Download AZ REAL ESTATE EXAM 2024-2025 NEWEST ACTUAL EXAM QUESTIONS AND DETAILED CORRECT ANSWERS and more Exams Real Estate Management in PDF only on Docsity! AZ REAL ESTATE EXAM 2024-2025 NEWEST ACTUAL EXAM QUESTIONS AND DETAILED CORRECT ANSWERS (VERIFIED ANSWERS) | A+ STUDYGUIDE Sam and Monique knew that the old industrial site that they purchased needed some environmental cleanup, but they don't have the cash and put cleanup on hold. The EPA hired its own crew to deal with groundwater issues because of industrial solvents and billed Sam and Monique $164,000 when the job was complete. If Sam and Monique don't pay the bill, which one of the following could happen? Correct Answer The EPA can seek damages in court for up to three times the actual cleanup costs. Karsten had a great experience with his apartment and landlord until about two months ago, when the plumbing in the unit above started leaking into his apartment. The landlord keeps saying he'll fix it but hasn't, and now Karsten has mold growing on the ceiling and walls. Karsten is moving out before his lease has expired, which is a form of ______. Correct Answer Constructive Eviction Dawn owns a bungalow three miles from the city center. She rents it to Bob and Jan Siegel. Dawn is a ______. Correct Answer Lessor Jose, the seller, and Silvia, the buyer, have signed an option agreement. Until Silvia exercises her option to buy, only Jose is bound by the option agreement; he must not sell the property to anyone else during the option period. What type of contract is this? Correct Answer Unilateral Woody has a lease with an option to buy on his penthouse apartment. Each month, 20% of his lease payment goes toward ________. Correct Answer A down payment toward the purchase price Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission? Correct Answer Both you and Barry As an Arizona licensee, you can legally enter into an additional employment agreement with a represented party if that party signs the state-required acknowledgement and gets a liability release from the first licensee. What else is true about this situation? Correct Answer Although it's legal, a civil suit is still possible. Sandra didn't realize that Arizona property taxes are split into two payments. While she paid the first half of her taxes by the October deadline, she didn't submit her Related to the legal description of land, what's a monument? Correct Answer A permanent land marker sometimes used in legal descriptions Christina purchased a house from Thomas. When did she officially gain ownership of the property? Correct Answer With the transfer of deed from the seller to the buyer Advertising or promotional materials must accompany a sale or lease notification for un-subdivided land to the Arizona Real Estate Commission. Which of the following must be clearly presented in the materials? An affidavit of mineral resource content of land A waiver of mining rights The name of the owner's personal bank Whether a water availability report has been issued Correct Answer Whether a water availability report has been issued The _______ retains jurisdiction over all matters regarding unsubdivided land in Arizona law, even if other agencies claim jurisdiction. Correct Answer Commissioner of the Arizona Department of Real Estate In Arizona, when must an owner of unsubdivided land provide copies of advertising and marketing materials to the commission? Correct Answer 14 days after its published Which of the following will impact an investor's ability to develop a new real estate project in a particular area? Correct Answer Presence of underground storage tanks Which type of an estate doesn't end automatically when the stated event or condition occurs? Correct Answer fee simple subjet to a condition subsequent The government's authority at all levels to ensure the health, safety and welfare of its citizens, which includes the control of public land use is the definition of ______. Correct Answer Police power In order to convey real property, what document would you use? Correct Answer Deed (or trust deed) A week-to-week tenancy is called? Correct Answer Periodic tenancy Another term for a valuation is ______. Correct Answer Formal appraisal Who does the Arizona Residential Landlord and Tenant Act not apply to? Correct Answer The Arizona Residential Landlord and Tenant Act doesn't apply to condo owners, mobile homes, transient occupancy in a hotel or motel, or occupancy by an employee of a landlord as a custodian. Which of the following properties would be covered by the Arizona Residential Landlord and Tenant Act? a.Beyonce owns a condo in Flagstaff. b. Candace rents a mobile home from a family friend for a long weekend. c. Henry has a year-long rental agreement for a duplex with his landlady, Jane, who lives next door. d. Roman works as a custodian for his landlord, Jeff. He only lives in his apartment because of his job. Correct Answer Henry has a year-long