Real Estate Prep 1

What is the maximum civil penalty that can be imposed per license law violation in Arizona?

$1,000

Tom is an Arizona homeowner who had a judgment lien levied against him, but the Arizona Homestead Exemption will allow him to exempt part of his primary residence from seizure for payment of debts. What is the maximum amount Arizona homeowners can exempt?

$150,000 for an individual or married couple

What did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? Round to the nearest cent.

$237,654.87 Multiply Answers by %

What is the maximum amount that a consumer can be paid out of the residential contractors recovery fund?

$30,000

After operating the firm for 17 years, Trethlon Manufacturing just sold its entire operation for $5.7 million. The adjusted purchase price was $3.9 million. While the corporation ran the business, it spent $970,000 on capital improvements. Real estate commissions and other costs of the sale were $358,000. What is Trethlon's capital gain?

$472,000 $3,900,000 + $970,000 + $ 358,000 = $5,228,000. Then, $5,700,000 - $5,228,000 = $472,000.

which type of deed conveys real property from a decedent's estate to a buyer

*Executor deed* executor is the person in charge of administering the estate according to the will of deceased. An executor's deed conveys real property from a decedent's estate to a buyer.

Generally, what's the common range for loan origination fees?

1% to 3% usually negotiable but most borrowers don't know this

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed is applied last?

1. Financing terms and cash equivalency condition of sale 2. market conditions at time of contract and closing 3. location 4. physical characteristics

Find the number of square feet in a rectangular lot with 75 feet of frontage and a depth of 140 feet.

10,500 square feet

When prorating annual property taxes of $2,400 using the statutory calendar, what's the daily rate, rounded to the nearest cent?

2400/360=6.66667

The subject property has a potential gross income of $350,000. The effective gross income is $262,500. After constructing the operating statement, an appraiser arrives at a figure of $138,000 for total expenses. What's the NOI for this property?

262,500 - 138,000 = 124,000 NOI is determined by subtracting the operating expenses from effective gross income.

A boundary line is 880 yards long. How many furlongs is this equal to?

4 Furlong is a measure of distance of 660 feet; also equivalent to 220 yards, 10 chains, and one-eighth of a mile.

Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage?

850 square feet *Read whole problem

Arizona judgment liens are valid for a period of 10 years from original entry date. When creditor want to renew a judgment, they can file a lawsuit or an affidavit of renewal of judgment with the clerk of courts. the affidavit must be filed within_______

90 days of the expiration of the judgment/prior renewal

The assessed value for your buyer clients' new purchase is $209,000. They feel they got a great deal since they're purchasing the property for $175,000. They've asked you to estimate their monthly property taxes. You know the rate for their jurisdiction is .52%. What is the monthly tax amount your clients owe?

90.57 (209,000 x .52)/100=1086.80 1086.80/12=90.57 monthly tax amount

What is a township?

A 36-square-mile square formed in the use of rectangular government survey system

ADRE will not issue a real estate license to ______.

A felony convict who is incarcerated or on parole

Arizona permits employing brokers to engage the services of licensees who act through certain business entities. Which of the following is a business entity through which a salesperson or associate broker may perform and be paid?

A professional limited liability company

which of the following is potential ramification to seller if a short sale is completed?

A short sale can negatively impact the sellers credit. and the lender may seek a deficiency judgment for the amount not repaid

An exclusive right-to-sell agreement must include ______.

A start and end date for the listing period

Which of the following types of properties may be eligible for purchase by Freddie Mac?

A triplex purchased as a primary residence Primary residents* not commercial space

Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______.

A zoning ordinance

Which phase of the investment cycle is best known for write-offs and, depending on the project, tax credits?

Acquisition

Your buyer client is paying cash and wants to know when and whether to purchase property insurance. How do you advise your client?

Advise your client that insurance is there to protect him, and it should be purchased upon transfer of ownership.

What would trigger the Arizona Registrar of Contractors to investigate a contracting without a license violation?

After performing a "sting" operation that nets results

The ______ clause is also known as a due-on-sale clause.

Alienation

The American National Standard Institute calculates a home's livable square footage or finished area to include which one of the following areas?

An enclosed area in a house that's suitable for year-round use

When you're involved in a transaction as a licensee, who are the third parties?

