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

✅ Correct Answer: Rescind the agreement within 10 days of receiving the disclosure statement, without penalty

The Condominium Act, 1998 provides a 10-day cooling-off period for buyers of new condominium units. The buyer may rescind the agreement within 10 days of receiving the disclosure statement or within 10 days of signing the agreement, whichever is later. This right exists regardless of the reason for rescission.

Reference: Condominium Act, 1998, S.O. 1998, c. 19, ss. 72–73; TRESA, O. Reg. 567/20

✅ Correct Answer: Any referral fee, commission, or other benefit the brokerage receives for referring the buyer to a particular lender or mortgage broker

Under the RECO Code of Ethics, registrants must disclose any material interest they have in a transaction, including referral fees or commissions received from mortgage lenders or brokers for referring clients. This disclosure must be made in writing to the client before the client enters into the mortgage arrangement.

Reference: RECO Code of Ethics, ss. 21–22; TRESA, s. 22

✅ Correct Answer: Obtain written consent from all clients after fully disclosing the nature and implications of multiple representation

Under TRESA, a brokerage engaged in multiple representation must disclose this fact in writing to all clients and obtain their written consent before proceeding. The brokerage must explain that in multiple representation, the duty of loyalty is limited because the brokerage cannot favour one client over the other, though duties of confidentiality and disclosure of material facts continue to apply.

Reference: TRESA, s. 24; O. Reg. 567/20, Part VI

✅ Correct Answer: The split must be agreed upon between the brokerages, and the listing brokerage is responsible for paying the cooperating brokerage's share out of the commission received from the seller

The commission split between a listing brokerage and a cooperating brokerage is a matter of agreement between the brokerages (usually set out in the listing agreement and the MLS/Realtor cooperation terms). The listing brokerage collects the full commission from the seller and is then responsible for paying the cooperating brokerage's agreed share. RECO rules require that all commission arrangements be documented.

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

✅ Correct Answer: A fine of up to $50,000 for an individual registrant and up to $100,000 for a brokerage, in addition to possible suspension, terms and conditions, or revocation of registration

The RECO Discipline Committee has broad powers to sanction registrants, including imposing fines (up to $50,000 for an individual, up to $100,000 for a brokerage), suspending or revoking registration, imposing terms and conditions, requiring additional education, and ordering costs. These penalties are designed to protect the public and maintain professional standards.

Reference: TRESA, Part VIII; RECO Discipline Rules and Procedures

✅ Correct Answer: Registrants must complete mandatory continuing education courses within each registration cycle in order to maintain their registration, with specific course topics prescribed by RECO

RECO requires all registrants to complete mandatory continuing education courses within each registration cycle as a condition of maintaining their registration. The required courses are prescribed by RECO and cover topics such as legislative updates, ethics, and professional practice. Failure to complete the required CE may result in non-renewal of registration.

Reference: RECO Continuing Education Policy; TRESA, O. Reg. 567/20, Part VIII

✅ Correct Answer: Six years from the date the record was created, with trust accounting records retained for a longer period

Under TRESA regulations, brokerages must retain records relating to each trade in real estate for at least six years from the date the record was created. Trust accounting and financial records must be retained for a longer period (typically seven years). These requirements ensure that RECO can audit compliance and that records are available for dispute resolution.

Reference: TRESA, O. Reg. 567/20, s. 70; RECO Record Retention Guidelines

✅ Correct Answer: OMVIC enforces rules including prohibitions on misrepresentation, mandatory disclosure of the total price, cooling-off periods for used car purchases, and licensing requirements for dealers — all of which a registrant must be aware of when facilitating or referring vehicle sales

OMVIC is the regulator for motor vehicle dealers in Ontario under the Motor Vehicle Dealers Act, 2002. Its rules include prohibitions on misrepresentation, mandatory disclosure of the all-in price, and specific cooling-off periods for certain used vehicle sales. While these rules primarily apply to registered motor vehicle dealers, real estate registrants who engage in or refer clients to vehicle transactions should understand OMVIC's requirements to avoid contravening consumer protection laws.

Reference: Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30; OMVIC Code of Ethics