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1. What type of land ownership confers the most comprehensive level of ownership possible? ANSWER: fee
simple

Explanation: Fee Simple: This is the most comprehensive form of land ownership. The owner of a fee simple
has an absolute title to the land. They have the right to possess, use, and dispose of the land as they choose
during their lifetime. Upon their death, the land can be passed to their heirs.

2. What is a distinguishing characteristic of a joint tenancy?

ANSWER: a right of survivorship

Explanation: Right of Survivorship in Joint Tenancy: This is a key feature of a joint tenancy. When one joint
tenant dies, their interest in the property automatically passes to the surviving joint tenant(s), rather than being
part of the deceased’s estate. This is distinct from tenancy in common, where deceased tenants' interests are
handled according to their will or intestacy laws.

3. Graham has granted a cellphone company permission to erect a transmission tower on his property. What
type of right has Graham granted?
ANSWER: an easement

Explanation: Granting an Easement: By allowing a cellphone company to erect a transmission tower on his
property, Graham has granted an easement. An easement is a non-possessory right to use and/or enter onto the
real property of another without possessing it. It is typically granted for a specific purpose, like utility
placement in this case.

4. What is the term for the system of land registration that guarantees title to land?
ANSWER: land titles system

Explanation: Land Titles System: This system guarantees title to land. In this system, the government maintains
records of land and title ownership. It provides a high level of assurance regarding ownership and rights over
the property, and is typically considered more modern and reliable than the older registry system.

5. John and Jackson are purchasing a property together and would like to register their title as joint tenants.
What is the defining feature that distinguishes this form of ownership?
ANSWER: Each interest is subject to a right of survivorship, and the rights of the deceased owner would pass
to the surviving owner.

Explanation: Joint Tenancy and Right of Survivorship: In the case of John and Jackson, the defining feature of
joint tenancy is the right of survivorship. This means that when one of the owners dies, their interest in the
property automatically passes to the surviving owner(s). This bypasses the need for probate or a will for that
portion of the property.

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6. The Krays are purchasing a home in a new subdivision and, like all the other homes in the subdivision, the
property’s title contains a prohibition from erecting a storage shed on the property. What is the name for
this type of restriction?
ANSWER: restrictive covenant

Explanation: Restrictive Covenant: The prohibition against erecting a storage shed in the property owned by
the Krays is an example of a restrictive covenant. This is a legal obligation imposed in a deed by the seller upon
the buyer of real estate to do or not to do something. Such restrictions are often found in subdivision
developments to maintain uniformity and standards in the neighborhood.

7. What distinguishes an undivided one-half interest held in a tenancy in common from a one half interest
held in a joint tenancy with respect to the co ownership of real estate? ANSWER: Each owns an undivided
interest in ownership of their portion.
Explanation: Tenancy in Common vs. Joint Tenancy: The difference between a tenancy in common and a joint
tenancy lies in the ownership interest after the death of one of the owners. In a tenancy in common, each owner
has an undivided interest in their portion, and this interest can be willed to other parties upon their death. In
contrast, in a joint tenancy, there is no individual ownership of a portion; the property is owned wholly by all
parties.
8. Aaron and Janelle enjoyed years of experiences shared through their rewarding ownership of Crystal Lake
Cottage Resort Inc. When Aaron died unexpectedly, the title automatically transferred to Janelle. Aaron’s
family has decided to dispute Janelle’s right to ownership. What is the name given to the type of ownership
interest enjoyed by Aaron and Janelle that allowed her to acquire ownership in this manner? ANSWER:
joint tenancy
Explanation: Joint Tenancy in Aaron and Janelle's Case: Aaron and Janelle's ownership of Crystal Lake
Cottage Resort Inc. was under joint tenancy. This type of ownership meant that upon Aaron's unexpected death,
the ownership of the property automatically transferred to Janelle, due to the right of survivorship inherent in
joint tenancy arrangements.
9. François and Wallace have been neighbours for ten years. François arranged to have a new garage
constructed in his backyard. He provided the builders with his surveyor’s certificate, but after completion
the garage encroached onto Wallace’s land. What is the most likely and amicable method of resolving the
encroachment? ANSWER: an easement agreement
Explanation: Easement Agreement for Encroachment: The most amicable method of resolving the
encroachment issue between François and Wallace is through an easement agreement. An easement agreement
allows one party to use another's property for a specific purpose. In this case, François would obtain
permission from Wallace to use a portion of his land where the garage encroaches. This solution avoids more
adversarial methods like litigation and offers a formal yet neighborly resolution.

