DISCLAIMER Copyright: 2017

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1 DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate and current information, UBC, their affiliates, authors, editors and staff (collectively, the "UBC Group") makes no claims, representations, or warranties as to accuracy, completeness, usefulness or adequacy of any of the information contained herein. Under no circumstances shall the UBC Group be liable for any losses or damages whatsoever, whether in contract, tort or otherwise, from the use of, or reliance on, the information contained herein. Further, the general principles and conclusions presented in this text are subject to local, provincial, and federal laws and regulations, court cases, and any revisions of the same. This publication is sold for educational purposes only and is not intended to provide, and does not constitute, legal, accounting, or other professional advice. Professional advice should be consulted regarding every specific circumstance before acting on the information presented in these materials. Copyright: 2017 by the UBC Real Estate Division, Sauder School of Business, The University of British Columbia. Printed in Canada. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced, transcribed, modified, distributed, republished, or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, web distribution, or used in any information storage and retrieval system without the prior written permission of the publisher.

2 2017 EXAM STUDY GUIDE DETAILED SOLUTIONS TO SELECT QUESTIONS The detailed solutions to select questions for the Examination Study Guide (ESG) have been published in order to assist candidates in preparing for the Rental Property Management Licensing examination. However, no attempt should be made to memorize each solution. The Real Estate Division at the University of British Columbia has made every attempt to ensure the accuracy of the solutions, as of the date of publication. However, there may be typographical errors and errors contained in the solutions will not form the basis of a successful appeal of your examination grade. Therefore, if for any reason you doubt the accuracy of the answer to any questions, you should either consult your course materials or contact the Real Estate Division student tutorial line to confirm the current answer. Please note that solutions are not provided for every question. Should you require assistance on any questions that are not listed here please contact a tutor. The solutions in this guide are listed numerically. To find a specific solution in this guide you can scroll through the pages or use the Find function (Ctrl F) and type in question XXX. For example if you wanted to go to question 620 you would open the search function and type in Question 620 and then hit find next. This will take you directly to question 620. Copyright 2017 by the UBC Real Estate Division Educational Testing Service

3 2017 Exam Study Guide Detailed Solutions To Select Questions 2 Question 1 Option (4) is correct. An Emergency Procedures Manual should include a floor plan that clearly indicates the following three items: primary evacuation routes and emergency exits; alternative evacuation routes and emergency exits; and the location of: fire alarm pull stations; hand-held fire extinguishers; and fire hose cabinets and hose connections. Question 7 Option (2) is false. When making a comparison of your building with those believed to be similar, there is one golden rule, namely compare like with like. Question 11 Where a registered owner discovers that his title has been transferred by forgery to another person, and registered in the forger s name, he should file a caveat to prevent the forger from transferring the property to a bona fide purchaser. A caveat is a note placed on a certificate of title by a person claiming an estate or interest in that land that prevents all dealings (e.g., transfers, mortgages) with the land inconsistent with the estate or interest claimed by the caveator. Question 13 The maintenance for any building can be divided into routine, preventive, and corrective maintenance. Keeping the premises clean, maintaining landscaping, clearing snow and ice, etc., are all examples of routine maintenance. Question 15 Each of options (1), (2), and (3) represent an intended purpose of the operating budget. The operating budget can help property owners and managers to forecast financial returns and net operating income, track financial performance by comparing the operational budget to actual expenditures, and to help the property manager to identify and control expenses. Question 16 Option (2) is correct. A lux is the amount of light produced by a standard candle at a distance of one meter. Regulations specify the number of lux of light required for certain areas and tasks in the workplace. Question 21 Option (4) is not a main purpose of a building bylaw or building code. The three main purposes of building bylaws are fire safety, public health (sanitary conditions), and structural sufficiency.

