AZ REAL ESTATE EXAM NEWEST ACTUAL EXAM QUESTIONS AND DETAILED CORRECT ANSWERS (VERIFIED), Exams of Real Estate Management

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AZ REAL ESTATE EXAM NEWEST

ACTUAL EXAM QUESTIONS AND

DETAILED CORRECT ANSWERS

(VERIFIED ANSWERS) | 2025 A+

STUDYGUIDE

On April 1st a salesperson took a six-month open listing on the property. On April 20th another sales person obtained a six-month exclusive right to sell listing on the same property. On May 1st the first salesperson obtained a buyer for the property and a sale closed on June 1st. This situation may be a/an: Correct Answer Must pay both because it is an Exclusive Right to Sell contract A broker receives earnest money from a buyer but instead of placing the money into the trust account the broker pays company bills. This action is an example of: Correct Answer Conversion because he is converting to another account, money not mixing. Once an applicant passes the real estate exam, which of the following statements are true? Correct Answer Once the state exam has been passed the application has one year to obtain either an active or inactive license. If an applicant goes over the year date they must re-take & pass the state exam again.

When a deed of trust is being foreclosed how many days do you have to redeem it? Key word redeem* Correct Answer Deed of trust has a 90-day reinstatement period with no redemption period. Chemicals used in refrigeration, air conditioning, insulation, and aerosol propellants that drift into the upper atmosphere where their chlorine components destroy ozone are called Correct Answer CFCs are chlorofluorocarbons, an inert chemical used in refrigeration and aerosol cans. A married couple bought property together. No other information is given, what type of tenancy do they have? Correct Answer A married couple would take title as community property unless they both requested survivorship. If two or more brokers get together to set a commission rate, this would be in violation of: Correct Answer Sherman Anti-Trust Law Except during a time of emergency, property cannot be confiscated through use of: Correct Answer Under the government's rights of police power, property can be confiscated in an emergency. To receive a tax-free sale of your principal residence, the homeowner must live in the property as their principal residence for at least: Correct Answer Homeowners

seeking the tax-free gain exemption from the IRS must live in their home for at least 2 years. A few real estate brokers from different companies were discussing the possibility of establishing an office policy to list for sale all raw land at a 10% commission. Which of the following is true? Correct Answer Sherman Anti-Trust Law A "mutual fund" for pooling investor money for investment in real estate: Correct Answer Real Estate Investment Trust REIT A property owner is selling a house "For Sale by Owner." the seller places the ad in the local newspaper looking for buyers. If the seller is on the Do Not Call Registry the broker may call when: Correct Answer The broker represents the buyer Short term capital gains are taxed at Correct Answer ordinary income tax rates A trust deed is signed by the: Correct Answer Trustor Which of the following activities will not occur in the secondary market? Correct Answer Origination fees A lender would add a margin to an index to accomplish which of the following? Correct Answer The purpose of the margin is for the lender to keep current with the cost of new mortgages.

An escrow agent can be: Correct Answer All: The escrow agent is responsible for performing the closing procedures according to the sales contract or escrow agreement. If the buyer is assuming an existing loan on the property, which of the following is prorated at closing? Correct Answer Interest only Which of the following would be a debit to the seller Correct Answer Property Taxes A preliminary title report would tell you all of the following except Correct Answer Zoning is not part of the preliminary title report The Real Estate Settlement Procedures Act was enacted to: Correct Answer RESPA ensures that consumers are provided with important, accurate, and timely information about the actual costs of selling or closing a transaction, not about the cost of obtaining a loan and interest. The costs of obtaining loans and interest are provided under Regulation Z of the Truth-in-Lending Act. RESPA does all of the following except: Correct Answer The HUD-1 statement prevents a buyer from being charged undisclosed fees; it requires disclosure of all costs involved with the transaction. Deed in Lieu Correct Answer this conveys title to the lender when the borrower is in default and wants to avoid

foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts, the avoidance and non-repayment of debt will most likely show on a credit history. It may prevent having the documents preparatory to a foreclosure being recorded and become a matter of public record. A deed in lieu will not eliminate any liens against the property and a lender may be reluctant to accept it for just this reason. If the loan value is 80%, and the property was appraised at $86,500.00 and sold for $88,000.00, how much would the purchaser be permitted to borrow? Correct Answer The borrower could borrow 80% of the 86,500. Which would be 69, A borrower pays off his loan. However, the lender refuses to cancel the mortgage. Which of the following clauses of a mortgage has the lender violated? Correct Answer Defeasance clause Notary Clause Correct Answer The notarial clause is signed by the notary, stating that the mortgage was signed freely and voluntarily by the borrower. Defeasance Clause Correct Answer A defeasance clause states that when the loan is paid, the mortgage is void. The bank's failure to cancel the mortgage of record is a violation of this clause.

