AZ CE Shop Practice Test questions
A homeowner sells his house for $325,000 more than he bought it for. When he files his income taxes, how much of this profit may be exclude from his capital gains if he's filing as a single taxpayer? -$150,000 -$200,000 -$250,000 -All of it
$250,000
In Arizona, what is the maximum deposit a subdivider can charge per plot in a future subdivision?
$5,000
In Arizona, how long does a seller who resides in a planned community or an HOA have to give the buyer notification of the association rules?
10 days after notification of pending sale
Arizona brokers must withdraw any interest earned on a trust account at least every _______.
12 months
In Arizona, when a public report is issued on a proposed subdivision, how long does a developer have to provide a copy to all reservation holders?
15 calendar days
Over how many years is a commercial property depreciated? -27.5 years -29 years -39 years -40 years
39 years
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 corporation -A partnership -A professional limited liability company -A sole proprietorship
A professional limited liability company
Which of the following describes a Ginnie Mae investment? -A high risk -A high yield -An interest only return -A safe investment
A safe investment
What's the Uniform Commercial Code? -A set of business laws created to regulate commercial transactions, including contracts dealing with personal property -A set of business laws created to regulate financial contracts dealing with real estate -A set of standards created to create a uniform way in which all commercial real estate transactions must be conducted -A set of standards for commercial business code of ethics
A set of business laws created to regulate commercial transactions, including contracts dealing with personal property
Individual property managers may be employed by an owner and manage ________ -A single property -Multiple properties -Properties within a single state -Several connected properties
A single property
Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
Barbie owns two thirds and Midge owns one third
George is an Arizona salesperson representing a seller client in a real estate transaction. His employing broker, Hannah, is preparing a written disclosure to give to the transaction parties regarding who will receive compensation from the transaction. When will Hannah need to provide the compensation disclosure? -Before closing -Before the final funds transfer -Before the first offer is received -Before the listing goes on the MLS
Before closing
Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan? -Buydown -Down payment -Gap financing -Usury
Buydown
Margaret had received her Closing Disclosure from the lender. To best protect her interests, what should she do with it? -Compare it to the Loan Estimate -File it with her mortgage papers -Take it to the closing -Use the information to compare loan costs with those of those of other lenders
Compare it to the Loan Estimate
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 has the highest priority? -Conditions of sale -Location -Market conditions -Physical characteristics
Conditions of sale
What are emblements in real estate? -Cultivated crops -Detached fixtures -Free standing plants -Open spaces
Cultivated crops (these are considered personal property)
Drainfields that use _______ are only six to eight inches deep. -Aerobic units -Drip irrigation -Mound systems -Sand filters
Drip irrigation
Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this? -Estate for life -Fee simple -Leasehold estate -Periodic estate
Fee simple
Buying at one price and immediately trying to sell it at a higher price is known as _______. -Exchanging -Flipping -Switching -Trading
Flipping
You should never advise buyer and seller clients to pay contractors _______. -In cash -With a check -With a credit card -With a money order
In cash
In Arizona, which of the following is true? -In order for a judgement to become a lien, the creditor must record a certified copy in the county recorders office -In order for a judgement to become a lien, the debtor just owe money for a mortgage, deed of trust, or contract of conveyance -Judgements automatically become liens -Judgements become liens if not paid within 90 days
In order for a judgement to become a lien, the creditor must record a certified copy in the county recorders office
Which of these is the best description of what CAGRD does? -It manages Colorado River water disputes and represents the state during federal negotiations -It manages the states AMA's, making sure that those areas don't use groundwater faster than it can be replenished -It manages those areas of the state that grow crops and are irrigated with groundwater -It provides a system to demonstrate assured water supply
It provides a system to demonstrate assured water supply
One member of the Arizona Real Estate Advisory Board is required to be a ________. -Commercial broker who is primarily a property sub divider -Licensed broker who has been engaged in multi family residential rental brokerage -Member of the general public -Political independent
Licensed broker who has been engaged in multi family residential rental brokerage
