AZ RE Exam
What is the fine for lying in a notice of intent to sell?
$1000 per infraction
Average cost of a septic? How long do they last?
$5000-$10000, 25-30 years
What is eminent domain?
(condemnation) Power of a government to take private property for public use.
Jason, your client, is developing a subdivision of 140 houses. He may place deed restrictions on as many as ______ properties.
140 (100%)
What is the maximum time a temporary broker can be appointed for?
30 days
What percentage do minorities make up of new buyers?
40%
What must be recoded with a trust account and how long do files need to be retained?
5 years for file retention. 1) dates funds were received 2) funds final disbursement 3)payors name 4) deposit location 5) deposit date 6) final disposition of funds
If claims were made ___ years ago, they most likely won't show up on a CLUE report
7
Wrap-around Mortgage
A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.
What source of law enables real estate licensees to draft or fill out documents relating to real estate transactions?
AZ State Consitution
According to ANSI standards, what is included in finished square footage?
Air space, areas with ceiling heights less than seven feet and areas disconnected from the main residence aren't included in the total square feet. Stairwells are, if they connect from finished area to finished area.
Easement in Gross
An easement in gross is basically selling rights to the land to another person, but without giving them legal ownership
Boot refers to what?
Any cash received in a 1031 exchange. The investor may deduct these fees
Pass Through Entities
Business income generated passes through the business to the owners' income tax return, rather than being taxed at the corporate level. (ie; Sole proprietorships S Corps LLC's Partnerships)
Arizona's Groundwater Management Act of 1980
Creation of the Arizona Department of Water Resources Establishment of active management areas (AMAs) Implementation of mandatory water conservation requirements Mandatory creation of drought-preparedness plans Creation of the Assured Water Supply Program and Adequate Water Supply Program Creation of the Arizona Water Banking Authority
Related to depreciation, what are the two types of physical deterioration?
Curable and incurable
In order to maintain their licenses, employing brokers must appoint and maintain a(n) ______.
Designated broker
Which federal act makes phone solicitation to numbers on the Do Not Call Registry illegal unless a prior relationship or permission exists?
Do Not Call Implementation Act of 2003
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?
Employing brokers are permitted to engage the services of salespersons and associate brokers who act through a PC (as an officer or shareholder) or PLLC (as a member or manager), but not other business entities.
Fee Simple
Fee simple is the highest form of ownership — it means the land is owned outright, without any limitations or restrictions other than local zoning ordinances. It means full and irrevocable ownership of land, and any buildings on that land.
What piece of information must ALWAYS be included in Arizona real estate advertisements?
Licensee's name and brokerage's name. (Blind ads—ads that don't include the licensee's name and brokerage's name—are strictly prohibited.)
An Arizona lender is about to pursue judicial foreclosure. In addition to filing the petition to foreclose, it will file and record a ______.
Lis Pendens - a pending legal action, or a formal notice of this.
What entity controls budgeting, site-plan review, and building codes?
Local governments and their planning boards control budgeting, site-plan review, and building codes.
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
How often do trust accounts need to be reconsiled by brokers?
Monthly
Who originates their own loans?
Mortgage bankers
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?
Murphey, the current owner
A professional corporation is like a regular corporation except that each of the professional corporation's officers, directors, and shareholders ______.
Must hold an active real estate license - A PC can only conduct business in the field in which its members are licensed.
Are Az real estate advisory board members paid?
No - but they can be reimbursed for travel expenses relating to activities of the board
Is non-judicial foreclosure an option for a seller under an Arizona agreement for sale when a buyer defaults on the loan?
Non-judicial foreclosure is possible only when a deed of trust is the security instrument.
Tip-Top Title, an Arizona title company, is the trustee for a home loan secured by a deed of trust. When the borrower defaults and the lender decides to foreclose, Tip-Top Title records the appropriate notice with the county to start the process. What does Tip-Top need to do as the next step in the process?
Notify the trustor and the beneficiary of the recorded notice within five days.
Angelo's aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?
Ordinary life estates are granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).
Which of the following business entities may apply for an employing broker's license in Arizona?
Partnership
Types of Income
Passive, active, portfolio (investments, capital gain, etc)
Police power is the government's authority at what level(s)?
