UPDATED REAL ESTATE FINAL EXAM QUESTIONS WITH 100% VERIFIED AND CORRECT ANSWERS

UPDATED REAL ESTATE FINAL EXAM QUESTIONS WITH 100% VERIFIED AND CORRECT ANSWERS "Arizona property taxes are based on: a. Prorate share b. Assessed value c. Front footage d. Transfer value - CORRECT ANSWER b. Assessed value" "Fred's father grants him an estate in land, which is limited to the length of Fred's lifetime. What type of interest does Fred's father retain in the land? a. A fee simple estate b. A life estate c. Pour autre vie d. A reversionary interest - CORRECT ANSWER b. A life estate" "Bob sells his property to Carl. Carl makes a down payment of $15,000. Bob carries back a note for the balance. On the closing statement, the carryback note would be shown as: a. A debit to the buyer b. A debit to the buyer and a credit to the seller c. A credit to the seller and a debit to the buyer d. A debit to the seller - CORRECT ANSWER d. A debit to the seller" "In the use of a trust deed, which of the following MAY serve as a trustee? a. The trustor b. The beneficiary c. A member of the Arizona State Bar d. A broker involved in the transaction - CORRECT ANSWER c. A member of the Arizona State Bar" "In Arizona, which of the following legal descriptions measures the smallest unit of property? a. Government check b. Lot and block c. Monument survey d. Government survey - CORRECT ANSWER b. Lot and block" "In Arizona, the property tax assessment rate applied to owner occupied residential property is: a. 10% b. 12% c. 14% d. 16% - CORRECT ANSWER a. 10%" "Any person who passes the examination for broker or salesperson, MUST activate their license within how many months after the examination date to avoid retaking the examination? a. 12 b. 9 c. 6 d. 3 - CORRECT ANSWER a. 12" ""Puffing" relates to exaggerations not made as representations of fact. That is: a. Discouraged by the Arizona Department of Real Estate. b. A violation of the Arizona Revised Statutes. c. Illegal d. Prohibited - CORRECT ANSWER a. Discouraged by the Arizona Department of Real Estate." "Lydia Goodheart has made a written offer to purchase Bud Perkins' home. The offer states that Perkins has five days in which to accept it. The day after Goodheart made the offer and prior to Perkins' acceptance, she informs the broker that she wants to withdraw the offer. The broker should tell Goodheart that: a. That the offer is irrevocable and she must wait four more days. b. Only her death would revoke the offer prior c. She may not resubmit the offer once the five-day period has expired d. She can withdraw the offer and demand the return of her earnest money - CORRECT ANSWER d. She can withdraw the offer and demand the return of her earnest money" "Kickbacks to the lender from service providers are prohibited by: a. RESPA b. Truth in Lending Act c. Equal Credit Opportunity Act d. FHA - CORRECT ANSWER a. RESPA" "Recording does NOT give: a. Actual Notice b. Constructive Notice c. Priority as to the interest d. A presumption of delivery - CORRECT ANSWER a. Actual Notice" "Depreciation is divided into three types-physical deterioration, functional obsolescence and: a. Curable obsolescene b. Economic obsolescene c. Substitution obsolescene d. Neo-obsolescene - CORRECT ANSWER b. Economic obsolescene" "In estimating the market value of an income producing property, an appraiser should consider all of the following objectives EXCEPT the: a. Projected net operating income (NOI) b. Estimated value of the land, plus replacement cost of the improvements c. Sales price of the subject property d. Recent sales prices of similar properties - CORRECT ANSWER c. Sales price of the subject property" "In Arizona, the statutory redemption period after a judicial foreclosure is: a. One month b. Three months c. Six months d. One year - CORRECT ANSWER c. Six months" "If during negotiations one party crosses out or changes any wording in a contract: a. Each party must initial the change in the margin for it to be valid b. The whole contract becomes void c. The document must be retyped d. The statute of frauds requires the document to be notarized - CORRECT ANSWER a. Each party must initial the change in the margin for it to be valid" "If a commission amount or percentage is NOT stated in the listing agreement: a. The broker would not be entitled to a commission b. The legal rate of interest would apply c. The normal rate of commission would apply d. The Real Estate Commissioner would determine the rate to be applied - CORRECT ANSWER a. The broker would not be entitled to a commission" "An eligible veteran made a purchase offer of $130,000 on a home he wants to finance with a VA-guaranteed loan. Four weeks after the offer was accepted, a certificate of reasonable value (CRV) for $127,000 was issued for the property. In this situation, the veteran could not do which of the following? a. Withdraw from the transaction without penalty b. Purchase the property with a $3,000 cash down payment c. Negotiate with the seller to reduce the price by $3,000 d. Borrow the $3,000 for the cash down payment - CORRECT ANSWER d. Borrow the $3,000 for the cash down payment" "It is discovered after a sale that the parcel is 20 percent smaller than the owner represented it to be. The broker, who passed on the information to the buyer is: a. Not liable as long as he only repeated seller data b. Not liable if the buyer actually saw what he was getting c. Not liable if the misrepresentation was unintentional d. Liable if he knew or should have known of the difference - CORRECT ANSWER d. Liable if he knew or should have known of the difference" "If more than