AZ Real Estate Pt. 2
How many days does a victim of domestic violence have to terminate their lease?
30 days
How many days does a tenant gave to make up for not paying rent on time?
5 days
Which of the following is a triggering term when used in advertising financing? A) "10% down" B) "Financing available" C) "Low monthly payments" D) "We work with all credit histories"
A) "10% down"
How long do Arizona landlords have to make a minor repair after tenants have notified them? A) 10 days B) 14 days C) Five days D) Seven days
A) 10 days
Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of? A) A land contract B) An assumable mortgage C) A straight-term loan D) A wraparound mortgage
A) A land contract
Which of the following statements about the promissory note is true? A) A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms. B) A promissory note isn't a legal document. C) A promissory note isn't transferable, so it must be held by the original lender until paid in full. D) A promissory note serves as collateral for a mortgage loan.
A) A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.
Jim learns his lender is judicially foreclosing on his home. What step does the lender take that makes it impossible for Jim to reinstate his loan? A) Accelerating his loan B) Evicting Jim C) Notifying credit score reporting agencies D) Recording a lis pendens
A) Accelerating his loan
What type of clause is this? "If any monthly installment under this Note is not paid when due and remains unpaid after a date specified by a notice to Mortgagor, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of the Note holder." A) Acceleration clause B) Alienation clause C) Defeasance clause D) Subordination clause
A) Acceleration clause
As the owner of a rental property, Julia is likely to delegate which of the following tasks to a property manager? A) Addressing maintenance and inspection issues B) Maintaining insurance C) Maintaining the property in a condition that meets all state requirements D) Setting up and maintaining a financial reserve
A) Addressing maintenance and inspection issues
Which of the following would property managers be expected to personally do as part of their assigned duties? A) Budget preparation and oversight B) Employee supervision C) Overnight care of tenant pets D) Property maintenance
A) Budget preparation and oversight
How does the Federal Housing Administration fund its mortgage insurance program? A) By charging borrowers a mortgage insurance premium B) From federal taxes C) From the sale of foreclosed homes D) Through fees paid by lenders that participate in the direct endorsement program
A) By charging borrowers a mortgage insurance premium
What type of loan meets certain criteria that are accepted by Fannie Mae and Freddie Mac? A) Conforming loan B) Government loan C) Jumbo loan D) Non-conforming loan
A) Conforming loan Conforming loan: Conforming loans exist so the government-sponsored enterprises (GSEs) Fannie and Freddie can buy them and automatically know that the mortgages they're purchasing — and the borrowers who took them out — fit a set of standardized requirements and have met certain creditworthy criteria.
Which one of the following tasks helps Diana fulfill her property management duty of providing maintenance and completing improvements? A) Creating and implementing a preventive maintenance schedule B) Creating an operating budget in which income is greater than expenses C) Generating monthly financial reports for property owner review D) Minimizing vacancy rates by doing market analyses and offering market-based rent rates
A) Creating and implementing a preventive maintenance schedule - Keeping the property and facilities in good condition by budgeting and scheduling preventive maintenance is a part of maintaining and improving the property.
Which of the following is an alternative to foreclosure? A) Deed in lieu of foreclosure B) Default C) Deficiency judgment D) Eviction
A) Deed in lieu of foreclosure
Which factor influences property value and addresses questions such as, "What's the market like?" and "Are there more buyers than sellers, or vice versa?" A) Demand B) Scarcity C) Transferability D) Utility
A) Demand - Demand looks at the market and the number of buyers vs. sellers.
Insurance monthly premiums are taken from which account? A) Escrow B) IRA C) Personal checking D) Trust fund
A) Escrow
What happens to any junior liens on the property at a non-judicial foreclosure in Arizona? A) Junior liens are extinguished by the sale. B) Junior liens become a debt owed to the new buyer. C) Junior liens remain on the property title, and the new buyer becomes responsible for repaying the debt. D) The lien holders are allowed to redeem the property after the sale.