Anyone involved in the transaction who isn't your client

The Appraiser Qualifications Board has set a minimum of 75 hours of appraiser education for which category of appraisers?

Appraiser trainee

With which Arizona agency do timeshare developers have to file a timeshare report?

Arizona Department of Real Estate

REALTOR® Arnold was instructed by his client Sebastian to find a buyer who would "fit into the neighborhood." What is Arnold's responsibility in this situation?

Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws.

Ava is borrowing money to buy some commercial property for her business. The loan agreement she signs includes a lock-in clause. What does that mean?

Ava will not be allowed to pre-pay the loan prior to the date specific in the loan agreement. Pre-payment penalty--used for high yield loans

A contract that requires both parties to act is a ______ contract.

Bilateral -both parties Unilateral- single party

Monica received a promotion at work that requires her to relocate. Because of the timing of her promotion, she'll need to buy a new house in her new city before her current one is sold. So, she won't have any equity from her current home to make a down payment on the new house. What loan option would allow her to make the purchase before selling the old house?

Bridge loan

Under which of the following types of leases does a tenant rent property with an unfinished interior and agree to complete the construction?

Building shell lease

You're showing a house when you notice piles of what looks like sawdust outside near the basement windows. This may be evidence of which pest?

Carpenter ants

Citytown officials know that they have an abandoned factory site that has been identified for cleanup under CERCLA. When city officials tried to trace the ownership of the property, they found several shell corporations but can't determine which individual or corporate entity actually owns the property. What is a likely outcome of this situation?

Citytown will apply to the CERCLA trust fund for cleanup costs.

If you're helping a property owner collect rent from tenants who lease space in an office building, you're likely working as a _______.

Commercial property manager

In Arizona, a real estate license is required to perform real estate activities on another's behalf for ______.

Compensation

A property manager has just started working for a new property owner who owns a small apartment building. The property manager learns that construction of a large apartment complex has been approved one block away from his client's apartment building. What type of analysis would include this information?

Competitive analysis

What's an antitrust violation's central element?

Conspiracy

You're a broker who's also a member of the National Association of REALTORS®. What does Article 3 of the Code of Ethics require you to do?

Cooperate unless it's not in your client's best interest.

Not only does ______ close you off from all of the rich and interesting things that other cultures have to offer, but as a real estate professional, it poses a great risk to your real estate practice.

Cultural insensitivity and bias

Javier represents Marcus, who's selling his rental property to Ben. Ben is represented by another real estate licensee, Francis. What is Ben's relationship to Javier?

Customer

The ______ method converts a single year's expected income (or an annual average) into a market value.

Direct Capitalization This is the expected return on investment the property is capable of producing in a single year—the first year of ownership.

Which one of the following actions is a licensee required to take to fulfill a fiduciary duty?

Disclose personal interest and licensed status when buying property for personal use.

Which of the following situations is an example of a non-agency relationship?

Dutton was previously a licensee. He's selling his home, and he wants Wanda, who's currently licensed, to assist him with the paperwork.

Which of the following is used to provide documented proof that buildings and improvements are properly raised to minimize flood damage?

Elevation certificate

A buyer client is preparing an offer on a property. He wants to make sure his offer stands out above all others and is accepted, so he discusses waiving the inspection contingency. What should the agent do?

Encourage the buyer to get an inspection, and if he still wants to waive it, put it in writing that you advised against waiving the inspection and have him sign.

Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.

Enforceable

When someone dies intestate with no heirs, the real property owned by that person may be taken by the state through _______.

Escheat

Ricky Nubbins is three months behind in his rent and has received several reminders from the landlord that the rent is past due. As a result, the landlord has begun working through proper channels to legally end Ricky's lease before the contract end date. The landlord is terminating his lease through ______.

Eviction

Arizona licensees are expected to deal ______ with all parties to a transaction.

Fairly

If there's no state or local building code to cover a specific situation, what code must the builder abide by?

Federal Building code The national codes apply unless stricter local or state building codes exist.

How is a mortgage banker paid?

Fees from originating and servicing loan

In general, what is the term for a person who's been placed in a position of loyalty and trust?

Fiduciary

After issuing a Notice of Immediate Termination—Material and Irreparable Breach to a tenant, what should a landlord do the same day?