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10. What typically occurs during the “closing” stage of a real estate transaction?
ANSWER: The seller delivers the title document, and the buyer makes final payment.

Explanation: Closing Stage of a Real Estate Transaction: During the closing stage of a real estate transaction,
the primary activities include the transfer of the property's title from the seller to the buyer and the final
payment from the buyer. The title document is a critical legal instrument that signifies the buyer's ownership of
the property, and the final payment completes the financial transactions involved in the real estate deal.

11. The Burtons are selling their home which has long standing basement flooding problems which have
damaged the foundation of the home. Before putting the home up for sale, they renovated the basement and
the foundation crack is now behind a wall and cannot be seen. Which statement best describes the Burton’s
obligations toward potential buyers of the home?
ANSWER: They have a positive duty to disclose the hidden defect.

Explanation: Disclosure of Hidden Defects by Sellers: The Burtons, in the process of selling their home, have a
legal and ethical obligation to disclose the hidden defect regarding the basement flooding and foundation
damage to potential buyers. This duty arises even though the defect might not be immediately apparent due to
the renovations. Non-disclosure of such significant issues could lead to legal consequences and is generally
considered misleading to buyers.

12. Which of the following is NOT an advantage of land titles systems over registry systems? ANSWER: there
is greater reliability and certainty
Explanation: Disadvantage of Land Titles System: The statement that there is greater reliability and certainty in
land titles systems compared to registry systems is actually incorrect. One of the primary advantages of land
titles systems over registry systems is their increased reliability and certainty in determining property ownership
and rights. Therefore, the notion of greater reliability and certainty is not a disadvantage but a key advantage of
land titles systems.

13. In what way is a registry system different from a land titles system?
ANSWER: absence of responsibility for validity of documents

Explanation: The main difference between a registry system and a land titles system is the level of responsibility
for the validity of the documents. A registry system is essentially a repository of documents where the
responsibility for checking the validity of these documents lies with the person conducting the transaction, not
with the registry itself. On the other hand, a land titles system provides government-certified records and
includes a parcel register that offers a more definitive statement of title.

14. From a lender’s perspective, which of the following is the focus of a mortgage?
ANSWER: preserving the value of the land in question

Explanation: From a lender's perspective, the focus of a mortgage is on preserving the value of the land in
question. This perspective is driven by the fact that the land serves as collateral for the loan. The lender's
primary concern is to ensure that the value of the land remains sufficient to cover the amount of the loan in case
of default.

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15. What are the circumstances that would allow a party to disregard the particular type of registry system used
to register documents securing a loan against a title?
ANSWER: where the right to an interest prioritized by registration is at issue

Explanation: A party may disregard the particular type of registry system used to register documents securing a
loan against a title in circumstances where the right to an interest that is prioritized by registration is at issue.
This means that the priority of interests, such as liens or mortgages, which depends on the timing of their
registration, takes precedence over the specifics of the registry system used.

16. Sylvano requested a copy of Certificate of Title No. 12312 from the land titles office. He intends to
purchase the land for development if it is unencumbered by registrations affecting its use. This particular
land titles office maintains an insurance fund to compensate for loss due to their error. What significance
does that fact have with respect to the copy of title Sylvano will receive in exchange for payment of the
prescribed fee? ANSWER: It is authoritative proof of the status of title.
Explanation: The fact that the land titles office maintains an insurance fund to compensate for loss due to their
error has significant implications for Sylvano. The copy of the Certificate of Title he will receive is not just a
document; it's authoritative proof of the status of title. This means that if the title has errors due to the office's
mistake, Sylvano is potentially eligible for compensation from the insurance fund, lending more credibility and
security to the document he receives.

17. Which term refers to the concept of “buyer beware”?

ANSWER: caveat emptor

Explanation: The term "caveat emptor" refers to the concept of “buyer beware.” This legal principle means that
the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

18. Drew meets with Sherry to have a second look at an apartment block his corporation may be interested in
purchasing. Why might Drew call an appraiser when he returns to the office? ANSWER: to get a formal
valuation based on the structure and market
Explanation: Drew might call an appraiser after his second look at an apartment block to get a formal
valuation based on the structure and the current real estate market. Appraisers provide an objective assessment
of a property's value, considering factors like location, condition, and market trends, which is crucial for
informed decision-making in real estate transactions.