4 2017 Exam Study Guide Detailed Solutions To Select Questions 3 Question 24 Option (1) is correct. Deferred maintenance is "putting off until tomorrow the repairs that should have been done yesterday". It is often used to keep operating expenses at a minimum, but it is in fact a false economy because ultimately the problem will have to be cured when it can no longer be ignored. Typically, the cost of remedial work will far exceed the cost if the work had been done when the problem first became evident. Question 26 Option (1) is false. Security personnel are the only component of a security system that have reasoning capabilities and can act pre-emptively to prevent problems. Option (3) is false. Occupants such as fast food restaurants and video arcades tend to attract, rather than decrease, the probability of crime. Option (4) is false. It is unusual for there to be security personnel on duty in a residential complex. Question 30 Option (1) is true. In certain scenarios, a joint tenancy can be severed by one of the joint tenants even if the other joint tenant(s) is unaware of the action of the joint tenant severing the joint tenancy. Option (2) is true. In a joint tenancy, the co-owners each have an undivided share in the property. By definition, joint tenants are co-owners of the same interest, whatever that interest may be. Option (3) is true. A defining feature of joint tenancy is the right of survivorship. This means that when one joint tenant dies, that joint tenant s estate automatically vests in the surviving joint tenant(s). Question 32 A caveat is a note placed on a certificate of title by a person claiming an estate or interest in that land that prevents all dealings (e.g., transfers, mortgages) with the land inconsistent with the estate or interest claimed by the caveator. A caveat remains on the register for two months and lapses automatically at the end of that time. If the caveator wishes to enforce the interest claimed, she must commence a court action within this two month period and register a certificate of pending litigation against the certificate of title. Question 33 Option (1) is false. Cooperative corporations in British Columbia are created under the Cooperative Association Act through incorporation, not the filing of a plan at the Land Title Office. A strata development is created by the filing of a strata plan by an owner developer. Option (2) is false. Cooperative ownership differs from strata title ownership in that it does not bestow an individual with fee simple title to the cooperative owner s unit. Instead, the owner in a cooperative possesses shares in a non-profit corporation. In turn, this corporation holds title to the land. Option (3) is true. A cooperative owner does not own an estate in land, making the process of financing a cooperative purchase more difficult. Option (4) is false. Typically, a cooperative association s board of directors must approve the person who proposes to buy a cooperative owner s shares, and the proposed sale of those shares will be subject to the board s approval. Question 36 Option (3) is correct. Real property markets are local because of the immobility of real property. This implies that real property will be affected by external influences from neighbouring properties (externalities). Immobility also implies there will be differences in the type of real property supplied between areas but little difference in the type of property supplied within an area.

5 2017 Exam Study Guide Detailed Solutions To Select Questions 4 Question 37 A benefit of ADR is the fact that it can provide parties with a greater sense of privacy than going to court. This is because ADR records are not made public, as they would be in the case of litigation. Question 38 Trespass consists of wrongfully entering, remaining on, or placing something on another s land. It is an intentional tort, which means that the act must be a voluntary one. A right to enter can apply to a portion of the premises so that if a person wanders into areas where he or she has no right of entry, the person becomes a trespasser. Option (2) is a trespass because John s action is voluntary in the sense that he has control over where he walks, even if he was unaware that he was not allowed to pass through the door which stated No Admittance. Option (1) is not a trespass because Mary was granted express permission to enter the premises by the store clerk. Option (3) is not a trespass because Sue is granted implied permission by Joan to enter Joan s property for the purpose of knocking on her front door Question 43 Public law comprises those areas of law that deal with the Constitution and bodies of government, the relationship between individuals and the state, and relationships between individuals that are of direct concern to the state. For example, public law includes tax law, constitutional law, and criminal law. Question 48 In addition to dividing up land into different zones and restricting land uses, a zoning bylaw can regulate or restrict: density; the number of buildings on a lot; set-backs and yards; height; site area, lot frontage and lot coverage; home occupations off-street loading and parking; signs; and more. Question 50 Option (3) is not a duty on the strata corporation. Work ordered by a competent public or local authority with respect to a strata lot must be carried out by the owner of the lot. If the strata corporation completes the work, it can seek reimbursement from the owner. Question 56 Option (1) is false because codes of ethics attempt to ensure that human actions will be both lawful and morally fair. Option (2) is false because suspension or cancellation of a licensee s membership in a professional association, such as the PAMA, does not disentitle the licensee to continue his or her professional practice. Option (3) is false because written codes of ethics, such as the PAMA Code of Ethics, are imposed by professional associations on its members, not by the Superintendent of Real Estate on all strata management licensees.

