Prepare for the Arizona Real Estate Salesperson exam with these practice questions and answers. This guide covers property law, contracts, financing, ADRE regulations, and Arizona-specific requirements.
Q: Within how many days after property transfer shall a buyer submit a completed transfer form and file with ADEQ
Answer: 15 days
Q: An example of involuntary alienation is where title to real estate passes by:
Answer: Sheriff’s deed
Q: What event will create an involuntary life estate?
Answer: Dower interest becoming cohate
Q: A valid warranty deed must contain all of the following elements, except:
Answer: Signed by grantee
Q: The clause in a deed which sets forth or limits the extent of the interests in the title being conveyed is:
Answer: The habendum clause
Q: An instrument that conveys a grantor’s interest is called a:
Answer: Deed
Q: Which of the items listed below is an interest in real property but not an estate?
Answer: Mortgage
Q: What law creates an automatic lien on a commercial property, subject to the listing agreement?
Answer: Broker lien law
Q: An article may be changed from realty to personalty by:
Answer: Detachment
Q: What is the purpose of a date in an appraisal report?
Answer: Define the market Conditions under which the appraisal was made
Q: The customary procedure for arriving at the fair market value of an office building for selling purposes is:
Answer: Figure the adjusted gross income, deduct all costs of operation, and divide the net operating income by the current rate of return for this type of investment
Q: Market price is closest to:
Answer: The amount of money given in exchange for the property (value in exchange)
Q: Which of the following does not relate to appraising?
Answer: Establishing value
Q: While determining the net operating income of an investment property, an appraiser will take into account all of the following except:
Answer: Interest expense
Q: Negligence that causes harm is a/an:
Answer: Tort
Q: Which of the following would NOT terminate an agency relationship?
Answer: Accepting an offer and opening escrow
Q: Seller and buyer sign a purchase contract. The buyer wishes to give it to another party. This action is called:
Answer: Assignment
Q: A buyer and a seller were separated in negotiations by only five hundred dollars. The listing and sales agent agree to reduce the commission by that amount to make the deal. Each agent gives their clients two hundred and fifty dollars after closing. What unethical practices exist here?
Answer: Undisclosed inducement and dividing commissions with non licensees
Q: A real estate broker, in the typical agency relationship with a seller, is a/an:
Answer: Special agent
Q: A lender is limited in the amount of reserves they may hold in a residential real estate transaction. This is governed by:
Answer: RESPA
Q: What regulation requires the lender to show the true interest rate?
Answer: Reg. Z
Q: The effective rate of interest is best described as:
Answer: Annual percentage rate
Q: The VA funding fee would change based on:
Answer: Loan to Value
Q: Broker lists property for $180,000. The ad reads $10,000 down and 8% interest. This ad would violate:
Answer: Reg. Z
Q: What document lets a buyer and seller see the costs involved with closing the transaction?
Answer: HUD-1 statement
Q: A title company is employed by a lender to collect payments on a deed of trust, what is the title company called?
Answer: Servicing agent
Q: Permanent finance payments would include which of the following?
Answer: Principal and interest
Q: What statement in an advertisement requires a full explanation?
Answer: Only $5,000 down
Q: What law requires lenders to limit the amount of funds that can be held in reserves?
Answer: RESPA
Q: The mortgagor is:
Answer: The borrower
Q: What is not an encumbrance?
Answer: Warranty deed
Q: Real estate loan usury rates are set by:
Answer: State laws
Q: Prorated taxes would be shown on the settlement statement as a:
Answer: Credit to buyer, debit to seller
Q: A residential tenant with a month-to-month lease enjoys which leasehold estate?
Answer: Periodic tenancy
Q: In real estate terms, an estate for years also may be called:
Answer: A leasehold
Q: Which of the following is not essential to a valid contract?
Answer: monetary consideration
Q: Which of the following cannot be a trustee?
Answer: C.P.A.
Q: An Arizona real estate licensee may not charge for document preparation according to:
Answer: Arizona Constitution Article XXVI
Q: Which of the following requires probate?
Answer: Tenancy in common
Q: What would NOT apply to an easement appurtenant?
Answer: Prescription
Q: An easement that conveys along with the title to a dominant estate is known as:
Answer: An appurtenant easement
Q: Termination of joint tenancy with rights of survivorship is accomplished by:
Answer: Deed by one or more property owner
Q: What agency oversees Active Management Areas and regulates ground water?
Answer: ADWR
Q: How many acres are in the following description: NE4 SW4 and the SE4 NW4; SE4 SW4 NE4 Section 22:
Answer: 90
Q: A property described as T5N, R4E of the GSRB&M is located between _____ and _____ miles north of the base line.
Answer: 24 and 30
Q: The Gila and Salt River Baseline runs:
Answer: East and west
Q: The difference between the actual value of a property and the total amount of liens against the property would be:
Answer: The owner’s equity
Q: Which of the following is in the proper order of occurrence?
Answer: Lis Pendens, judgment, execution
Q: When the entire loan balance is due because the borrower breached the terms of the loan agreement, this action is called:
Answer: Acceleration
Q: What is a loan called when it has even payments for the life of the loan?
Answer: Amortized
Q: Where would the exceptions and reservations appear on a title report?
Answer: Schedule B
Q: Which of the following is NOT necessary for a valid transfer of title to real estate?
Answer: Recording of the deed
Q: Which of the following is NOT synonymous with “title”?
Answer: Possession
Q: What warrant indicates that the grantee is the owner of the property?
Answer: Seizin
Q: What document is recorded with the deed?
Answer: Affidavit of value
Q: When a document is recorded, this notice is called:
Answer: Constructive
Q: An interest in title to real property, not government owned, obtained by action at law based on adverse possession best describes:
Answer: Prescription
Q: What deed would place the least liability on the grantor?
Answer: Quit claim
Q: What action would terminate a purchase contract?
Answer: Eminent domain
Q: What is the rescission time when a party purchases a timeshare?
Answer: 7 calendar days
Q: A trustor lists his property for sale on May 1. On May 2 he was notified of default on the trust deed, which default had occurred 45 days prior to notification. The trustor, under these conditions:
Answer: May sell the property within the 90 day reinstatement period
Q: A subordination clause is most often used in a:
Answer: Trust deed
Q: The capitalization method is used to:
Answer: Convert net income to market value
Q: What would NOT be provided for in a non-recourse loan?
Answer: Deficiency judgment
Q: After a mortgage is being foreclosed, if the sale amount was insufficient to cover the debt, the lender may ask for a/an?
Answer: Deficiency judgment
Q: In an agreement for sale, when does title convey?
Answer: Upon the last payment
Q: Who benefits from the assignment of rents clause?
Answer: Beneficiary
Q: A wraparound loan would never be which of the following?
Answer: A first deed of trust
Q: A defeasance clause would apply to:
Answer: Deed of trust
Q: You do not need to hold a real estate license to:
Answer: Act as a residential leasing agent if you work at only one location during any given workday
Q: Before fixing a minor defect, a tenant must give the landlord how many days’ notice to repair the defect?
Answer: Ten
Q: A salesperson earns $75,000 per year. If he receives 75% of the 7% commissions paid to his firm on his sales, what is his monthly dollar volume of sales?
Answer: $119,047
Q: Property listed at $150,000 and sold for 10 % less. It is subsequently re-sold for 20% more than original listing. What was the percentage of profit?
Answer: 33 percent
Q: You borrow $14,400 at 9.25%. If the principal and interest are repaid in one payment at the end of seven months, what is the total payment?
Answer: $15177
Q: A third party named to receive the life estate upon the death of the original grantee of the life interest is known as the:
Answer: Vested remainderman
Q: Rank the order of liens highest to lowest.
Answer: Property taxes, assessments, mortgage lien, IRS
Q: A conveyance of title “upon the condition that the land shall not be used for the sale of intoxicating beverages or liquors”, which does not automatically terminate creates:
Answer: A conditional estate
Q: What type of legal description is based on a baseline and principal meridian?
Answer: Rectangular survey system
Q: When the law allows for tacking this would refer to which of the following easements?
Answer: Prescription
Q: Title to personalty is conveyed by means of a document called:
Answer: Bill of sale
Q: Jones sells his property to Smith but Jones stays on the land. Jones holds:
Answer: An estate at sufferance
Q: Buyer purchases property and receives a warranty deed. What would not transfer with the deed?
Answer: Annual crops
Q: In appraisal terminology, how would you judge the quotation “A factory too close to a home is”?
Answer: Incurable economic obsolescence
Q: What is market value?
Answer: The price the property is likely to bring in an “arm’s length” transaction
Q: Which of the following would be the best technique for an appraiser to use on a single family residence that is new?
Answer: The cost method is a valid approach which is the most effective on newer properties
Q: By definition what does an appraiser give in the course of his work?
Answer: An estimate
Q: A listing agreement is a mutual agreement between a broker and a principal and is considered:
Answer: An authorization to sell
Q: All of the following would apply to a buyer broker exclusive employment agreement EXCEPT:
Answer: Legal description of the property
Q: The owner of a two-family residence lists the property with New Age Realty. Two weeks later, an offer comes in from a financially qualified woman with two children. Living in one of the units, the owner decides to reject her offer. Which law has been violated?