Habendum Clause Correct Answer The habendum clause is the "to have and to hold" clause. Conveyence clause Correct Answer The conveyance clause states that the property is being conveyed in a deed, not a mortgage. The VA funding fee would change based on: Correct Answer If a funding fee were to exist in a VA loan, it would matter based on the LTV ratio. A debit is Correct Answer Money that is owed The "escape clause" in FHA insured financing of a home purchase is the: Correct Answer The FHA requires that an escape clause be included with the purchase contract that permits the buyer to cancel the contract if the property does not appraise for the sale price. What would NOT be provided for in a non-recourse loan? Correct Answer A non-recourse loan prevents a deficiency judgment. Deficiency Judgment Correct Answer A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full.

non-recourse loan Correct Answer a loan that limits the lender's repayment options to the assets of the business and the collateral at risk Recourse Loan Correct Answer a loan that allows the lender to seek repayment from the borrower's personal assets At what point does recordation take place? Correct Answer The document is recorded at the close of escrow and priority of the lien is established by the docket and page number. Any broker or salesperson who initiates a suit to recover a commission for performing a regulated real estate activity must first be able to prove that he/she was properly _____ at the time the claim arose. Correct Answer According to A.R.S. 32-2152 (A): to commence an action to recover a commission, the broker or salesperson must prove that he/she was properly licensed at the time the claim arose. Before placing or erecting a sign giving notice that specific property is being offered for sale, lease, rent or exchange, a licensee shall secure: Correct Answer According to Commissioner's Rule R4- 28 - 502 (I): before placing or erecting a sign giving notice that specific property is being offered for sale, lease, rent, or exchange, a salesperson or broker shall secure the written consent of the property owner, and the sign shall be promptly removed upon request of the property owner.

A licensee owes a fiduciary duty to the client that includes protecting and promoting the client's interests. If the client is the seller or lessor and may be unable to perform, the licensee: Correct Answer According to Commissioner's Rule R4- 28 - 1101 (B1): a licensee participating in a real estate transaction shall disclose in writing to all other parties any information which the licensee possesses that materially and adversely affects the consideration to be paid by any party to the transaction, including any information that the seller or lessor may be unable to perform. Cumulative Zoning Correct Answer is a method of zoning in which any use permitted in a higher-use, less intensive zone is permissible in a lower use, more intensive zone. For example: under this method, a house could be built in an industrial zone but a factory could not be built in a residential zone. When zoning is cumulative this means that: Correct Answer In an R-3 area, R-1 and R-2 uses are permitted Ernest Money Correct Answer it shows buyers sincere intention (putting skin in the game), and serves as liquidated damages thus protecting seller if buyer breaches. Note that earnest money is not required but does bolster an offer. The broker is required by Arizona law to reconcile his or her trust account Correct Answer Bank reconciliation and client ledger is balanced monthly.

Which of the following cannot be a trustee? Correct Answer CPA CPA Correct Answer certified public accountant Which applies to Tenancy in common Correct Answer All other co-ownership tenancies have an "equal undivided shares". Tenancy in common has "fractional shares or interests" which can be unequal. Four widowers decided to buy a home and live together. They took title in equal shares, but agreed that as each of them died, his share would pass to the remainder of the group until only one was left who would then own the entire property. The men took title to the home as: Correct Answer Joint Tenants What must be recorded to be valid? Correct Answer Beneficiary Deed The homestead exemption protects which of the following? Correct Answer Protects the equity in your primary residence. (up to $150k) What is it called if a property is sold and the seller remains on the land without permission? Correct Answer Tenancy at sufferance

An easement cannot be extinguished by Correct Answer This is a decision of the property owner (servient tenement). Which best describes prior appropriation? Correct Answer First in time, First in right. The oldest permit holder has the legal right to first use of the water. What is the only navigable waterway in Arizona? Correct Answer CO River What is the form of co-ownership in which two or more persons each have an undivided interest in the property but no right of survivorship? Correct Answer Tenancy in Common A type of ownership that is considered a long-term lease is best described as: Correct Answer Cooperative Building codes are primarily enforced by: Correct Answer the issuance of permits An interest in and possession of any real property is called Correct Answer An estate Roberta wishes to build her garage 2 feet from her side lot line. City code calls for all side setbacks to be at least 5 feet. She will need to get what to be able to legally proceed and be assured that future owners will not have a problem? Correct Answer A variance will provide permanent permission to deviate from the setback rules.