19. What is the legal effect of a financing condition in an offer?

ANSWER: The transaction will not proceed unless the buyer’s lender grants a mortgage

Explanation: The legal effect of a financing condition in an offer is that the transaction will not proceed unless
the buyer’s lender grants a mortgage. This condition is included in real estate contracts to ensure that the buyer
can secure the necessary financing to complete the purchase. If the buyer cannot obtain a mortgage, the
condition allows them to withdraw from the contract without penalty.

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20. Before the real estate market took a serious downturn, Prime Lenders Inc. had entered into a high ratio
mortgage agreement with Juha Dally. Dally ceased making mortgage payments six months ago, and Prime
now wants to commence foreclosure proceedings, but it appears that the proceeds of the sale will not be
sufficient to pay the outstanding debt. Which of the following statements describes Prime’s legal position?
ANSWER: Prime can sue Dally for the shortfall between the outstanding mortgage and proceeds from the sale.

Explanation: In the case of Prime Lenders Inc. and Juha Dally, where Dally ceased making mortgage payments
and the sale proceeds are insufficient to cover the outstanding debt, Prime's legal position is that it can sue Dally
for the shortfall between the outstanding mortgage and the proceeds from the sale [2]. Additionally, Prime may
proceed with foreclosure to recover the amount owed through the sale of the property.

21. Often, matters relating to either the supply of water or soil contamination are addressed in an accepted offer
for the purchase and sale of real property. Which statement best describes future legal relevance in
instances where such matters are addressed in this manner?
ANSWER: They are both forms of contractual warranties that survive closing.

Explanation: Matters Relating to Water Supply or Soil Contamination: These issues, when addressed in a real
estate purchase agreement, are considered as contractual warranties. They continue to have legal significance
even after the property sale has been completed. This means that if any issues arise after the sale related to
these warranties, the buyer may have legal recourse based on the terms of the contract.

22. Martina is purchasing a home in Winnipeg. The closing date is October 1. Each year’s real property taxes
are payable in June for taxes owed up to December 31. The amount of the taxes paid by the vendor for the
entire year is $2400. In the circumstances of this transaction, which statement most accurately describes an
adjustment on taxes?
ANSWER: The vendor will receive approximately $600 in adjustment from the purchaser.

Explanation: Adjustment on Taxes in Real Estate Transaction: In the scenario described, the vendor (seller) has
paid the entire year's property taxes, but will not own the property for the entire year. Therefore, the purchaser
(Martina) is responsible for a portion of these taxes, calculated from the date of the closing (October 1) to the
end of the year (December 31). This results in the vendor receiving an adjustment from the purchaser,
calculated as the proportion of the year they will not own the property, which amounts to approximately $600.

23. Which of the following would NOT typically be contained in an Agreement of Purchase and Sale?
ANSWER: mortgage terms

Explanation: Contents of an Agreement of Purchase and Sale: An Agreement of Purchase and Sale typically
includes details about the property, price, terms and conditions of the sale, but does not usually contain
mortgage terms. Mortgage terms are generally arranged separately by the buyer with a financial institution
and are not a part of the basic purchase and sale agreement.

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24. The city has decided to green up its public transportation system by converting to light rail transit. Plans are
underway to commence compensation negotiations with affected landowners. What is the legal name given
to the type of authority that has been exercised in these circumstances?
ANSWER: authority to expropriate

Explanation: Legal Authority for Converting to Light Rail Transit: The city's action of converting to light
rail transit and negotiating with affected landowners falls under the 'authority to expropriate'. This legal
authority allows a government entity to acquire private land for public use, with compensation to the
landowners. In this case, it is used to develop public transportation infrastructure.

25. Which investigation step is likely to reveal whether the buildings on a property comply with local setback
bylaws?
ANSWER: survey

Explanation: A survey is a crucial step in real estate transactions to determine if the buildings on a property
comply with local setback bylaws. This process involves measuring the property and its structures to ensure
they align with legal regulations regarding the distance from the property line to the buildings.

26. What principle has the Supreme Court endorsed when dealing with the broad social issue of how to balance
the need to encourage development and commercial activity with the need to control and prohibit
dangerous activities?
ANSWER: polluter pays principle

Explanation: The Supreme Court has endorsed the "polluter pays principle" to address the balance between
development and environmental protection. This principle holds that entities responsible for pollution or
environmental damage bear the costs of managing and remedying it, encouraging responsible development
practices.