rental agreement for a duo with his landlady, Jane, who lives next door Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached? Correct Answer Against encumbrances Licensee Jack is selling his home. What must he disclose on any ads he creates for his property? Correct Answer His status as a salesperson, using the words "owner/agent" On the Arizona closing statement, what's the term for an amount that will show up in the party's favor? Correct Answer Credit Which of the following does CAP NOT do? Correct Answer Help more communities recycle effluent water. In a short sale, the ________ must consent to the sale. Correct Answer Seller's lender Your client Jerry wants to buy some acreage to run a 10- acre ranch. He found the perfect spot—and it's inside an INA. What should you tell him? Correct Answer "The only way you can irrigate here is if you buy land that was irrigated between 1975 and 1979." Arizona's solar energy exemption protects consumer's rights to ______. Correct Answer Install/use solar energy devices For Arizona electronic records laws to apply to a real estate transaction, to what must the parties first agree? Correct Answer Conduct the transaction electronically Which of these scenarios is an example of two parties rescinding a contract? A sales transaction falls through when Nora, the buyer, doesn't qualify for financing. Bobby, the buyer, makes an offer on a house that doesn't meet the appraisal contingency. He cancels the sale. Sally, the seller, sells her property to two different buyers. Both buyers sue Sally for specific performance. Sherman, the seller, decides not to sell his condo after all. Fortunately, his buyer, Alice, decided to join the Peace Corps. They mutually agree to cancel the sale with no penalty on either side, and each signs paperwork to this effect. Correct Answer Sherman, the seller, decides not to sell his condo after all. Fortunately, his buyer, Alice, decided to join the Peace Corps. They mutually agree to cancel the sale with no penalty on either side, and each signs paperwork to this effect. A declaration of a party's intention to void a contract. This is an irrevocable step that frees the demanding party from their obligations set forth by the contract. When a rescinding of contract occurs, it is as if the contract had never been established in the first place Correct Answer Rescinding of a contract How often do Arizona real estate licenses need to be renewed? Correct Answer Every 2 years The two real estate firms in one small town, Vineyard Realty and Homestead Homes, agree to charge the same commission rate to avoid clients selecting a firm based simply on price. What specific federal legislation prohibits this? Correct Answer The Sherman Antitrust Act of 1890 What prohibits monopolies and collusive actions that result in unreasonable restraint of trade, such as price fixing Correct Answer The Sherman Act of 1890 A judgment that results in a payment from the Arizona real estate recovery fund counts as ______ on the part of the licensee. Correct Answer Evidence of a violation One member of the Arizona Real Estate Advisory Board is required to be a ______. Correct Answer Licensed broker who has been engaged in multi-family residential rental brokerage Which form of ownership allows an unlimited number of co-owners but can only be created if the four unities are present? Correct Answer Joint tenancy when real estate is owned by a single person or legal entity, providing the owner with the most complete control of the land. Correct Answer Estate In Severalty (Sole Ownership) a legal arrangement in which two or more people own a property together, each with equal rights and obligations. Joint tenancies can be created by married and non- married couples, friends, relatives, and business associates. This legal relationship creates what is known as a right of survivorship so if one owner dies, their interest in the property is directly passed on to the surviving party(s) without having to go through probateor court system. Correct Answer Joint Tenancy a form of shared property ownership that is reserved only for married couples. ... This form of legal ownership creates a right of survivorship so if one spouse dies, the Alyssa's mortgage loan is secured by the note and the mortgage. Which of the following is true if she lives in a lien theory state? Correct Answer She holds title to the property, and the mortgage becomes a lien on the property. Approximately 13% of all Arizona lands are Trust lands, including land in Mohave, Yavapai, Coconino, and Apache counties. What is undeveloped state land in Arizona primarily leased out for? Correct Answer Grazing and agriculture What is a licensee's responsibility related to the paperwork in a real estate transaction? Correct Answer Make sure all parties have copies of the paperwork and that it's retained for the statutory period. Which of the following protects the owner against financial loss