When an attorney gives an abstract of title, he would also give: Correct Answer An opinion. Building permits would be issued under the government's right of: Correct Answer Building permits would be issued under the government's right of police power. A legitimate reason for appraising a property as of some date in the past is: Correct Answer To settle an estate What is the most important factor a developer would take into consideration in selecting a new area to develop? Correct Answer Location The selling price of real estate is most generally based on: Correct Answer The selling price of real estate is most generally based on market value; the most probable price a property should bring in a competitive and open market When the appraiser looks at the home Sandy has just purchased, he notices it has a fireplace and the comparable homes do not. He makes a $3,000 upward adjustment on his sales comparison approach worksheet. The $3,000 adjustment is based on what appraisal principle? Correct Answer Contribution The seller lists a property with a broker and the listing is to expire on October 20th. On October 19th, the broker presents an offer to the seller. After two days of negotiations the seller accepts the buyer's offer. Since the

broker's listing has expired, what is the status of the broker's commission? Correct Answer The seller is obligated to pay a commission The day after the broker's listing expired, the seller sold the property to a buyer that was shown the property by the listing broker. Which of the following is true regarding the real estate commission? Correct Answer The seller would owe the full commission. Which of the following is NOT needed to have a valid listing/employment agreement? Correct Answer Legal description When the principal terminates the agency relationship before it expires, it is called: Correct Answer Revocation Using one's authority or weakness to secure consent to a contract is termed: Correct Answer Undue influence Constructive fraud is also known as: Correct Answer Constructive fraud is an unintentional concealment or omission of a material fact, also known as negligent misrepresentation. In escrow, who is your customer when your brokerage has the listing? Correct Answer The Buyer A buyers broker owes a fiduciary responsibility to: Correct Answer A buyers broker represents the buyer and owes the fiduciary responsibility of confidentiality to their client

If the seller retains the buyer's earnest money due to a contract breach, this would be called Correct Answer Liquidated damages The price of a listed property should NOT be advertised or offered unless it conforms to: Correct Answer The price of a listed property should NOT be advertised or offered unless it conforms to an amount previously agreed to by the owner. Legal action to enforce a contract is called: Correct Answer Specific Performance All of the following would apply to a buyer broker exclusive employment agreement EXCEPT: Correct Answer Legal description of the property. it is addressing employment terms not the property An out-of-state prospect asks an agent to locate a diverse neighborhood for him. The agent should: Correct Answer A real estate agent has no duty or obligation to provide demographic data that would have the effect of limiting housing choices. Nonconforming use would apply to which of the following, listed below? Correct Answer A use that was once lawful but no longer conforms Cody is a first-time buyer making an offer on a property that will include the appliances. The seller accepts the

offer and includes a document that will protect the owner if the furnace breaks. Which kind of protection did Cody receive? Correct Answer Home Warranty What insulating material was pumped into houses until its ban in the 1970s Correct Answer urea-formaldehyde insulation Federal Emergency Management Agency (FEMA) is responsible for: Correct Answer Flood are maps When a person has the right to use the water adjacent to his land, this is referred to as: Correct Answer Riparian Which is not considered a fractional section? Correct Answer section 32 is a standard section The smallest area to survey would be: Correct Answer Lot and Block What sections are NOT considered standard? Correct Answer Section 18 is a fractional section. A subdivision public report is required on the following properties except? Correct Answer Commercial Lots-The public report statutes do not regulate commercial lot sales. Arizona law defines a subdivision as land that is divided or proposed to be divided for sale or lease into Correct Answer 6 or more lots of less than 36 acres

When a buyer purchases a parcel of unimproved land, there exists a right to rescind. Which of the following statements is correct? Correct Answer The buyer has a 7- day unilateral right to rescind if he has seen the property. Improved subdivided property is defined as: Correct Answer A parcel of land on which a structure has been built-Improved subdivided property is defined as a parcel of land that has a structure or will have a structure in the next two years. If you buy unimproved land in a subdivision "sight unseen" you have how long to rescind the contract? Correct Answer 6 Month recession right Who signs a deed of re-conveyance? Correct Answer The Trusteeeeee Deed of Reconveyance Correct Answer is to indicate that the borrower has been released from the mortgage debt. The deed transfers the property title from the lender, also called the beneficiary, to the borrower. This document is most commonly used when a mortgage has been paid in full A general contractor does work for a tenant in a commercial leased space. The tenant fails to pay the contractor. What is true regarding the lien? Correct Answer The contractor can only lien the leasehold interest.