A lender requests an appraisal of a property under foreclosure. What type of value is the lender most likely to be interested in? -Going concern value -Insured value -Investment value -Liquidation value
Liquidation value
Which occupancy type is eligible for a VA loan? -All occupancy types -Investment property -Owner occupied -Second home
Owner occupied
Which of the following leases is more commonly used with retail properties, such as shopping centers and malls? -Ground leases -Index leases -Percentage leases -Reappraisal leases
Percentage leases
Mortgage bankers are mostly what type of enterprise? -Closed -Exclusive -Private -Public
Private
Hugh is representing Jacqueline in her purchase of a new condo. She wants to move in before closing, and in order to fulfill his statutory duties, which of the following actions would Hugh take? -Recommend Jacqueline seek the advice of a lawyer -Recommend Jacqueline speak with his designated broker -Recommend that she wait until after closing to keep things simple -Research the implications and report them back to her
Recommend Jacqueline seek the advice of a lawyer
After meeting with his business, Daniel has decided to sell his office building in order to free up some capital. He's going to lease it from the new owner, Blake, so he can stay in place. What type of lease does he have? -Escalated -Ground lease -Lease option -Sale and leaseback
Sale and leaseback
Where can a party reviewing a title commitment find basic details about the transaction? -Schedule A -Schedule B-1 -Schedule B-2 -This is not contained in the title commitment
Schedule A
Felicia and Alicia have just received a copy of the public report and proposed purchase contract from the developer to whom they have given a deposit. The land they want to build on is part of a large subdivision on the outskirts of Flagstaff. How long do Felicia and Alicia have to review the contract and execute it? -14 calendar days -21 calendar days -30 days - Seven business days
Seven business days
Which of these situations represents a unilateral contract? -Cain sells Trent his bike -Maurice promises Shelton $100 if Shelton will sell his painting. Shelton agrees, but Maurice doesn't pay Shelton -Nathan and Sue exchange vows at their wedding -Sherry promises to give Brent a ride home from work, and then doesn't show up
Sherry promises to give Brent a ride home from work, and then doesn't show up
Nellie and Victor own a suburban ranch home and fell behind on paying their property taxes when Victor lost his job last year. Victor is working again, but they still haven't saved enough to pay their back taxes. They're worried that the county may begin foreclosure proceedings. What type of lien is this? -Attachment -General -Special assessment -Specific
Specific
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 managers dream. That budget is __________ -A capital reserve -An expense -Historical -Stabilized
Stabilized
A _________ is a tract of land divided into lots or plats and used for building purposes. -Plat -Site plan -Subdivision -Topographic map
Subdivision
When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale? -The licensee isn't permitted to list other properties for sale as long as they're not competing properties -The licensee is permitted to list other properties for sale, even if they're competing properties -The licensee must list the seller's property only for the first 90 days, after which the licensee may list other properties
The licensee is permitted to list other properties for sale, even if they're competing properties
Which of the following is true about mortgage brokers? -They don't service the loan beyond placement -They originate their own loans -They've paid through fees from originating and servicing loans -They service the loan for it's entire lifecycle
They don't service the loan beyond placement
Property management firms must keep all clients financial records for at least _________ year(s) from the date each document was executed. -Four -One -Three -Two
Three
What's the minimum number of business days prior to closing that lenders have to provide borrowers with the Closing Disclosure form? -Five -Four -Three -Two
Three
What type of timeshare involves a buyer agreeing to pay a one time purchase price and an annual maintenance fee, and in return selecting an accommodation time and having the right to use the unit for a specific number of years? -Lifelong -Permanent -Renewable -Vacation
Vacation
When is a licensee's compensation usually considered earned? -When a buyer is approved for financing -When a seller's property is listed on the MLS -When the client and licensee enter into an agency relationship -When the client has entered into a purchase contract
When the client has entered into a purchase contract
Stan was the victim of domestic violence at the hands of his live in girlfriend, Staci. When the police arrived, they arrested Staci and took her to county jail. The next morning, Stan obtained a protective order. A week later, Stan decided that her couldn't stay in his apartment anymore because of bad memories. He informed his landlord in writing and provided a copy of the protective order. Did Stan's landlord have to allow him to terminate his lease early under Arizona law?
