taxes, insurance, and maintenance costs in addition to its own occupancy costs.

Cash-on-cash return

Annual before-tax cash flow divided by the cash invested by the investor; it measures the return earned on equity rather than on the total property value.

Pooled trust account

A designated account at a financial institution into which a brokerage deposits client funds, kept separate from the brokerage's own operating money.

Monthly trust reconciliation

The required comparison of the trust account bank balance to the trust ledger balances, with any shortage or discrepancy reported and investigated promptly.

Errors and omissions insurance

Professional liability coverage required of licensees, protecting against claims arising from negligent acts, errors, or omissions in providing real estate services.