6 2017 Exam Study Guide Detailed Solutions To Select Questions 5 Question 59 Options (1), (2), and (3) are all true. To meet the ethical duty of competence, it is necessary that property management professionals be competent within their area of expertise. If this standard of service cannot be rendered, or a particular aspect is beyond a member s expertise, the member is directed to decline offering their services and seek assistance of persons with expertise in the particular field. In order to maintain competence and further the growth of his or her skills, the Code encourages property management agents to use their best efforts to be fully informed, suggesting that agents take advantage of opportunities for continuing professional education. Question 61 Option (1), (2), and (3) are all results of the doctrine of stare decisis. This doctrine holds that if a court has already decided a particular point, and a subsequent court is faced with the same issue, the earlier decision should govern the subsequent decision. Decisions made by the Supreme Court of Canada have the most weight in our law, followed by the appeal courts of the various provinces, which are binding upon lower courts of those provinces and are very persuasive to the lower courts of other provinces. This allows for uniformity in the Canadian common law system. Question 62 A tenancy at sufferance is created when a commercial tenant holds over without the consent of the landlord and does not vacate the premises at the end of a lease term. A periodic tenancy refers to any occupancy or tenancy that is automatically renewed on the last day of the term for a further term of the same length. A tenancy at will usually arises when a relative or friend of the property owner occupies the premises at the will of the owner of a property; there is often no contract and the occupant is not required to pay rent or charges of any sort. A fixed term tenancy refers to a leasehold interest where the term runs for a definite (or fixed) period of time. Question 65 Statement (3) is true. Statement (1) is false because a property manager represents the owner of the property, not the tenant. Statement (2) is false because the property manager can only represent his own clients. Statement (4) is false because a property manager can represent his client as long as the service is specifically contemplated by the property management service agreement.

7 2017 Exam Study Guide Detailed Solutions To Select Questions 6 Question 68 Recommended subject matter of an operations manual includes: staff job descriptions lighting building maintenance equipment management organizational chart equipment maintenance purchasing inventory controls service contracts building security loss prevention programs emergency procedures life safety procedures and systems tenant arrivals and departures record-keeping forms to be used Question 69 By default, the Residential Tenancy Act allows landlords to increase the rent once every 12 months in an amount up to the maximum amount permitted under the Regulations, which is the inflation rate (as measured by the Consumer Price Index) plus 2%. Landlords are not permitted to raise rents except in accordance with the provisions of the RTA, unless an Order is obtained from the Residential Tenancy Branch authorizing a rental increase. In this case, since the Consumer Price Index is 1%, the maximum rent increase that Jennie can face this year is 3%. Question 71 Statements (2), (3), and (4) are true. Statement (1) is false because the brokerage can have one trust account for all its clients; however, it needs to keep a separate trust ledger for each client, showing all amounts received and disbursed and including any unexpected balance in relation to that client. Question 73 Apparent authority is present when the principal acts in such a manner as to lead a third party to believe that his agent has authority to perform certain acts on the principal s behalf, even though the agent does not in fact have such authority. Actual authority is given to the agent by the principal in their agency agreement. Express authority is created and limited by the terms of the agency agreement. Usual or customary authority is present when the agent is engaged by the principal to act in a particular transaction that is governed by customs of the trade, and it permits the agent to act in accordance with such customs as long as they are lawful and reasonable and the principal has not indicated otherwise. Question 74 Statements (1), (3), and (4) are true. Statement (2) is false because articles attached to the land merely by their own weight will, in the first instance, be considered chattels unless circumstances show that they were intended to be part of the land (i.e., fixtures).