27. On May 1, Orianna forwarded her client’s signed title transfer document, keys, and remote control for the
garage door to the purchaser’s lawyer. The items were sent in trust, on the express condition that she
receive the payment of the balance of the purchase price in return. John will comply, then submit the
transfer document to the registry promptly for registration. In the meantime, which of the following should
John’s clients have effectively put in place for the May 1 closing date?
ANSWER: a certificate of insurance coverage

Explanation: In this scenario, John’s clients should have a certificate of insurance coverage in place by the
closing date. This certificate assures that the property is insured, protecting both the seller and the buyer
from potential liabilities or damages that might occur during the transition period.

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28. What is the purpose of a ‘state of repair’ clause in a real estate transaction?
ANSWER: to require the seller to ensure the condition of the property remains unchanged until closing

Explanation: The 'state of repair' clause in a real estate transaction serves to obligate the seller to maintain the
property in its current condition up until the closing. This clause ensures that the property is handed over to the
buyer in the same state as when it was initially agreed upon, avoiding any deterioration or damage that might
occur before the final transaction.

29. Merrilee and Keith own several of acres of vacant land adjoining the property where their greenhouse
operations and large garden centre facility are located. The greenhouse side of the business is ready to
expand. A senior lending officer of ImaBigBank is meeting with Merrilee and Keith to discuss the
expansion plans and the financial needs and circumstances of their business. How will the parties most
likely be described on the mortgage if ImaBigBank approves the financing?
ANSWER: ImaBigBank is the mortgagee, and Keith and Merrilee’s business is the mortgagor.

Explanation: In the context of a mortgage, the lender is referred to as the "mortgagee," while the borrower
is known as the "mortgagor." In this scenario, ImaBigBank, providing the loan, is the mortgagee, and
Merrilee and Keith's business, receiving the loan, is the mortgagor.

30. A mortgage covering the loan arranged by Kryhalla Spa Inc. has been forwarded to the land titles system.
What is the most likely result once the document has been registered?
ANSWER: Registration creates a charge on land until repayment is complete.

Explanation: When a mortgage is registered in the land titles system, it does not transfer ownership or
occupier's rights to the lender, nor does it solely create a right to have ownership restored. Rather, it
establishes a legal charge or lien on the property, which remains until the loan is fully repaid. Therefore, the
correct answer is that registration creates a charge on the land until repayment is complete.

31. Which of the following is synonymous with equity of redemption with respect to real property law?
ANSWER: the right to have legal ownership restored upon the repayment of the mortgage

Explanation: The term "equity of redemption" in real property law refers to the right of a mortgagor to
reclaim legal ownership of their property upon full repayment of the mortgage. This right exists even after
default on the mortgage but before any foreclosure process is completed.

32. A bank took immediate possession of real property for the nonpayment of a mortgage installment on its due
date. It is taking steps to have the property sold. The bank is aware that, due to poor market conditions, the
amount of the mortgage is higher than the value of the property. What are the most likely legal matters that
will come before the courts?
ANSWER: foreclosure and deficiency

Explanation: When a bank takes possession of a property due to non-payment of a mortgage installment, the
legal matters likely to come before the courts involve foreclosure and deficiency. Foreclosure is the process
where the lender seeks to take ownership of the property to recover the loan amount. A deficiency occurs when

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the value of the property is less than the amount owed on the mortgage, possibly leading to additional legal
proceedings to recover the remaining debt.

33. One of MSM Properties’ tenants is now three months behind on its rent and MSM plans to exercise its
remedy of distress. How will this remedy assist MSM?
ANSWER: MSM can seize property belonging to the tenant.

Explanation: The remedy of distress allows a commercial landlord to seize a tenant's property located
within the leased premises to recover unpaid rent. This action is aimed at encouraging the tenant to pay the
outstanding rent to avoid losing their property.

34. Which term refers to the remedy that allows a lender to terminate the mortgagor’s interest in the property?
ANSWER: foreclosure

Explanation: Foreclosure is the legal process through which a lender can terminate a mortgagor's interest in a
property due to default on the mortgage. This process is usually initiated when the borrower fails to make mortgage
payments as agreed.

35. Minimarket Grocers is in a one year lease of a bay in a strip mall that is subject to a periodic tenancy. The
one year period will be completed in three months. What will happen if Minimarket allows the three
months to pass without taking any further steps?
ANSWER: The lease will automatically renew for another year.

Explanation: In a periodic tenancy, the lease automatically renews for another period (in this case, a year)
unless either party gives notice to terminate. If Minimarket Grocers does not take any action as the lease period
ends, it will be presumed that they intend to continue the tenancy for another year.