File a Special Detainer Action.

Which of the following are included in the transfer of real property unless specifically excluded in writing?

Fixtures

Rico is an appraiser who is performing a valuation on a property. What's another term for what Rico is doing?

Formal appraisal

Which of the following home appliances can release carbon monoxide into a home?

Gas Range

When a licensee has broad responsibility to handle all details of a specific transaction, what type of real estate agency relationship usually exists?

General

Which of the following describes a census tract?

Geographic area developed in a community and identified by number

Which statement most accurately describes the role and function of Ginnie Mae in the secondary mortgage market?

Ginnie Mae insures MBSs made up of government-insured or -guaranteed loans. making them a more secure investment for investors.

9 Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?

Gross lease

Nick and Chris tine own a Taco Bell franchise. They built the restaurant on land they've leased from the Fargood Foundation. What type of lease do they have?

Ground Lease

Fred is an agricultural lender who helps the ranchers and farmers in his community by providing credit for purchasing land, making repairs to their buildings, and improving their agricultural property. He's able to do this in part because of the ______ offered by the USDA Farm Service Agency.

Guaranteed loans The USDA Farm Service Agency offers guaranteed loans to agricultural lenders.

Audrey is raging mad at her landlord, Ruby, who hasn't sent anyone to fix the toilet. To show that she is serious, Audrey could remind Ruby that she is legally obligated to maintain the ______ of the premises.

Habitability

Marion is seeking an Arizona real estate salesperson license. To obtain the license, she must meet all of the following requirements, EXCEPT ______.

Have at least one year of experience working in real estate

Erik is acting in a single agency capacity in a transaction. What does this mean?

He's representing (and owes undivided loyalty to) either the buyer or the seller.

Julian is hiring a branch office manager for the new office his brokerage just opened. His choice has come down to Arizona licensed salesperson Hannah or Arizona licensed broker Alvin. If he chooses Alvin, what task would he be able to perform that Hannah would not?

Hiring or firing affiliated licensees

Capitalization is the process of converting ______ to value.

Income

To whom would a 1031 tax exchange usually appeal?

Investors

Which offer would be the most appealing to a seller?

It depends on the seller's needs and motivations.

Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max's representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he's seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max's agency coupled with interest?

It's still in place because it doesn't terminate on the death or incompetence of the principal.

which statement regarding rentals agreements is true?

Its always best to get rental agreements in writing

Marjory is an Arizona salesperson representing a seller on behalf of her employing broker, Leonard. Kenneth is a salesperson representing a buyer on behalf of his employing broker, Jason. Marjory's listing agreement provides for compensation to the buyer's agent in the transaction. From whom will Kenneth receive his compensation?

Jason

The doctrine of "use it or lose it" is known as the doctrine of ______.

Laches

To whom/which entity should a licensee who's been threatened with violence after refusing to violate fair housing law report the threat?

Law enforcement officials

Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit

Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit

Cooperation agreements with out-of-state brokers may only be entered into by Arizona ______.

Licensed brokers

A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.

Loan to Value Ratio

Which of the following loan types can be packaged into a mortgage-backed security eligible for guarantee by Ginnie Mae?

Loans insured or guaranteed by U.S. government agencies

which type of legal description do courts prefer

Lot and block

What steps must a lien-holder take to perfect their mechanic's lien in Arizona?

Make copies of the lien claim, give one to the county recorder, give the other to the building's owner

Tim and Tina Wells bought a home with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year. When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. They expected these plantings to be considered part of the real property because of the ________.

Method of annexation

Which of these is an example of a sub-agency relationship?

Morris, who's licensed independently, finds a buyer customer for Greg's listing with Marvel Homes and is obligated to act in the best interest of Marvel Homes' client.

Who originates their own loans?

Mortgage bankers

Rescission can be a(n) ______ agreement to cancel a contract.

Mutual

What's one square yard equal to?

Nine square feet 9^2

Moira has been licensed as an Arizona salesperson for a little more than two years. She wants to get her membership camping license and her broker's license within the next year, holding all three to round out her licensure and open up her business opportunities. Can she move forward with this plan?

No, licensees may only hold one real estate license at a time.