8 2017 Exam Study Guide Detailed Solutions To Select Questions 7 Question 76 Option (1) is false. An occupier may still have a limited responsibility to trespassers. Option (2) is true. At common law, duties owed to children tend to be more onerous than duties owed to adults because of children s limited ability to appreciate danger and to act reasonably in the circumstances. Option (3) is false. Section 1 of the Occupiers Liability Act states that there may be more than one occupier of the same premises. Individuals who are in physical possession of the premises, (such as a lessee) will be considered occupiers. Option (4) is false. Individuals who have responsibility for, and control over, the condition of the premises, the activities conducted on those premises and the persons allowed to enter those premises will be considered occupiers. Despite being away, Clara would likely be considered an occupier as she owns and operates the lot. Question 77 Option (2) is correct. An appraiser who is asked to find the market value of a newly-constructed church would not be able to use the comparative or investment approaches due to the lack of data and would be justified in relying upon the cost approach. In addition, the appraiser can effectively determine the the cost of constructing the improvements since the church is newly constructed and has not experienced any depreciation. Question 78 Options (1), (2), and (4) are true. Option (3) is false because the PAMA Code sets out the requirement that Members shall supply their clients with accurate records regarding the finances and maintenance of property at intervals agreed upon by the Client. Question 79 A complaint must be in writing, and cannot be provided orally, despite containing a full description of the events giving rise to a particular complaint. Question 81 Options (1), (2), and (3) are true. Option (4) is false because, while the Standard Bylaws will apply as a default, a strata corporation may amend its bylaws as it sees fit. Question 82 Disclosing an individual s personal information without consent is not permitted when assisting the tenant s employer get in contact with the tenant/employee. The situations in options (1), (2), and (4) are permitted exceptions to the requirement for consent, as outlined in section 11 of the Personal Information Protection Act. Question 84 Option (3) is correct. Studies have found sufficient evidence to conclude that indoor air pollution represents a major portion of the public's exposure to air pollution and may pose serious acute and chronic health risks. Many employee complaints of a variety of symptoms including chronic headaches, sore and watery eyes, fatigue, and a host of other ailments may be due to poor indoor air quality. Option (1) is false. Studies have shown that the air being inhaled indoors can be 20 to 100 times more polluted than outside air. Option (2) is false. It has been estimated that up to 50% of buildings have poor indoor air quality. Option (4) is false. Property managers are responsible for ensuring that their building provides acceptable air quality.

9 2017 Exam Study Guide Detailed Solutions To Select Questions 8 Question 88 The contract is enforceable against the infant if the contract is affirmed by the tenant after he or she reaches 19 years of age, if the infant performs or partly performs the contract after reaching his or her 19 th birthday, or if the infant does not repudiate the contract within a year after reaching his or her 19 th birthday. All three of these situations are listed in section 19 of the Infants Act. Question 89 The Real Estate Development Marketing Act aims to protect purchasers by requiring developers who market or intend to market development units in development properties to: 1. Meet any preliminary requirements or approvals applicable to the type of property to be marketed; 2. Ensure appropriate steps are taken to pay the cost of utilities or other related services and to assure the purchaser s title (or other interest) upon purchase; and 3. Prepare and file a disclosure option in the form required by the Superintendent of Real Estate. There is no obligation in this statute to consult the public with respect to a development. Question 93 Option (1) is correct. The original cost of the asset less all the depreciation that has accumulated to date is referred to as the net book value of the asset. Question 95 Option (3) is true. Option (1) is false because the landlord or property manager should take care not to share personal information about the complainant without his or her prior consent. Option (2) is false because the landlord or property manager should give the particulars of the complaint to the tenant in writing. Option (4) is false because the protection of personal information is a primary consideration when disclosing tenant complaint letters to other tenants. Personal information belonging to the complainant that is not authorized for disclosure should be protected. Question 97 Option (2) is incorrect. Percy made the provision regarding size 12 font a mandatory requirement. The fact that there are no waivers or exclusions in the bid invitation means that Percy must disqualify any non-compliant bids. Option (3) is incorrect. If the bid invitation states that the bid will close on a certain date, Percy must adhere to that date. Late bids must be disqualified. Option (4) is incorrect. If the bid invitation states that bids are irrevocable for 60 days after the close of bidding, then this becomes a term of all bid contracts. This is a legally binding requirement for all bidders, which Bingo has breached. Question 98 Option (3) is an important consideration for the construction of a building s superstructure, not the substructure or foundation. Options (1), (2) and (4) are all important considerations for the construction of a building s substructure or foundation.