36. What is the name given to the right of a commercial landlord to seize the property of the tenant located in
the leased premises?
ANSWER: distress

Explanation: The right of a commercial landlord to seize the property of a tenant located in the leased premises
for non-payment of rent is known as distress. This remedy is specifically designed for commercial tenancies to
ensure landlords can recover unpaid rent.

37. What is the main factor in deciding whether a lease has been created?
ANSWER: the legal concept of exclusive possession

Explanation: The main factor in deciding whether a lease has been created is the legal concept of exclusive
possession. This means that the tenant has the right to possess the property to the exclusion of others, including
the landlord, for a specified period. This exclusivity is a defining characteristic of a lease agreement.

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38. What is the major consequence of the creation of a lease?

ANSWER: exclusive possession

Explanation: The major consequence of the creation of a lease is exclusive possession. Once a lease is
established, the tenant gains the right to exclusively use and control the property for the duration of the lease
term. This right is protected by law and cannot be infringed upon by the landlord or others without legal cause.

39. Why is a commercial lease dependent upon the value, nature, and size of the property?
ANSWER: they determine the complexity of the lease agreement

Explanation: A commercial lease is dependent upon the value, nature, and size of the property because these
factors determine the complexity of the lease agreement. Larger or more valuable properties often require more
detailed and complex lease agreements to address specific issues related to their use, maintenance, insurance,
and other responsibilities. The nature of the property also influences the terms of the lease, such as permitted
uses, modifications, and improvements.

40. Andrea manages several strip malls for a mid sized real estate holding company. One tenant appears to
have abandoned the offices he had leased, leaving a lot of possessions of value behind. Andrea has taken all
of the necessary steps to sell the property and apply the proceeds to the tenant’s rent arrears. What is the
legal description of the remedy Andrea is pursuing?
ANSWER: landlord’s right of distress

Explanation: In the scenario described, Andrea is pursuing the landlord’s right of distress. This is a legal
remedy that allows a landlord to seize and sell a tenant's possessions left on the property to recover unpaid rent.
This right is typically exercised when a tenant defaults on rent payments and is a form of self-help remedy that
allows landlords to directly enforce their rights against a delinquent tenant.

41. Mineral rights—such as rights to oil, gas, or coal and other minerals may be owned separately from
ownership of the surface. a. True
b. False

ANSWER: True

Explanation: Mineral rights refer to the ownership rights to underground resources like oil, gas, coal, and other
minerals. These rights can be owned separately from the surface land ownership, allowing different parties to
own the surface and the subsurface minerals.

42. Real property is largely governed by common law, which, by tradition, devotes its focus on protecting
rights to property and, in particular, determining the rights of ownership to a piece of land. a. True
b. False ANSWER: True

Explanation: Real property law is indeed primarily governed by common law. Common law has traditionally
focused on protecting property rights, including determining ownership rights over land. This framework is
foundational in establishing and enforcing real estate property rights.

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43. The highest and most comprehensive level of ownership of land possible is known as a fee simple. a. True
b. False ANSWER: True

Explanation: Fee simple refers to the most comprehensive type of land ownership. It grants the owner full rights
to the property, including the right to use, sell, lease, or will the land, with minimal restrictions.

44. Tenants in common each have an undivided interest in the land and are able to deal with their own interests
in any way they see fit without having to consult with one another. a. True
b. False ANSWER: True

Explanation: In a tenancy in common, each tenant holds an undivided interest in the property. This means they
can manage or dispose of their portion of the property independently without needing the consent of the other
tenants. Each tenant's share can be different in size, and they can transfer or will their share independently.

45. Joint tenancy, which is typically the form of ownership in land used for property acquired by spouses as
their marital home, is distinguished by the right of survivorship. a. True
b. False ANSWER: True

Explanation: Joint tenancy is a form of property ownership commonly used by spouses for their marital home. A
key feature of joint tenancy is the right of survivorship, meaning that upon the death of one joint tenant, their
interest in the property automatically passes to the surviving joint tenant(s), rather than becoming part of the
deceased's estate.

46. One of the factors that distinguishes registration in a land titles system from registration in the registry
system is that the sequence of registration is unimportant in a land titles system. a. True
b. False ANSWER: False

Explanation: In a land titles system, the sequence of registration is actually crucial. The order in which
documents are registered can affect the priority of interests in the property. This is a key difference from the
registry system, where the sequence of registration may not be as critical.

