RECA Residential Unit 4 Exam Questions With Verified Answers
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RECA Residential Unit 4 Exam Questions
With Verified Answers
3 Types of property defects - answerPatent, Latent, Material latent
What are Patent defects (on a property)? - answerobvious flaw discovered upon reasonable
inspection. caveat emptor applies (meaning that the buyer should have inspect...
RECA Residential Unit 4 Exam Questions
With Verified Answers
3 Types of property defects - answer✔Patent, Latent, Material latent
What are Patent defects (on a property)? - answer✔obvious flaw discovered upon reasonable
inspection. caveat emptor applies (meaning that the buyer should have inspected enough to find
anything like this). Unless the seller provides information or warranties regarding the patent defects, it is
the buyers responsibility to address them.
What are Latent defects (on a property)? - answer✔Latent defects are physical deficiencies that do not
render the property dangerous or potentially dangerous, so caveat emptor applies.
Latent (or hidden). A true latent defect is one that is not known to either the seller or buyer at the time
of the sale.
Liability becomes an issue when it can be proven that a defect was known to the seller but could not
have been discovered by the buyer, even upon a reasonable inspection.
What are material latent defects (on a property)? - answer✔A material latent defect is a "hidden" defect
that materially (largely) affects the use or value of the property.
Material latent defects are of significance because the seller is aware of them but the buyer will not
discover them through a reasonable inspection. These effects may render the property dangerous or
potentially dangerous, unfit for habitation or unfit for the purpose that the buyer is acquiring it.
What is caveat emptor? - answer✔Let the buyer beware. However, this rule is often violated; people are
often required to speak up
Two types of patent defects - answer✔Minor and material
8 examples of Minor patent defects - answer✔Broken window pane, damage to entry walkway/stairs,
Ill-fitting or damaged doors, ill-fitting windows, cracks in cement driveway, stained/damaged walls and
ceilings, worn or damaged flooring, worn or damaged faucets/fixtures.
7 examples of Material patent defects - answer✔Roof requiring re-shingling, Large windows with broken
seals, cracked heat exchanger in furnace, easily observable foundation deterioration, property located in
flood hazard area, property located near a fertilizer plant, property condemned by Alberta Health
Services.
What are material patent defects? - answer✔defects that could pose serious health and/or safety
concerns for occupants or visitors to the property.
5 examples of Latent defects - answer✔1. a hole in drywall hidden from view by a wall hanging. 2. A
dent in hardwood flooring hidden from view by an area carpet 3. Broken window latch hidden from view
by window covering 4. Water stains on carpeting hidden from view by a large plant stand 5. Damage to
the inside wall of a bedroom closet hidden from view by clothes.
8 examples of material latent defects - answer✔1. Significant structure damage that has been concealed
2. Notices from local authorities that prejudicially affect the property 3. Any renovation or repair work
that lacks required/appropriate permits from the local municipality or other authority 4. Concealed
crack in the foundation wall 5. Concealed electrical wiring improperly installed 6. Environmental
contamination not remediated and is concealed 7. Properties formerly used as marijuana grow op or
drug lab what were renovated but not professionally remediated 8. Corroded post-tension cables
If the buyer is not represented, it is the seller's REP to communicate material latent defects to the
unrepresented buyer? - answer✔Yes, as it in the best interest of the seller (or else the buyer may sue
the seller if it is not made clear).
What does misrepresentation refer to? - answer✔a false or misleading statement or representation
made by one party to another
3 types of misrepresentation - answer✔negligent, reckless and intentional
Negligent Misrepresentation - answer✔a false or misleading statement made by a person, who believed
it to be true, and where the person carrying out the misrepresentation took reasonable steps to assure
the accuracy of the statement
Reckless Misrepresentation - answer✔false or misleading statement made by a person who had not
intended to mislead but failed to take reasonable steps to confirm the statement's truthfulness or
accuracy
In general property inspectors should have in-depth knowledge on the following 6 areas - answer✔1.
New and old building service systems 2. How different building service systems interact 3. Causes and
effects of building systems deterioration and remedies 4. Applicable legislation 5. Hazardous material 6.
Current safety standards
In Alberta who governs residential property inspectors and inspection businesses? - answer✔The Fair
Trade Act, Home Inspection Business Regulation
How to determine if a property inspector or business is currently licensed? - answer✔Visit Service
Alberta website at servicealberta.ca
What is the Property Inspection Request form and what does it include? - answer✔RECA created the
Property Inspection Request form to assist REPs in educating their clients about property inspections.
The form includes a list of the various inspections and reports available to buyers.
What is an ESA? - answer✔Environmental Site Assessment. To determine if a property is contaminated
True or False - An ESA Phase 1 assessment does not typically involve lab testing or items like paint, soil,
air, or moisture. - answer✔True, that is done in Phase 2
What is the ESAR? - answer✔Environmental Site Assessment Repository. An online searchable database
that provides scientific and technical information about assessed and/or reclaimed sites throughout
Alberta.
4 activities when performing due diligence that REPs should also complete - answer✔1. Convey to
clients and document in writing information received from others including situational details such as
where and when the conversation occurred. 2. Retain copies of due diligence activities provided to
clients for the brokerage records 3. Never express opinions regarding matters such as what the client
should or should not do and what will or will not occur in the future. 4. If the client seeks an opinion
beyond your expertise, advise the client to seek legal advice and/or advice from an appropriate expert.
Are Sellers and the REPs who represent them legally obligated to disclose patent defects? - answer✔No
4 Factors for - related to disclosing patent defects - Factors for disclosure - answer✔1. Questionable if
defect is discoverable through reasonable inspection of property 2. Buyer less likely to commence legal
action against seller if made aware of defect. 3. Usually less negotiation to arrive to mutually acceptable
purchase contract 4. Seller may appear open and honest to buyers
4 Factors against - related to disclosing patent defects - Factors against disclosure - answer✔1. Defect is
clearly discoverable through reasonable inspection of property 2. Buyers may not consider purchasing
property upon becoming aware of defect 3. Seller may receive higher sale price for property 4. Doctrine
of caveat emptor applies
Due to the desire to mitigate risk, is it okay for REPs to disclose Patent defects without the lawful
instructions of the seller - answer✔No, regardless of the desire to mitigate risk, unless the seller
instructs the REP may not disclose patent defects to potential buyers. It would be a breach of the REPs
general obligation and fiduciary duties.
The decision to disclose or not disclose patent defects rest solely with the seller
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