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John makes an offer to Joe, and Joe makes a counter offer. Joe dies before the counter offer is accepted. What is the contract status? A. Valid B. Void C. Enforceable D. Bilateral - ansB. Void 1031 Exchange - ansA transaction that, under provisions of Section 1031 of the Internal Revenue Code, allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale. 1099 - Misc - ansThe Internal Revenue Service form that is used to report various types of miscellaneous income earned other than salary earned from an employer Abandonment of a Homestead - ansThe loss of a homestead exemption if the owner moves to another state, sells the property, turns the property into a rental or no longer occupies the home as a primary residence Abutting - ansRefers to parcels that share a boundary Acceleration Clause - ansA clause in loan documents that allows the lender to call the note all due and payable if the borrower breaches the terms Accretion - ansThe gradual addition of land by natural causes, such as shoreline movements Acre (in square feet) - ans43,560 square feet Acre Foot - ansOne foot of water over the entire surface of an acre; contains 325,851 gallons of water Active Management Area (AMA) - ansAreas within Arizona where water management programs, such as restriction governing groundwater use, are in place; requires demonstration of Assured Water Supply Actual Eviction - ansThe physical removal of a tenant from a leased property with the tenant relieved of any further responsibility to pay rent Actual Notice - ansExpress knowledge of a fact (compared to Constructive Notice, which is notice given by publication) Ad Valorem - ansA concept for property taxes that means "according to value" Adequate Water Supply - ansThe standard required from developers OUTSIDE of an Active Management Area (AMA); if adequate water supply cannot by demonstrated, the developer must disclose this fact in all advertising and promotional material Adjustable Rate Mortgage (ARM) - ansA mortgage loan that has an interest rate on the note that periodically adjusts based on an index that reflects the cost to the lender; also called Variable Rate Mortgage Adjusted Basis - ansThe purchase price of a property (basis) minus accumulative depreciation, plus acquisition costs, plus capital improvements; also called Adjusted Purchase Price Adjusted Sales Price - ansSales price minus costs of sale (commission and closing costs) Administrator - ansCourt-appointed personal representatives of an estate for someone who dies intestate (without a will)
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Administrator's Deed - ansA document that transfers title to real estate from an intestate person to his or her heirs Adverse Possession - ansAcquiring title to land because of a long-term, open and notorious use of the land. The legal process is called PRESCRIPTION. The required time period in Arizona is 10 years. Advisory Board - ansA 10-member board appointed by the Governor that advises and gives recommendations to the Commissioner of the Arizona Department of Real Estate. Member serve a 6-year term Affidavit of Affixture - ansA document for owners of mobile homes certifying that the home is immobilized, i.e., anchored to real property Affidavit of Disclosure - ansA disclosure document that may be required when selling property that is either in an unincorporated area (not in a city or town), NOT in a subdivision, or if five or fewer parcels are involved in the transaction. It provides information about certain aspects of the property and allows the buyer an opportunity to rescind the contract. Affidavit of Value - ansA sworn statement under oath that indicates the purchase price paid by the buyer in a trascaction; must be filed with the deed and signed by both buyer and seller. Agency - ansA relationship of trust between one person (the principal) and another (the agent) in which the agent has the authority to act on behalf of the principal. Agency creates a fiduciary duty on the part of the agent to act in good faith. Agent - ansOne who represents a principal; In Arizona, the designated agent is the agent of the principal. Associated licensees in the office are considered subagents to the principal. Both the agent and the subagents are fiduciaries to the principal (client). Agreement for Sale - ansA carryback document between buyer and