47. A tenancy in common is a form of undivided co ownership distinguished by the right of survivorship. a.
True
b. False ANSWER: False

Explanation: Tenancy in common is a form of co-ownership where each owner has a separate and distinct share
in the property. Unlike joint tenancy, there is no right of survivorship in a tenancy in common; upon the death of
one tenant, their interest in the property becomes part of their estate and does not automatically pass to the other
tenant(s).

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48. With the exception of Newfoundland and Labrador, Prince Edward Island, and Quebec, all provinces and
territories in Canada either use the land titles system or are in the process of converting from a registry
system to a land titles system. a. True
b. False ANSWER: True

Explanation: Most provinces and territories in Canada, except Newfoundland and Labrador, Prince Edward
Island, and Quebec, either currently use the land titles system or are transitioning from a registry system to a
land titles system. The land titles system is known for providing greater certainty and security of title to land.

49. The legal right to drive across someone’s land would typically be achieved through a restrictive covenant.
a.True b. False ANSWER: False
Explanation: The legal right to drive across someone else's land is typically granted through an easement
or right-of-way, not a restrictive covenant. Easements grant the holder a specific use of the land of
another without owning or taking it, such as the right to cross it.

50. Before Anya can draft the letter to the purchaser’s lawyer stating the balance due on closing, she must
adjust the sale price to take into consideration such things as prepaid annual municipal property taxes.
a. True b. False
ANSWER: True

Explanation: When finalizing real estate transactions, it's necessary to adjust the sale price for various
factors, such as prepaid expenses like annual municipal property taxes. This ensures that the balance due on
closing accurately reflects all financial obligations associated with the property.

51. The mortgagor is the party who lends the money, and the mortgagee is the party who borrows the money
and signs the mortgage promising to repay the loan.
a. True b. False
ANSWER: False

Explanation: The terms are reversed. The mortgagor is the borrower who pledges their property as security
for the loan, while the mortgagee is the lender who provides the loan.

52. The rights of the mortgage lender are limited to a combination of the following three remedies: suing the
borrower, taking possession of the land, and foreclosure.
a. True b. False
ANSWER: False

Explanation: While these are common remedies available to a mortgage lender, the rights and remedies of a
mortgage lender can extend beyond these three options, including restructuring the loan, agreeing to a short
sale, or other legal remedies depending on jurisdictional laws and the specific terms of the mortgage
agreement.

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53. If a bank has foreclosed on a property located in Alberta, Saskatchewan, or British Columbia and has been
left with a deficiency after its sale, the vendor cannot personally sue individual borrowers and can sue only
corporations that have waived their statutory protection.
a. True b. False
ANSWER: True

Explanation: In Alberta, Saskatchewan, or British Columbia, if a bank has foreclosed on a property and
there's a deficiency after its sale, the vendor cannot personally sue individual borrowers. They can only sue
corporations that have waived their statutory protection. This limitation protects individual borrowers from
personal liability in certain foreclosure situations.

54. At any point before the foreclosure process is complete, ownership of the land can be regained if the
borrower is able to repay the loan.
a. True b. False
ANSWER: True

Explanation: Before the foreclosure process is complete, the borrower can regain ownership of the land if
they can repay the loan. This principle allows borrowers a chance to rectify their default and recover their
property before the foreclosure is finalized.

55. The rights of a new purchaser will normally be subject to any previously registered interests against the
title. a. True
b. False

ANSWER: True

Explanation: The rights of a new purchaser are normally subject to any previously registered interests
against the title. This means that any liens, encumbrances, or other interests that were registered against the
property before its purchase remain in effect even after the property is sold to a new owner.

56. The risk associated with borrowing a high percentage of the capital needed to acquire commercial real
estate is that, if there is default in payment due under the loan at any time and the company is unable to
negotiate more favourable terms with the lender, the ownership and possession of the property can be
completely lost. a. True
b. False

ANSWER: True

Explanation: Borrowing a high percentage of the capital needed to acquire commercial real estate carries
the risk that if there is a default in loan payment and the company cannot renegotiate terms with the lender,
they can lose ownership and possession of the property. This underscores the risks involved in highly
leveraged property investments.

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57. It is typical that a commercial lease will address such important matters as the responsibility for repairs and
maintenance to the leased space and any common areas, as well as permitted alterations a tenant may make
to the space and what happens with the alterations once the lease expires. a. True
b. False

ANSWER: True

Explanation: It is typical for a commercial lease to address responsibilities for repairs, maintenance, and
alterations. Commercial leases often outline who is responsible for maintaining the leased space and
common areas, and set rules for any modifications a tenant may make. These leases also typically specify
what happens to any alterations made by the tenant when the lease ends. Such clauses are standard to
ensure both parties are clear about their responsibilities and rights regarding the property.