if the real estate title has defects? Correct Answer Title insurance The Arizona State Constitution empowers licensees to ______. Correct Answer Draft and fill out documents incidental to real estate transactions Which offer would be the most appealing to a seller? Correct Answer It depends on the seller's needs and motivations. The Equal Credit Opportunity Act is regulated by the ______. Correct Answer Consumer Financial Protection Bureau An investor is thinking about buying a $200,000 commercial property. She has $100,000 saved up for a down payment and wants to finance the remaining $100,000. Annual cash flow is projected to be $13,000. What is the potential return on investment? Correct Answer 13% Regarding the Arizona Fair Housing Act, which of the following statements is true? Correct Answer It closely follows the federal Fair Housing Act. Liza is doing a comparative market analysis. Comparable A has an adjusted price of $118,000; comparable B has an adjusted price of $109,500; and comparable C has an adjusted price of $122,900. How should Liza use this data? Correct Answer Base the list price on the comparable most similar to the subject property. Assuming licensee Shannon has actual knowledge of all of the following property issues, which should she disclose to prospective buyers? Correct Answer The upstairs bathroom has a leaky toilet The CLUE report shows _______. Correct Answer All of the insurance claims on a property for a certain number of years You're working with buyers who are pre-approved for a loan of as much as $200,000. Assuming they lock in a 5.25% interest rate at closing, how much of their first payment will go toward interest? Correct Answer $875 When Fannie Mae purchases a loan, they pay the loan originator a(n) ______ fee. Correct Answer Collection The ADA was established, among other reasons, to ensure that people with disabilities have access to the same locations as those without disabilities. The ADA creates a set of standards that designers and builders must follow in which circumstance? Correct Answer When building new or altering older facilities Which of the following is a true statement regarding record keeping requirements for Arizona real estate licensees? Correct Answer Records are subject to ADRE audit. An easement is one type of encumbrance that can affect a property. Which of these statements about easements is true? Correct Answer Easements are often established by a written agreement between the parties. The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. Correct Answer USDA Farm Service Agency An insurance score above ______ should be considered a good score Correct Answer 770 Which of the following is something Arizona licensees are statutorily required to NOT do? Correct Answer Put clients and transactions on hold if a controversy with another licensee comes up. Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating? Correct Answer Seisin Phil is a property manager, which means he serves as a ______ agent to his landlord/client. Correct Answer General The major categories of water users in Arizona are ______, industrial, municipal, special users, and private water companies. Correct Answer residential When a planned community in Arizona has more than 50 units, who or which entity must send the HOA information to a potential buyer? Correct Answer The association Fiduciary duties preformed by agents are made to keep trust to their clients.. what does OLD CAR duties stand for and in short what is the role of each duty? Correct Answer Obedience- Agents should obey ALL of their clients lawful instructions Loyalty- Should put their clients interest before anyone else.. including their own Disclosure- Agents must disclose all facts related to transaction Confidentiality- Agents must keep an clients info confidential Accounting- Agents must account for all money, property, and paperwork entrusted to them by their client. Reasonable skill & care- Agents must provide clients with the utmost quality on all aspects Who is responsible for all of the dealings over a specific piece of your client's property? Correct Answer General agent Who has limited authority to act on the behalf of their client? Correct Answer Special agent This person doesn't make any decisions or enter into any contracts on the client's behalf, but simply acts as an intermediary, liaison, and negotiator, conveying, representing, and advocating for their client's best interests. Correct Answer Special agent Who typically serves as a general agent? Correct Answer Property Manager This type of agent carries out the terms of property management agreement, this person finds themselves collecting rent, evicting tenants, and entering into leases with tenants on behalf of your client, the property owner. Correct Answer General agent This is someone who acts in a very limited capacity and offers fewer services... give an example of this type of agent. Correct Answer