seller. The seller does not give a deed to the buyer until paid in full; therefore the seller retains legal title and the buyer has equitable title. Also called Land Contract, Contract for Deed or Installment Sale Air Lot - ansThe ownership of the interior of a condominium; a property that is above the base elevation of the land as in a multi-level building Air Rights - ansThe right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land. Alienation - ansThe transfer of ownership or an interest in property from one person to another by any means Alienation Clause - ansA clause used in a mortgage allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred ownership of the property. Also called Due on Sale Clause. Allodial System - ansA concept of land ownership that allows private individuals to own property Alluvion - ansSolid material deposited along a shore by accretion American Land Title Association (ALTA) - ansA national association of title companies, abstractors and attorneys whose members agree to promote uniformity, quality and professional standards in title insurance policies Amortization - ansPayment of debt in regular, periodic installments of principal and interest (as opposed to interest-only payments)
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for the remainder of the lease term. In both ceases, assignment does not release the assignor from the obligations stated in the contract Assumable Loan - ansA financing arrangement in which the outstanding loan amount can be transferred to someone else. Assumption of Mortgage - ansAn agreement by a buyer to assume the liability under an existing note secured by a mortgage Assured Water Supply - ansThe demonstration that sufficient water of adequate quality will be continuously available to satisfy the needs of the proposed development for at least 100 years; required from developers within an Active Management Area (AMA). Attachment - ansCourt-ordered seizure of a defendant's property to satisfy a judgement. In the case of real property, attachment creates a lien. Attachment, Man-made - ansAn item of personal property that has been attached to or closely associated with real property in such a way that it is now legally part of the real property. Also call FIXTURE Attachment, Natural - ansThings growing on land, such as trees or shrubs. Also called EMBLEMENTS or FRUCTUS NATURALES Attorney-at-Law - ansAn individual licensed to practice law for the public Attorney-in-Fact - ansA person specifically designated in an instrument (e.g. power of attorney) to do something legally for another in his stead. An attorney-in-fact has a fiduciary relationship with the principal and need not be an attorney-at-law Automatic Stay - ansAn injunction that automatically stops lawsuits, foreclosures, garnishments and all collection activity against the debtor the moment a bankruptcy petition is filed Avulsion - ansThe erosion or tearing away of land through natural causes, such as flooding, which may remove soil or cave in the banks of a river Bill of Sale - ansAn instrument in writing that transfers ownership of tangible personal property Condemnation - ansThe act or process of taking private property for public use through the government's power of eminent domain In order to record a deed, which of the following would be required? A. Signed by the grantee B. Signed and delivered C. Signed and acknowledged D. Signed and dated - ansC. Signed and delivered In Arizona, a deed is acknowledged to? A. Show the intent of the grantee B. Confirm the buyer is an owner occupant C. Meet the recordation requirements D. Meet the statute of frauds - ansC. Meet the recordation requirements When a document is acknowledged, it shows? A. The document was recorded B. The document was released