Answer: The Federal Fair Housing Act
Q: In some states, the common-law legal rights which a wife has in property owned by her husband during their marriage are best known as:
Answer: Dower
Q: Chemicals used in refrigeration, air conditioning, insulation, and aerosol propellants that drift into the upper atmosphere where their chlorine components destroy ozone are called
Answer: CFCs
Q: 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?
Answer: cap
Q: 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?
Answer: The brokers are in violation of the Sherman Anti-Trust laws.
Q: When land is offered interstate it would be regulated by the Office of Interstate Land Sales Registration. What number of lots must be offered for the regulation to take place?
Answer: 100 or more
Q: All of the following statements are true regarding depreciation EXCEPT:
Answer: A building can only be depreciated once
Q: Schedule B on a title policy would not contain which of the following?
Answer: Type of conveying deed used
Q: A title free from defects that an owner has the right to convey is a/an:
Answer: Marketable title
Q: An assignment of rent clause is for the benefit protection of the:
Answer: Beneficiary
Q: The back-end ratio of a loan would apply to:
Answer: Total monthly obligations divided by gross monthly income
Q: All the following statements about a deed in lieu of foreclosure is true EXCEPT:
Answer: Deed recorded by the lender and eliminates all junior liens
Q: Debits to the seller include all of the following EXCEPT:
Answer: Impound accounts
Q: The Real Estate Settlement Procedures Act applies to:
Answer: 1-4 plex residential property
Q: The law that requires buyers and sellers be given an itemization of all costs and expenses of the buying and selling of a home is:
Answer: RESPA
Q: RESPA does all of the following except:
Answer: Allows lenders to charge undisclosed fees
Q: The “escape clause” in FHA insured financing of a home purchase is the:
Answer: Right of the buyer to withdraw if the appraisal is lower than the contract price
Q: Which of the following would not occur in a forbearance?
Answer: Foreclosure sale
Q: A property is valued at $100,000 and is taxed at 45 mills. The assessment rate on the property is 35%. Calculate the yearly taxes.
Answer: $1,575.00
Q: A trust deed is signed by the:
Answer: Trustor
Q: A non-recourse loan would not provide for which of the following:
Answer: Deficiency judgement
Q: A preliminary title report would tell you all of the following except:
Answer: Zoning
Q: Who does NOT qualify for a homestead exemption?
Answer: Family Trust
Q: Who may NOT sign a broker’s property management trust account?
Answer: The broker’s client
Q: A purchaser wishes to buy, but the contract for purchase is subject to obtaining financing or cannot be completed until some stated condition is fulfilled. What is the status of such a contract?
Answer: executory
Q: A contract based on an illegal consideration is:
Answer: void
Q: Municipalities have the right to restrict the use of properties located therein. This right comes from:
Answer: Enabling legislation
Q: Which of the following is true? The Arizona Department of Real Estate…
Answer: Audits broker’s trust accounts
Q: Which of the following is not compatible with joint tenancy?
Answer: Probate
Q: What common element would apply to tenancy in common?
Answer: Unequal interests
Q: When an easement only has a servient tenement it would be an easement:
Answer: In gross
Q: If you hold a long-term proprietary lease you would have an interest in:
Answer: Cooperative
Q: The homestead exemption protects which of the following?
Answer: Equity in the principal residence
Q: From the point of beginning, go south 1,200 feet, thence west 1,500 feet, thence north 600 feet, thence back to the point of beginning. How many acres are contained in this description?
Answer: 31 acres
Q: The Arizona Affidavit of Disclosure would include all of the following EXCEPT:
Answer: The affidavit of disclosure applies only to residential zoned property
Q: If you buy unimproved land in a subdivision “sight unseen” you have how long to rescind the contract?
Answer: Six months
Q: Which of the following statements describes the purpose for conveying bare legal title to the trustee in a deed of trust?
Answer: Bare legal title allows the trustee to conduct foreclosure proceedings without going to court.
Q: Deeds are recorded:
Answer: To provide constructive notice of their existence
Q: Which of the following will a standard policy of title insurance insure against?
Answer: Forgery
Q: Who places deed restrictions on real estate?
Answer: The Grantor
Q: Chattel real would best be defined as:
Answer: Personal property
Q: Property taxes for the year are $1,824. COE is set for May 15. How would the proration be calculated in escrow?
Answer: Debit Seller $678.93. Credit buyer $678.93
Q: When rights transfer with a deed this is referred to as:
Answer: Bundle of rights
Q: Who is responsible for supplying the appropriate documents when a property is located within a homeowner’s association?
Answer: Real Estate Commissioner
Q: What type of listing gives the broker the least protection?
Answer: Open listing
Q: When a licensee represents a customer, the licensee owes the customer:
Answer: Honesty
Q: An authorization to sell consists of a mutual agreement between broker and seller and is considered:
Answer: A contract for personal services
Q: Who is responsible for formulating the Commissioner’s Rules?
Answer: Real Estate Commissioner
Q: What type of listing did the broker obtain if he is only paid if he is the “procuring cause”?
Answer: Open
Q: What type of property is protected from deficiency judgments in Arizona?
Answer: Single family on 2 acres or less
Q: What would be considered a general lien?
Answer: Judgments
Q: A deed of trust is signed by the:
Answer: Trustor
Q: Usury laws in the State of Arizona limit interest rates to:
Answer: Anything the principals contractually agree it should be
Q: What would NOT be a lien?
Answer: Easement in gross
Q: When a mortgage is paid in full, what document releases the lien?
Answer: Satisfaction of Mortgage
Q: Net spendable income is also known as:
Answer: After-tax cash flow
Q: Which of the following may be protected by Arizona anti-deficiency legislation?
Answer: home on a 9000-square-foot lot
Q: Under normal circumstances, a reconveyance deed is used:
Answer: When the trustor has paid off the deed of trust
Q: A property management agreement would contain all of the following EXCEPT:
Answer: Method of reporting on prospective tenants
Q: Which of the items listed below best describes a partition action?
Answer: Divided co-ownership
Q: Mother & son own an investment property with equal interest. No other information is available, how do they hold title?
Answer: Tenancy In Common
Q: When an attorney gives an abstract of title, he would also give:
Answer: An opinion
Q: A life estate would end by merger. Which of the following best explains merger?
Answer: Remainder party buys the life tenant interest
Q: Which of the following would be an example of “chattel real”?
Answer: Leasehold estate
Q: Which approach to value would be most appropriate when appraising a vacant factory?
Answer: Cost approach
Q: A legitimate reason for appraising a property as of some date in the past is:
Answer: To settle an estate
Q: The methods of “unit cost-in-place”, “quantity survey” and “cubic foot and square foot” would most probably be used in which of the following appraising methods?
Answer: Cost
Q: The relationship of a licensed real estate broker to the principal is best described by which of the following terms?
Answer: Fiduciary
Q: What type of listing would be considered more unilateral than bilateral?
Answer: Open
Q: A principal contracts to have more than one broker represent them using a/an:
Answer: Open listing
Q: During a phone call, a salesperson discusses showing a property to a prospect. Three days later, the agent shows the property; at that time the customer reveals her financial abilities and motivation. Three days after that, the agent prepares her offer; he asks the buyer to sign an agency disclosure statement stating he represents the seller. When should the agent have disclosed this fact?
Answer: Before showing the house
Q: What is the limit of the amount of punitive damages that can be awarded based on the Civil Rights Act of 1866?
Answer: No limit
Q: A listing agent is given confidential information by the seller. The listing agent then gives this information to the selling agent. Which best describes this activity?
Answer: It is a breach of fiduciary duties
Q: When a broker takes a listing on a commercial building, the broker is considered?
Answer: A special agent
Q: A property manager is asked to install a new spa on the premises. The expense of the new spa would be considered:
Answer: Capitalized item
Q: To negotiate a “tax deferred exchange” without the payment of any tax at the time of the exchange, an apartment house owner could trade for:
Answer: An apartment house, and assume a loan equal to or greater than the loan on his property, and no boot
Q: According to the Equal Credit Opportunity Act, lenders must inform all credit applicants who are rejected of the reasons for denial within _____ days.
Answer: 30
Q: In a General Partnership:
Answer: only the general partners are responsible
Q: A body of federal and state laws designed to prohibit and regulate deceptive advertising and sales practices are known as ____________ laws.
Answer: Consumer protection
Q: Payoff on a deed of trust lien is received by the:
Answer: Beneficiary
Q: The type of title insurance that is issued in the name of the property owner, where coverage runs from the time of purchase until the owner sells the property, is a/an:
Answer: Owner’s fee policy
Q: What charge would be paid at closing on a high-risk conventional loan?
Answer: PMI
Q: Proration accomplishes what?
Answer: Allocates expenses between buyer and seller
Q: Which of the following is not a feature of an FHA-insured loan?
