Arizona 6-Hour Contract Writing Course EXAM - Study Set

Karen is working with buyer Mandy. What document should Mandy include with her purchase offer?

A Pre-Qualification Form

Which of the following best describes a lease agreement?

A legally binding, written contract between a landlord and a tenant

Who signs a listing agreement?

A licensee and a seller client

Which of the following statements is true regarding purchase agreements in Arizona?

A purchase contract states the price and terms of the agreement.

What is a stigmatized property?

A residence that was, or was rumored to have been, the site of an unfortunate incident, such as a murder or suicide

A transfer of _____ or fewer parcels of property in an unincorporated area of the county requires the filing of an affidavit of disclosure.

Five

The Domestic Water Well Addendum gives the seller ______ days from contract acceptance to deliver the SPDS, including details about the well's use, to the buyer.

Five

The AAR purchase contract cover sheet states that buyers should read the title commitment within _____ of receiving it.

Five days

Broker Jamie just helped Vince buy his first house. After the transaction is completed, how long does Jamie need to hold onto all documents pertaining to Vince's purchase?

Five years

Lisa wants to find information about what items (like the air conditioner and flat-screen TV) will be included with the property transaction. In which purchase contract subsection might she find what she's looking for?

Fixtures and Personal Property

A week after their contract fell through, buyer Julie sued seller Omar for specific performance. What does this mean?

Julie still wants Omar to sell her his property. A suit for specific performance compels a contract party to fulfill the contract terms; in this case, the seller is compelled to sell the property.

Sellers are required to disclose _____.

Known material facts

The AAR purchase contract cover sheet encourages buyers to hire a qualified professional to inspect aspects of the property, such as a(n) ______.

Pest inspector The AAR purchase contract cover sheet encourages buyers to hire a qualified professional to perform a home inspection on the property. In addition, depending on the property condition, the buyer may also want to hire specialists to inspect certain aspects of the property (e.g., mold inspector, pest inspector, pool inspector, roof inspector, etc.)

Which of the following is NOT an acceptable form of delivery for offer acceptance?

Phone call

Your seller clients, the Kirkpatricks family, complained that the buyer's financing fell through. "The buyer was pre-qualified! How can this happen?" they asked. You answer, "______."

Pre-qualification does not equal pre-approval

Licensee Jonathan signed a listing agreement with a new client. Which of these actions should Jonathan plan to perform next, before he publishes the listing on the MLS?

Prepare a features list. Jonathan needs to prepare a features list before he can publish the listing. The comparative market analysis should already have been done, and the open house and repair work, if any, come later.

Don is the buyer and Sandra is the seller. On the contract, they are considered the ______.

Principals

Randy and his broker, Charlize, have an exclusive-right-to-sell listing agreement. One of Randy's work colleagues discovers that Randy is selling his home, so Randy engages an attorney to draw up a contract and sells the home without working through Charlize. What's true of the commission in this situation?

Randy owes Charlize the full commission agreed upon in the listing agreement.

George has closed a transaction. Which final step must he complete as part of the typical residential sales process?

Retain copies of transactional paperwork. Licensees are required to retain copies of their transactional paperwork, so the process isn't complete until this step is accomplished.

The _____ allows sellers to disclose material information about the condition of the property they're selling.

SPDS Property owners complete the Residential Seller's Property Disclosure Statement (SPDS) when selling property in order to disclose material information about the condition of the property to potential buyers.

Which type of financing occurs when a seller helps to financing the transaction by taking responsibility for a portion of the buyer's loan?

Seller carryback

Every buyer should receive a(n) ______.

Seller's Property Disclosure Statement

Trent's seller client isn't currently living in the property that she's selling. She wants to know when she is no longer liable for the property maintenance. What should Trent tell her?

She is responsible for maintaining the property until closing.

Fiona signed a purchase contract to buy Pete's house. Later, Fiona decided to walk away from the transaction to buy a cheaper home on the other side of town. What is likely to happen to Fiona?

She may lose any deposits she's paid and be liable for damages.

Ben accepted Simone's offer to purchase his land. When he got a higher offer a few weeks later, he decided to terminate the contract with Simone and accept the new offer. What may happen now?

Simone can sue Ben for specific performance and compel him to sell her the land.

Lena's agent, Josh, lets her know that the listing agreement states she is responsible for getting insurance to cover some of the risks of listing her home for sale. What risks might he be referring to?

Someone could be injured while looking at the property.