one offer on a property is received, the listing broker MUST present: a. The first offer b. The last offer c. The best offer d. All offers - CORRECT ANSWER d. All offers" "In a real estate transaction, both the seller's agent and the buyer's agent are legally required to put whose interest first? a. Their own prospect's b. The buyers' c. The seller's d. Their principal's - CORRECT ANSWER d. Their principal's" "Homeowner's Association fees are levied: a. Monthly b. Quarterly c. Semi-annually d. Annually - CORRECT ANSWER d. Annually" "In Arizona, prior to obtaining a Public Report, a subdivider may accept only: a. A ground lease b. A building contract c. A lot reservation d. A purchase contract - CORRECT ANSWER c. A lot reservation" "The only thing a subdivider can sell before receiving the commissioner's Public Report is: a. An undivided interest b. An estate of inheritance c. A lot reservation d. An option contract - CORRECT ANSWER c. A lot reservation" "Which of the following is a requirement for a valid agency relationship? a. Written agreement b. Compensation c. Mutual consent d. Brokerage license - CORRECT ANSWER c. Mutual consent" "What is it called if property passes back to the state? a. Succession b. Escheat c. Will d. Bequeath - CORRECT ANSWER b. Escheat" "Which of the following agreements is required to be in writing? a. Commission agreements between brokers b. Leases for one year c. Listing agreements d. Month to month rental agreements - CORRECT ANSWER c. Listing agreements" "The statute of frauds requires that: a. Real estate brokers answer buyer's and seller's question honestly b. The seller of real estate provides a written disclosure of the condition of the property c. Certain contracts, including those for the sale of real estate, must be in writing to be enforceable d. A mortgage borrower has three days in which to cancel the loan - CORRECT ANSWER c. Certain contracts, including those for the sale of real estate, must be in writing to be enforceable" "Under a contract for deed (land contract), when is the buyer entitled to a warranty deed? a. When the property is sold b. Anytime during the term of the contract c. After the final payment under contract has been made d. Only after 50% of the purchase price has been paid - CORRECT ANSWER c. After the final payment under contract has been made" "Who would have the legal authority to sign the name of the seller to a contract of sale? a. A special agent b. An attorney-in-fact c. The listing broker d. An attorney at law - CORRECT ANSWER b. An attorney-in-fact" "When a buyer purchases a parcel of land, which of the following is true regarding the mineral rights? a. The mineral rights remain with the seller b. The mineral rights will transfer to the buyer c. The mineral rights remain with the state d. The federal government retains ownership and control of all mineral rights - CORRECT ANSWER b. The mineral rights will transfer to the buyer" "What is the minimum number of classroom hours or prescribed education necessary for renewal of an Arizona real estate license? a. Twelve b. Six c. Eighteen d. Twenty-four - CORRECT ANSWER d. Twenty-four" "The priority of mortgages in relation to each other is based on which of the following: a. Time of execution b. Time of recording c. Time of delivery d. Time of acknowledgement - CORRECT ANSWER b. Time of recording" "The maintenance and repair costs for the common area expenses of a condominium are allocated to unit owners and monthly assessments are paid after the assessments are established by the Homeowners Association Board of Directors based on the: a. Monthly bills b. Quarterly bills c. Annual budgets d. Quarterly budgets - CORRECT ANSWER c. Annual budgets" "The rules under which Arizona real estate licensees operate are prescribed by the: a. Real estate commissioner b. State legislature c. Governor d. Real estate advisory - CORRECT ANSWER a. Real estate commissioner" "Which of the following is NOT true regarding a property management trust account? a. Multiple properties can be in one trust account b. A salesperson can be a signator on the trust account c. A salesperson signator may sign checks for paying miscellaneous maintenance fee d. An unlicensed employee of a property management firm may not sign checks on the property management trust account - CORRECT ANSWER d. An unlicensed employee of a property management firm may not sign checks on the property management trust account" "Which of the following is TRUE as to quitclaim deeds? a. They convey after acquired title b. They convey a warranty of merchantability c. They are often used in lieu of title insurance d. They can convey a partial interest - CORRECT ANSWER d. They can convey a partial interest" "The mortgage MOST commonly uses: a. Compound interest b. Simple interest c. Discounted interest d. Prepaid interest - CORRECT ANSWER b. Simple interest" "Under Arizona law, the trust deed conveys the power of sale to the: a. Trustor b. Trustee c. Beneficiary d. Grantee - CORRECT ANSWER b. Trustee" "The person making an acknowledgement on a deed is BEST described as the: a. Grantor b. Grantee c. Broker d. Notary public - CORRECT ANSWER a. Grantor" "The maximum amount of money that can be paid for any one license from the Recovery Fund is: a. $30,000 b. $20,000 c. $90,000 d. $40,000 - CORRECT ANSWER c. $90,000" "The portion of a deed that indicates what the grantee will "have and hold" is called: a. An estoppel clause b. The fee simple clause c. The defeasance clause d. An habendum clause - CORRECT ANSWER d. An habendum clause" "The priority of mortgages in relation in each other