Free Real Estate Practice Questions

✅ Correct Answer: Never, as referral fees may only be paid to licensed real estate professionals

Under RECO rules and TRESA, referral fees may only be paid to individuals who are registered under TRESA. Paying a referral fee to an unlicensed person is prohibited, regardless of the amount or relationship.

Reference: RECO Code of Ethics, s. 15; TRESA, O. Reg. 567/20, s. 58

✅ Correct Answer: Advertising a property at a price significantly lower than the listed price to attract prospective buyers

Advertising a property at a price significantly lower than the listed price constitutes misleading or bait-and-switch advertising, which is prohibited under the RECO Code of Ethics. All advertising must be accurate and not deceptive.

Reference: RECO Code of Ethics, s. 36; TRESA, O. Reg. 567/20, s. 56

✅ Correct Answer: At the earliest practical opportunity and before any offer is made

Under TRESA, a brokerage must disclose all commission and remuneration details to the client at the earliest practical opportunity and before any offer or agreement of purchase and sale is made. This requirement ensures clients have full knowledge of the costs involved before they are committed.

Reference: TRESA, s. 23; O. Reg. 567/20, s. 51

✅ Correct Answer: The brokerage owes fiduciary duties including loyalty, confidentiality, full disclosure, and the duty to act in the client's best interests

Under TRESA, a listing brokerage that enters into a representation agreement with a seller owes the client fiduciary duties, including loyalty, confidentiality, full disclosure of material facts, obedience to lawful instructions, and the duty to act in the client's best interests. These duties are central to the agency relationship.

Reference: TRESA, Part IV; RECO Code of Ethics, ss. 3–6

✅ Correct Answer: A known structural defect in the foundation that has been patched but not properly repaired

A known structural defect in the foundation is a material defect that must be disclosed to a potential buyer because it affects the property's value and use. Under the RECO Code of Ethics and TRESA, registrants must disclose all known material defects and latent defects that are not readily observable.

Reference: RECO Code of Ethics, s. 19; TRESA, s. 21

✅ Correct Answer: When the offer signed by the buyer is delivered to the seller or the seller's agent, and the seller's acceptance is communicated to the buyer or the buyer's agent

A binding contract for the purchase and sale of land is formed when there is a valid offer (signed by the buyer, delivered to the seller or their agent) and an unconditional acceptance (communicated back to the buyer or their agent) in accordance with the terms of the offer. Until both offer and acceptance are properly executed and communicated, there is no binding contract.

Reference: TRESA, O. Reg. 567/20; common law principles of offer and acceptance in Ontario

✅ Correct Answer: To determine whether any writs of seizure and sale or judgments have been registered against the owner that could encumber the title

The execution index search reveals writs of seizure and sale and other judgments registered against the owner. If such writs exist, they may bind the owner's interest in the property and must be addressed before or at closing to ensure the buyer receives clear title. This is a critical step in the due diligence process.

Reference: Land Titles Act, R.S.O. 1990, c. L.5; Registry Act, R.S.O. 1990, c. R.20

✅ Correct Answer: The registrant wishes to purchase a property listed by their own client in the same brokerage

When a registrant wishes to purchase a property listed by their own client, a clear conflict of interest arises. The registrant must immediately disclose their personal interest in writing to all parties, and typically must cease to represent the seller in that transaction to avoid breaching fiduciary duties.

Reference: RECO Code of Ethics, ss. 4–5; TRESA, s. 22

✅ Correct Answer: The Agreement is terminated unless the party entitled to the benefit of the condition waives it in writing on or before the specified date

If a condition precedent is not waived or fulfilled by the date specified in the Agreement of Purchase and Sale, the Agreement is terminated and the deposit is returned to the buyer, unless the party entitled to the benefit of the condition waives it in writing by that date. The condition exists for the benefit of one party (typically the buyer), who may choose to waive it.

Reference: TRESA, O. Reg. 567/20; Standard OREA/OREA Agreement of Purchase and Sale forms

✅ Correct Answer: All trust funds must be deposited into a designated trust account within one business day of receipt, and detailed trust records must be maintained and reconciled monthly

Under RECO rules, all trust funds received by a brokerage must be deposited into a designated trust account promptly (within one business day). Brokerages must maintain detailed trust records and perform monthly reconciliations. Trust funds are the property of the client and must never be used for brokerage operating expenses.

Reference: RECO Code of Ethics, ss. 10–12; TRESA, O. Reg. 567/20, Part V