Arizona's ______ requires contracts to be in writing in order to be enforceable.

Statute of frauds Arizona's statute of frauds requires that to be enforceable, all promises or agreements be in writing and signed by the party that is to be charged.

Jerome just closed a transaction for Rachel. What should Jerome do with the transaction records?

Store them in a private transaction file for a period of five years.

Georgia and Stan are savvy house hunters who have been pre-approved for a $250,000 mortgage. Which of the following must be true?

They've submitted a loan application, and the lender has verified their financial information.

Per the Disclosure section of the Arizona purchase contract, the disclosure starts with the delivery of the seller's property disclosure statement to the buyer within ______ days of contract acceptance.

Three days Per the Disclosure section, the disclosure starts with the delivery of the Seller's Property Disclosure Statement to the buyer within three days of contract acceptance.

How long is the cure notice period (CPN) according to the Arizona purchase contract?

Three days The CPN is three days, and gives the noncompliant party three days to comply or be in breach of the contract.

For how long must real estate files be kept?

Transaction files must be kept for five years.

Jax represents Chloe, who has submitted an offer for Tristan's property. She has offered to pay the purchase price in exchange for receiving the title to Tristan's land. Who is the offeree in this situation?

Tristan The offeree is the person who receives the offer and may or may not accept it. In this case, Jax (the offeror) is submitting an offer to Tristan (the offeree).

What type of financing is offered primarily to rural property owners and are guaranteed by the federal government?

USDA financing

Which of the following can help a licensee avoid risks when drafting or using real estate contracts in Arizona?

Using approved fill-in-the-blank forms

Which of the following is a helpful way to avoid risks associated with Arizona contracts?

Using pre-printed forms

Remi offered to purchase Vera's house for $350,000. He paid the earnest money, but couldn't get enough for the down payment by the closing date. Where will the earnest money go now?

Vera is entitled to keep the earnest money because Remi breached their contract.

Which party email addresses may be used to delivery transaction communications in Arizona?

Whichever email addresses the buyer lists on the contract

Which of the following is NOT a task that a licensee must complete regarding transactional paperwork?

Writing a contract from scratch

Lilith signed a purchase contract with buyer Kirsten. She receives another offer from Jorge a week before closing. Is Lilith allowed to accept this offer?

Yes, Lilith may accept Jorge's offer as a backup.

Roberto, a licensee, filled in the blanks on a standard form used in his brokerage firm. Is this okay?

Yes, licensees can use standard forms provided by the brokerage or approved by an attorney. Licensees can fill in the banks with approved language, using standard forms provided by their brokerage firm.

During a showing, Uma asked licensee Braum whether any deaths have occurred on the Trent's property. Braum knows that Trent's wife passed away on the property two years ago, but doesn't have Trent's permission to share this information. What should Braum say?

"I'm not at liberty to disclose that information."

Jaxon met with his seller client, Patricia, to go over the purchase contract. She told Jaxon that she wasn't sure yet whether she wanted to leave behind her washer and dryer, so she didn't know what to write into the purchase contract. What should Jaxon tell Patricia to do?

"You need to make a decision before we submit the contract so the buyers know what they're getting with the property."

What is the maximum fine for any lead-based paint disclosure violations?

$10,000

What is the default length of the inspection period in Arizona?

10 days The AAR purchase contract states that the "Buyers Inspection Period shall be ten (10) days" after contract acceptance, unless otherwise specified in the contract.

Per the AAR purchase contract, sellers must agree to repair any damages that cost as much as ____ of the purchase price prior to closing.

10%

Kat is buying a home in Arizona. The purchase contract includes a 14-day inspection period. The seller provided the SPDS form today. How many days does Kat have to provide notice of items disapproved on the SPDS form?

14 days The buyer has the period of inspection noted in the Purchase Contract or five days after receipt of the Seller's Property Disclosure Statement (whichever is later) to provide notice of items disapproved.

When a foreign person sells U.S. real estate, what is the highest percentage of the purchase price that buyers must withhold for federal income tax purposes, according to FIRPTA?

15%

In most cases, what's the minimum age for an individual to legally sign a contract in Arizona?

18

Which type of financing usually requires a 20% down payment in order to avoid paying for private mortgage insurance?

Conventional mortgage

What type of contingency in the purchase contract allows a buyer to terminate the contract is the property doesn't appraise at the agreed -upon sale price?

Appraisal contingency

Which of the following documents may be attached to a purchase contract?