Answer: No MIP insurance
Q: When a new FHA loan is acquired the mortgage insurance premium:
Answer: Is an up-front and monthly premium
Q: A brief summary of a property’s history, listing all recorded documents that may affect the title, is a/an:
Answer: Abstract of title
Q: The money to fund FHA loans is provided by:
Answer: Lending institutions
Q: Which lien attaches to a property to prevent the transfer of title when there is a pending lawsuit that may affect the title?
Answer: Attachment
Q: When the tenant pays all expenses in a lease this would be known as:
Answer: Net lease
Q: The priority of a lien is, in the absence of fraud, created as of the date it was:
Answer: Recorded
Q: The “Time is of the Essence” clause in a contract means:
Answer: the transaction is to close on or before the date called for
Q: Which of the following best defines the landlord’s eviction of the tenant?
Answer: Actual eviction
Q: An easement created by open, continuous and exclusive use for 10 years is called:
Answer: An easement by prescription
Q: When a lessor pays taxes, insurance & maintenance, it is called a/an:
Answer: Gross lease
Q: What Arizona government agency is in charge of environmental issues?
Answer: ADEQ
Q: “Contiguous” means:
Answer: Parcels of land connected or touching each other
Q: When a lot is sold outside of a subdivision, which of the following must appear in the deed?
Answer: No ingress or egress exists
Q: Improved subdivided property is defined as:
Answer: A parcel of land on which a structure has been built
Q: A real estate transaction is final when:
Answer: Deed signed and delivered
Q: You would discover a ‘cloud on title’ by reviewing:
Answer: Schedule B of a title report
Q: It is said that agency is comprised of common law. This means:
Answer: It is established by tradition and court decisions
Q: In Arizona, the seller must file with the County Assessor, at the close of escrow, an “affidavit of value” disclosing the sales price of the real property which is the subject of the transaction. The purpose of this affidavit is to assist the County Assessor in determining:
Answer: The market value of the property
Q: What designation applies to the appraiser of noncomplex one- to four-unit residential properties with a transaction value of less than $1 million?
Answer: Licensed real property appraiser
Q: Which of the following could be pursued by the lender for a deficiency?
Answer: home on 4 acres
Q: What is NOT part of a typical property management agreement?
Answer: Annual budget
Q: When a property manager repairs a malfunctioning pool pump, the type of maintenance is called:
Answer: Corrective
Q: What would be considered personal property?
Answer: Emblements
Q: A master plan adopted by a local planning commission may not be concerned with matters of:
Answer: Deed restrictions
Q: The grantor of an interest in real property may, upon violation of conditions in deed by the grantee, regain his interest. This is known as the possibility of:
Answer: Reverter
Q: Of the following, which is not an encumbrance?
Answer: License
Q: What is it called when personal property is transformed into real property?
Answer: Actual annexation
Q: Real property can be divided into corporeal and incorporeal. An incorporeal right would be:
Answer: Easements
Q: A homestead exemption:
Answer: Protects the claimant against personal judgments up to the amount of this exemption
Q: Developer George purchased 5 acres of residential land on the edge of town with frontage on the main highway. When the zoning board and city council refused to rezone the property to accommodate a commercial development, George sued for the value that he would have received had the land been rezoned to a higher classification. This type of legal challenge is known as:
Answer: Inverse condemnation
Q: Escheated property is sold at public auction by the sheriff. The proceeds of the sale:
Answer: Are deposited into the General Fund of the State of Arizona
Q: “Gross income” best describes:
Answer: Income before expenses
Q: After the appraiser has used all three appraisal approaches to estimate value, what process is used to arrive at one estimate of value?
Answer: Reconciliation of correlation
Q: Adjusted gross income includes:
Answer: Rents, minus vacancies, minus credit losses, plus other income
Q: “Net income” best describes:
Answer: Income after expenses
Q: A licensed broker employed by a principal may NOT:
Answer: Accept or reject offers of purchase
Q: When the principal terminates the agency relationship before it expires, it is called:
Answer: Revocation
Q: The purchase agreement states:
Answer: The broker has the right to present subsequent offers even after one is accepted
Q: 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?
Answer: Nothing
Q: A conditional use permit allows:
Answer: Help for property owners with special needs
Q: The 1988 Fair Housing Act protected which class?
Answer: Families and handicapped
Q: When a lender will NOT make a residential loan due to the geographical area, this is called:
Answer: Redlining
Q: The purpose of RESPA is to:
Answer: Disclose a loan estimate in 3 days
Q: Which of the following relate to residential investment depreciation?
Answer: Economic life of 27.5 years
Q: The Closing Disclosure would be given to a borrower how many days prior to closing?
Answer: Three Business Days
Q: The type of mortgage where the lender pays the borrower based on the equity of the home is called:
Answer: Reverse annuity
Q: On a closing statement, the earnest money paid by the buyer would be which of the following?
Answer: Credit buyer only
Q: What clause pledges property as security for a loan?
Answer: Hypothecation clause
Q: What is the body of law that governs negotiable instruments?
Answer: Uniform Commercial Code
Q: When a loan is made to a borrower with poor credit and low ratios, this type of loan would be called:
Answer: Subprime
Q: When a borrower repays a lender at a rate higher than agreed, the excess payments are applied to:
Answer: Principal
Q: FHA Title I was created for which of the following reasons?
Answer: Home improvement loans
Q: What document serves as escrow instructions?
Answer: Purchase agreement
Q: The leasehold estate that can be terminated by either party and can not be assigned is:
Answer: Tenancy at will
Q: When rented property is sold by the owner, the outstanding leases:
Answer: Remain binding upon the new owner
Q: Quiet enjoyment refers to:
Answer: Arrangement between landlord and tenant
Q: When a Broker misappropriates funds, this is called?
Answer: Conversion
Q: There are five covenants in a General Warranty Deed. What is NOT a covenant?
Answer: Covenant of Perfect Title
Q: The purchaser of a property inside a community facilities district would like to know more information about the community facilities district. Which of the following would most closely describe a CFD?
Answer: Operate, maintain and repair public infrastructure
Q: The seller has accepted an offer, but another offer comes in. Which of the following is true?
Answer: The agent is not required to present the second offer if so instructed by the owner in writing
Q: What would NOT apply to community property?
Answer: Unequal shares
Q: 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:
Answer: Joint tenants
Q: An owner of a two-acre lot separates it and wants to give away one of the newly formed lots. What would they have to provide?
Answer: Easement by necessity
Q: If a husband and wife decide to take title as tenancy in common, which of the following would apply?
Answer: Husband and wife may have unequal interest
Q: What would be considered grandfathered water rights?
Answer: Type I right for non-irrigation
Q: What agency is in charge of environmental protection at the state level?
Answer: ADEQ
Q: Which of the following defines an encumbrance?
Answer: A limitation that is attached to the property
Q: Who signs a deed of re-conveyance?
Answer: Trustee
Q: A residential property is set to close escrow April 24th. What would be the proration if the property taxes for the year were $1,250?
Answer: Debit seller $392, Credit buyer $392
Q: The seller’s proceeds would show on a closing statement in the following manner:
Answer: Debit seller only (buyer is not involved at all, any debit is against the account, not the buyer)
Q: In using the income approach to value, an appraiser would not care about:
Answer: The cost to cure a leaky roof
Q: A poor floor plan is an example of:
Answer: Functional obsolescence
Q: The trustor in a deed of trust holds:
Answer: All rights in ownership
Q: What is the interest rate on a $10,000 loan with semi-annual interest of $450?
Answer: 9%
Q: What would be part of a property manager’s annual budget?
Answer: Advertising
Q: A factor which does not contribute to the value of real estate is:
Answer: Cost
Q: Depreciation is used by real estate appraisers when using which approach to value?
Answer: Cost approach
Q: Generally, three types of notes are used with mortgages and trust deeds. The _____ calls for periodic payments of interest only, with the principal to be paid at the end of the loan term.
Answer: Straight note
Q: Once the assessed valuation is determined, it can then be used to determine the annual tax on a given real property by first dividing the assessed valuation by 100 and multiplying the result by the tax rate, which is set annually by:
Answer: The County Board of Supervisors
Q: In an agreement for sale, the seller is the:
Answer: Vendor
Q: A CAP rate is based on what type of income?
Answer: Net
Q: A promissory note is:
Answer: Evidence of the debt
Q: All of the following are true regarding a deed of trust EXCEPT:
Answer: Conveys legal title to the trustor
Q: An affidavit of value would be used in which of the following circumstances?
Answer: To assist the assessor in determining property taxes
Q: An affidavit of value would contain all of the following EXCEPT:
Answer: Tax transfer stamps
Q: At mortgage foreclosure sale, if the property is abandoned, the statutory period of redemption can be cut to which of the following times?
Answer: 30 days
Q: Before the mortgage foreclosure is held the mortgagor can redeem the property. This is called:
Answer: Equitable period of redemption
Q: How does an alienation clause benefit a lender?
Answer: Loan is not assumable
Q: What is it called when the note and security instrument are in one document?
Answer: Land contract
Q: When a promissory note is created between the lender and the borrower, what would not be listed in the note?