10 2017 Exam Study Guide Detailed Solutions To Select Questions 9 Question 99 Option (1) is correct. Legal representation can be viewed as an intangible product that cannot be seen, touched, or experienced ahead of time. Each representative is a product offering a unique combination of personality characteristics, experience, and knowledge to the client. In contrast, a novel is a tangible product because it can be seen, touched, or experienced ahead of time. Question 100 The roof replacement expense is a capital expenditure, and should be included on the capital budget, not the operating budget. Capital expenditures are major expenses that occur infrequently, compared to operating expenditures. Maintenance, administration and property taxes are all examples of expenses that would be found on a typical operating budget. Question 103 The amount of compensation that employees will receive is not considered in a job analysis. A job analysis is the process of determining the nature of a job by collecting and organizing information about its various aspects, including: what the job seeks to accomplish (option (4)); duties and responsibilities of the job (option (1)); equipment and machines used and operated (option (2)); characteristics of the work environment; and skills, abilities, knowledge, education, and experience required to successfully perform the job (job specifications). Question 105 Under the BC Human Rights Code, an employer like Rex can ask prospective employees about whether they are legally entitled to work in Canada, whether they have reached the legal working age in BC, and whether they have any physical disabilities that will prevent them from carrying out the essential duties of the job, but Rex cannot ask about whether a prospective employee is pregnant or plans to get pregnant. Question 106 There are 3 main classifications of interests in land that do not amount to estates, namely: 1. easements; 2. restrictive covenants; and 3. profits a prendre. A licence is not an interest in land. Rather, it is a contractual right or privilege to do something. Question 107 Within 35 days after a Response to the Complaint is filed, a Complainant must complete and file a Complainant Document Disclosure, listing all documents in the Complainant s possession or control that may be relevant to the Complaint or response to the Complaint. In addition, the Complainant is required to deliver a copy of each document listed to all of the parties to the complaint.

11 2017 Exam Study Guide Detailed Solutions To Select Questions 10 Question 108 Option (4) is correct. Depreciation expense is an attempt to allocate the cost of the asset over its useful life. Option (1) is incorrect. Depreciation expense is not another name for capital cost allowance (CCA) because CCA is a method of calculating depreciation for income tax purposes. Option (2) is incorrect. Depreciation expense is not a deductible expense in computing taxable income, but capital cost allowance is. Option (3) is incorrect. Land is not considered to be a depreciable asset and thus, depreciation expense is never taken on land. Question 109 Renovating old warehouses and factories to turn them into multi-family residential properties is sometimes known as heritage conversion. This allows developers to take advantage of high ceiling heights, interior and exterior architectural detail, high ceilings, exposed period flooring, and distressed brickwork. Question 110 Options (1), (3), and (4) are true. Option (2) is false because the property manager must only hire a temporary replacement if an in-house staff member is sick or on vacation. The contractor must find replacements for his or her own employees. Question 111 A landlord can only terminate a residential tenancy in limited circumstances. In option (1), Roger would likely be able to terminate the tenancy pursuant to section 47(1)(e) of the Residential Tenancy Act (the Act ) because his tenant has engaged in illegal activity that is likely to cause damage to Roger s property, and is likely to adversely affect the security and safety of other occupants of the residential property. A landlord can give notice to end a tenancy agreement to a tenant who is repeatedly late paying rent pursuant to section 47(1)(b) of the Act (option (3)). Under section 47(1)(a) of the Act, a landlord may, at any time, give the tenant a notice of the end of the tenancy if the tenant does not pay the security deposit within 30 days of the date it is required (option (4)). With respect to option (2), where the landlord intends in good faith that the landlord, or a spouse, child, or parent of the landlord or landlord s spouse will occupy the premises, the landlord can give notice to end the tenancy agreement. However, Jean Paul s nephew does not fall within this list of family members and such notices are not effective until the end of a fixed-term tenancy. Question 113 In sole source contracting, a purchaser deals with only one contractor from start to finish. Negotiation is not only possible but expected, and there are no legal obligations on either side, other than to be honest, until a deal is made. Question 114 Major jurisdiction in the area of labour legislation rests with the provinces as opposed to the federal government. The scope of federal powers with respect to this area is quite limited, covering less than 10% of the Canadian labour force (generally those interprovincial industries such as banks, airlines, railways, etc.)