Which of the following defines an encumbrance? Correct Answer A limitation that is attached to the property A warranty deed covenants the grantee against a loss by: Correct Answer Nothing warrants the loss of property by eminent domain. Homeowners insurance would cover your casualty or property damage. A warranty deed protects the grantee(receiver) against defective title. When rights transfer with a deed this is referred to as: Correct Answer Bundle of Rights Chattel real would best be defined as: Correct Answer personal property A quitclaim deed is commonly used to: Correct Answer Release an interest in title-As the name implies a quit claim deed is used to "quit" an interest in property. Adverse position is gained by Correct Answer Living open & hostile on a property for ten years A buyer purchases property in a homeowner's association with CC&Rs. The CC&Rs would most likely be found where? Correct Answer The CC&Rs would be found in the county recorder's office A definition of involuntary alienation is: Correct Answer Title to property can be conveyed by action of the court

What deed would place the least liability on the grantor? Correct Answer Quit claim An auctioneer may only auction real property in the state of Arizona if: Correct Answer The auctioneer is licensed with a licensed employing brokerage In filing a notice of intention to subdivide with the Real Estate Commissioner which of the following need NOT be stated? Correct Answer Floor plans don't need to be stated. A subdivision is the sale or lease of 6 or more lots of land and you can't assume that they have floor plans. Blind Ad Correct Answer An ad that does not indicate that it is listed with a broker, it is illegal. A real estate licensee would also like to hold an Arizona cemetery license. Which of the following is true? Correct Answer It is lawful (legal) to hold a real estate license and a membership camping or Arizona cemetery license all at the same time. A mortgage on personal property is called: Correct Answer Chattel Mortgage At what time would a warranty deed be given to a buyer under a land contract? Correct Answer Once the land contract is paid in full, the buyer receives the warranty deed.

A trust deed may be released from the records by: Correct Answer Recording the reconveyance-A deed of trust is given at the time of a lien and a deed of reconveyance releases that deed and transfers (reconveys) it back to the borrower, releasing the borrower from the lien and when the reconveyance is recorded it is removed or released from public records What is the statutory redemption period on a tax lien foreclosure sale? Correct Answer 3 years What is NOT an encumbrance? Correct Answer Homestead When the note and security instrument are in one document, this is: Correct Answer Land Contract A real estate financing device which does not transfer legal title but does place equitable title with the buyer is called: Correct Answer Agreement for sale Before fixing a minor defect, a tenant must give the landlord how many days' notice to repair the defect? Correct Answer 10 days A property management firm may pay a finder's fee to: Correct Answer property owner may...pay a finder's fee to an unlicensed person who is a tenant in an apartment complex managed by the firm or owned by the owner.

Under the Arizona Landlord Tenant Act the landlord of a multi-family dwelling is responsible for which of the following? Correct Answer Providing educational materials to the tenant regarding bedbugs You do not need to hold a real estate license to: Correct Answer Act as a residential leasing agent if you work at only one location during any given workday A property manager hires employees to manage several of their properties. What type of insurance is the company required to carry for the employees? Correct Answer Workers Comp What would be part of a property manager's annual budget? Correct Answer Advertising The seller's proceeds would show on a closing statement in the following manner: Correct Answer Debit seller only What type of listing did the broker obtain if he is only paid if he is the "procuring cause"? Correct Answer Open Listing Where would the exceptions and reservations appear on a title report? Correct Answer Schedule B What is not synonymous with TITLE? Correct Answer Possession

Which of the following will a standard policy of title insurance insure against? Correct Answer Forgery Which type of will does NOT require witnessing? Correct Answer holographic A real estate transaction is final when: Correct Answer The deed is signed and delivered When a deed of trust is paid off, how many days does the trustee have to convey the deed of reconveyance to the trustor? Correct Answer 30 Days When a lot is sold outside of a subdivision, which of the following must appear in the deed? Correct Answer No ingress or egress exits The Affidavit of Disclosure: Correct Answer The Affidavit of Disclosure allows for a 5-day rescission right, applies to all land zoning, and is recorded with the grand deed. When a quarter section is nonstandard as a result of lakes, mountains, and/or streams this is called: Correct Answer Government lot What Arizona government agency is in charge of environmental issues? Correct Answer ADEQ is the Arizona government agency Water table is defined as Correct Answer The level at which water will be located