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C. The document was drafted D. The document was signed of your own free will - ansD. The document was signed of your own free will A valid deed must contain all of the following EXCEPT? A. Legal Description B. Signed by Grantor C. Signed by Grantee D. Consideration - ansC. Signed by Grantee What is it called when title passes by involuntary alienation through prescriptive suit? A. Escheat B. Laws of Descent C. Eminent Domain D. Adverse Possession - ansD. Adverse Possession Which of the following shows the best relationship between testate and intestate? A. Will - Administrator B. No Will - Executrix C. Executor - Will D. Administrator - Executor - ansA. Will - Administrator A person who receives real property through a will is called the? A. Bequestor B. Bequestee C. Devisor D. Devisee - ansD. Devisee A homestead may be terminated for all of the following reasons EXCEPT: A. Abandonment B. Selling the property C. Moving out of state D. Death of a spouse - ansD. Death of a spouse Which of the following would NOT qualify for a homestead exemption? A. Married couple living in a co-op B. Single person living in a mobile home that is parked in a rented space C. Family who owns a house in the name of a corporation D. Unmarried people living in manufactured housing on jointly-owned land - ansC. Family who owns a house in the name of a corporation A lease in which the lessor receives a fixed rent and assumes responsibility for all other costs on the property is called a/an: A. Open Lease B. Net Lease C. Percentage Lease D. Gross Lease - ansD. Gross Lease Which of the following would have a percentage lease? A. Municipality
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C. Non-freehold has no time limit. Freehold has a definite period. D. Non-freehold is for a person's life. Fee simple is a lease. - ansA. Fee simple is freely inheritable. Leasehold is a lease. Arizona property taxes become a lien on real property effective: A. January 1 B. March 1 C. May 1 D. October 1 - ansA. January 1 What would NOT be a use of police power? A. State laws B. Environmental regulations C. Condemnation of a property D. Licensing of real estate agents - ansC. Condemnation of a property (This is a use of Eminent Domain.) Wetlands would come under what control? A. Police Power B. Deed Restrictions C. Zoning D. Eminent Domain - ansA. Police Power What would NOT be a legal principle when applying legal tests to fixtures? A. Attachment B. Intent of the parties C. Adaptation of the item D. Cost of the item - ansD. Cost of the item (MARIA...Method of Attachment, Agreement, Relationship, Intent, Adaptability) A tenant's right to harvest crops after a lease has expired is known as: A. Remainder Rights B. Leasehold Rights C. Reversion Rights D. Emblements - ansD. Emblements All of the following would be considered appurtenant in a real estate transaction EXCEPT: A. Mineral Rights B. Property Improvement C. Annual Crops D. Bundle of Rights - ansC. Annual Crops When rights transfer transfer with a deed, this is referred to as? A. Chattel Real B. Reversionary Rights C. Leasehold D. Bundle of Rights - ansD. Bundle of Rights What is NOT necessary for a valid transfer of title to real estate? A. Signing of the deed
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B. Acknowledgement of the deed C. Delivery of the deed D. Recording of the deed - ansD. Recording of the deed The Habendum Clause would be found in a: A. Warranty Deed B. Deed of Trust C. Mortgage D. Lease - ansA. Warranty Deed Habendum Clause - ansIdentifies the extent of ownership being transferred and is only used when limiting the interest conveyed as in a Limited Warranty Deed A cloud on title is found on a property set to close escrow. What could remove the cloud? A. Deed in lieu of foreclosure B. Security Instrument C. Estoppel Certificate D. Quit Claim Deed - ansD. Quit Claim Deed An Affidavit of Value would contain all of the following EXCEPT: A. Consideration B. Tax Transfer Stamps C. Legal Description D. Signatures - ansB. Tax Transfer Stamps Constructive Notice is accomplished by: A. Recordation B. Signing a document C. Acknowledgement D. Notarizing a document - ansA. Recordation What items would be exceptions to a lenders ALTA policy? A. Survey Issues B. Zoning C. Boundary Lines D. Mechanics Liens not yet recorded - ansB. Zoning An owner's title policy would protect a buyer against: A. Encroachments B. Surveyor's error C. Unrecorded easements D. Forgery - ansD. Forgery A standard policy of title insurance would cover which of the following events: A. Eminent Domain B. Police Power C. Exceptions to the policy D. An encumbrance that was not excluded from the policy - ansD. An encumbrance that was not excluded from the policy