Answer: Points charged for the loan
Q: When it becomes necessary to foreclose on a Deed of Trust:
Answer: Notice of Sale is sent to Debtor
Q: Who benefits from a non-disturbance clause in a loan?
Answer: Tenant leasing the property
Q: Annual loan payments are:
Answer: Called annual debt service
Q: Depending on the “class” of real property, (i.e. residential, commercial, railroad, mines etc.), a tax assessment ratio is applied to the property’s full cash value by the County Assessor in order to determine:
Answer: The assessed valuation of the subject property
Q: The purpose of “acknowledging” a trust deed in Arizona is:
Answer: Shows the intent of the buyer
Q: If real property is sold at a tax sale and the delinquent taxpayer has abandoned the property, which type of lien would be in second position upon expiration of the statutory redemption period?
Answer: Real property tax lien
Q: A trustee under a deed of trust would not be involved in which of the following circumstances?
Answer: Collection of monthly loan payments
Q: After a mortgage foreclosure any excess monies would go to the:
Answer: Mortgagor
Q: What would not apply to Police Power?
Answer: Condemnation
Q: When a condition is placed in a deed it would most likely refer to which of the following?
Answer: Defeasible fee
Q: What is the highest form of land ownership?
Answer: Fee simple
Q: Which of the following is an involuntary specific lien?
Answer: Mechanic’s lien
Q: A lease is written for the months of May, June, July and August. This type of lease would be called an estate:
Answer: For Years
Q: A life tenant leases a property for 25 years to a major corporation. The life tenant dies ten years later. What is the status of the lease?
Answer: Lease is terminated
Q: Fee simple absolute estates are all of the following except:
Answer: Conditional
Q: A land owner needs water. His land contains no available water source. However, the land owner is given the right to cross over his next-door neighbor’s property to run a pipeline from a river to his land. Which right grants this permission?
Answer: Appropriative rights
Q: The word “value”, as used in appraising, is most nearly the same thing as:
Answer: Worth
Q: The rule that says an item is only worth what it contributes in value to the property best describes:
Answer: The rule of contribution
Q: After listing a property that the agent believes is overpriced, the agent returns to the office and vents his frustration to a fellow licensee at the brokerage. Which duty has the agent breached?
Answer: loyalty
Q: Using one’s authority or weakness to secure consent to a contract is termed:
Answer: Undue influence
Q: A salesperson has a direct fiduciary duty to the:
Answer: Broker
Q: The salesperson entered into a buyer-broker contract with her brother. A week later, the salesperson takes a new listing and prepares an offer for her seller from her brother/client. What disclosure does the salesperson owe to the buyer and seller?
Answer: disclose the material relationship with the buyer on the dual agency disclosure
Q: How many times in 10 years could a single person sell their personal home and receive, tax-free, a gain of $250,000?
Answer: 5 times
Q: What is not an advantage of a corporation?
Answer: double taxation
Q: Owners of two apartment buildings located in the same area but with different amenities make an arrangement to show certain people to a specific building. This market allocation action would be in violation of:
Answer: Anti-trust laws
Q: All of the following relate to commercial real estate depreciation EXCEPT:
Answer: Land value
Q: All of the following are paid by the seller EXCEPT:
Answer: Lender’s title policy
Q: Mortgages are recorded in order to:
Answer: Create a valid lien
Q: 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?
Answer: Defeasance clause
Q: Who has title on a land contract?
Answer: vendor
Q: The title company does which of the following?
Answer: Examines and researches titles
Q: A lender would add a margin to an index to accomplish which of the following?
Answer: To keep current with the cost of new mortgages
Q: A person leases a property and would like to build a house on the leased land. The tenant’s rights would be:
Answer: Leasehold
Q: When can a property manager use a self-help eviction?
Answer: Only in non-residential tenancies
Q: The discrimination relating to familial status does not apply to housing for:
Answer: Older persons
Q: The statute of limitation for violations of real estate law under title 32 is:
Answer: Five years
Q: Alex gives Bill the right to use his property. This right may not be revoked. What is this called?
Answer: Easement
Q: What must be recorded to be valid?
Answer: beneficiary deed
Q: A homestead may be terminated for all of the following reasons EXCEPT:
Answer: Death of a spouse
Q: What is the Arizona Superfund site known as?
Answer: Water Quality Assurance Revolving Fund
Q: What determines the north and south boundaries in a government survey?
Answer: Baselines
Q: To keep the range lines as nearly as possible six miles apart, a correction line is made as the line continues north. This correction is made every:
Answer: 24 miles
Q: What is a loan called that contains a lot release clause. Two or more parcels of property are offered as security?
Answer: Blanket Mortgage
Q: What warrants that the grantee has the highest claim of ownership?
Answer: Quiet enjoyment
Q: What is the maximum number of grantees that can be named in a deed?
Answer: Any number
Q: How many days does an employing broker have to return a salesperson’s license to the Department of Real Estate once a licensee is terminated from a brokerage?
Answer: 10
Q: A property owner tells his agent that he may represent the property and make other decisions concerning that property. This type of agency is:
Answer: General
Q: Discount points are:
Answer: Prepaid interest
Q: The sales price would appear in a closing settlement sheet as a:
Answer: Debit to buyer / credit to seller
Q: At a mortgage foreclosure sale, the buyer gets a deed from:
Answer: No one
Q: May a property seller require a buyer to use a particular title company? Are real estate licensees affected by RESPA restrictions in this area?
Answer: No, Yes
Q: In a seller carryback, who receives the credit on a closing statement?
Answer: Buyer
Q: A property management company is required to keep a copy of all residential rental agreements, upon expiration, for how long?
Answer: One year
Q: A lender will loan $48,000 at 9% plus 5 points. What is the lender’s adjusted rate of interest including the points?
Answer: Multiply the 5 points by 1/8% increase in interest.5 X 1/8% = 5/8%. 5 points will increase the return 5/8%.Add the increase return of 5/8% to the interest of 9%.9% + 5/8% = (9 5/8%)NOTE: if you were a lender and received a return on your investment of 9% + 5 points, it would be valid to say you receive 9 5/8% with no points (PAR)NOTE: When finding how much the points increase the investors of 9% + 5 points, it would be valid to say you receive 9 5/8% with no points (PAR).
Q: Caris purchased a home for $152,000. The lender agreed to loan 80% of the price at 8 3/4% and 6 points. What is the cash value of the point?
Answer: $152,000 X 80% = $121,600$121,600 X 0.06 = ($7,296)
Q: The discount points are 3%, which represent $2,700. The buyer down payment is 20%. What is the purchase price of the property?
Answer: 100%-20%=80%$2,700 divide by 3% = $90,000$90,000 divide by 80% = ($112,500)
Q: A lender charges 4 discount points, which equals $2,000. What is the loan amount?
Answer: $2,000 divide by 4% = ($50,000)
Q: A lender charges $1,600 for discount points. If the loan is $80,000, how many discount points must the lender charge?
Answer: $1,600 divide by $80,000 = 0.02 = (2 points)
Q: Jones buys a home for $182,000. Second Federal will loan the balance after 20% down at 9 3/4% and 4 1/2 points. What is the first month’s interest?
Answer: 100-20=80%$182,000 X 80% = $145,600$145,600 X 9 3/4% = $14,196$14,196 divide by 12 months =($1,183 first month interest)
Q: You are receiving a monthly interest check of $255, which is 9% interest on your principal. How much is your principal?
Answer: Find the annual amount of interest$225 (I) per month X 12 months = $2,700 (I) annualDivide the annual interest (I) by the rate (R)$2,700 (I) divide .09 (R) = $30,000 (9)Your principal is $30,000
Q: A home sold for $275,000 including a 5% transfer tax. What is the actual value of the home?
Answer: 100%+5%=105%$275,000 divide by 105%=($261,904 actual value of home)
Q: A property was purchased at $165,000 and has depreciated at 4 1/2% for each of the past years. What is the value of the property after four years?
Answer: 4 1/2% X 4 = 18%100%-18%=82%82% X 165,000 = (135,300 value after 4 years)
Q: Ms. Twiddle sold her four-plex for $111,000, which included an 85% profit. What was the original cost?
Answer: 100%+85%=185%111,000 divide by 185%=($60,000)
Q: What is the value of a property if the monthly gross income is $1,520 and the monthly gross rent multiplier is 96?
Answer: $1,520 x 96=($145,920)
Q: An apartment sold for $240,000, and the gross rental income per year is $30,000. What is the annual gross rent multiplier?
Answer: $240,000 divide by $30,000=(8 annual gross rent multiplier)
Q: A lender agreed to loan 75% of the value of a property. The current interest paid is $650 monthly at a rate of 8 1/2%. What is the value of the property?
Answer: $650 x 12 months=$7,800$7,800 divide by 8 1/2% = $91,764$91,764 divide by 75%=($122,352 actual value of the property)
Q: A loan was made for $120,000 payment at $700 monthly interest at 9%. What would be the third month’s payment, including interest?