Lou and Lannie, two unmarried siblings, decide to buy a vacation home. They enter into a contract with the seller, Amanda. A week after signing the contract, Lou and Lannie have a falling out. Now their brother Larry wants to buy the home with Lou, and Lannie wants no part of the purchase anymore. Amanda agrees, and they substitute Larry for Lannie in the contract, leaving Lannie with no further liability. This is an example of ______.

Novation

For what environmental issue are CFCs blamed?

Ozone depletion

Which of the following business entities may apply for an employing broker's license in Arizona?

Partnership

Which of the following is a legal term that can mean the right to take products out of the soil?

Profit

Kirsten wants to know how her property management firm is compensated for managing her rental property in Flagstaff. She should refer to her ______ for this information.

Property Management agreement

When the buyer and seller both have costs to pay, which form shows who pays what?

Purchase Contract

Which of the following is NOT an ADEQ environmental program type?

Radon mitigation The ADEQ comprises three environmental program types: air quality, water quality, and waste.

Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he'd buy it from Hank for $80,000, which Hank agreed was a fair price. It's two months later, and Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable?

Real estate contracts must be in writing.

Which of the following is a danger of office exclusives?

Reduced market exposure

Institutions that purchase loans, package them into mortgage-backed securities, then sell these to investors may commonly be referred to as ______.

Secondary market players

With a land contract, who retains the title to the property?

Seller

In a land installment contract, which party holds the deed to the property until the buyer pays the purchase price in full?

Seller The seller retains the deed until the buyer pays the agreed-upon sales price in full. Retaining the deed is the seller's assurance that the buyer will pay.

Orla represents the seller, and Pardeep, an agent from a different firm, represents the buyer in the same transaction. What type of agency relationship does Orla have with her client?

Seller agency

Which of the following is NOT a way to remove a tax lien from a property?

Selling the property after the lien has been in effect for at least three years.

Trinity has been named executor of her uncle's will. What does this mean?

She's responsible for carrying out the will's provisions.

Arizona broker Sarah has had a trust account open for six months now. How many times has Sarah had to reconcile and record a reconciliation for this trust account?

Six times, because the account must be reconciled once per month.

Forecasting the income and expenses that we can reasonably expect to bring in and pay out over a short term results in a budget that's every property manager's dream. That budget is ______.

Stabilized

Once the market study has been conducted, a developer can apply to ________________ for approvals.

State and local agencies

Which clause refers to the order of liens on a property?

Subordination A subordination clause allows the security instrument's lien position to be placed in a lower priority to a new loan that's using the same property as collateral.

What does the Arizona Department of Real Estate administer?

The Arizona Administrative Code

Which of the following is a true statement about U.S. Department of Veterans Affairs loans?

The VA will guarantee a loan based on the sales price or the certificate of reasonable value (CRV).

Which of the following statements about Colorado River water is true?

The federal government regulates the distribution of this water.

Which of the following is NOT a number you need to calculate property taxes?

The original purchase price

In the consideration of real property and personal property, severance is _____.

The process of removing a fixture before agreement or after negotiation, to designate it personal, rather than real, property.

In property ownership, what is an undivided interest?

The right of each co-owner to use the entire property

In Arizona, who's responsible for property damaged between contract signing and COE?

The seller

Which of the following is a reason for a tenant remedy to be applied in Arizona?

The tenant informed the landlord of the problem, and it's still not fixed 10 days later.

Why are net listings illegal in some states?

There's potential for a conflict of interest.

Sheila owns a timeshare that gives her ownership in the property for a certain number of weeks per year in perpetuity. What type of timeshare is this?

Timeshare estate

Which of the following statements is true regarding timeshare estates?

Timeshare estates can be sold or passed down to heirs.

What's the intended use of the Uniform Residential Appraisal Report?

To evaluate the subject property for a mortgage finance transaction

A person who facilitates the paperwork, but doesn't actually represent either party to the transaction, may be a ______.

Transactional broker

Tricia wrote an offer to purchase Ziggy's vacant lot. She intended to borrow $55,000 of the $95,000 purchase price at an interest rate of 5.75%. She applied for the loan but wouldn't cooperate with the lender to provide the required documentation. Tricia subsequently used the loan contingency to terminate the contract. Which of these is true?