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What is true regarding a VA Loan? A. The entire loan is insured B. The borrower would pay MIP C. The top 25% of the loan is guaranteed D. VA loans can only be used once - ansC. The top 25% of the loan is guaranteed A lender must show the real interest rate in a residential loan transaction according to: A. RESPA B. REG Z C. Fair Housing D. Anti-Trust - ansB. REG Z RESPA (Real Estate Settlement Procedures Act) - ans-protects consumers by disclosing actual closing costs in a timely manner
- applies to borrowers for one-to-four family residences
- does not apply to loans used to finance the purchase of 25 acres or more, vacant land, or transactions where the buyer assumes, or takes subject to, an existing loan Reg Z - ansRequires lenders to disclose ALL actual and total costs of acquiring credit, including true interest rate, origination fees and discount points. Reg Z implements The Truth In Lending Act (TILA) or Title I of the Consumer Credit Protection Act in 1968. TILA does NOT apply to the following types of transactions:
- business, commercial or agricultural loans
- loans payable with four or less installments
- loans without finance charges
- loans made to corporations, partnerships, associations and agencies The following would be trigger terms in advertising that would require full disclosure of interest related and finance charges:
- "4% interest rate"
- "$500 down payment"
- "$350 monthly payments" But general terms like "low down payment," "affordable rates," and "easy terms" would not Full disclosure includes:
- down payment requirement and annual percentage rate
- type of loan (conventional, FHA, VA)
- terms and monthly payments
- origination fees and discount points
- mortgage insurance premiums and additional charges Not disclosing gives the borrower gives the home purchaser who's borrowing money a three day rescission period when they normally wouldn't have The book "Your Home Loan Toolkit" is a requirement of: A. Federal Reserve
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B. Regulation Z C. RESPA D. Fair Housing Act - ansC. RESPA The 1988 Federal Fair Housing Act added what protected classes? A. Familial status B. Familial status and gender C. Familial status and age D. Familial status and handicapped - ansD. Familial status and handicapped Civil Rights Act 1866
- Race
- Color Civil Rights Act 1968
- Sex/Gender
- Religion
- National Origin Fair Housing Amendments 1988
- Familial Status
- Handicap Remember FRESHCORN Familial Status (Fair Housing Amendments 1988) Race (Civil Rights Act 1866) EQUAL Sex (Civil Rights Act 1968) Handicap (Fair Housing Amendments 1988) Color (Civil Rights Act 1866) OPPORTUNITY Religion (Civil Rights Act 1968) National Origin (Civil Rights Act 1968) What would be covered under the familial status of fair housing? A. Family of any Age B. Parents and children, 20 years or less C. A pregnant woman D. A husband and wife over 55 years of age - ansC. A pregnant woman If a property has the right to exclude families with children, which of the following parties listed below would be allowed to reside in the property? A. A 62-year-old retired doctor B. A 52-year-old employed lawyer C. A 50-year-old nurse
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B. 20
C. 30
D. 60 - ansC. 30 What is the maximum security deposit allowed according to the Arizona Landlord-Tenant Act? A. One months rent B. 1-1/2 months rent C. 1-1/2 months rent plus last month D. First and last months rent plus 1-1/2 months security - ansB. 1-1/2 months rent Under the Arizona Landlord Tenant Act the landlord of a multi-family dwelling is responsible for which of the following? a. placing the tenant's security deposit in an interest bearing account b. providing a full accounting of the security deposit within 10 days upon request c. providing educational materials to the tenant regarding bedbugs d. giving a copy of the Americans with disabilities act to each tenant - ansc. providing educational materials to the tenant regarding bedbugs When a landlord has the right to seize the tenant's belongings for rents in arrears, this is called: A. Constructive Eviction B. Forbearance C. Distraint D. Actual Eviction - ansC. Distraint If a tenant fails to pay rent, what would the landlord first deliver to the tenant? A. Judgement B. 5-Day Notice C. Forcible Detainer D. Abandonment Notice - ansB. 5-Day Notice Actual Eviction Process:
- 5-Day Notice (Go to Step 2 if not paid in 5 days)
- Forcible Entry and Detainer (Detainer document mailed to tenant by Court. If Tenant still doesn't pay, Landlord asks Court to go to Step 3.)