Answer: $700 month principal payments x 2 month=$1,400 principal paid$120,000-$1,400=$118,600 principal balance left$118,600 x 9%=$10,674 annual interest$10,674 divide by 12 months=$889.50$889.50+700=($1,589.50 for the third payment)
Q: A man pays $100,000 for a property. He secured a mortgage for $90,000 at 6% interest. In one year he made an 8% gross profit on the property. What was the return on his equity?
Answer: $100,000 invested -$90,000 mortgage =$10,000 which is buyer equity$100,000 investment x 8% profit =$8,000 gross profit90,000 mortgage x 6% interest = $5,400 interest cost on the $90,000$8,000 gross profit – $5,400 interest cost = $2,600 net profit$2,600 net profit divide by $10,000 buyer equity =(26% return on the equity)
Q: In a purchase, the sale price is $227,500. The buyer puts $34,125 down and can get a 70% loan from the bank. What is the amount of the balance of the down payment needed from the buyer, excluding closing cost?
Answer: $227,500 x 70% = $159,250$227,500 -$159,250=$68,250$68,250-$34,125 =(34,125 needed to close)
Q: A home sold property for $162,150, which is 15% more than he paid for it. How much did he pay for it?
Answer: 100%+15%=115%$162,150 divide by 115%=($141,000 original purchase price)
Q: Buyer purchases property and has a $90,000 title policy. The title company is required to pay a claim, but the payoff is higher than the original policy amount. This is due to:
Answer: An inflation clause in the title policy
Q: A freehold estate which is inheritable, freely transferable, and is the highest estate and the most extensive interest in real property may be referred to as a:
Answer: Fee simple absolute
Q: Title insurance for the lender would cover all of the following EXCEPT:
Answer: No junior liens will appear on title
Q: All of the following would run with the land except:
Answer: Trade fixtures
Q: Which of the following is not properly included in the concept of the power of eminent domain:
Answer: The right of government to confiscate property from the owner
Q: The main difference in the various types of deeds is in their:
Answer: Warranties
Q: Deed restrictions and zoning regulations are used to accomplish which of the following?
Answer: Prevent uncontrolled growth
Q: When is the title policy delivered?
Answer: At closing
Q: “Effective gross income” best describes:
Answer: Gross income minus a figure for vacancy and collection losses
Q: The principle of ________ affirms that value is created by expected benefits to be derived in the future. Which of the following is the correct insertion?
Answer: Anticipation
Q: 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?
Answer: Contribution
Q: A buyer’s agent is paid a percentage of the gross sales price. When negotiating a contract, the agent should:
Answer: Negotiate the lowest possible price for the client
Q: If it is the policy of the broker to prohibit non-management level licensee dual agency, which of the following can not happen?
Answer: A buyer’s agent can also represent the seller in the same transaction
Q: What would be considered evidence of the agency relationship between broker and seller?
Answer: Listing agreement
Q: In order to be an enforceable contract there must be a valid offer, acceptance and:
Answer: Communication
Q: When a contract is missing a legal description it would be considered:
Answer: Unenforceable
Q: Seller accepts a sales contract, with a close of escrow in 90 days. What is the buyer’s position?
Answer: Equitable title
Q: A broker closed a transaction on realty and then found out that the buyer was under 18 years of age. The sale was:
Answer: voidable
Q: Which of the items listed below least affects the use of land:
Answer: Lender’s lien
Q: The right of the mortgagor to regain title is called:
Answer: Redemption
Q: Which of the following conventional loan to value ratios would not need private mortgage insurance?
Answer: 80% – 20%
Q: The Real Estate Settlement and Procedures Act is administered by:
Answer: The Department of Housing and Urban Development
Q: Which of the following would be a debit to the seller?
Answer: Property taxes
Q: The funds for a loan secured by a trust deed are supplied by the:
Answer: Beneficiary
Q: If not given with the application, when must a lender give the required RESPA information to a buyer?
Answer: Within 3 days
Q: An estoppel certificate primarily benefits:
Answer: The investor who purchases the note and mortgage
Q: Copies of rejected offers to purchase must be kept by the broker for _____. Copies of binding contracts must be kept for _____.
Answer: One year, five years
Q: When a real estate brokerage is sold to another real estate brokerage, the listings:
Answer: Must each be assigned by the property owner on the accruing brokerage’s listing form and reviewed by the broker of the accruing brokerage
Q: If a designated broker appoints a temporary broker during their vacation, how long must a copy of the paperwork be kept?
Answer: 1 year
Q: Each employing broker shall have and maintain:
Answer: A definite place of business
Q: Which of the following actions would terminate your homestead?
Answer: Renting your house out
Q: When are homeowners associations required to meet?
Answer: Annually
Q: Who regulates the Arizona Superfund?
Answer: ADEQ
Q: A legal description must:
Answer: Be sufficient to identify the land and its location
Q: A warranty deed covenants the grantee against a loss by:
Answer: Defective title
Q: Marketable title is all of the following EXCEPT:
Answer: Perfect title
Q: Which of the following deeds would give a buyer the greatest protection in a purchase?
Answer: Warranty Deed
Q: What is the statutory redemption period on a tax lien foreclosure sale?
Answer: 3 years
Q: What is NOT an encumbrance?
Answer: Declaration of homestead
Q: When a deed of trust is created who authorized the “power of sale”?
Answer: Trustee
Q: If a trust deed contained a clause providing that the indebtedness was to be paid in full if the property was sold, it would be said that:
Answer: The trust deed contains an alienation clause
Q: When a mortgage that was in default has been satisfied, the mortgage has been:
Answer: Redeemed
Q: Of the following, which is not an example of a freehold estate?
Answer: Periodic tenancy
Q: A real estate investment business organized as a trust best describes a/an:
Answer: REIT
Q: When a condition is placed in a deed it would most likely refer to which of the following?
Answer: Defeasible fee
Q: Which of the following warrants title by the seller for them and under them only?
Answer: Special warranty deed
Q: What is the most important factor a developer would take into consideration in selecting a new area to develop?
Answer: Location
Q: What is an appraisal?
Answer: An opinion of value for the day the appraisal only
Q: Which of the following is NOT an operating expense?
Answer: Depreciation
Q: “The rate” refers to:
Answer: The rate of return used by investors
Q: What would be considered a unilateral contract?
Answer: Option to buy
Q: A group of local real estate brokers are having their annual meeting. What topic should be avoided in their conversation?
Answer: Discussion of their personal commission schedules
Q: What government agency enforces the Do Not Call list?
Answer: FTC
Q: When a property is in foreclosure and the owner files bankruptcy, what is the present status of the foreclosure?
Answer: The foreclosure will automatically be put on hold
Q: Who does NOT have police power?
Answer: Arizona state lottery
Q: The lender will require a two-month reserve for insurance at closing. The insurance premium for a one-year policy is $648 and has been paid outside of closing. The entry on the closing statement is:
Answer: Debit the buyer $108
Q: Debits to the seller include all of the following EXCEPT:
Answer: Impound accounts
Q: What is a bringdown search (fee)?
Answer: Updates the title prior to close of escrow
Q: What type of title insurance coverage protects the holder from damage due to a secret lien?
Answer: Extended coverage
Q: What is true regarding a VA loan?
Answer: The top 25% of the loan is guaranteed
Q: A monetary judgment by the court is:
Answer: An involuntary lien on the personalty and realty of the subject debtor
Q: If a dwelling is damaged or destroyed by fire how many days must the tenant give the landlord to terminate the rental agreement?
Answer: 14
Q: The legal right of a landlord to seize the tenant’s belongings for rents in arrears is called:
Answer: Distraint
Q: A utility company wants an easement on land, but the landowner doesn’t want his property encumbered. What would the owner give the utility?
Answer: License
Q: What type of lien is an attachment?
Answer: Voluntary
Q: What warrants that the grantee has the highest claim of ownership?
Answer: Quiet enjoyment
Q: A signed deed in escrow is acted upon and recorded:
Answer: Whenever all conditions in the escrow have been met
Q: When the buyer is getting a new loan, the interest proration on the closing statement will reflect…
Answer: Debit to the buyer
Q: A property is in the process of being foreclosed. Who is responsible for the property taxes?
Answer: Trustor
Q: Seller of a property wants to net $92,500 after paying $1,200 in points; $500 in closing costs and 7% commission. What must the property sell for?
Answer: $101290
Q: Mr. and Mrs. B. sold their house for $113,000, with a 7% commission. The buyer is getting a VA loan for $110,000. The seller is asked to pay the 2 and 1/2 points, title insurance of $120, termite inspection of $40. They also have a balance of $72,340 on their current home loan. How much money will they be receiving at close of escrow?
Answer: $29,840
Q: An estate in real property which automatically terminates and reverts to the grantor is called:
Answer: Fee simple determinable
Q: A buyer is obtaining a new loan to purchase property. The buyer is most likely to accept title with which of the following liens remaining unpaid as of close of escrow:
Answer: Property taxes for the current year for the property being sold
Q: Which one of the following is not considered a “less- than-freehold” estate?
Answer: Life estate
Q: An appraiser has selected three comparable sales for the property she is appraising. After making adjustments, she has adjusted sales prices of $100,000, 107,000 and $110,000. How does she reconcile these three different numbers?