Police power is the government's authority at ANY LEVEL to do what it can to ensure the health, safety, and welfare of its citizens.
What document is used to give a buyer an overview of the title history and information about what is or isn't covered in an insurance policy?
Preliminary Report
What does PITI stand for?
Principal, interest, taxes, insurance
At what stage in the closing process does the buyer obtain a binder for insurance coverage?
Prior to closing
"Separate property" is property most likely acquired ______.
Prior to marriage
Tammy and Reginald bought a house with a gas line easement on the property. An easement like this one placed by the utility company is an example of a ______.
Private land use control
What items are accrued or prepaid?
Prorated
What 3 primary acts impact mortgage loan disclosure?
RESPA, TILA, Dodd-Frank
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, what action would Hugh take?
Recommend Jacqueline seek the advice of a lawyer.
Robert and Carla are considering loan options. One of the options they're reviewing involves a higher monthly payment, but reduced total interest over the loan life. This loan option is called a ___________.
Reduced loan term
Which of the following scenarios constitutes illegal licensee compensation in Arizona?
Salesperson Miranda's seller client gave her a $250 gift card as a thank you for a job well done at the close of their transaction.
Brownfields Law (aka what?)
Small Business Liabilities Relief and Brownfields Revitalization Act. It provides grant funds to communities in order to assess and clean up the many thousands of brownfields (abandoned or otherwise unused commercial or industrial sites, many of which are suspected to contain hazardous waste) that are believed to exist nationally.
Which of these is the best description of subsidence?
Subsidence is when the earth's surface sinks. It's often caused by overdraft (withdrawing excessive amounts of groundwater).
What source of state law is a series of laws that are enacted by the state legislature and upheld by regulations?
The Arizona Revised Statutes
advisory board members
The board consists of 10 governor-appointed members who serve six-year terms. Two real estate brokers with at least five years' experience in Arizona Two members who have been engaged in residential real estate brokerage for the five years immediately preceding appointment One member who has been engaged in multi-family residential rental brokerage as a licensed broker for the five years immediately preceding appointment Two members who are primarily property sub-dividers Three members of the general public who do not hold a real estate license in the state and aren't a blood relative of a real estate licensee in az
When a contract is executory (for instance, in a land contract), what type of title does the buyer hold?
The buyer has equitable (i.e., financial) interests in the property, but not legal title.
Who contributes to an escrow account so the insurance payment can be met?
The buyers mortgage payment
A client terminates a listing agreement before its expiration date. What happens now?
The client may owe a commission anyway.
Condominium ownership includes ownership of the space inside the unit itself, as well as ______.
The common elements
Shira bought a condominium in a planned unit development. The development has a small playground, tennis and basketball courts, and a putting green. Who owns these recreational facilities?
The condo owners
Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Which of the following best describes this contract?
The contract is voidable.
What is the relationship between 1031 exchanges and debt load in an exchanged property?
The debt load for the new property must be equal to or greater than the debt load for the previous property, or the difference may be taxable.
What is required to be filed with the Arizona Department of Real Estate as part of the timeshare public report application?
The declaration of dedication filed with the state of Arizona, The property covenants owners are required to comply with
Who is ultimately responsible for the actions of an Arizona brokerage's licensed employees?
The employing broker
Kelly is closing on the house she's purchasing on Wednesday. When does the lender need to provide the Closing Disclosure by?
The lender must provide the Closing Disclosure by Friday of the week before closing.
Who establishes real estate commission rates?
The licensee or brokerage and the client
Under an Arizona agreement for sale, sellers aren't allowed to use the forfeiture process if ______.
The loan is accelerated
What information must subdividers provide the AZ Department of Real Estate before accepting deposits for a subdivision?
The name and location of the development
What two pieces of information regarding compensation must be disclosed to all transaction parties in any given Arizona real estate transaction?
The name of each employing broker representing a transaction party and who will receive compensation from the transaction
Who is responsible for requesting a loan payoff statement before closing?
The seller
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?
The statute of frauds; The statute of frauds requires not only that a contract to convey real property be in writing, but also that the contract identify the parties to the contract.
Short-term capital gains are taxed at
The taxpayer's marginal tax rate
When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust?
The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower.
What is an easement?
This is a non-possessory interest in land involving a right of use.
What's one of the ways that bulk zoning achieves its objectives?
Through setbacks
Arizona licensed contractor Billy was charged an assessment of $400 when he renewed his contractor's license. Why was this fee collected?
To fund the residential contractors recovery fund
Why do brokerage firms purchase general liability insurance as a risk management method?
To transfer risk
An advertisement through which of the following sources may include a link to the name of the employing broker (rather than the full name of the employing broker within the ad itself)?
What does the parol evidence rule state?
Under the parol evidence rule, these agreements made outside of the contract are inadmissible in court unless there is evidence of fraud, duress, or a mutual mistake. The rationale behind the rule is to deter untruthful attacks on contracts.
The statute of frauds states that if a contract transferring ownership of real property is not in writing, it's ______.
Unenforceable
Roger's offer on Trenton's property was accepted. At what point in the transaction does Roger first get equitable title to Trenton's property?
When Roger's offer was accepted, he received equitable title to the property. He has the right to full ownership when the sales closes (dependent that the equitable title is transferred to the lender as security on the mortgage loan).
When does offer and acceptance occur?
When both parties sign a contract with a full understanding of the terms.
Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?
Whether consent was voluntary
Can you omit a licensee's professional website URL from an exception submission for a contest or lottery in AZ?
Yes
You're the listing agent for a property located at 333 Anza Street. You place an ad for the property in the real estate section of Craigslist. What must your ad show?
Your ad must clearly show that the property is offered for sale by a broker, not a private party.
What's another name for a nonconforming loan?
a jumbo loan, is one that exceeds the conforming loan limit.
Covenant against encumbrances
a promise that the property is not encumbered with liens, easements, or other such limitations except as noted in the deed
Easement Appurtenant
a right of use that continues from owner to owner that involves a relationship between two parcels of land: a dominant parcel that benefits from a servient parcel
capital gain formula
adjusted purchase price + capital improvements + commission/sale costs = adjusted basis THEN sale price - adjusted basis = capital gain
Pur Autre Vie Life Estate
allows their to be a heir to life estate
Which of the following people is exempt from the licensing requirements for engaging in real estate activities in Arizona? a) Martin has completed his education requirements for a broker license but hasn't taken the Arizona exam. b) Rebecca is an attorney and member of the state bar association. She focuses on real estate and property law for her firm. c) Sandy is helping an acquaintance in the homebuying process. The acquaintance will pay Sandy 1% of the property's sale price for her time and effort. d) Stan works for a property owner in a salaried position. He sets up new tenants with rental agreements and collects their rents.
b (attorney doing her duty)
What is a bridge loan?
bridge loan (also known as a swing loan) is a temporary (usually 90-day) loan that provides funds in addition to an existing loan until permanent financing can be obtained. It is often used for buyers who have not yet sold their prior property.
Which party is responsible for performing a title examination prior to closing?
closing agent
Zoe and Matt just purchased a home in the Shady Acres subdivision. While replacing some windows, they learned that all shutters facing the street must be either dark blue or dark green. This is an example of a(n) ______.
deed restriction
What is the purpose of a closing disclosure?
details all costs at closing and projected monthly payment. It is provided 3 days prior to closing
What is not an exception in a title insurance policy
disclosed and undisclosed easements
How often can a capital gains exclusion be used?
every 2 years (If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse)
If a negotiable instrument is transferrable, it must be ___________.
in writing, be payable on demand or at a definite time, contain a promise or order to pay, state a specific or fixed sum of money, and be signed.
What does the Tax Cut and Jobs Act do?
it allows homeowners to deduct home equity loan interest, but only if the funds were used to buy, build, or improve the home. There are also additional stipulations.
The fewer contingencies from buyer:
less likely to fall through
What does the loan estimate provide?
loan payment schedule
The amount of money that a seller will make on a transaction after closing expenses and brokerage fees are paid is called ________.
net proceeds
Leasehold Interest
one party has the right to occupy the property for a given length of time
Freehold interest
ownership interest
James is a trustee for an estate that's being sold. What are the license requirements for James under Arizona statute?
trustees do not need a license
what is the secondary market?
where lenders and investors buy and sell existing mortgages or mortgage-backed securities. This frees up money for additional mortgage lending. So, you can think of the secondary market as the "resale marketplace" of loans.