Tricia failed to act in good faith to try to get her loan, so she's in breach of contract.

Moneys given for purchase deposits are ______.

Trust funds

If the responsible parties refuse to clean up hazardous contamination, the EPA can hire its own contractors and seek damages in court for _______.

Up to 3x the actual clean-up costs

Fabiola and Rex just learned that their offer on Dena's condo was accepted. Dena's broker sent the contract to the escrow company, and Rex will drop off the earnest money tomorrow. When does escrow open?

When the escrow company gets a copy of the contract

Which of the following duties does a licensee owe to a buyer with whom no agency agreement exists?

Which of the following duties does a licensee owe to a buyer with whom no agency agreement exists?

Which of the following projects requires a building permit in Arizona?

Wiring the basement for electricity

If no deadline is specified in the lease agreement, an Arizona landlord must return a tenant's security deposit, less any itemized deductions, within ___ business days of the tenant vacating.

Within 14 business days

Arizona licensee Joseph tells his client that a property is zoned as residential, even though he knows it's zoned as commercial. Is this action prohibited under Arizona license laws?

Yes, Joseph has lied and misrepresented the property. Joseph has lied and misrepresented the property.

You're planning to tweet information about an Arizona property you've just listed. You cram the tweet as full of details about the property as you can, knowing that you don't need to include the name of your brokerage under which of the following circumstances?

You include a link to another site where the brokerage name is clearly displayed.

Under certain circumstances, an attorney may perform real estate services without holding a real estate license. This would be true for an attorney who employs up to ______ salespeople.

Zero, can not operate without license

Cameron, a broker with a firm in Yuma, is reconciling his clients' trust account, and is about to perform the reconciliation process required by the Arizona Department of Real Estate. To complete the reconciliation, he needs to gather his bank statement, his journal of receipts, disbursements and deposits, and ______.

a reconciliation report

Which of the following statements is correct?

an unenforceable contract is a valid contract, but it will not be enforced by the courts

Which economic characteristic of land contains the concept that a land's value can be affected by the changes made to it, such as construction of a home or shopping center?

improvements

Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description?

meters and bounds description

"Land divided into lots for development" is the definition of ______.

subdivision

which of the following is true about the federal housing administration's qualifying standards for a mortgage loan

Are somewhat less stringent than standards for conventional loans

Derek is the designated broker for his brokerage. The firm recently opened a branch office. Derek's next chore is hiring a branch office manager. Who will he be able to consider for the position?

Arizona licensed brokers

Where are underground storage tanks primarily found?

In older homes and former industrial sites

In Arizona, which of the following is true?

In order for a judgment to become a lien, the creditor must record a certified copy in the county recorder's office.

Which physical characteristic of land addresses the concept that while improvements may deteriorate over time, the land itself cannot be destroyed?

Indestructibility

Individual property managers may be employed by an owner and manage _

Individual property managers may be employed by an owner and manage _

which of the following is a possible title issue with real estate owned transaction?

Internal audit delay Unpaid liens against the title Internal audits may cause delays in the title transfer process. REO properties have already been through the foreclosure process, and the bank has therefore likely paid any liens and dealt with any eviction issues.

Your buyer client just got an estimate from an unlicensed handyman for work she wants done on her home after closing. What advice would you give her?

Suggest she get a minimum of three estimates for the work.

For which of the following duties are employing brokers responsible in relation to the activities of the brokers and salespersons they employ?

Supervising

Which agency applies the "target" designation to a dwelling and has set specific requirements for lead abatement and remodeling of these homes?

The EPA

If an Arizona tenant asks the landlord to rekey the door locks in response to a domestic violence incident, which of the following is true?

The landlord is entitled to have a copy of the new key. Landlords charge for this

When a developer accepts earnest money or a down payment and puts it in an escrow account, he must inform the purchaser or lessor of the name of the title company and what else?

The name of the broker's trust account

Mitzi's foreclosed property was sold at an Arizona trustee's sale. After the sale, she was notified that the lender had filed a deficiency judgment against her. Under what condition can this happen in Arizona?

The subject of the foreclosure was a commercial property. In Arizona, anti-deficiency statutes protect most residential properties from a deficiency judgment, but the protection doesn't cover foreclosed commercial property.