Yes
Buyers of timeshares in Arizona may cancel their purchases within how many days of signing the contract?
10 days
Angelique, a foreign investor, is getting ready to sell her urban condo. What percentage of withholding of the sales price will FIRPTA require?
15%
When an owner of unsubdivided land in Arizona is denied a public report and has filed an objection and hearing request, how long does the commission have to schedule a hearing with the owner? -14 days -20 days -30 days -7 days
20 days
What percentage of new buyers are minorites?
40%
John wants to do a 1031 tax exchange with a property he just sold. How many calendar days does he have to identify a new property for the for the exchange? -180 -30 -45 -60
45
What percentage of loss would the seller have if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, then sold the property for $153,000? Round your answer to the nearest percent. -0.06% -12% -6% -95%
6% (add the cost of the lot and cost of house together to get total cost, subtract sales price from total cost to get amount of loss, then divide total cost by loss amount)
Which range of credit scores represents the average score for Americans overall? -580 to 669 -670 to 739 -740 to 799 -800 or higher
670 to 739
When Ray receives a notice of trustee's sale, he knows his property is in foreclosure and he needs to hustle to find a way to reinstate his loan. He hasn't got much time, though Arizona law requires a minimum of ______ between the date the notice is recorded and the date of the sale.
90 days
What is a township? -A 36 square mile square formed when using the rectangular survey system -A one square mile square formed when using the rectangular survey system -A permanent reference point used in the measurement of elevations -The point of beginning used in a metes and bounds survey
A 36 square mile square formed when using the rectangular survey system
What's the term for someone who's been given authority to act on behalf of someone else? -Agent -Client -Mortgage lender -Trustor
Agent
What is a real estate employment agreement in Arizona? -An agreement between a licensee and the licensee's broker -An agreement between two licensee's working with the same client -A term for property management agreements -A term for the listing agreement or buyer agency agreement
An term for the listing agreement or buyer agency agreement
Homeowners Annette and Jeff are suing contractor Daniel for breach of contract. Where might they be able to find an affidavit of suspended license to use as prima facie evidence in the court proceedings? -Arizona Administrative Office of the Courts -Arizona Department of Real Estate - Arizona Registrar of Contractors
Arizona Registrar of Contractors
How are creditors holding junior liens on Arizona property paid after a foreclosure sale? -By the borrower, if that party receives any proceeds from the foreclosure sale -By the lender, if the proceeds of the foreclosure sale exceed the amount owed on the loan -By the trustee, if the proceeds from the foreclosure are sufficient -Junior liens are extinguished by a foreclosure sale, so the debt is canceled
By the trustee, if the proceeds from the foreclosure sale are sufficient
Which source of law establishes legal precedent based on a courts interpretation of other sources of law? -Administrative -Case -Constitutional -Statutory
Case law
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 -Citytown will bill the EPA for cleanup costs -Citytown will end up paying for cleanup -The factory site won't be cleaned up and will sit empty
Citytown will apply to the CERCLA trust fund for cleanup costs
In order to maintain their licenses, employing brokers must appoint and maintain a(n) -Branch manager -Designated broker -Officer in charge -President
Designated broker
In Arizona, who is expected to establish a system for monitoring compliance with statutes, rules, and the brokerages policies and systems? -Brokerage office managers -Designated brokers -Employing brokers -Licensees
Designated brokers
Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this? -Easement appurtenant -Easement by necessity -Easement by prescription -Easement in gross
Easement appurtenant (dominant)
Janalynne is a designated broker setting up the main place of business for her employing broker. Before officially opening for business, she'll make sure that the __________ is on display in the office. -Affiliated brokers license -Articles of incorporation or similar business documentation -Business plan -Employing brokers or designated brokers license
Employing brokers or designated brokers license
Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice's needs? -Exclusive agency -Exclusive right to sell -Net -Open
Exclusive agency
Under which of the following clauses are the costs of building maintenance over a specified level are passed on to the tenant? -Escalator clause -Expense stop clause -Lease option clause -Tax stop clause