58. Although a landlord’s basic obligation is to refrain from interfering with the tenant’s use of property, where
a tenant has willfully damaged that property, the landlord may exercise a right of distress to evict the tenant
and preserve the value in the property. a. True
b. False

ANSWER: True

Explanation: If a tenant willfully damages the property, the landlord may have the right to evict the tenant
and take steps to preserve the property's value. This is based on the principle that while landlords should
not interfere with tenants' use of the property, they also have a right to protect their property from damage
and ensure its value is maintained.

59. A tenant cannot withhold rent, even if the landlord fails to meet a requirement in the lease and must instead
sue for compensation while continuing to pay rent. a. True
b. False

ANSWER: True

Explanation: A tenant is generally not allowed to withhold rent due to a landlord's failure to meet lease
requirements. Instead, the tenant is expected to continue paying rent while seeking compensation or
remediation through legal means. This ensures that the lease obligations are met consistently, while also
providing a path for tenants to address grievances.

60. Commercial leases are highly regulated by provincial legislation. a. True

b. False

ANSWER: False

Explanation: Commercial leases in Canada are not as highly regulated by provincial legislation as
residential leases. While there is some regulation, commercial leases are more flexible and subject to
negotiation between the landlord and tenant. Residential leases, on the other hand, are more strictly
regulated to protect the rights of individual renters.

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61. Describe some of the statutory and common law restrictions frequently imposed on land use.

ANSWER: The numerous restrictions on land use imposed by statute law and
common law include the following:
• Municipal governments have the authority to control land use through planning schemes and
zoningregulations. For example, if an area of a town is zoned for residential use, it is normally
not available for commercial development.
• Environmental regulations affect the use of land by limiting or prohibiting the discharge of
harmfulsubstances and may even require owners to clean up environmental contamination
caused by previous owners.
• The common law of nuisance limits any use of land that unduly interferes with other
owners’enjoyment of their land. A landowner who produces smoke or noise is subject to being
sued for the tort of nuisance.
• Family law may designate property as matrimonial—to be shared by both spouses—
despiteownership registered in the name of one spouse. Both spouses must agree to the
disposition of such property.
• Many government agencies have the authority to expropriate land for particular purposes.
• Government agencies can make use of privately owned land for a particular purpose, such as
apipeline.
• Some jurisdictions impose restrictions on foreign ownership of land, particularly agricultural
land.

62. Briefly discuss tenancy in common.

ANSWER: Tenancy in common provides each owner in the relationship with an undivided interest in the
land. This means each of the tenants in common is free to deal with her own interest in the land
as she sees fit and without having to consult with the other co owner. Should one of the tenants
in common die, the tenant’s undivided interest in the real estate forms part of her personal estate
and goes to her heirs.

63. Briefly discuss joint tenancy.

ANSWER: A joint tenancy is a form of undivided co ownership. It is distinguished from other forms of
ownership of real property by the right of survivorship. When one of the joint tenants dies, his or
her undivided interest in the real property is automatically transferred to the surviving joint
tenant. The heirs of a deceased joint tenant would have no claim to land held under joint
tenancy.
64. Identify the key features of the land titles system.
ANSWER:
In the land titles system, the certificate of title contains a legal description of the property and
identifies the nature of and owners of the various interests in the land. Because the certificate
itself is authoritative proof of title, there is less potential for competing claims.

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Transactions in a land titles system are less time consuming and costly because a person wishing
to know the state of the title to a piece of land need only consult the certificate of title and is not
ordinarily required to do a historical search. This enhanced certainty and reliability has caused
several provinces that used the registry system—such as Ontario, New Brunswick, and Nova
Scotia—to move toward the land titles system.

65. Identify the basic terms generally contained in an agreement of purchase and sale of real property.

ANSWER: The basic terms contained in an agreement of purchase and sale of real property generally
include the following:
1. The precise names of the parties
2. The precise identification and description of the property, including reference to the registered
titleand sufficient detail so as to leave no doubt as to location, size, and boundaries
3. The purchase price, deposit, and method of payment
4. A statement of any conditions on which the agreement depends, such as financing, zoning,
orenvironmental inspection
5. A list and description of exactly what is included in the price (equipment, fixtures)
6. The date for closing and a list of what each party must deliver on that date
66. Briefly outline the stages in a typical real estate transaction.