A) Junior liens are extinguished by the sale.
Investment Property One has a 12% capitalization rate, while Property Two has a 9% capitalization rate. Based on capitalization rate alone, which investment involves the most risk? A) Property One B) Property Two
A) Property One - Investments with a higher capitalization rate also involve more risk.
How is a loan assumption documented? A) The buyer and seller both sign an assumption agreement. B) The buyer must add his or her signature to the existing promissory note and security instrument, which must be recorded. C) The lender must return the promissory note to the original maker and attach a new note to the security instrument. D) The loan is refinanced with a new loan agreement.
A) The buyer and seller both sign an assumption agreement.
Which of the following best defines capitalization rate? A) The expected rate of return on investment B) The rate at which assets depreciate over time C) The rate of capital recapture D) The value of a business as an investment
A) The expected rate of return on investment - A capitalization rate is the expected rate of return on an investment and is based on the performance of comparable properties.
Which of these steps does an Arizona lender take after borrower default on a loan secured by a mortgage? A) The lender accelerates the loan and files a court action requesting foreclosure. B) The lender notifies the trustee to initiate foreclosure by recording a Notice of Sale with the court. C) The lender records a lis pendens on the property as notice of foreclosure to the borrower. D) The lender requests a deed-in-lieu from the borrower. If the borrower declines, the lender files a court action to foreclose.
A) The lender accelerates the loan and files a court action requesting foreclosure.
Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates? A) To assess the adequacy of tenant income screening processes B) To assess your ability to manage tenant relations C) To determine if rental rates are too high compared to your competitors' rates D) To forecast the amount of effort that will be required to collect the late rents
A) To assess the adequacy of tenant income screening processes
A buyer has received a Closing Disclosure from the lender. What's the purpose of this form? A) To detail all costs the buyer will owe at closing B) To disclose the distribution of commissions that will occur at closing C) To estimate closing costs D) To estimate the seller's net proceeds
A) To detail all costs the buyer will owe at closing
What's the intended use of the Uniform Residential Appraisal Report? A) To evaluate the subject property for a mortgage finance transaction B) To help prospective buyers decide on offering prices C) To help prospective sellers determine acceptable selling prices D) To provide an investor with a sound basis for the purchase of real estate
A) To evaluate the subject property for a mortgage finance transaction - As stated on page four of the URAR, the intended use of this appraisal report is for the lender/client to evaluate the subject of the appraisal for a mortgage finance transaction.
Sara's property management agreement contained an automatic renewal provision. How many days' notice does her property management firm need to give her before the automatic renewal date? A) 15 B) 30 C) 60 D) Seven
B) 30 - In order for an automatic renewal clause to be legal, the property management firm must agree to send the owner a reminder notice at least 30 days before the automatic renewal date of a property management agreement.
Which range of credit scores represents the average score for Americans overall? A) 580 to 669 B) 670 to 739 C) 740 to 799 D) 800 or higher
B) 670 to 739
Freddie Mac is ______. A) A government entity B) A government-sponsored enterprise C) A private entity D) A public-private partnership
B) A government-sponsored enterprise
Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this? A) Acceleration clause B) Alienation clause C) Non-recourse clause D) Transfer clause
B) Alienation clause
What kind of mortgage involves two or more properties pledged as security for repayment of a loan? A) Adjustable B) Blanket C) Growing equity D) Wrap-around
B) Blanket
In the formula NOI ÷ V = R, what does R represent? A) Annual yield B) Capitalization rate C) Capital recapture rate D) Depreciation rate
B) Capitalization rate
Synergy National Bank issued a conventional loan that is eligible for purchase by Fannie Mae. When Fannie Mae purchases the loan, what will Synergy National Bank receive in return? A) Brokerage fee B) Collection fee C) Origination fee D) Points
B) Collection fee
With the cost approach to value, what is the replacement cost? A) Cost of the materials used in construction B) Cost to build a functionally equivalent improvement C) Cost to build an exact replica of the subject, with the same materials and deficiencies D) Cost to buy the property
B) Cost to build a functionally equivalent improvement - The replacement cost reflects the cost to build a functionally equivalent improvement, as opposed to the reproduction cost, which is the cost to build an exact replica of the subject, with the same materials and deficiencies.