- Writ of Restitution (Document affixed to door. If tenant doesn't leave as ordered, officer forcibly removes them.) When a landlord will not maintain property and the tenant moves out, this is called: A. Constructive Eviction B. Actual Eviction C. Forcible Detainer D. Writ of Restitution - ansA. Constructive Eviction When a property manager manages a property, he owes the owner: A. Fiduciary B. Universal Agency
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C. Sales reports of properties in the area D. Agency by implication - ansA. Fiduciary Which of the following must have a real estate license? A. Trustee B. Property Manager C. Attorney in Fact D. For Sale by Owner - ansB. Property Manager A property management agreement would contain all of the following EXCEPT: A. Frequency of reports B. Method of reporting on prospective tenants C. Cancellation provisions D. Amount of money a manager can spend on repairs - ansB. Method of reporting on prospective tenants What is not part of a typical property management agreement? A. Beginning and ending date B. Frequency of management reports C. Thirty-day cancellation clause D. Annual Budget - ansD. Annual Budget A property owner may refuse to rent to a prospective tenant under which of the following conditions: A. Tenant has a disability B. Tenant receives government aid C. Tenant is a convicted drug user D. Tenant is in an alcohol treatment program - ansC. Tenant is a convicted drug user Who may not appear on a property management trust account? A. Designated broker B. Salesperson C. Management employee D. Property Owner - ansD. Property Owner What would not be required of a real estate brokerage office? A. Broker must initial all contracts within 10 days B. The broker shall keep contracts for five years from termination C. The broker needs to be in day-to-day control of the business D. Brokerage firms are required to maintain a trust account. - ansD. Brokerage firms are required to maintain a trust account. Earnest money is put into a broker's trust account for the benefit of the buyer and seller. The broker removes the money from the trust account in order to pay operating expenses. What would this action be considered? A. Conversion B. Commingling C. Subordination D. Defeasance - ansA. Conversion
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B. Commissioner's rules C. Statute of Fraud D. Arizona Constitution Article XXVI - ansD. Arizona Constitution Article XXVI The real estate rules are formulated by: A. Advisory Board B. Commissioner C. Governor D. State Legislature - ansB. Commissioner The Commissioner has the power to do all of the following EXCEPT: A. Prescribe rules and regulations B. Investigate signed written complaints C. Examine office records D. Create real estate statutes - ansD. Create real estate statutes The Real Estate Advisory Board is appointed by the: A. Attorney General B. Public Election C. Governor D. Commissioner - ansC. Governor Which of the following listed below is true regarding the Real Estate Advisory Board? A. The Board will formulate new rules B. The Board may revoke a salesperson's real estate license C. The Board is appointed by the Real Estate Commissioner D. The Board will advise and evaluate the Commissioner - ansD. The Board will advise and evaluate the Commissioner How many people are required in order to have a real estate brand office? A. 1 B. 2 C. 3 D. 4 - ansA. 1 A subdivision public report is required on the following properties EXCEPT: A. Residential timeshare B. New home sales C. Residential lot sales D. Commercial lots - ansD. Commercial lots It is said that agency is comprised of common law. This means: A. It is state law. B. It is federal law. C. Whatever the seller and broker decide. D. It is established by tradition and court decisions. - ansD. It is established by tradition and court decisions. Who is the principal in a real estate transaction? A. Customer
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B. Client C. Broker D. Sub-Agent - ansB. Client In an agency relationship, the broker would owe fiduciary to which of the following parties? A. Sub-agent B. Co-operating broker C. Client D. Customer - ansC. Client When a buyer is considered a customer, the salesperson would owe the buyer all of the following EXCEPT: A. Ethics B. Fiduciary C. Disclosure D. Truthful Information - ansB. Fiduciary When a broker takes a listing on a commercial building, the broker is considered: A. A general agent B. A special agent C. A universal agent D. A dual agent - ansB. A special agent If a broker wishes to legally collect a commission in a dual agency: A. Written consent is required from both buyer and seller B. Oral consent is needed from the seller C. Written consent is needed from the buyer only D. Written consent is needed from the buyer along with notification to the real estate department - ansA. Written consent is required from both buyer and seller What agency relationship requires informed consent from the principals? A. Buyer brokerage B. Sub-agency C. Single agency D. Dual agency - ansD. Dual agency A broker is hired by a seller to sell the client's real property. The broker must obey which of the following? A. The concept of buyer beware B. All lawful instructions of the client C. All of the buyer's instructions D. Full disclosure to the buyer of any and all information - ansB. All lawful instructions of the client When a broker misappropriates funds, this is called: A. Conversion B. Commingling C. Conveyance D. Consideration - ansA. Conversion