Answer: Use a weighted average, giving the most weight to the most similar property
Q: Replacement of a building best describes:
Answer: Building the functional equivalent of the original structure
Q: What is the first objective of an appraiser?
Answer: Define the problem and his approach to it
Q: What type of agency is created when a salesperson lists a property for sale?
Answer: Expressed – Actual
Q: The owner/occupant of a four-unit apartment building decides not to rent one of his units to a woman with two children. Which law has the owner violated?
Answer: No violation has occurred
Q: Redlining would best be defined as:
Answer: Limiting the number of residential loans in an area without regard to economic qualifications
Q: How many days would a lender have to give the buyer a loan estimate in a Residential loan transaction?
Answer: 3 days from loan application
Q: The three-day right to rescind is granted under …
Answer: Regulation Z
Q: Which of the following enforces anti-trust laws?
Answer: Federal Trade Commission
Q: A borrower applying for a FHA loan would be required to:
Answer: Pay a mortgage insurance premium
Q: A closing with all parties present is a/an:
Answer: Roundtable closing
Q: Which of the following is not part of the secondary market?
Answer: Federal Universal Mortgage Association
Q: A survey is the process of:
Answer: Determining the size and boundaries of a piece of property
Q: A signed release to substitute a new mortgagor for the original mortgagor is called:
Answer: A novation
Q: A closing conducted by a disinterested third party best describes a/an:
Answer: Escrow closing
Q: What statement would require full disclosure when advertising residential property?
Answer: $900 monthly loan payment
Q: A note that calls for periodic payments of principal only, with a balloon payment at the end of the loan term is called a/an:
Answer: Installment note
Q: When a buyer assumes a loan what is the status of the ALTA policy?
Answer: Remains in force and effect
Q: If a tenant abandons the property and leaves personal property behind how long does the landlord hold the tenants property?
Answer: 10 days
Q: The recovery fund must have a minimum balance of $600,000 by which of the following dates?
Answer: June 30th
Q: What is the maximum legal contract rate of interest for individuals to pay on real estate loans in Arizona?
Answer: Unlimited
Q: What adjoins to the studs at the top and bottom?
Answer: Top and sole plate
Q: Which is not considered a fractional section?
Answer: 32
Q: Of the following, which best describes a second mortgage?
Answer: A junior lien on real estate
Q: A definition of involuntary alienation is:
Answer: Title to property can be conveyed by action of the court
Q: When two real estate licensees have a dispute that is handled outside the court, it is called:
Answer: Arbitration
Q: In Arizona, a mortgage is similar to a deed of trust, but includes what kind of clause that states, “To be void upon the condition that I pay…”
Answer: Defeasance
Q: The 2002 tax bill on the Bohlers’ home was $1,282 and was paid on October 31, 2002. The Bohlers have sold their home and the escrow will close on April 23, 2003. How much will the tax proration be, using a calendar year and prorating to the day of closing?
Answer: $393.12
Q: What is the borrowing instrument that permits additional sums of money to be loaned by the same security device?
Answer: Open end loan
Q: A property management agreement would contain all of the following EXCEPT:
Answer: Method of reporting on prospective tenants
Q: Using the concept of the gross rent multiplier, what would a single family rental house sell for if the monthly rent was $975 and a single family rental in the same area just sold for $155,990 and had been renting for $950 monthly?
Answer: $160095. (Value / Gross Rent = GRM) $155,990 / $950 = 164.2 and (Gross Rent X GRM = Value) $975 X 164.2 = $160,095
Q: Which of the following is a general lien?
Answer: Judgment lien
Q: The word “tenancy” describes:
Answer: A mode of holding
Q: Which of the following is the most commonly accepted estate of inheritance?
Answer: Fee simple
Q: What form of real estate financing would fall under federal securities laws?
Answer: REIT
Q: Which of the following does not derive from a city’s police power?
Answer: Developer’s restrictive covenants
Q: In real estate, the word “amenities” refers to:
Answer: Factors of convenience, location beauty or utility
Q: The gross rent multiplier is calculated by:
Answer: Dividing the price by the gross rents
Q: Constructive fraud is also known as:
Answer: Negligent misrepresentation
Q: At a weekly business meeting, two agents from two different firms discover that they are both trying to list the same house. In the argument that follows, one agent scolds the other for offering to take the listing at 6%. Their broker’s policy is to take 7% listings. Which law, if any, have the agents violated?
Answer: The Sherman Antitrust law
Q: The seller tells the broker they would like to sell their property furnished. The agent should do all of the following EXCEPT:
Answer: Add the personal property to the deed
Q: A “mutual fund” for pooling investor money for investment in real estate:
Answer: Real Estate Investment Trust
Q: Which of the following is not true of the Federal Housing Administration?
Answer: Guarantees mortgage loans
Q: What is true about the APR?
Answer: The APR includes the interest rate and all finance charges
Q: In the state where Bob lives, someone who receives a loan from a lender must transfer his/her property to the bank’s holding company while the loan is outstanding. The document used to accomplish this is a/an:
Answer: Deed of trust
Q: When a wraparound is created who is responsible for the underlying loans?
Answer: Vendor
Q: What term does the law use to describe a holdover tenant?
Answer: Tenancy at sufferance
Q: An unlicensed property manager can do all of the following except:
Answer: Negotiating lease terms
Q: Title to property would pass when:
Answer: The deed is signed and delivered
Q: All of the following relate to Limited Liability Companies EXCEPT:
Answer: Article of Incorporation
Q: When action is brought in court to compel a party to carry out the terms of a contract, this is called:
Answer: specific performance
Q: To be enforceable a lease must be in writing if the term is:
Answer: Longer than one year
Q: An Arizona broker must review and approve every listing taken by his/her personnel within _____ of the date the listing was taken.
Answer: 5 calendar days
Q: An example of a freehold estate is:
Answer: A fee simple estate
Q: According to Arizona Revised Statutes, when a deed is not recorded it is
Answer: Valid but potentially invalid against subsequently recorded interests
Q: When constructing a home, the load bearing walls would rest on:
Answer: Footing
Q: The Advisory Board is to adhere to which of the following guidelines?
Answer: It will consist of a ten-member panel
Q: In Arizona, the statutory redemption period if a property is sold for back taxes, is how long?
Answer: 3 years
Q: Patents, trademarks, copyrights and royalties are an example of:
Answer: Intangible personalty
Q: Property management firms shall keep all financial records pertaining to clients for at least:
Answer: Three years
Q: A rental property has 6 rental units that rent for $700 each per month. Similar property in the area has been selling for $700,000. What would be the gross rent multiplier for this type of property?
Answer: 13.8Rationale: The price/value divided by the gross rents equal the gross rent multiplier. This problem has monthly rent but is asking for “gross rent multiplier” which translates to “annual gross rent multiplier” (remember if it doesn’t say monthly it is NOT monthly). So $700 12 6 = $50, 400/year divided by $700,000 = 13.8 Gross rent multiplier.
Q: Your bundle of rights includes all of the following except:
Answer: Right of encroachment
Q: A condominium and cooperative would be the same in that:
Answer: Both pay annual assessments
Q: In checking for conformity of a home in a particular neighborhood, an appraiser would not consider:
Answer: Listed price
Q: On which of the following properties would you most likely use the income approach to appraising?
Answer: Office building
Q: Who would not write a purchase contract?
Answer: Escrow officer
Q: Broker Smithson, although believing the seller was demanding too high an asking price, took an exclusive right to sell listing on a home. Several months later, Smith met with the seller and urged her to reduce the listing price, but to no avail. Now, just as the listing is about to expire, Smithson advertises the property at a price below that shown on the listing and immediately receives an offer which the seller accepts. Broker Smithson’s actions:
Answer: Constitute a breach of the agency agreement
Q: The listing agent discriminates against a minority buyer. If the seller were to be held responsible for the actions of the agent, it would be an example of:
Answer: Vicarious liability
Q: If a partnership does not pay its debts, the creditors may collect from the personal assets of:
Answer: General partners
Q: Brokerage companies have an agreement to not take listings in each other’s area. This practice would be:
Answer: Violation of anti-trust laws
Q: Which of these transactions requires the use of a Closing Disclosure at closing?
Answer: New home purchase with conventional financing
Q: What is the purpose of the Foreign Investment Real Property Act?
Answer: Requires tax withholding if seller is a foreigner
Q: What can be determined by a location survey?
Answer: Whether or not the property’s buildings encroach on neighboring land
Q: The Real Estate Settlement Procedures Act was enacted to:
Answer: To protect consumers from abusive lending practices
Q: What is the document prepared by an attorney that states the attorney’s opinion of the status of the title?
Answer: Certificate of title
Q: Arizona real estate law states that the Real Estate Commissioner may do each of the following EXCEPT:
Answer: Hold an active real estate license while acting as Real Estate Commissioner
Q: What would be an essential element for an Arizona deed?