is based on which of the following? a. Time of execution b. Time of recording c. Time of delivery d. Time of acknowledgement - CORRECT ANSWER b. Time of recording" "What requires that all listings be in writing? a. The Arizona Constitution b. The Statute of Limitations c. The Law of Agency d. The Statute of Frauds - CORRECT ANSWER d. The Statute of Frauds" "The S1/2 of the NW1/4 of the SE1/4 of the SW1/4 of a section contains: a. 1 ¼ acres b. 2 ¼ acres c. 5 acres d. 10 acres - CORRECT ANSWER c. 5 acres" "The contractual right to collect a commission from a seller under an exclusive right to sell listing, belongs to the: a. Listing salesperson b. Listing firm c. Selling salesperson d. Selling firm - CORRECT ANSWER b. Listing firm" "The commission received by a broker who is a member of a multiple listing service is: a. Set by the multiple listing service b. Determined by the local realtors board c. Negotiated by the broker and the seller d. Negotiated by the buyer and the seller - CORRECT ANSWER c. Negotiated by the broker and the seller" "Tom signed a six-month listing agreement with real estate agent Vicky. After four months, Tom decided to take his house off the market and notified Vicky that he was canceling the agreement. At this point: a. Tom has no further obligation to Vicky b. Vicky can sue Tom for specific performance c. Tom's attempt to cancel the agreement is ineffective because the listing term hasn't expired d. Vicky can sue Tom for damages - CORRECT ANSWER d. Vicky can sue Tom for damages" "Which of the following sections in township is considered fractional? a. 6 b. 10 c. 12 d. 17 - CORRECT ANSWER a. 6" "The full cash value of a property is $90,000. It is assessed at 10% of the F.C.V. for tax purposes. The tax rate is $10.95 per $100 of assessed valuation. What is the simi-annual tax payments? a. $492.75 b. $985.50 c. $550.85 d. $476.50 - CORRECT ANSWER a. $492.75" "When a claim is settled by the Title Insurance Company, the Company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is called: a. Escrow b. Surety c. Subrogation d. Subordination - CORRECT ANSWER c. Subrogation" "Which of the following is not part of the Landlord/Tenant Act? a. Security deposits regulations b. Regulation of property management agreements. c. Notices for eviction. d. Notice period for condominium conversions. - CORRECT ANSWER b. Regulation of property management agreements." "What is the distance in miles from the principal meridian that describes Range 4 West? a. 12 to 18 b. 18 to 24 c. 24 to 30 d. 30 to 36 - CORRECT ANSWER b. 18 to 24" "The borrower's rights after a mortgage foreclosure are referred to as rights of: a. Forfeiture b. Reinstatement c. Foreclosure d. Redemption - CORRECT ANSWER d. Redemption" "The real estate recovery fund will be refunded if on June 30 the fund balance falls below: a. $30,000 b. $100,000 c. $300,000 d. $600,000 - CORRECT ANSWER d. $600,000" "When one is advised to add a tennis court to an apartment complex, this is determined by the appraisal principle of: a. Regression b. Progression c. Contribution d. Economic Life - CORRECT ANSWER c. Contribution" "The right to use water that is adjacent to the land is referred to as: a. Surface water rights b. Avulsion c. Riparian d. Reliction - CORRECT ANSWER c. Riparian" "The legal capacity of a person entering into a real estate contract is affected by: a. Age b. Sobriety c. Both A and B d. Neither A or B - CORRECT ANSWER c. Both A and B" "Which of the following elements is necessary in order for a mortgage to be considered valid? a. Recordation of the note b. Competent parties c. An alienation clause d. A federally regulated lender - CORRECT ANSWER c. An alienation clause" "There are two classifications of water law in Arizona. They are: a. Flowing and stagnant b. Non-navigable and navigable c. Ground and surface d. Percolated and underground rivers - CORRECT ANSWER c. Ground and surface" "When a salesperson with a brokers license is employed by a designated broker, the salesperson may use which of the following designations: a. D.B.W.F. term-95 b. Associate broker c. Affiliate broker d. Assistant broker - CORRECT ANSWER b. Associate broker" "When a water filtration plant is built in a residential area, this may subject homes in the area to: a. Physical depreciation b. Accelerated depreciation c. Functional obsolescence d. Economic obsolescence - CORRECT ANSWER d. Economic obsolescence" "The Arizona Homestead law protects an owner's equity up to: a. $50,000 b. $100,000 c. $125,000 d. $150,000 - CORRECT ANSWER d. $150,000" "Which of the following is NOT a characteristic of a fee simple title? a. It is free of encumbrances b. It is of indefinite duration c. It is transferable with or without valuable consideration d. It is transferable by will or intestacy - CORRECT ANSWER a. It is free of encumbrances" "The Federal Fair Housing Act does NOT apply to the sale of: a. Single family houses listed by licensed real estate brokers b. Commercial and industrial properties c. Multifamily dwellings of five or more units d. Vacant land for residential construction - CORRECT ANSWER b. Commercial and industrial properties" "A property is sold on July 15. The prepaid annual insurance is $750 and the annual water bill of $90 was prepaid on January 1. If these payments are prorated, what amount will be returned to the seller? a. $350 b. $387 c. $403 d. $456 - CORRECT ANSWER b. $387" "A buyer assumed a seller's 11%, $80,000 first deed of trust on the settlement date of June 13. The seller made the monthly payment of June 1 with interest in arrears. Which of the following is a CORRECT