A third party holds legal title to Jackie and Tom's house until their loan is paid off. What type of security instrument was used to secure the real estate transaction? A) Deed B) Deed of trust C) Free title D) Mortgage
B) Deed of trust
How long does a tenant have to remedy the situation if issued a Notice of Noncompliance Materially Affecting Health and Safety? A) 10 days B) Five days C) Seven days D) Three days
B) Five days
Capitalization is the process of converting ______ to value. A) Capital recapture B) Income C) The expected rate of return D) The value of previous depreciation taken
B) Income
Which approach to value is typically used for investment property of two- to four-family units? A) Cost approach B) Income approach C) Revenue approach D) Sales comparison approach
B) Income approach
Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation? A) Financing terms and cash equivalency B) Income generated C) Market conditions at time of sale D) Physical characteristics of the property
B) Income generated
With a straight mortgage, what type of payments are made up until the end of the loan term? A) Insurance B) Interest C) Points D) Principal
B) Interest
What is NOT a benefit of using the property management agreement? A) It addresses issues related to terminating the agreement. B) It creates an agreement between a property owner and a tenant. C) It eliminates potential misunderstandings between the parties. D) It outlines the property manager's responsibilities to the owner.
B) It creates an agreement between a property owner and a tenant. - The parties to a property management agreement are the property owner and the property manager.
Sue is the winning bidder at an Arizona sheriff's sale. When she pays the sheriff, she receives a certificate of sale. Why? A) It is temporary proof of ownership until the court approves the sale. B) It serves as proof of ownership until the redemption period is over. C) Property purchased at a foreclosure sale will no longer have a clear title, so the certificate of sale is used instead. D) The certificate of sale is used when the buyer will be reselling the property.
B) It serves as proof of ownership until the redemption period is over.
Which type of insurance can property managers carry to protect against wrongful evictions? A) Commercial general liability B) Professional liability coverage C) Residential dwelling policy D) Worker's compensation
B) Professional liability coverage
Investment Property One has a 12% capitalization rate, while Property Two has a 9% capitalization rate. Based on capitalization rate alone, which investment will have the highest appraised value? A) Property One B) Property Two
B) Property Two - The lower capitalization rate means lower risk, but higher value.
Arizona landlord Tara receives a notice of a trustee's sale on the property she's already rented out to tenant Will. What is Tara's obligation under the law? A) She must send Will a written notice of this within 10 business days of receiving the sale notice. B) She must send Will a written notice of this within five business days of receiving the sale notice. C) She must tell Will about this within 10 business days of receiving the sale notice. D) She must tell Will about this within five business days of receiving the sale notice.
B) She must send Will a written notice of this within five business days of receiving the sale notice. - When an owner receives a notice of trustee's sale on a property after a tenant has entered into a rental agreement on the property, the owner must give the tenant written notice within five business days of receiving the notice of trustee's sale.
What dictates a leasehold estate's value? A) The length of the lease, and whether or not it's renewable B) The relationship between scheduled rent and the market rent C) The relationship between the lessee and lessor D) The wishes of the lessor, who owns the property
B) The relationship between scheduled rent and the market rent
Which range of credit scores represents subprime borrowers? A) 0-100 B) 250-300 C) 580-669 D) 740-799
C) 580-669
An insurance score above ______ should be considered a good score. A) 500 B) 660 C) 770 D) 800
C) 770
A non-judicial foreclosure in Arizona includes which of the following? A) Acceleration of the loan B) Borrower's right of redemption C) Borrower's right of reinstatement D) Filing of a lis pendens
C) Borrower's right of reinstatement
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. A) Capital B) Grants C) Guaranteed loans D) Secondary market for agricultural loans
C) Guaranteed loans
Identifying the purpose of the appraisal leads the appraiser to do what next? A) Determine highest and best use. B) Estimate value of land. C) Identify data needed. D) Use three approaches to estimate value.
