ON Real Estate Sim 1 flashcards
ON Real Estate Sim 1 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Fiduciary duty
- A legal obligation of a broker or salesperson to act in the client's best interest, including loyalty, confidentiality, disclosure, obedience, accounting, and reasonable care. It arises from the agency relationship and continues after the transaction ends.
- Dual agency
- A situation where one brokerage represents both buyer and seller in the same transaction. It requires informed written consent from both parties and full disclosure of material information to each side.
- Material fact
- Information that could affect a reasonable person's decision to buy or sell, such as latent defects, encroachments, or stigmatized-property events where required. It must be disclosed regardless of agency representation.
- Condition precedent
- A contract term requiring an event, such as financing approval or a satisfactory inspection, before the agreement becomes binding. If the condition is not waived or satisfied by the stated date, the agreement may become void.
- Time is of the essence
- A contract principle making stated dates strict obligations. Missing the completion date or a condition waiver date can constitute breach, allowing the other party to claim damages or terminate.
- Deposit
- Money paid by the buyer on signing and held in trust, usually by the listing brokerage. It is credited to the purchase price at closing and forfeited only if the contract permits it on default.
- Fixture
- A chattel attached to land with the intention of permanent improvement, such as built-in cabinets or a furnace. Fixtures pass with the land unless the agreement expressly excludes them.
- Easement
- A registered right to use another person's land for a specific purpose, such as a driveway or utility line. It runs with the land and binds subsequent owners when registered.
- Joint tenancy
- A form of co-ownership where each owner holds an undivided interest with the right of survivorship. On death, the deceased owner's share passes automatically to the surviving joint tenant.
- Tenancy in common
- Co-ownership where each owner holds a distinct, transferable share with no right of survivorship. On death, the share passes to the owner's estate under a will or intestacy rules.
- Torrens system
- A land registration system where the government registers title itself rather than merely recording documents. A bona fide purchaser for value relying on the register receives indefeasible title subject to registered encumbrances.
- Title insurance
- A policy protecting an owner or lender against losses from title defects, survey errors, fraud, and certain unregistered interests. It supplements but does not replace a title search.
- Gross debt service ratio
- A lender calculation comparing annual housing costs, including principal, interest, taxes, and heating, to gross annual income. It is one test of mortgage affordability.
- Loan-to-value ratio
- The mortgage amount divided by the property's appraised value or purchase price, whichever is lower. A higher ratio means less equity and usually requires default insurance.
- Amortization period
- The length of time required to repay a mortgage completely at a given payment schedule. It differs from the term, which is the period the interest rate is fixed.
- Capitalization rate
- A ratio of a property's net operating income to its sale price or value. It reflects the market's required return and risk; a higher cap rate generally indicates higher perceived risk.
- Highest and best use
- The reasonably probable use of a property that is legally permissible, physically possible, financially feasible, and produces the greatest value. It guides appraisal and development analysis.
- Sales comparison approach
- A valuation method estimating value by adjusting recent sale prices of similar properties for differences in location, size, age, condition, and features. Adjustments are made to the comparables, not the subject.
- Legal non-conforming use
- A property use that existed lawfully before a zoning bylaw change and may continue despite no longer conforming. It generally cannot be expanded and may be lost if discontinued for the statutory period.
- Variance
- An approval allowing a property to depart from a specific zoning requirement because strict application would cause undue hardship. It differs from rezoning, which changes the permitted use itself.
- Phase I environmental assessment
- A records review and site inspection used to identify potential contamination from past uses. If it identifies a concern, a Phase II assessment involving sampling and testing may follow.
- Load-bearing wall
- A wall that supports structural weight from above, such as floors or a roof. Removing or altering it without engineering review can cause structural failure and is a common renovation risk.
- GFCI protection
- A ground-fault circuit interrupter device that shuts off power when it detects a current imbalance. It is required in wet locations such as bathrooms, kitchens, and exteriors for safety.
- R-value
- A measure of a material's resistance to heat flow. Higher R-values indicate better insulation performance, and the required value varies by climate and building component.
- Home inspection
- A non-invasive visual examination of a property's systems and components, reported as an opinion on condition at the time of inspection. It is not a warranty and may not reveal concealed defects.
- Net operating income
- Effective gross income minus operating expenses, excluding mortgage payments, capital expenditures, and income taxes. It is the key input for the income approach and debt coverage calculations.
- Debt service coverage ratio
- Net operating income divided by annual mortgage payments. Lenders use it to assess whether a property generates enough income to service its debt, often requiring 1.20 or higher.
- Triple net lease
- A commercial lease where the tenant pays base rent plus property taxes, insurance, and maintenance. The landlord receives relatively predictable net income with less expense risk.
- Cash-on-cash return
- Annual pre-tax cash flow divided by the equity invested in a property. It measures the return on actual cash invested and complements the capitalization rate.
- Trust account
- A designated account holding client funds, such as deposits, separate from the brokerage's operating money. Records must be reconciled regularly, and commingling is prohibited.
- Continuing education requirement
- A licence condition requiring registrants to complete a set number of education credits within a cycle. Failure to meet the deadline typically results in licence suspension.
- Conflict of interest
- A situation where a licensee's personal or financial interest could influence their duty to a client. It must be disclosed in writing, and the client may need to consent or the licensee may need to withdraw.