settlement entry for the interest? a. $439.92 seller's credit b. $293.28 buyer's debit c. $439.92 seller's debit d. $293.28 seller's debit - CORRECT ANSWER d. $293.28 seller's debit" "A subdivider hires a broker to sell his property. When the broker is out of town, the subdivider shows the property, quotes prices and takes deposits. The subdivider's actions: a. Were entirely proper b. Can be compensated by the broker c. Could make him subject to disciplinary action by the department of real estate d. Place the broker in jeopardy, since he is acting as an unlicensed salesperson - CORRECT ANSWER a. Were entirely proper" "A real estate licensee is usually presumed to be the agent of the: a. Party paying the commission b. Party with whom a written contract has been signed c. Owner of the property d. Buyer - CORRECT ANSWER b. Party with whom a written contract has been signed" "A licensee may do all of the following except: a. Sell in any area of the state b. Act in all business matters for the broker c. Find buyers d. Be named on the broker trust account - CORRECT ANSWER b. Act in all business matters for the broker" "A salesperson receives cash instead of a check as earnest money deposit. He should: a. Put it into a trust account b. Keep it for the commission c. Give it to the seller d. Give it to the broker - CORRECT ANSWER d. Give it to the broker" "A release clause provides for the release of: a. Brokers from liability b. Parcels of land from blanket mortgages or trust deeds c. Leases d. Listing agreements - CORRECT ANSWER b. Parcels of land from blanket mortgages or trust deeds" "All of the following are correct regarding an executory real estate purchase contract when one party is in bankruptcy proceedings, EXCEPT: a. The Trustee may deliver title if in the Trusteeʼs sole opinion it is in the best business interest to complete the transfer. b. The Trustee for the buyer may reject the agreement. c. The Trustee for a seller may not be able to deliver marketable title. d. Permission from the Bankruptcy Court is required for the Trustee to sell an asset of the Bankrupt estate. - CORRECT ANSWER ?* a. The Trustee may deliver title if in the Trusteeʼs sole opinion it is in the best business interest to complete the transfer." "A mortgage assumption on a settlement statement would appear as a: a. Credit to the seller b. Balance factor c. Debit to the buyer d. Credit to the buyer - CORRECT ANSWER d. Credit to the buyer" "A broker offers to prepare documents for a real estate transaction at a fee of $350. Which of the following is true? a. He cannot charge for this service b. He may charge for this service of both parties agree c. He may charge for this service if it is considered an escrow fee d. He may charge for this service if the fee is negotiable - CORRECT ANSWER a. He cannot charge for this service" "A real estate purchase transaction closes on February 15. The buyer does not record the deed until April 24. A judgment for $12,000 against the grantor is filed and recorded on April 21. The judgment: a. Is a lien against the property b. Is invalid relative to the subject property c. Constitutes a judgment inchoate d. Is a judgment in reversion - CORRECT ANSWER a. Is a lien against the property" "A real estate license is required for: a. A trustee selling real estate under a deed of trust b. An attorney-at-law in the performance of his duties c. Person employed by developer to answer questions concerning home sales. d. A receiver in bankruptcy or a person acting under a court order - CORRECT ANSWER c. Person employed by developer to answer questions concerning home sales." "A valid contract could be unenforceable because of: a. Lack of contractual capacity b. The Statute of Limitations c. The absence of consideration d. An illegal purpose - CORRECT ANSWER b. The Statute of Limitations" "An agent has an offer on a property listed by another real estate company. No one in the listing brokerage is available within 24 hours. The salesperson MUST: a. Have his employing broker present the offer b. Return the offer to the buyer c. Send the offer by registered mail d. Get written permission from the seller to present the offer - CORRECT ANSWER d. Get written permission from the seller to present the offer" "A broker is instructed not to show a property while the owner, a white, is away. While the owner is out of town, a black couple requests to be shown the property. The broker should: a. Show the property b. Refuse to show the property c. Ask HUD for an exception to the Fair Housing Act. d. Inform the prospects that the home is not available. - CORRECT ANSWER b. Refuse to show the property" "A real estate salesperson may NOT: a. Buy or sell real estate as a principal b. Accept a commission from another broker c. Show property on which her office has no listing d. Represent both buyer and seller in a transaction - CORRECT ANSWER b. Accept a commission from another broker" "A buyer who desires to reduce the contract interest rate on the thirty year promissory note from 8 3/8 percent to 8 percent per annum would pay: a. 2 points b. 3 points c. 4 points d. 5 points - CORRECT ANSWER b. 3 points" "A developer desires to offer for sale thirty time-share intervals in a resort property. Prior to offering such interests in the resort, the developer MUST obtain: a. Ownership free of encumbrances b. A public report issued by the Real Estate Commissioner c. Approval from the State Corporation Commission-Securities Division d. Time share zoning - CORRECT ANSWER b. A public report issued by the Real Estate Commissioner" "A plat is: a. A document used to record a