Limited agent EX: escrow officer or a real estate licensee that post a seller's listing on the MLS but won't act in an advisory capacity to a seller. This type of agent acts as a facilitator to a party, assisting the parties with paperwork, but not acting as a fiduciary to either Correct Answer Non-agent/transactional broker If a commission amount or percentage is NOT stated in the listing agreement: Correct Answer The broker would not be entitled to a commission Most homes in AZ are cold with legal descriptions that state: Correct Answer Lot and block In which of the following appraisal methods DOES an appraiser need to determine a dollar amount for depreciation? Correct Answer Cost Approach Rights of occupancy of an owner in a cooperative are based on: Correct Answer A proprietary lease If an apartment building's zoning classification changes from multi family to detached single family use only, the owners of the apartment building are permitted to: Correct Answer sell the apartment units as residential condominiums principal balance due on the mortgage on February 2? Correct Answer $59,862 To determine effective gross income, one would deduct which of the following from gross income? Correct Answer A vacancy and collection loss factor What is the distance in miles from the principal meridian that describes Range 4 West? Correct Answer 18 to 24 The owner tells the broker that there is a sewer on the property. A buyer purchases the property and discovers a septic tank on the property. Who is liable? Correct Answer The broker only The commissioner may deny the issuance of a Public Report for a new subdivision, if the developer is unable to: Correct Answer Deliver title or interest contracted for: The Federal Housing Administration is administered by: Correct Answer The Department of Housing and Urban Development Under a graduated payment mortgage, the monthly payment will: Correct Answer Increase annually by a predetermined rate in the early years of the loan, then remain constant When a party owns a cooperative, the rights are based on: Correct Answer A long-term proprietary lease Title to real estate passes to the grantee at the time the deed is: Correct Answer Delivered and accepted The mortgage MOST commonly uses: Correct Answer Simple interest When the owner of real estate conveys real property, he is called the: Correct Answer Grantor The maintenance and repair costs for the common area expenses of a condominium are allocated to unit owners and monthly assessments are paid after the assessments are established by the Homeowners Association Board of Directors based on the: Correct Answer Annual budgets There are two classifications of water law in Arizona. They are: Correct Answer Ground and surface What type of loan can change in payment, interest rate and amount owed? Correct Answer Open-end mortgage Under the Statute of Frauds, which of the following would NOT be covered? Correct Answer An agreement between two brokers to split commissions Which of the following is NOT true regarding a property management trust account? Correct Answer . An unlicensed employee of a property management firm may not sign checks on the property management trust account Which of the following processes is not part of deed of trust foreclosure? Correct Answer Deed of reconveyance A buyer assumed a seller's 11%, $80,000 first deed of trust on the settlement date of June 13. The seller made the monthly payment of June 1 with interest in arrears. Which of the following is a CORRECT settlement entry for the interest? Correct Answer $293.28 seller's debit A buyer of real property: Correct Answer May be a customer or a client A developer desires to offer for sale thirty time-share intervals in a resort property. Prior to offering such interests in the resort, the developer MUST obtain: Correct Answer A public report issued by the Real Estate Commissioner A seller makes a loan to the buyer to assist with the down payment and secures that loan with a lien on the property. This kind of lien is considered: Correct Answer A purchase money mortgage A minority buyer asks to see a type of house in a certain area. You (the salesperson should do which of the following? Correct Answer Show him houses only in that one area A commercial property was in foreclosure and after the sale, the mortgagee did not receive enough money to satisfy the note. Which of the following statements is true? After initial assessments have been made by the homeowners association, they shall be made at least: Correct Answer Annually based on an annual budget A release clause provides for the release of: Correct Answer Parcels of land from blanket mortgages or trust deeds Real property can become personal property by: Correct Answer Severance The document filed with the county recorder to change the status of a manufactured home from personal property to real property is a: Correct Answer Affidavit of Affixture Which of the following