ANSWER: First Stage: Agreement of Purchase and Sale

SELLER:
• Decides to sell a piece of land
• Determines the value of the land, possibly through a professional appraisal
• Engages a real estate agent to find a buyer and signs a listing agreement
• Engages a lawyer to advise on the legal requirements
• Engages a surveyor to confirm boundaries
BUYER:
• Decides to buy land
• Engages an agent to find suitable land
• Engages an appraiser to value the seller’s land• Engages a lawyer to advise on the legal
requirements
SELLER AND BUYER:
• Negotiate, possibly with the assistance of their agents and lawyers
• Reach agreement on all terms and conclude a formal written agreement
Second Stage: Investigations
SELLER:
• Addresses any problems discovered through the buyer’s investigation
BUYER:
• Investigates all aspects of the property, including the seller’s title and any outstanding claims
• Confirms the boundaries of the land by retaining a land surveyor
• Arranges for financing
• Has an engineer assess the structural soundness of the building
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• Has a consultant investigate environmental soundness

Final Stage: Closing
SELLER:
• Delivers the title document• Delivers the keys to the property
BUYER:
• Makes final payment
• Registers the title document
• Arranges for insurance
• Moves in
67. What remedies are available to the mortgagee (lender) in the event of default by the homeowner?

ANSWER: The rights of the lender and the procedures to be followed vary from province to province, but
all involve a combination of four remedies—suing the borrower, taking possession of the land,
selling the land or having it sold, and foreclosure.
Foreclosure refers to the lender’s right to terminate the borrower’s interest in the property to
allow the lender to realize the value of the land by selling it directly pursuant to a power of sale
or through a court supervised sale. In some jurisdictions, the bank’s recourse will be restricted to
the land and the bank will not be able to pursue the borrower directly unless it is a high ratio
mortgage. Most provinces permit the lender to proceed against the borrower for the shortfall—
known as the deficiency—between the outstanding amount and the proceeds from sale of the
property.
At any point before the foreclosure process is complete, ownership of the land can be regained if
the borrower is able to repay the loan (assuming of course that another source of financing
becomes available). If the borrower cannot repay the loan, it loses the land and may be left
owing a substantial debt. If there is more than one mortgage registered against the land, the
remedies of the various mortgagees are more complicated. Each mortgagee’s rights and
remedies are determined in strict order of registration of the mortgages with mortgagees beyond
the first less likely to recover than those that registered ahead of them.

68. Describe the role of the administrators of a land titles system

ANSWER: The administrators of a land titles system evaluate each document presented for registration and
maintain a record of the documents relating to each piece of property. They are also responsible
for the accuracy of the information they provide to the public and maintain an insurance fund to
compensate those who suffer loss because of their errors.

69. Briefly discuss the relevance of the sequence of registration in a land registry system and a land titles
system. Also identify how the sequence of registration has recently become particularly problematic, and
identify the parties affected by those problems.
ANSWER: The sequence of registration is crucial to both systems. If there are conflicting claims to the
same piece of land, the person who registered his interest has first priority, regardless of which
transaction was completed first. So long as the one who registers first has no knowledge of the
earlier transaction and has paid valuable consideration for the land in question, that person’s

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interest in and claim to the land is fully protected. The party who registers second has no claim
to the land but may have actions against those who assisted in the failed transactions or who
made representations concerning the status of title. This feature of registration is especially
problematic in view of the recent increase in fraudulent mortgage activity, resulting in a conflict
between an innocent landowner and an innocent bank.
70. Briefly outline the typical covenants in a commercial lease.

ANSWER: There are a number of features typical in a commercial lease, including the following terms:
• The tenant is responsible for repairs unless the lease imposes some obligation on the landlord.
• The tenant is entitled to exclusive and quiet possession of the premises for the full term. In
return, thetenant must pay rent and observe the terms of the lease.
• The tenant cannot withhold rent, even if the landlord fails to meet a requirement in the lease.
Thetenant’s remedy is to claim compensation from the landlord while continuing to pay rent.
• The tenant cannot terminate the lease and move out unless the landlord’s breach of the lease
has madethe premises uninhabitable for normal purposes.
• Ordinarily, the tenant can assign the lease or sublet the property to another tenant. It is common
forthe lease to require the landlord’s consent for both of these arrangements. Such leases
normally also provide that the landlord’s consent may not be unreasonably withheld.

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