C) Identify data needed.
What type of provision is standard with either the mortgage or the deed of trust, but is included in the promissory note rather than the security instrument? A) Acceleration B) Alienation C) Late charge D) Power of sale
C) Late charge
Suzy is the buyer in an installment sales contract. What type of title will she have to the property once she meets her contractual obligations? A) Equitable B) Financial C) Legal D) Temporary
C) Legal
Which of the following is the price a lender believes the property will bring at a foreclosure sale? A) Insured value B) Investment value C) Mortgage value D) Value in use
C) Mortgage value - Lenders won't lend on what they can't recoup. Therefore, the loan amount will be based on what a lender would hope to recoup, should a foreclosure sale be necessary.
Which occupancy type is eligible for a VA loan? A) All occupancy types B) Investment property C) Owner-occupied D) Second home
C) Owner-occupied
Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults? A) Acceleration B) Alienation C) Power of sale D) Reconveyance
C) Power of sale
Which of the following is a promise from the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms? A) Deed of trust B) Mortgage lien C) Promissory note D) Usury
C) Promissory note
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? A) Equity mortgage B) Purchase agreement C) Purchase money mortgage D) Seller-insured loan
C) Purchase money mortgage
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called? A) Equity mortgage B) Purchase agreement C) Purchase money mortgage D) Seller-insured loan
C) Purchase money mortgage a mortgage issued to the borrower by the seller of a home as part of the purchase transaction.
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? A) Abandonment B) None C) Recover damages D) Repair and deduct
C) Recover damages - Alice may be able to recover damages from the landlord if the fair rental value of her unit diminishes due to the lack of hot water.
As a property manager, Lisa most likely provides which of the following services? A) Maintaining insurance B) Maintaining the property in a condition that meets all federal requirements C) Screening new tenants D) Setting up a financial reserve
C) Screening new tenants
With a land contract, who retains the title to the property? A) Beneficiary B) Buyer C) Seller D) Trustee
C) Seller
In the case of a ______, the lease terms, including the rent, may not be changed during that time. A) Periodic tenancy B) Property management change C) Tenancy for a specific term D) Verbal agreement
C) Tenancy for a specific term - In a tenancy for a specific term, the lease terms stay the same throughout the duration of the lease.
Under an Arizona agreement for sale, sellers aren't allowed to use the forfeiture process if ______. A) More than 50% of the original purchase price has been paid B) The borrower still resides on the property C) The loan is accelerated D) The loan term is greater than 15 years
C) The loan is accelerated
A property management agreement may not be assigned to another licensee without ______. A) A "change of property manager" clause B) Approval from the designated broker C) The owner's written consent D) Verbal approval from all parties
C) The owner's written consent
The capitalization process uses a capitalization rate, which is based on what? A) Estimates of future sales B) Last year's sales C) The performance of comparable properties D) The stock market
C) The performance of comparable properties - The capitalization rate is based on the performance of comparable properties. It's the expected rate of return on an investment and can be calculated using the formula of: NOI ÷ V = R, or net operating income ÷ value = rate.
Which of the following are ways a private loan company insulates themselves from the risk of lending funds to a borrower who has had problems securing them elsewhere? A) They may charge higher fees. B) They may charge higher interest. C) They may charge higher interest, higher fees, and require the borrower provide collateral to secure the loan. D) They may require collateral to secure the loan.
C) They may charge higher interest, higher fees, and require the borrower provide collateral to secure the loan.
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. A) American Agricultural Lending Service B) Farm Credit System C) USDA Farm Service Agency D) USDA Rural Development Program
C) USDA Farm Service Agency - Direct loans are available to farmers and ranchers through the USDA Farm Service Agency, funded by congressional appropriation.