is personal property? A) Mortgage Note B) Fixture C) Cesspool System D)Perennial Shrubs Correct Answer Perennial shrubs A bulk sales affidavit is a required notification by a buyer of a business with business inventories to its creditors within how many days of completing the sale? Correct Answer 10 days Title to personal property is transferred with a: Correct Answer Bill of Sale To establish a lien on personal property a Financing Statement is filed with the: Correct Answer Secretary of State Under the Uniform Commercial Code, the document used to create an interest in personal property is a: Correct Answer Security agreement A subdivision can be restricted by a developer in the deed restriction for all of the following reasons EXCEPT: Correct Answer Zoning changes All of the following are exempt from registration under the Interstate Land Sales Full Disclosure Act, EXCEPT: Correct Answer The lots are subject to a mortgage lien A deed restriction does not permit the building of a fence. The buyer erects a fence for his dog. The neighbors would enforce the deed restriction by: Correct Answer A civil court action A right of way across an adjoining property for purposes of ingress and egress is considered a/an: Correct Answer Easement appurtenant An easement created through continued use of a property is called Correct Answer A prescriptive easement All of the following are specific liens, EXCEPT: Correct Answer Internal Revenue Taxes A property tax lien is what type of lien? Correct Answer Specific After the Treasurer's sale, the owner of the property has a Right of Redemption period of: Correct Answer 3 Years A mechanic's lien filed by a contractor is a valid lien for: Correct Answer 6 months After a project is completed and Notice of Completion is recorded, how long does a subcontractor have to record its lien? Correct Answer 60 Days All Mechanic's and Material man's Liens recorded against a property will have the same date of priority, which is: Correct Answer The date the construction project started A deduction a homeowner has for income tax purposes is: Correct Answer Interest expense A CLUE report can be obtained by the: Correct Answer Seller's insurance agent A Homeowners' Insurance policy: Correct Answer Is known as a Multiline policy An estate that is less than a freehold and lasts for a certain duration of time is known as a: Correct Answer Leasehold estate A fee estate subject to termination upon the occurrence of a specified event but does NOT terminate automatically, would be: Correct Answer Fee simple on condition subsequent An exclusive agency may NOT be terminated: Correct Answer By the principal when the broker is making the principal1s payments to avoid foreclosure The water table is: Correct Answer The depth at which ground water can be found The Active Management Areas for ground water include all of the following, EXCEPT: Correct Answer Flagstaff Under contract law the following is required for a valid contract: Correct Answer Offer must be accepted To create a binding contract for real property, the acceptance of the offer MUST be signed by the: Correct Answer Offeree The Statute of Frauds was passed to prevent: Correct Answer Perjury A waiver is a: Correct Answer Unilateral act A client refuses to sell his property when presented with an offer according to the terms of a valid listing. The client: Correct Answer Does not have to sell Which of the following is FALSE regarding an option? Correct Answer Optionee has a legal right to return of consideration if option is not exercised Which of the following would NOT terminate an offer? Correct Answer A request by offeree for more time for acceptance Tom sold to Dick, but Dick recorded the deed in the wrong county: Correct Answer Between Tom and Dick, Dick has good title. In the chain of title a patent would have been issued by: Correct Answer A sovereign government A deed that conveys an interest in real property to a grantee beneficiary designated by the owner and that is effective on the death of the owner is a: Correct Answer Beneficiary deed All of the following are usual elements in a valid deed EXCEPT the: Correct Answer Grantee's signature The MOST important element in delivery of a deed is: Correct Answer Intent of grantor A deed can be: Correct Answer The Correct Answer is: Signed with an "X" The difference between prescription and adverse possession is: Correct Answer Title to the property Title to real estate that is inherited from a person who died intestate is: Correct Answer Title by descent A Title Insurance Commitment provides all of the following, EXCEPT: Correct Answer Zoning classification An owner's title insurance policy protects the buyer against financial loss due to title defects: Correct Answer That existed at the time the insured received the title An ALTA Lenders Policy is a policy for lender's protection and generally includes: Correct Answer Constructive and actual notice An