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A. Buyer and broker B. Buyer and seller C. Seller and broker D. Seller and subagent - ansB. Buyer and seller Jim makes an offer and Jill accepts. If Jill dies, what is the contract status? A. Void B. Voidable C. Unenforceable D. Valid - ansD. Valid John makes an offer to Joe, and Joe makes a counter offer. Joe dies before the counter offer is accepted. What is the contract status? A. Valid B. Void C. Enforceable D. Bilateral - ansB. Void What would a contract be considered if it has no force and effect? A. Unenforceable B. Voidable C. Voidable by one party D. Void - ansD. Void Void means does not meet the criteria for contract law or has illegal intent. Unenforceable often appears valid but for some reason cannot be enforced by either party because one or more key elements is missing because of Statute of Frauds, Statute of Limitations or Doctrine of Laches When a contract is missing a legal description, it would be considered: A. Valid B. Voidable C. Unenforceable D. Void - ansC. Unenforceable Alex makes an offer on Bob's property through a cooperating broker. Alex would be considered the: A. Grantor B. Grantee C. Vendor D. Offeror - ansD. Offeror Alex delivers a contract to Jeffrey and gives Jeffrey five days to accept the offer. One day later, Alex withdraws the offer. What is true? A. Alex must give Jeffrey five days B. Alex may withdraw the offer C. Jeffrey may sue Alex for specific performance D. Jeffrey must give written permission for Alex to back out - ansB. Alex may withdraw the offer
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Balloon Payment - ansA lump-sum payment due at the end of a mortgage contract period. Baseline - ansA primary line running east to west that establishes a north and south boundary in the rectangular survey system of legal land description Basis - ansA buyer's initial cost for a real estate purchase; the dollar amount the Internal Revenue Service attributes to an asset in determining annual gain or loss, or depreciation, on the sale of an asset Benchmark - ansLocal markers that surveyors can use as starting point for determining elevation Bilateral Contract - ansA contract in which the parties expressly enter into mutual agreements or engagements. Each party promises to perform some act Blanket Mortgage - ansA single mortgage loan where two or more different parcels of property are offered as security for the loan. Parcels are released as security as each is sold. Blockbusting - ansAn illegal act whereby owners are encouraged to sell their properties because minorities are moving into their neighborhood. Also Panic Selling or Panic Peddling Boot - ansTaxable, not like-kind property used in an exchange, such as cash or other personal property that is used to balance an exchange of real property; can be borrowed Bring Down Endorsement - ansAn extension of a title search to verify that no liens have been filed against a property between the time of the original search and the recording of the deed or mortgage Broker's Trust Account - ansA bank account, separate from a real estate broker's personal and business accounts, used to segregate trust funds from the broker's own funds. Not required in Arizona as most brokers use the title/escrow company for holding transaction funds (which must be done within 3 banking days), but if one exists, it must be reconciled monthly and interest must be removed annually. Budget Mortgage - ansA mortgage agreement where payments include principal and interest on the loan plus 1/12 of the year's property taxes and hazard insurance premiums Buffer Zone - ansA tract of land between two differently zones areas Bulk Land - ansParcels of land that are 160 acres or larger Bulk Sale Transfer - ansTransfer of title to personal property under the Uniform Commercial Code (UCC) Bundle of Rights - ansLegal rights conferred to owners of real property, including Disposition, Enjoyment, Exclusion, Possession and Control C Corporation - ansA legal entity owned by its shareholders that has limited liability. The corporation is taxed as an entity as well as the dividends received by the shareholders therefore, double taxation Caisson - ansColumn lots the form the structural support of air lots Capital expenditures - ansAn expense incurred to improve property Capital Gains - ansThe gain from the sale of a capital asset, i.e. one held for investment purposes Capital improvement - ansThe addition of a permanent structural change or restoration of some aspect of real property that will either enhance the property's value, increase its useful life, or adapt it to a new use