subdivision of land b. A diagram used to show where and how buildings are to be constructed c. A process used to obtain zoning variances d. A surveying instrument used to identify property borders - CORRECT ANSWER b. A diagram used to show where and how buildings are to be constructed" "A property manager owes his fiduciary relationship to: a. The owners b. The tenants c. Both the owners and the tenants d. The homeowner's association - CORRECT ANSWER a. The owners" "A buyer of real property: a. Is always considered a customer. b. Is always considered a client c. May be a customer or a client d. Normally has a fiduciary relationship with the real estate salesperson - CORRECT ANSWER c. May be a customer or a client" "A licensed salesperson referred a buyer to an out of state broker who agreed to pay a commission for the referral. The licensed salesperson would be paid by: a. The buyer b. His broker c. The out of state broker d. Would not be paid since he is not licensed in the state - CORRECT ANSWER b. His broker" "A listing contract completed and signed by a salesperson is reviewed by the broker and: a. Must be initialed by the broker as approved within 5 days after being written b. Must be initialed by the broker as approved within 10 calendar days after being written c. Must be initialed by the broker as approved within 10 business days after being written d. Does not require broker approval - CORRECT ANSWER c. Must be initialed by the broker as approved within 10 business days after being written" "A tenant calls the property owner several times asking that a leaking roof be repaired. If the property owner refuses to fix it of there is unreasonable delay, the tenant may move out on the legal grounds of: a. Constructive eviction b. Inverse condemnation c. Hypothecation d. Non-conforming use - CORRECT ANSWER a. Constructive eviction" "When more than one offer is received on a subject property, the listing agent shall: a. present all offers to the seller including verbal offers b. present all written offers c. present all offers in the order they were received d. present the written offers only in the order they were received. - CORRECT ANSWER *? a. present all offers to the seller including verbal offers" "A mortgage lender agrees to lend 80% of the purchaser price for four points. If the purchase price of the property is $165,000, how much will the lender receive for the discount? a. $3,300 b. $6,600 c. $5,280 d. $8,250 - CORRECT ANSWER c. $5,280" "A broker and an owner discussed several types of listing agreements and decided upon an exclusive right to sell. The broker drafted the listing, but the owner did not sign it. The broker subsequently produced a willing buyer and demanded the commission from the owner based upon the exclusive right to sell. The commission is: a. Not due because the unsigned agreement amounts to a net listing. b. Due because there is an implied contract between the broker and owner. c. Due because an oral agreement is all that is required for an exclusive right to sell to be enforceable. d. Not due because the agreement was not signed by the owner. - CORRECT ANSWER d. Not due because the agreement was not signed by the owner." "A Phase I environmental assessment includes all of the following procedures EXCEPT: a. A site inspection b. Title research c. Hydrology studies d. Pollution cleanup - CORRECT ANSWER d. Pollution cleanup" "A fibrous mineral used for fireproofing, but which is considered to be a carcinogen is: a. Lead b. Popcorn c. Asbestos d. Radon - CORRECT ANSWER c. Asbestos" "A tenant leases an apartment, but the landlord fails to repair the water heater within a reasonable period of time. This situation can cause: a. Actual eviction b. Forcible detainer c. Constructive eviction d. Tenancy of sufferance - CORRECT ANSWER c. Constructive eviction" "A real estate agent in an agency relationship must exercise all of the following EXCEPT: a. Management b. Accounting c. Obedience d. Due Professional Care - CORRECT ANSWER a. Management" "A legal procedure or action brought about by one party to a contract to enforce the terms of the contract against the other party is: a. Lis Pendens b. Specific Performance c. Punitive Damages d. Exemplary Damages - CORRECT ANSWER b. Specific Performance" "All of the following are TRUE regarding an Unrepresented Seller Compensation Agreement, EXCEPT: a. The parties to the agreement are the Seller and Buyer b. The agreement has a beginning and expiration date. c. The compensation terms are included d. The agreement states that the Broker is acting solely as the Buyerʼs Agent - CORRECT ANSWER a. The parties to the agreement are the Seller and Buyer" "After initial assessments have been made by the homeowners association, they shall be made at least: a. Quarterly based on cost required b. Annually based on last month's cost required c. Annually based on an annual budget d. Annually based on the builder developer's projections - CORRECT ANSWER c. Annually based on an annual budget" "A broker prepares documents for a real estate transaction and charges a document preparation fee of $75. The charging of such a fee is: a. Acceptable if the parties to the transaction agree b. Prohibited by the Arizona real estate code c. Prohibited by Ariticle 26 of the Arizona Constitution d. Acceptable if it is called an escrow fee - CORRECT ANSWER c. Prohibited by Ariticle 26 of the Arizona Constitution" "A property is sold for $100000 with 5% being paid with the offer as a good faith deposit and then 20 days later an additional $10,000. How much does the buyer pay at closing? a. $10,000 b. $15,000 c. $80,000 d. $85,000 - CORRECT ANSWER d. $85,000" "A listing that is never advertised or entered into a multiple listing system is known as a: a. Pocket Listing b. Coming Soon Listing c. Open Listing d. Net Listing - CORRECT ANSWER a. Pocket Listing" "A broker brought a qualified buyer to the seller. However, at the close of escrow, the seller refused to pay the commission. The earnest money being held in the broker's trust account is the exact amount of the commission. What should the broker do? a. Keep one-half of the earnest money, and give the balance to the seller. b. Keep the entire amount in lieu of commission c. Turn the earnest money over to the seller and sue the seller for the commission d. Put the earnest money into escrow and wait for the court to decide. - CORRECT ANSWER c. Turn the earnest money over to the seller and sue the seller for the commission" "A provision in an executory contract that prohibits a debtor-inpossession from rejecting the contract pursuant to the Bankruptcy Code is: a. Unenforceable b. Illegal c. Voidable d. Enforceable - CORRECT ANSWER *? a. Unenforceable" "A seller accepts an offer that is accompanied by an earnest money check. How should the broker handle the check? a. Hold it until the buyer's loan is approved b. Hold it until the day of closing c. Deposit it in the escrow account d. Deposit it in the operating account - CORRECT ANSWER c. Deposit it in the escrow account" "A management agreement between an owner and a broker states that the management fee will be 7% of the first $200,000 of the annual gross rents collected and 8% of the rents collected that exceed that amount. If last year's gross rents collected totaled $222,500, how much was the management fee? a. $15,800 b. $16,688 c. $17,575 d. $17,800 - CORRECT ANSWER a. $15,800" "An advantage of a net lease to the lessee is: a. He can deduct mortgage interest on his income taxes b. He can deduct the property taxes on his income taxes c. He can deduct building depreciation on his income taxes d. He does not have to pay utilities - CORRECT ANSWER b. He can deduct the property taxes on his income taxes" "A seller is unable to convey a marketable, unencumbered title to a buyer. What action should the listing broker take with any earnest money held in escrow? a. Pay it all out to the seller b. Return it in full to the buyer c. Deduct any commissions and expenses due and pay the balance to the seller d. Deduct any commissions and expenses due and return the balance to the buyer. - CORRECT ANSWER b. Return it in full to the buyer" "A power of sale clause would MOST likely be found in: a. A mortgage b. A promissory note c. A trust deed d. A listing contract - CORRECT ANSWER c. A trust deed" "A type of loan where the lender pays the owner of the property a monthly income is called: a. A reverse annuity b. An open-end mortgage c. A flexible balance loan d. A blanket mortgage - CORRECT ANSWER a. A reverse annuity" "A seller makes a loan to the buyer to assist with the down payment and secures that loan with a lien on the property. This kind of lien is considered: a. An installment note b. A special assessment c. A purchase money mortgage d. A blanket mortgage - CORRECT ANSWER c. A purchase money mortgage" "A commercial property was in foreclosure and after the sale, the mortgagee did not receive enough money to satisfy the note. Which of the following statements is true? a. The lender can sue for a deficiency judgment against the borrower b. The lender would not be able to sue for a deficiency judgment c. The lender's only recourse if the property and the new owner d. The lender could only look to equity above the homestead exemption - CORRECT ANSWER a. The lender can sue for a deficiency judgment against the borrower" "A pre-transfer inspection of On-Site Wastewater Treatment Facilities is required on the re-sale of properties by the: a. Arizona Department of Environmental Quality b. Arizona Department of Real Estate c. Arizona Department of Agriculture d. Arizona Board of Technical Registration - CORRECT ANSWER a. Arizona Department of Environmental Quality" "A man sold his property for $88,000. He made a profit of 10%. What was the original cost of the property? a. $80,000 b. $79,000 c. $79,200 d. $80,800. - CORRECT ANSWER a. $80,000" Which two documents are necessary to establish a legally binding mortgage loan? - CORRECT ANSWER Promissory note and deed of trust The promissory note outlines the borrower's promise to repay the loan, while the deed of trust secures the property as collateral for the loan" "If a buyer defaults on a sales contract after providing $10,000 as earnest money for a $200,000 property, what can the seller do with the $10,000? - CORRECT ANSWER Keep the entire amount as compensation. Earnest money serves as a form of security deposit and is typically forfeited by the buyer in the event of default as a way to compensate the seller for any losses or damages" "Surface rights, air rights and subsurface rights are all rights that can be sold by a property owner while still retaining the property itself. These rights are known as: - CORRECT ANSWER Severable rights Surface rights, air rights, and subsurface rights can be sold separately and are called severable rights." "When an easement allows the use of a neighboring property which automatically transfers upon the sale of either dominant or servient property, it is called what type of easement? - CORRECT ANSWER Easement Appurtenant Appurtenant means "runs with the land". An easement Appurtenant is an easement allowing the use of a neighboring property which automatically transfers upon the sale of either dominant or servient property." "In real estate, what is the closest meaning to the term "quieting a title?" - CORRECT ANSWER Clearing any liens or encumbrances on a property. Refers to legal process of resolving any claims, deflects, or disputes that could cloud or challenge ownership rights of a property, ensuring a clear and marketable title." "What is the highest form of land ownership which includes the full and complete bundle of property rights? - CORRECT ANSWER Fee Simple Absolute It is the highest level of property ownership giving the owner(s) the right of possession, control, exclusion, enjoyment, & disposition." "If your broker sells a triangular parcel of land for $750 an acre, and your commission rate is 8%, what will be your commission if the land has a base length of 1,200 feet and a height of 700 feet? - CORRECT ANSWER $578.71 The triangular parcel's area is (1/2) x 1,200 ft x 700 ft = 420,000 square feet. There is 43,560 Sqft in an acre 420,000/43,560=9.65 acres x 750= $7,231.40 x 8% = $578.51" "Tom is constructing a new house valued at $100,000. Given that the average property value of his surrounding neighbors is $225,000, which principle suggests that Tom will experience a positive effect on his property value? - CORRECT ANSWER Principle of progression States that a property's value tends to increase when surrounded by higher-valued properties. Tom's property values may benefit from the higher average property value of his neighbors." "Bob Jones, who lacks a real estate license, hires Sally Salesperson to sell his property. During Sally's absence, Bob shows the property, provides price quotations, and accepts deposits. What are the implications of Bob's actions? - CORRECT ANSWER Bob's actions are illegal and can lead to legal consequences Conducting real estate activities without a license is prohibited in most jurisdictions. Bob's actions, such as showing the property, quoting prices, and accepting deposits, violate licensing requirements and can result in legal consequences." "What is the general purpose for cities to require building permits? - CORRECT ANSWER To require a minimum level of construction standards. This maintains the safety and well being of the public." "What is a true statement regarding the recording of a deed? - CORRECT ANSWER Recording a deed establishes ownership rights Recording a deed in the appropriate government office establishes the legal proof of ownership and protects the property rights of the owner." "The city of Brownwood plans to build a new water treatment facility but the land that is required is privately owned. Eminent domain allows the city to: - CORRECT ANSWER Take possession of the land against the owner's wishes, yet the owner must be compensated Eminent Domain allows the government to take possession of privately owned land for use by the public even at the objection of the owner as long as the property owner receives compensation." "When the appraised value of a property is given, it is based on: - CORRECT ANSWER Comparable sales The appraised value of a property is given by comparable sales as well as an opinion of the properties fair market value." "Agent Brook is preparing for a listing appointment and has gathered information to prepare a report of recent market data for the seller to review. The report agents reconcile to obtain a reasonable list price for a property based on current listings, recent sales, and expireds would be called: - CORRECT ANSWER Comparative Market Analysis (CMA) The report agents reconcile to obtain a reasonable list price for a property based on current listings, recent sales, and expireds is called a Comparative Market Analysis (CMA)" "What does the term "merchantable title" (or marketable title) refer to? - CORRECT ANSWER A title free from defects and legal encumbrances Refers to a property title that is considered clear and free from defects, liens, and other legal issues that could affect ownership rights or transferability." "Jon's tire store is being built across the street from Big Bob's tires. What appraisal principle describes this situation? - CORRECT ANSWER The appraisal principle of Competition states that two similar businesses attract more customers when within close proximity than they would separately." "If a landlord receives rent at the start of the month and sells the property 10 days later, how should the rent be prorated at settlement? - CORRECT ANSWER The rent is divided based on the number of days owned by the seller and buyer. To ensure a fair settlement, the rent should be prorated, dividing it based on the number of days the seller and buyer each own the property." "Which statement indicates that any verbal discussions made prior to a written contract are invalidated and cannot be considered? - CORRECT ANSWER Parol Evidence Rule States that any verbal agreements or discussions made prior to a written contract invalidated and cannot be considered in the contract's interpretation." "Which of the following formulas is used to determine value through the income approach in real estate? - CORRECT ANSWER Value = Gross Rent Multiplier x Monthly Rent The income approach calculates value by multiplying the Gross Rent Multiplier with the monthly rent, providing an estimation of property's worth based on its income potential." "The beautiful town of Big Bear is experiencing a fast influx of new residents. There are few homes on the market and no new construction developments in the works. What will this do to the price of the existing homes in the area? - CORRECT ANSWER The prices will increase The principle of supply and demand control property values. An influx of new residents in an area with limited housing drives property values up." "Homeowner Paul is selling his home without a real estate agent. He places an advertisement stating "Owner Financing 3% down payment" is Paul's advertisement in violation of the Truth in Lending Act? - CORRECT ANSWER No, property owners are not regulated by TRIL advertising requirements The Truth in Lending Act and Regulation Z regulates the terms used in lending advertisements by lenders. Property owners are exempt from the advertising requirements when selling their property." "At what point does the legal title to real property transfer from the seller to the buyer? - CORRECT ANSWER Closing or Settlement Legal title to real property typically transfers from the seller to the buyer at the closing or settlement, where all necessary documents are signed, funds are exchanged, and ownership is officially transferred." “A real estate salesperson advised a prospective buyer that the property the buyer was considering was scheduled for annexation into the city limits. This disclosure constituted which of the following: a. Disloyalty to principal b. Misrepresentation c. Required Disclosure to Buyer d. Violation of Confidentiality by Agent - CORRECT ANSWER c. Required Disclosure to Buyer" "Following the acceptance of a listing by a broker which laws govern the actions of the parties to the contract? a. The Laws of Retribution b. The Laws of Novation c. The Laws of Agency d. Common Law - CORRECT ANSWER c. The Laws of Agency" "In writing an offer to purchase, if the purchasers are husband and wife and the purchase is to be made in cash, in order for the new ownership to exist as community property it will be necessary to: a. Obtain only one purchaser's signature b. Obtain both the purchaser's signatures c. Have the one purchaser's signature acknowledged d. Have both purchaser's signatures acknowledge - CORRECT ANSWER a. Obtain only one purchaser's signature" "In Arizona, the use of surface water is governed by all the following, except: a. riparian rights b. Prior appropriation c. Reasonable use d. Recorded permit issued by the Department of Water Resources - CORRECT ANSWER a. riparian rights" "John Jamison, a salesperson with Taylor Realty, lists the property of Charles and Loretta Simpson for sale at $52,000. The Simpson's have told Mr. Jamison that they are pressed to sell and would accept a purchase price of $49,000. Jamison shows the property to Rand Evans and tells Evans he can purchase the property for $49,000. Jamison has: a. Property performed his duties to his client b. Violated his relationship with his client c. Acted in the best interest of all parties d. Typically acted as a salesperson is expected to act. - CORRECT ANSWER b. Violated his relationship with his client" "Chris is the broker hired to sell Erin's house. Chris shows the house to the Martin's, who want to put in an effort on it. At this point, what duties does Chris legally owe to the Martin's? a. Confidentiality and fairness b. Fairness and honesty c. Obedience and disclosure d. Confidentiality and honesty - CORRECT ANSWER b. Fairness and honesty" "Condominium ownership is MOST commonly represented by a: a. Deed b. Stock c. Bill of sale d. Proprietary - CORRECT ANSWER a. Deed" "In an advertisement offering her only house for sale, the owner states that she will give preference to cash buyers who are female and member of the Catholic religion. The owner subsequently refuses a cash offer because the offeror was a male Presbyterian. Which of the following is CORRECT? a. Since the seller only owned one house, she is exempt from the 1968 Act. b. Since the advertisement only states a preference, it is not discriminatory. c. Since the seller's main purpose was to obtain cash, the refusal is not discriminatory. d. Since the advertisement was in fact discriminatory, the seller's exemption is lost and she has violated the 1968 Act. - CORRECT ANSWER d. Since the advertisement was in fact discriminatory, the seller's exemption is lost and she has violated the 1968 Act." "If an apartment building's zoning classification changes from multifamily use to detached single-family use only, the owners of the apartment building are permitted to: a. Sell the apartment units as residential condominiums b. Add more apartments as long as they comply with the requirements of the former zoning classification c. Continue the present use as long as that use is not enlarged or discontinued d. Refurbish and expand the current building - CORRECT ANSWER c. Continue the present use as long as that use is not enlarged or discontinued" "Dick's listing sells and is scheduled to close in two weeks. Dick's broker, Harold receives disciplinary action from the Real Estate Commissioner for a prior act and his license is suspended. Which of the following statements is true? a. Harold and Dick are both entitled to a full commission b. Harold and Dick are not entitled to a commission c. Harold and Dick will be entitled to a commission, if Harold's license is reinstated d. Harold is not entitled to a commission but Dick is entitled to a commission - CORRECT ANSWER d. Harold is not entitled to a commission but Dick is entitled to a commission" "In Arizona, the charges for the day of closing are customarily: a. Charged to the seller b. Charged to the buyer c. Split between the seller and buyer d. Paid by the escrow company - CORRECT ANSWER b. Charged to the buyer" "If a seventeen-year old person enters into a contract to purchase real property, the contract is: a. Valid b. