Humber/Ontario Real Estate Course 3 Exam Practice

Which of the following statements is TRUE concerning the requirement of a Realty Tax Clearance Certificate?

1. It is required for all home sales to ensure there are no outstanding tax liabilities

2. It is optional and at the discretion of the buyer

3. It confirms that there are no taxes owing on the property up until the end of the year

4. It verifies that the seller has paid all the taxes up to the date of the transaction

The correct answer is: It confirms that there are no taxes owing on the property up until the end of the year

The statement regarding the Realty Tax Clearance Certificate being true is the assertion that it confirms there are no taxes owing on the property up until the end of the year. This is essential for buyers and sellers in real estate transactions because it provides assurance that there are no outstanding tax liabilities that could affect ownership transfer. By confirming that there are no taxes owed, it safeguards the buyer from inheriting financial responsibilities related to unpaid property taxes. This clarity can be crucial for facilitating a smooth transaction and ensuring that all financial obligations have been met prior to closing. The context for the other options is important: While it might seem logical to suggest that a tax clearance certificate is required for all home sales, it is specifically dependent on local regulations and practices. It is not merely optional; in many transactions, it becomes a significant part of the due diligence process to protect the interests of the buyer. The stipulation that it confirms the status of taxes only until the end of the year is inaccurate because taxes are often assessed and can be due in installments, indicating the necessity to verify the current standing right up to the transaction date.