12 2017 Exam Study Guide Detailed Solutions To Select Questions 11 Question 115 Option (2) is true. Option (1) is false because a fundamental term of the contract is known as a condition, not a warranty. Option (3) is false because the remedy for breach of a condition can be either termination of the contract or damages, while for breach of a warranty, the remedy is only damages. Option (4) is false because only a breach of a condition will allow the contract to be terminated. Question 116 Budget Actual Annual base rent (rate x space): $756,000 $756,000 Monthly base rent: $63,000 $63,000 Vacancy: $2,898 $3,276 Recovery: $38,000 $38,000 Misc. revenue: $9,000 $7,500 Operating Expenses: $38,000 $42,000 July Net Income $69,102 $63,224 Variance: $63,224 - $69,102 = -$5,878 Question 117 Competitive bid contracting is a complex and legally binding process on both the purchaser and bidders. Originally, it was not binding on either party, but since the Supreme Court of Canada s unanimous decision in a case called The Queen v. Ron Engineering, almost all forms of competitive bidding create legal obligations and duties on both the purchaser and the bidders. Competitive bid contracting results in the purchaser being less vulnerable to abuse than in sole source contracting, decreases the potential for favouritism, and is a more formal process than sole source contracting. Question 118 Options (1), (2), and (4) are true. Option (3) is false because the forms of advertising covered by section 52 are extremely broad, including representations by any means whatsoever. Question 120 Personal selling refers to face-to-face communication with a potential customer. The major advantage of personal selling is flexibility because a representative can react to quickly changing situations. Often, personal selling is appropriate for complex or expensive products such as real estate property management services. Question 122 Green certification programs for multi-unit residential buildings include EnerGuide, Built Green, and LEED. ENERGY STAR is an international standard for energy efficient consumer products. Question 124 Options (2), (3), and (4) are true. Option (1) is false because the sign should be changed regularly if it is not clean or upright or if the information is not current. For example, the percentage leased figures should be changed as leasing progresses.

13 2017 Exam Study Guide Detailed Solutions To Select Questions 12 Question 127 The duty not to make a secret profit means that the agent must keep the principal fully informed about all of the actual benefits and prospective benefits accruing to the agent as a result of the agency relationship. Question 133 The Human Rights Tribunal will consider the following factors when determining whether a monetary award is justified: 1. the nature of the discrimination (option (1)); 2. the time period of the discrimination (option (2)); 3. the frequency or impact of the discrimination in that period; 4. the age of the Complainant; 5. the vulnerability of the Complainant; and 6. the psychological or emotional impact of the discrimination (option (3)). Question 136 A defendant can successfully defend against a claim of negligence by establishing, on the balance of probabilities, that the damage suffered by the plaintiff was not reasonably foreseeable by a person in the defendant s situation. Option (1) is incorrect because intent is not necessary in a negligence claim. Option (2) is incorrect because if the defendant breaches the standard of care owed to the plaintiff, he can be held liable for negligence. Option (4) is incorrect because it does not matter if the act of the defendant was authorized by statute. If the act can be done in a non-negligent manner, it must be done in that manner.