Expense stop clause
Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing? -Civil Rights Act of 1866 -Equal Credit Opportunity Act of 1974 -Fair Housing Amendments Act of 1988 -Housing and Community Development Act of 1974
Fair Housing Amendments Act of 1988
The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this? -Fee simple absolute -Fee simple defendable -Fee simple determinable -Fee simple subject to a condition subsequent
Fee simple determinable
Jackie was sued in civil court by one of her creditors. As a result of the judgment against her, her house, car, and art collection are all subject to sale in order to pay the creditor. What type of lien is this? -General -Special assessment -Vendor's -Voluntary
General (general liens are placed against ALL of an individual's or business's real and personal property, not just a specific property)
If an Arizona licensee misses the deadline for the continuing education requirements, the Arizona real estate commissioner can grant a waiver or additional time if the licensee shows ___________ -Financial responsibility -Good cause -Proof of enrollment -Reasonable effort
Good cause
Which act protects a consumers financial information, restricts which third parties can access it, and when they may do so? -Fair Credit Reporting Act -Gramm Leach Biley Act -Privacy Act -Truth in Advertising Act
Gramm-Leach-Biley Act
Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination? -Fair Housing Amendments Act of 1988 -Federal Fair Housing Act of 1968 -Housing and Community Development Act of 1974 -Housing for Older Persons Act of 1995
Housing for Older Persons Act of 1995
Why are underground storage tanks a potential environmental issue?
If they leak, they may contaminate the surrounding soil and groundwater
Which ownership type is defined by four unities: time, title, interest, and possession? -Freehold estate -Joint tenancy -Tenancy by the entirety -Tenancy in common
Joint tenancy
Children and pregnant women are especially vulnerable to poisoning caused by what hazard? -Asbestos -Lead -Oil -Pigment
Lead
An Arizona lender is about to pursue judicial foreclosure. In addition to filing the petition to foreclose, it will file and record a _______. -Court order -Formal complaint -Junior lien -Lis pendens
Lis pendens
Which of the following is the best example of the economic principal of leveraging, as it applies to a real estate transaction? -Completing the loan process -Making a down payment -Making the loan payments -Purchasing title insurance
Making a down payment
In the equation NOI ÷ R = V, "V" equals: -Direct capitalization rate -Market value -Mortgage value -Variable yield rate
Market value
What is the oldest type of legal description used in the U.S.? -Assessor's parcel number -Lot, block, tract -Metes and bounds -Rectangular government survey
Metes and bounds
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? -Map -Metes and bound description -Monument -Plat book
Metes and bounds description
Who originates their own loans? -Mortgage bankers -Mortgage brokers -Real estate brokers -Real estate licensee
Mortgage bankers
Which person or entity works with many different lenders to find the best loan for the customer? -Commercial bank -Credit union -Mortgage banker -Mortgage broker
Mortgage broker
Murphey's farm has been in his family for generations, since his great-great-great-grandfather received it as a land grant in 1862. What's the beginning point of this property's chain of title? -Murpheys grandfather, the previous owner -Murpheys great great great grandfather -Murphey, the current owner -The federal government that originally granted the land
Murphey, the current owner (chain of title always begins with the current owner and goes back in time)
Which of the following is a legal term that can mean the right to take products out of the soil? -Inheritance -License -Profit -Reserve
Profit
Which of the following is one of the desired outcomes of Freddie Mac's activities? -Decrease liquidity in the U.S. housing market -Increase interest rates on high dollar loans -Increase overall leverage in the U.S. housing market -Provide stability in the U.S. housing market
Provide stability in the U.S. housing market
Who or what most likely establishes a covenant not to compete? -Developer restrictive covenants -Local building codes -Local zoning restrictions -Purchase or lease contract
Purchase or lease contract
Alice has asked her landlord three times over the past week to come fix the hot water in the bathtub. She's unable to fix the problem herself but she doesn't want to move out. What other remedy is available to Alice? -Abandonment -None -Recover damages -Repair deduct
Recover damages