Appraisal contingency notice Both the appraisal contingency notice and the pre-qualification form may be attached to the purchase contract.

Based on their credit rating and stated income, a lender pre-qualified Sam and Lisa for a loan. Which statement is true?

As long as they've told the truth about their income, Sam and Lisa have a good chance of getting the loan. Pre-qualification is just the beginning, but it does provide reason to believe Sam and Lisa will be able to obtain their loan.

If Tanya has received a loan pre-qualification, it means which of the following steps has been completed?

Correspondence with a lender, in which she provides some basic financial information Loan pre-qualification only requires that the buyer provide very basic financial information, and the information usually isn't verified by the lender, which is why a pre-approval is more reliable.

When there are two versions of an original transactional document, the versions are called ____.

Counterparts

Listing agreements provide an outline of broker obligations, which may include ______.

Creating an MLS listing

All of the following subsections are in the Property section of the AAR purchase contract, EXCEPT which one?

Cure notice period

Everly received an offer for her property. In order to form a valid contract, Everly must _____.

Accept the offer

Felicity wants to make her role very clear to anyone who wants to be her client. To do this, any buyer-broker agreements she has with clients should explicitly state that Felicity acts as a(n) ______ only.

Agent

Which form allows buyers to respond to the result of a home inspection?

BINSR The buyer's inspection notice and seller's response (BINSR) addresses the inspection period in the purchase contract and allows buyers to respond to a home inspection (by requesting repairs, waiving the inspection, or canceling the contract). Sellers may also use this form to respond to any buyer requests.

Which of the following is contingent upon cancellation of a prior contract?

Backup contract The backup contract form is used when submitting an offer on a property currently under contract. The buyer acknowledges that the seller is under contract and that this offer is a "backup," subject to cancellation of the first contract.

Arizona law requires all of the following for listing agreements, EXCEPT which one?

Be written in highly technical legal jargon.

Federal law requires sellers of homes built before 1978 to provide the lead-based paint disclosure. When must it be provided?

Before closing The lead-based paint disclosure and EPA booklet must be provided before closing. Buyers must acknowledge receipt of the disclosure, and they have 10 days to conduct a risk assessment.

Sandra must sell her old house before she can buy Ron's house. What addendum does she need to use to convey this information?

Buyer contingency

Tanya is currently not complying with the purchase contract she has with Richard. The cure period notice gives her three days to ______.

Comply or be in breach of the contract

A(n) ______ is essentially an agreement or promise between parties.

Contract

Licensee Daniella reviewed the purchase contract she'd just completed with her buyer , and noticed that there were a few pages her client had forgotten to initial. What is the best thing for Daniella to do now?

Call her client back in to complete the contract. Missing signatures or initials can make a contract void or voidable, so Daniella should get her client to complete the contract before submitting it to the seller.

Marshall is working with multiple clients who are all looking for a similar type of home. He should ______.

Disclose the fact in writing to his clients There are guidelines for representing multiple buyers seeking similar properties.

Simone has three clients who want to buy the same house in Scottsdale. What must she do in this situation?

Disclose the situation to all her clients and avoid giving any client details about another client's offer.

Which of the following are NOT included in the Property section of the AAR purchase contract?

Disclosures and remedies

In addition to providing a disclosure of any lead-based paint hazards in homes built before 1978, what must a seller's agent provide to prospective buyers?

EPA lead safety pamphlet

The buyer-broker agreement is an example of a(n) ______.

Employment agreement

What are the documents that the title company provides to a Texas buyer along with a title commitment?

Evidence of exceptions in the title commitment

Which federal entity determines floodplain areas?

FEMA The Federal Emergency Management Agency (FEMA) is responsible for determining floodplain areas and turning them into maps that are available to the public

Which of the following statements is true if a loan contingency is in effect in a sales contract?

If the buyer can't meet the terms of the agreement due to the inability to obtain a loan, the agreement is terminated.

When Marcy toured her new client's house, she noticed paint peeling off of the shutters. When she asked the seller if the house was painted with lead-based paint, he replied, "I'm not sure ... I inherited the house from my dad, who built it in the '50s." What is Marcy required to do?

Inform the seller that he needs to complete the lead-based paint disclosure form and provide potential buyers with the EPA pamphlet regarding lead hazards.

Nicholas is working with a buyer client who wants a special clause added to his purchase contract. How should Nicholas handle this?

Instruct the client to hire an attorney to draft the clause.

Which of the following increases risks when using real estate contracts in Arizona?

Interpreting the legal consequences of a client's actions Interpreting legal consequences should be left to someone who practices law (an attorney). If a licensee does this, it can increase her risk of giving poor advice or being sued later on.

Which of the following statements best describes a lease agreement's purpose?

It identifies the terms of a lease transaction between the landlord and the tenant.

How many days after the purchase contract is submitted to the seller does the seller have to provide the SPDS?

It must be provided within three days, or within the period of time indicated in the purchase agreement.

Knowing who can and cannot enter into a legally binding contract means you are determining ______.

Legal competency

Which of the following is true regarding real estate licensees in Arizona?

Licensee compensation must go through their broker.

Buyers are reminded on the contract cover sheet to review all of the following documents EXCEPT which one?

Listing agreement

Each party being clear and agreeing on the essential details of a contract is called _____, which is a typical characteristic of a real estate contract.

Meeting of the minds Meeting of the minds occurs when each side is clear on and agrees to the essential details, rights, and obligations of the contract.

Contracts _____ in order to be enforceable in Arizona.

Must be in writing

Tammy is the listing agent for a home built in 1958. The homeowner isn't aware of any lead-based paint on the property, but has never had an inspection done to find out. When prospective buyers show up to the open house, Tammy gives each a lead-based paint disclosure and the required Environmental Protection Agency brochure titled, "Protect Your Family from Lead in Your Home." When the seller finds out Tammy did this, she's livid. Did Tammy do anything wrong?

No, since the property was built before 1978, the disclosure and EPA brochure are required.

The Arizona Real Estate Agency Disclosure and Election form describes all of the following types of agency relationships, EXCEPT which one?

Nonagency

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step?

Obtain a pre-qualification letter. Pre-qualification requires that the applicant provide minimal information to the lender. Completing the loan application is a much lengthier, complex process and usually occurs after the applicant locates a property.

What is the AAR's policy on modifying its sample contract forms?

The AAR prohibits any alterations to its forms and will pursue anyone who tries this for violation of copyright law.

Where can Arizona licensees find sample boilerplate transaction contracts to use?

The Arizona Association of REALTORS® website

Harvey, an Arizona listing agent, has been presented with an offer from a buyer's agent for his client's property. Where should he look in order to see the buyer financing information as part of the bid?

The Pre-Qualification Form

Who signs the Arizona Real Estate Agency Disclosure and Election form?

The buyer or the seller, but not both The Arizona Real Estate Disclosure and Election form should not be signed by both a buyer and a seller. It's one form per party.

What information about agency relationships may be contained in the listing agreement?

The listing broker represents the owner, but may also represent a potential buyer for the owner's property. The listing agreement may also contain information about the broker's agency relationships with other parties, and specify that the broker is the property owner's agent but may also represent a potential buyer or renter (i.e., prospect) for the owner's property. In addition, the broker may represent both the owner and the prospect in a transaction, so long as all parties give their informed consent.

If Emily has received pre-approval for her mortgage loan, it means which of the following steps has been completed?

The loan application and lender verification of data

You are working with sellers who want to sell a stigmatized property. Which of the following is true?

The property's stigmatized nature does not need to be disclosed on the Sellers Property Disclosure Statement. Although some states require a seller to disclose whether a property is stigmatized on the disclosure form, disclosure isn't required in most states.

Which of the following is true about prices and earnest money according to the AAR purchase contract?

The purchase contract specifically states where earnest moneys will be deposited. The purchase contract specifically states in what form the earnest money is received: by personal check, wire transfer, or some other method. In addition, the purchase contract explicitly indicates whether earnest moneys will be deposited with an escrow company or in the broker's trust account.

Who is responsible for researching and obtaining information about a homeowners association during a transaction?

The seller

Based on the AAR purchase contract, which of the following is true regarding utilities?

The seller contracts with the buyer that the utilities will be on (at the seller's expense), and the buyer may enter the premises with reasonable notice to the seller for the final inspections.

Which warranty does NOT survive closing?

The seller must maintain the property, including personal property included in the sale. A few warranties survive closing, including the seller's disclosure of facts that are material to the sale, and the buyer's statement that the buyer has conducted all necessary inspections prior to closing and has not relied upon any verbal representations.

Arizona buyer Natalie is curious as to whether the seller has filed an insurance claim for the property in the past. Which of the following is true?

The seller must provide a five-year insurance claim history of the property (or the length of time the seller has owned the property, if less than five years) within five days of contract acceptance.