Select the choice that best translates this clause into plain English. "Upon payment of all sums secured by this Mortgage, Mortgagee shall discharge this Mortgage without cost to Mortgagor. Mortgagor shall pay all costs of recordation, if any." A) The borrower must pay all recording fees if the property is transferred to another owner. B) The borrower will be charged a fee when the loan has been paid off to ensure that the satisfaction of the note is recorded. C) When the borrower has fully paid off the loan, the lender will record that the note is satisfied. D) When the borrower has fully paid off the loan, the lender will retain the note that is satisfied.
C) When the borrower has fully paid off the loan, the lender will record that the note is satisfied.
Capital Expenses
Costs for improvements and major maintenance
Which of the following statements best describes disintermediation? A) A bank sells an existing mortgage on the open market. B) An investor loans money to a consumer for real estate financing. C) Consumers are depositing more money into banks than they are withdrawing. D) Consumers are withdrawing more money from banks than they are depositing.
D) Consumers are withdrawing more money from banks than they are depositing.
How many days after termination of the property management agreement does the property management firm have to provide the owner with a list of all tenant security obligations? A) 14 B) 35 C) 75 D) Five
D) Five
Which of the following statements about Freddie Mac is correct? A) It insures the MBSs it issues. B) It makes loans directly to consumers. C) It purchases government-insured or -guaranteed loans. D) It sells participation certificates to investors to raise funds to purchase additional loans from lenders.
D) It sells participation certificates to investors to raise funds to purchase additional loans from lenders.
Maggie has a neighbor, Jim, who is facing foreclosure. She likes Jim and wants to help him out, so they agree to do a "subject to" purchase. What does this mean? A) Maggie will co-sign a second mortgage with Jim so that he'll have the funds to pay off the first mortgage. B) Maggie will purchase the home at the foreclosure auction and rent it to Jim at a reduced rate. C) Maggie will sign an agreement with the lender to assume liability for Jim's loan. D) Maggie will take over Jim's loan payments without telling his lender she's doing so.
D) Maggie will take over Jim's loan payments without telling his lender she's doing so.
Which scoring system is a way for insurance companies to rank the risk of a person filing an insurance claim? A) Claim adjustment score B) Credit risk score C) Credit score D) Personal insurance score
D) Personal insurance score - The personal insurance score is a number that ranks a person based on the likelihood of filing an insurance claim.
What may the lender require if the borrower is unable to put at least 20% down on a conventional loan? A) Discount point B) Mortgage insurance premium C) Pre-payment penalty D) Private mortgage insurance
D) Private mortgage insurance
The fundamental purpose of the ______ is to provide tenants facing eviction from a foreclosed property sufficient time to locate alternative housing. A) Arizona Eviction Protection Program B) HUD Section 8 Housing Program C) HUD Section 8 Housing Voucher Protection Program D) Protecting Tenants at Foreclosure Act
D) Protecting Tenants at Foreclosure Act
Which clause in the deed of trust is the equivalent of the defeasance clause in the mortgage? A) Acceleration B) Alienation C) Power of sale D) Reconveyance
D) Reconveyance
Which clause refers to the order of liens on a property? A) Cross-default B) Exculpatory C) Non-recourse D) Subordination
D) Subordination the order the outstanding liens on your property get repaid if you stop making your mortgage payments.