Which of these statements about Arizona's special water users is true? -Arizona's private swimming pools use very little water -Golf course require a lot of water and don't contribute to Arizona's economy -Most Arizonans never visit the state's lakes -Recreational use of Arizona's lakes causes water quality problems
Recreational use of Arizona's lakes causes water quality problems
Which legal description method is regulated by the U.S. Department of the Interiors Bureau of Land Management? -Governmental -Lot and block -Metes and bounds -Rectangular government survey
Rectangular government survey
The Arizona Administrative Code, also known as "the commissioner's rules," is made up of __________. -Laws -Regulations -Statutes -Substantive policy statements
Regulations
Arizona landlord Tara receives a notice of a trustees sale on the property she's already rented out to tenant Will. What is Tara's obligation under the law? -She must send Will a written notice within 10 business days of receiving the sale notice -She must send Will a written notice of this within five business days of receiving the sale notice -She must tell Will about this within 10 business days of receiving the sale notice -She must tell Will about this within five business days of receiving the sale notice
She must send Will a written notice of this within five business days of receiving the sale notice
With a triple net lease, the tenant pays _______ separately from the base rent. -Insurance, utilities, and maintenance -Maintenance, insurance, and debt service -Taxes, debt service, and lease payment -Taxes, insurance, and maintenance
Taxes, insurance, and maintenance
Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here? -Agency after the fact, because Kennie Mae continued to perform tasks for Buzz through the closing date -Law of agency, because Kennie Mae defined her agency relationship with Buzz through the tasks she performed -The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz -The ratification doctrine states that Kennie Mae ratified her relationship with Buzz by signing the closing paperwork
The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz
Which option is true if a deed is not recorded after closing? -The buyer must pay a fine to the seller -The entire closing is void -The property's legal ownership can be challenged -The title never changes hands from the seller to the buyer
The property's legal ownership can be challenged
In property ownership, what is an undivided interest? -Ownership that includes all surface, subsurface, and air rights -Sole ownership -The right of each co owner to use the entire property -The right to transfer an interest in property to another
The right of each co owner to use the entire property
If a buyer wants to write an offer and asks for your help but doesn't want to sign an agency agreement with you, who do you represent?
The seller
Who is responsible for requesting a loan payoff statement before closing? -The buyer -The seller -The lender -The title insurance representative
The seller
Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates? -To assess the adequacy of tenant income screening processes -To assess your ability to manage tenant relations -To determine if rental rates are too high compared to your competitors rates -To forecast the amount of effort that will be required to collect the late rents
To assess the adequacy of tenant income screening processes
Why do brokerage firms purchase general liability insurance as a risk management method? -To accept risk -To avoid all risks -To prevent risk -To transfer risk
To transfer risk
Consumers must submit a claim for disbursement from the Arizona real estate recovery fund within ______ year(s) after the judgement was awarded. -Five -One -Three -Two
Two
Of the following, which is considered a typical accrued adjustment? -Heating oil in the tank -Prepaid taxes -Unpaid real estate taxes -Utilities billed and paid in advance
Unpaid real estate taxes
In which of these scenarios is an Arizona property seller allowed to initiate forfeiture after borrower default? -When the security instrument is a deed of trust, and the property is commercial -When the security instrument is a mortgage and the property is commercial -When the seller is a junior lien holder -When the transaction uses an agreement for sale
When the transaction uses an agreement for sale
What must Arizona landlords provide to all new tenants before or at the beginning of their tenancy? -A copy of the Arizona Landlord Tenant Act -A copy of the Fair Housing Act -Written notification that the Arizona Residential Landlord and Tenant Act is available on the Arizona Department of Housing's website -Written notification that they can verify a licensee's license status on the Arizona Department of Real Estate's website
Written notification that the Arizona Residential Landlord and Tenant Act is available on the Arizona Department of Housing's website