agreement to waive prior rights in favor of another is: Correct Answer Subordination The primary responsibility for RESPA disclosures rests with the: Correct Answer Lending institution All of the following would be debits on a seller's closing statement EXCEPT: Correct Answer The purchase price Which of the following MOST likely would be prorated on a closing statement? Correct Answer Association monthly fee Marketable Title is free from all of the following EXCEPT: Correct Answer Taking under Eminent Domain A political factor influencing value WOULD be: Correct Answer Rent control A mortgage loan which allows additional money advances using the same mortgage is known as: Correct Answer An open end mortgage A VA guaranteed loan would NOT have: Correct Answer A prepayment penalty Which of the following would NOT apply to FHA loans? Correct Answer Balloon payments Which of these statements is FALSE regarding a VA loan? Correct Answer The veteran cannot pay more than the amount of the Certificate of Reasonable Value Monthly payments on a VA loan would MOST likely increase due to: Correct Answer A rise in taxes A proposed loan under the USDA Single Family Housing Guaranteed Loan Program must comply with all of the following EXCEPT: Correct Answer The residence must be located on a 40 acre parcel that is cultivated Commercial income property loans generally include all of the following terms EXCEPT: Correct Answer Loan to value ratio of 100 percent A ratio that helps commercial lenders decide on the maximum loan size is the: Correct Answer Debt-service Coverage Ratio Which of the following would command the highest loan to value ratio loan? Correct Answer A single family residence Normally, interest on home loans would be: Correct Answer Accrued interest for the month preceding payment Liquidation of a financial obligation on an installment basis is Correct Answer Amortization A borrower can be relieved of primary responsibility for a mortgage by finding a buyer who is willing to: Correct Answer Assume the loan The foreclosure avoidance procedures adopted by the CFPB restrict the mortgage servicer from making a first notice or filing for foreclosure until the borrower is delinquent more than: Correct Answer 120 days The Statutory Redemption Period after a Trustee's sale is: Correct Answer None If you hold a freehold estate, you hold all of the following EXCEPT: Correct Answer an estate for years In a net lease the lessee may pay all of the following EXCEPT: Correct Answer mortgage principal and interest Under an assignment of a lease, the assignor becomes: Correct Answer secondarily responsible for payment of rent der's fee paid to an unlicensed person by a broker is permissible: Correct Answer When paid to a tenant in a complex managed by the broker The monthly accounting by the property manager is called: Correct Answer Property management report Security deposit: Correct Answer Is money or property given to assure payment or performance under a rental agreement The term of a member of the Advisor Board is: Correct Answer 6 Years A real estate salesperson or broker may form a "team" or "group" to advertise and promote services if: Correct Answer The team or group is comprised of real estate salespersons and or/associate brokers. Cost basis for tax purposes is NOT affected by: Correct Answer Mortgage interest expense Capital gains are taxed at a favorable tax rate if the capital asset was held for: Correct Answer More than one year Boot is more closely associated with a: Correct Answer Trade A person who buys undeveloped acreage, divides it into ten 5-acre lots and sells the lots is a: Correct Answer subdivider Correct Answer The listing broker can collect a full commission For which of the following, when properly signed, does the buyer receive equitable title only? Correct Answer Agreement for sale The money that the salesperson receives from the buyer as an escrow deposit should be: Correct Answer Deposited in the escrow agency trust account Under an installment or land contract, legal title to the property is usually held by: Correct Answer the seller What advantage might a land contact have to a seller, compared to a purchase money mortgage? Correct Answer Forfeiture provisions What would NOT void a sales contract? Correct Answer the broker's death The gross rent multiplier is determined by Correct Answer Dividing the price by the monthly gross rents When the commissioner receives a written complaint against a licensee, the commissioner will: Correct Answer conduct a hearing before any suspension A real estate broker is required to have all of the following EXCEPT: Correct Answer trust account Real estate title information is best found in the records of the: Correct Answer County Recorder A women's rights group established a nonprofit housing project with preference to single women with children. Their action is: Correct Answer Improper under the Civil rights Act of 1968