Answer: Signature of grantor
Q: The lettering used for the name of the employing broker when advertising real property for sale or lease shall appear:
Answer: In a clear and prominent manner
Q: The distance between Section 4 and Section 34 in any given township is:
Answer: 4 miles
Q: What sections are NOT considered standard?
Answer: 18
Q: A defeasance clause is in a mortgage for the protection of the:
Answer: Borrower
Q: A man leased a building with permission to install heavy machinery. In order to install said machinery, the lessee has to install a special foundation. The foundation so installed becomes a/an
Answer: Improvement to the property
Q: The act of the government taking private property for public use is:
Answer: Condemnation
Q: Tom, Rick, and Harry own a house. When Rick dies, his heirs receive his 1/3 interest. What type of co-ownership did they have?
Answer: Tenancy in common
Q: Which of the following is not a governmental restriction on property?
Answer: Adverse possession
Q: An investor buys a single-family rental property with an initial basis of $150,000. Assuming 30 year straight-line depreciation, what is the basis of the property after 10 years?
Answer: $100,000. The annual depreciation would be $5,000 ( 150,000 / 30 ), thus 10 years’ depreciation would be $50,000 ( 10 x 5,000 ). The basis after 10 years is 150,000 – 50,000 = $100,000
Q: The increase in value created by joining ownership of several smaller parcels of land into one large single ownership is called:
Answer: Plottage increment
Q: Which of the following would be the best example of functional obsolescence?
Answer: Walking through one bedroom to reach another
Q: What is an essential element of a real estate contract?
Answer: Consideration
Q: Bill delivers a contract to Liz and gives Liz five days to accept the offer. One day later Bill withdraws the offer. What is true?
Answer: Bill may withdraw the offer
Q: The rule that says a buyer is expected to reasonably inspect the property, instead of relying on what he or she was told. This best describes:
Answer: The doctrine of caveat emptor
Q: An owner knows a broker is showing the owner’s property to a prospective buyer without authority in what might appear to be an ostensible agency relationship. Unless the owner takes steps to stop the unauthorized showings, the owner could be liable for which of the following?
Answer: Certain acts of the licensee
Q: A prospective buyer who has previously always lived in the city is looking at a rural property with a real estate agent. The buyer admits that she doesn’t know anything about rural properties. The buyer likes the back yard because it is very large but remarks that a small patch of the yard seems to grow more, and much healthier, grass than any other part of the yard. The agent should recommend a
Answer: well and septic inspection
Q: When property zoning is changed from single family to commercial usage, this change would be called:
Answer: Up zoning
Q: When a real estate brokerage declares Chapter 7 bankruptcy, the status of the listings are:
Answer: Terminated
Q: 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?
Answer: Land contract
Q: What type of loan is amortized, 30 year term, must be paid in full on the tenth anniversary?
Answer: Balloon
Q: The maximum FHA loan is based on the:
Answer: Appraised value and purchase price
Q: In an option, the option binds the:
Answer: Optionor
Q: For how long must a broker must keep his or her property management agreements?
Answer: 5 years
Q: The Statute of Frauds was brought into being to prevent:
Answer: perjury
Q: There are how many standard sections in a township?
Answer: 25
Q: When a buyer assumes an existing loan, it appears on the settlement sheet as:
Answer: Debit the seller
Q: Which is NOT an appurtenance and therefore does NOT pass with a standard warranty deed
Answer: trade fixtures
Q: Which would have the highest assessment ratio
Answer: commercial property
Q: An article may be changed from realty to personalty by
Answer: severance
Q: Trade fixtures are considered
Answer: personal property
Q: Incomplete, as an interest in property, such as a lien that has been filed but not enforced
Answer: inchoate
Q: The transfer of an estate to another for years, for life, at will, or by lease. Transfer of possession of property by lease
Answer: demise
Q: Individual who grants real property
Answer: grantor
Q: Individual receiving the grant of real property
Answer: grantee
Q: Transfer of real property through a will
Answer: devise
Q: An estate with a specific beginning and end date, does not need notice to terminate
Answer: estate for years
Q: Conventional life estates are created by the actions of
Answer: a life tenant
Q: When a defeasible estate ends, title will pass by all of the following except
Answer: a specific third party
Q: Weakest type of will
Answer: nuncupative
Q: Recordation occurs when
Answer: docket and page number are assigned
Q: Grantor warrants the title against any and all defects that may be arisen before or during his period of ownership. Gives the best protection
Answer: General warranty deed
Q: Grantor warrants title only against defects arising during the time he owned the property
Answer: Special warranty deed
Q: Grants any interest in property that the grantor may have
Answer: Quitclaim deed
Q: An interest in title to real property, not government owned, obtained by action of law based on adverse possession best describes
Answer: prescriptive suit
Q: A devise is an example of________ conveyance
Answer: testamentary
Q: Recordation of a deed is the responsibility of the
Answer: Grantee
Q: Which form of title evidence is commonly used in Arizona
Answer: title insurance
Q: An increase in the balance of a loan when payments are not enough to cover the interest, when principal balance increases
Answer: negative amortization
Q: A load where payments include principal and interest plus 1/12 of the years property taxes and hazard insurance premiums
Answer: budget mortgage
Q: A mechanic’s lien, once filed, is a valid lien on the subject property for how long
Answer: 6 months
Q: A security instrument in a real estate transaction is a
Answer: trust deed
Q: Real estate financing device that does not transfer legal title but does place equitable title with the buyer is called
Answer: agreement for sale
Q: The lender may consider a mortgage or trust deed to be
Answer: a security agreement
Q: When you default on a deed of trust what is the first notice given
Answer: constructive notice
Q: A buyers initial cost for real estate purchase for determining gain, loss, or depreciation on the sale of an assest
Answer: basis
Q: Cash flow divided by the down payment and settlement costs, expressed as a percentage
Answer: cash on cash return
Q: Short term capital gains are taxed at
Answer: ordinary income tax rates
Q: Which of the following would be considered a security
Answer: single-family homes in an investment pool
Q: A man may take depreciation for income tax purposes on all of the following EXCEPT
Answer: land held for future profit
Q: All of the following relate to limited liability companies EXCEPT
Answer: articles of incorporation
Q: What is NOT part of a tax-deferred exchange
Answer: Highest and best use
Q: A borrower is required to put 10% down for the purchase of property would be considered
Answer: equity
Q: When a person declares a tax-free gain on a personal residence, the minimum holding period is
Answer: 2 years
Q: Civil rights court case 1866
Answer: Jones V Alfred H Mayer
Q: 1974 added what protected classes
Answer: sex/gender
Q: Federal fair housing complaints would be filed with which HUD entity
Answer: FHEO Fair housing equal oppurtunity
Q: Which of the following would not be exempt under the federal fair housing act
Answer: for sale by owner selling a five-plex
Q: The federal fair housing act of 1968 identified with protected class
Answer: national origin
Q: FHA monthly loan payments include all of the following except
Answer: pre-paid loan interest
Q: The mortgage insurance premium required of an FHA-insured loan would least likely benefit
Answer: borrower
Q: Monthly payments on an FHA loan would most likely increase due to
Answer: rise in insurance premiums
Q: Which of the following is NOT a feature of an FHA loan
Answer: alienation clause
Q: The booklet “Your home loan toolkit” is a requirement of
Answer: RESPA
Q: Which of the following applies to a VA- guaranteed loan
Answer: funding fee
Q: A type of ownership that is considered a long term lease is best described as
Answer: cooperative
Q: 1 square yard equals
Answer: 9 sqft
Q: 1 square mile equals
Answer: 640 acres
Q: 1 section equals
Answer: 1 square mile
Q: Home inspectors are governed by
Answer: Board of Technical Registration
Q: Ethics complaints are filed with
Answer: Arizona association of REALTORS
Q: How many days after personal legal trouble do you need to notify the ADRE
Answer: 10 days
Q: Salespersons can only be paid by
Answer: designated broker
Q: If the address changes for a brokerage ADRE must be notified within
Answer: 10 calendar days
Q: A subdivider must provide a
Answer: permanent acess
Q: A sale of subdivided land in Arizona is rescindable by the purchaser if it does not include
Answer: legal access
Q: What is a maximum number of lots in a subdivision a person may own and sell without having to apply for a Public Report
Answer: 5
Q: Once the ADRE publishes a subdividers Public Report assuming there are no material changes, it is valid for
Answer: 5 years
Q: Real estate agents often have _______ insurance
Answer: E&O insurance
Q: Assuming the legal rights of a person for whom a debt has been paid
Answer: subrogation
Q: A concept preventing the assertion of a right or claim because of an undue delay
Answer: Laches
Q: Items of additional material that are attached to an existing contract to explain, modify, or revoke elements of the contract
Answer: addendum
Q: Standardized language used in contracts for the sake of efficiency and completeness
Answer: boilerplate
Q: In an option, the option binds the
Answer: optionor
Q: A purchase agreement does NOT need which of the following
Answer: title taken
Q: coercion and duress were applied against one party in a contract. the contract was:
Answer: voidable
Q: when the buyer and seller have signed the purchase contract, there is a/an
Answer: expressed contract
Q: Who has the primary responsibility for presenting an offer
Answer: listing broker
Q: The listing agreement is between the property owner and the
Answer: employing broker
Q: What is Not allowed in a valid listing agreement
Answer: provisions for automatic renewal
Q: The amount the property actually sold for
Answer: market price
Q: The amount that any party agrees to pay in an open market
Answer: market value
Q: The increase in value created by joining ownership of several smaller parcels of land into one large single ownership is called
Answer: plottage increment
Q: The period of time that an improvement contributes value to the land is considered to be its
Answer: economic life
Q: When the cost approach is used to determine value, which of the following applies?