What would be considered grandfathered water rights? Correct Answer Type I right for non-irrigation When land is designated to be in an AMA, what applies? Correct Answer When land is designated to be in an AMA, historic groundwater overdraft occurred. Growndwater overdraft may still be occurring. What would a life tenant hold Correct Answer a freehold estate Bill Jones and Jo, his daughter, bought a parcel of land for cash. No other information is available. How did they take title? Correct Answer Tenancy in Common Who would hold title to real estate? Correct Answer Life tenant with life estate The term "underwriting" of a loan means: Correct Answer Evaluation of lender risk The maximum amount of money which a person or persons may recover from the real estate recovery fund per transaction is: Correct Answer $30k To be enforceable a lease must be in writing if the term is: Correct Answer Longer the 1 year

Brokers agreement to cooperate in the split of commissions due on property sales: Correct Answer are enforceable by court action even though they are oral. A subdivider employs hostesses to show houses. The hostesses explain the features of the homes and gave the prices and terms. In this scenario: Correct Answer The hostesses must be licensed An employer wants to be protected against employee's dishonesty, the employer should ask for a: Correct Answer Fidelity Bond When can a property manager use a self-help eviction? Correct Answer only in non-residential tenancies What is the document prepared by an attorney that states the attorney's opinion of the status of the title? Correct Answer a certificate of title The title company does which of the following? Correct Answer Examines and researches titles Who has title on a land contract? Correct Answer Vendor. A closing with all parties present is a/an: Correct Answer Roundtable closing What is not an encumbrance? Correct Answer A warranty deed

What is true regarding a VA loan? Correct Answer The top 25% of the loan is guaranteed In what type of installment agreement does the buyer make payments for the right to possession, but does not recieve the title until most or all of the terms have been met? Correct Answer Land contract FHA Title I was created for which of the following reasons? Correct Answer Home Improvement loans The maximum fine for calling a person on the Do Not Call Registry would be: Correct Answer $16k When a person sends unsolicited fax advertising the fine can be up to: Correct Answer $16K What is the purpose of the Foreign Investment Real Property Act? Correct Answer Requires tax withholding if seller is a foreigner When an active military person is unable to make his monthly mortgage payment the lender must obey which of the following? Correct Answer Soldiers and Sailors Relief Act What is the legal process by which potentially responsible parties who contributed to contamination at a Superfund site can be required to reimburse the trust fund for money spent during any clean up actions by the federal government? Correct Answer Cost Recovery

Which best describes a layer of clay or other impermeable material installed over the top of a closed landfill to prevent entry of rainwater and minimize leachate? Correct Answer Cap A group of local real estate brokers are having their annual meeting. What topic should be avoided in their conversation? Correct Answer Commission If a disagreement occurs between buyer and seller at the time of escrow closing, where do the parties turn to settle their disagreement? Correct Answer Purchase contract A listing agreement is a mutual agreement between a broker and a principal and is considered: Correct Answer Authorization to sell The owner of a small strip mall refuses to lease to a tenant of Greek ancestry. Which law has been violated? Correct Answer Under the Civil Rights Act of 1866, all buyers/lesees are protected from discrimination based on race, color, or ancestry. Ancestry is not a protected class under Title VIII of the Federal Fair Housing Act. If it is the policy of the broker to prohibit non-management level licensee dual agency, which of the following can not happen? Correct Answer A buyer's agent can also represent the seller in the same transaction

As an agent is showing a house to a customer, the agent notices a large vertical crack in the basement wall. What is the agent's duty? Correct Answer Nothing! When a buyer and seller agree to cancel a contract, under normal conditions who would receive the earnest money? Correct Answer Buyer because it is assumed that it is mutual What would be considered evidence of the agency relationship between broker and buyer? Correct Answer Buyer Broker Contract What is not required for a valid buyer broker agreement? Correct Answer Retainer Fee Who would be considered exempt under the Civil Rights Act of 1866? Correct Answer No exemptions A buyer's agent is paid a percentage of the gross sales price. When negotiating a contract, the agent should: Correct Answer Negotiate the lowest possible price for the client Which of the following would least likely be a lawful use of eminent domain? Correct Answer Shopping center The clause in a deed which sets forth or limits the extent of the interests in the title being conveyed is: Correct Answer Habendem Clause