Arizona tenant Gene has just learned that his apartment building is about to be foreclosed upon. Under which federal law must Gene be given 90 days' notice prior to his being evicted, if the new owner decides to evict the current tenants? A) The Arizona Landlord and Tenant Act B) The Federal Fair Housing Act C) The National Foreclosure Protections Act D) The Protecting Tenants at Foreclosure Act
D) The Protecting Tenants at Foreclosure Act
Alma's family is getting assistance from the Section 8 program in Arizona. What organization provides the funds for this program? A) Arizona Department of Housing B) Arizona Public Housing Authority C) Project-Based Rental Assistance D) The U.S. Department of Housing and Urban Development
D) The U.S. Department of Housing and Urban Development
Arizona law prohibits any city in Arizona from restricting the use of vacation rentals due to which of the following? A) The adoption of residential zoning ordinances B) The enforcement of residential use ordinances C) The protection of the public's health and safety D) The rental's classification
D) The rental's classification
When a lender has a lien on a property via a mortgage, what rights does the lender hold? A) Air rights B) Possession rights C) The entire bundle of rights D) The right to foreclose
D) The right to foreclose
Larry obtained a mortgage from State Bank. Larry owns the property, controls it, and has all the rights that come along with real property ownership. State Bank has an interest in the property and one other right. What is that? A) Equitable title B) Mortgage title C) Reversionary interest D) The right to foreclose if the borrower defaults
D) The right to foreclose if the borrower defaults
When proceeds from an Arizona foreclosure sale are applied, which of these parties will be paid after any junior lien holders? A) The homeowners association B) The senior lien holder C) The trustee D) The trustor
D) The trustor
Arizona creditors who hold a junior lien on a property in foreclosure have which one of these rights? A) To accept a deed in lieu of foreclosure B) To purchase foreclosure rights from the senior lien holder C) To pursue a deficiency judgment prior to the foreclosure sale D) To reinstate the loan and take the position of the senior lien holder
D) To reinstate the loan and take the position of the senior lien holder
When a property is sold at an Arizona non-judicial foreclosure, the auction is called a ______. A) Beneficiary foreclosure auction B) Deed of trust foreclosure C) Sheriff's sale D) Trustee's sale
D) Trustee's sale
Which of the following factors carries the least weight when calculating a credit score? A) Credit usage B) Payment history C) Percent of credit used D) Type of accounts
D) Type of accounts
Which of the following is considered an ineligible property type for which a loan to purchase or refinance wouldn't be purchased by Fannie Mae? A) Condominium B) Cooperative C) Single family residence D) Vacant lot
D) Vacant lot
The Arizona Residential Landlord and Tenant Act does NOT apply to ______. A) Apartments B) Rental duplexes C) Single-family homes D) Vacation rentals by owner (VRBOs)
D) Vacation rentals by owner (VRBOs)
What's the capitalization formula used in the income approach? A) Value = cap rate - income B) Value = income × cap rate C) Value = income + cap rate D) Value = net operating income ÷ cap rate
D) Value = net operating income ÷ cap rate
When may a home warranty be purchased? A) Only at the time the property is listed B) Right after closing C) When something breaks D) When the property is listed or at the time of closing
D) When the property is listed or at the time of closing
In which of these scenarios is an Arizona property seller allowed to initiate forfeiture after borrower default? A) When the security instrument is a deed of trust, and the property is commercial. B) When the security instrument is a mortgage and the property is commercial. C) When the seller is a junior lien holder. D) When the transaction uses an agreement for sale.
D) When the transaction uses an agreement for sale.
Which of the following types of claims would be covered by a property manager's professional liability insurance policy? A) Car accident during business use of vehicle B) Damage to the owners property C) Worker's compensation D) Wrongful eviction
D) Wrongful eviction
What is DUST?
Demand Utility Scarcity Transferability
Sales price divided by gross annual income
Gross Income Multiplier
Sales price divided by gross monthly rental income
Gross Rent Multiplier
Which three of the following are factors in the capitalization formula? Income Taxes Value Rate
Income Value Rate
Capital Reserve Budget
Money set aside for things like repairs, upgrades, improvements, and major maintenance
Residential dwelling policy
Protects against financial loss from most common causes of damage and should name property manager as additional insured.
What is an estoppel certificate?
a letter from a lender that verifies the principal balance that is owed on a loan.
What is usury?
the illegal action or practice of lending money at unreasonably high rates of interest.