Answer: replacement cost minus depreciation
Q: Range lines run
Answer: north and south
Q: Township lines run
Answer: east to west
Q: Each township is how many miles square
Answer: 6 miles square
Q: Each township has an area of
Answer: 36 square miles
Q: How many sections in one township
Answer: 36
Q: 1760 yards equals
Answer: 1 mile
Q: The line that runs north and south
Answer: meridian
Q: The line that runs east and west
Answer: baselines
Q: In the rectangular survey system a six mile strip of land running north and south
Answer: Range
Q: A primary line running east and west that establishes north and south boundary in the rectangular survey system
Answer: baseline
Q: In the rectangular survey system a six mile strip of land running east and west
Answer: tier
Q: North and south lines that run parallel to principal meridians at six mile intervals establishing east and west boundaries
Answer: range lines
Q: How many townships are contained in a government survey “check”?
Answer: 16
Q: If the sub totals on a sellers closing statement show more debits than credits this means the
Answer: seller has to pay more money to escrow
Q: If the buyer is assuming an existing loan on the property, which of the following is prorated at closing?
Answer: interest only
Q: When would IRS form 1099S be used?
Answer: Report sales price
Q: When a real estate agent sends unsolicited email it must include
Answer: an opt-out provision
Q: A homeowner sues a real estate agent for 6000. which court is this heard in
Answer: justice court
Q: Any property that has a septic system is use is required to have an inspection within ______ months of transfer of ownership
Answer: 6 months
Q: If someone plans on living in their house for______ after doing home improvements they maybe may do them themselves, otherwise they must hire a general contractor
Answer: at least 12 months
Q: A grandfathered water right that may be sold separate from the land is called
Answer: type 2
Q: All of the following are considered grandfathered water rights EXCEPT
Answer: exempt domestic well
Q: Words in a deed that limit the extent of the grantee’s ownership:
Answer: habendum
Q: When a property is located within a homeowner’s association and is regulated by covenants, conditions and restrictions, what is true?
Answer: the appear as an encumbrance on the title
Q: In Arizona a deed is acknowledged to
Answer: meet the recordation requirements
Q: What is NOT necessary for a valid transfer of title to real estate?
Answer: recording of the deed
Q: The Habendum clause would be found in a:
Answer: warranty deed
Q: In order to record a deed, which of the following would be required:
Answer: signed and acknowledged
Q: All of the following would affect the basis of property EXCEPT:
Answer: interest paid on the loan
Q: The difference between replacement cost and present value is:
Answer: depreciation
Q: The cost approach of appraising would not include?
Answer: capitalization rate
Q: Physical deterioration of a building that is curable would be referred to as
Answer: deferred maintenance
Q: The direct sales comparison approach would most likely use:
Answer: comparables
Q: Due to changes in modern design, your property is no longer desirable. This is referred to as
Answer: functional obsolesence
Q: Direct sales comparison method of appraisal is based on?
Answer: substitution
Q: What would a contract be considered if it has no force and effect?
Answer: void
Q: What will terminate a listing agreement?
Answer: death of the seller
Q: Warren makes an offer to Francis and Francis makes a counter-offer. Francis dies before the counter-offer is accepted. What is the contract status?
Answer: never was a contract
Q: What is an essential element when a sales agent writes a real estate contract?
Answer: consideration
Q: A mortgage contingency clause would contain all of the following EXCEPT
Answer: name of the lender
Q: The Arizona Fair Housing Act is enforced by
Answer: the arizona attorney general
Q: In order to preserve his/her right to a hearing regarding charges alleging violations of real estate law, a licensee must file a written answer to the complaint within:
Answer: twenty days after a service of a notice of hearing
Q: Upon request by the Commissioner, a subdivider must file a copy of any advertising material used in connection with sales of the subdivided lands with the Commissioner within:
Answer: ten days
Q: Property management records shall be kept at the broker’s main office or if the broker provides prior written notification of the street address to the real estate department:
Answer: at an off site storage location in Arizona
Q: The Arizona Landlord Tenant Act covers all of the following EXCEPT:
Answer: maintenance request forms
Q: What type of lease would you expect a property manager to execute on behalf of his/her landlord?
Answer: gross lease
Q: What is a lease called when the lessee pays tax, insurance & maintenance?
Answer: net lease
Q: What type of lease would be used by a property manager in a heavy industrial manufacturing building?
Answer: net lease
Q: If a tenant pays a landlord on a regular basis and occupies the property for successive intervals of time, the tenant would most likely have which of the following leasehold estates?
Answer: periodic tenancy
Q: The broker must:
Answer: give his client an accounting of the property management account every 6 months
Q: When a woman has an interest in land that will continue as long as she lives, she has:
Answer: a life estate
Q: Which of the following statements regarding condominium ownership is correct?
Answer: a unit owner my devise the property
Q: When a Quit Claim deed is used, what type of interest does the grantee have?
Answer: whatever interest the grantor held
Q: What would an owner’s policy of title insurance cover?
Answer: all items recorded on public record
Q: What would not apply to community property with right of survivorship?
Answer: willing to a third party
Q: What would a life tenant hold?
Answer: freehold estate
Q: A commercial tenant installs a pizza oven in his new restaurant. The pizza oven would be deemed a/an:
Answer: chattel
Q: A valid encumbrance affecting title of estate and land (such as a mortgage or judgment) is called a:
Answer: cloud on title
Q: One of the appurtenances to a parcel of land would be a/an:
Answer: bundle of rights
Q: The local city council decides to reduce the assessment rate for a major corporation that is relocating to the area to build a manufacturing plant. Such a reduction is termed:
Answer: abatement
Q: A valid exercise of the government’s police power to restrict an owner’s use and enjoyment of his property would include which of the following?
Answer: building codes
Q: Which of the following would NOT be an operating expense in the income method of appraising
Answer: principal and interest payments
Q: Which appraisal approach uses depreciation?
Answer: cost
Q: What is not an operating expense?
Answer: Vacancy and loss of credit
Q: What is taken into consideration when calculating the effective gross income
Answer: vacancy and loss of credit
Q: Direct sales comparison method of appraisal is based on
Answer: substitution
Q: Which of the following would not be used in the cost approach?
Answer: net income
Q: What would be least important when appraising property?
Answer: original cost
Q: What would not impact property value
Answer: title insurance policy
Q: What is taken into consideration when calculating the effective gross income?
Answer: vacancy and loss of credit
Q: A listing agent intentionally fails to tell the buyer of a known defect on the property that later harms the buyer. The listing agent could be guilty of:
Answer: fraud
Q: Which of the following listings would not be entered into a multiple listing service?
Answer: pocket listing
Q: A valid written contract must contain
Answer: an offer and acceptance
Q: A master planned community would best be described as
Answer: two or more platted subdivisions with CC&Rs
Q: Which level of radon is considered the maximum acceptable level?
Answer: 4
Q: Ecology is best defined as
Answer: the relationships between all living organisms and their environments
Q: Which term best describes reducing the degree or intensity of, or eliminating pollution?
Answer: abatement
Q: When real estate is depreciated for tax purposes, it must be:
Answer: improved property
Q: To have a qualified tax deferred exchange, what would be required?
Answer: properties must be held for investment
Q: Title I of the (ADA) Americans with Disabilities Act applies to employers:
Answer: with 15 or more employees
Q: Which court case abolished the concept of separate but equal?
Answer: Brown vs board of ed
Q: When a person has suffered a violation of the Fair Housing Law they have ______ months to file a claim.
Answer: 12
Q: According to RESPA, what is the maximum amount of tax reserves a lender may impound?
Answer: 2 months
Q: A title search can be conducted by:
Answer: anyone
Q: The seizing of property by court order as security for a debt or judgment is known as:
Answer: attachment
Q: A buyer with badly damaged credit would be most likely to use:
Answer: FHA
Q: When a lender is allowed to determine if a borrower qualifies for FHA insurance the process is called:
Answer: direct endorsement
Q: Who signs the estoppel certificate?
Answer: Borrower/lessee
Q: “Quiet Enjoyment” in a lease means:
Answer: The lease will not be terminated if the building is sold
Q: For purposes of examination, a subdivider is required to keep and maintain records of all sales transactions and funds received by the subdivider pursuant to the sales transactions, and shall make them accessible to the commissioner:
Answer: upon reasonable notice and demand
Q: When the court orders property to be sold as a result of a judgment it is called:
Answer: execution
Q: The principal purpose of a public report on both subdivided and un-subdivided lands is:
Answer: to provide potential buyers with various material facts related to the lands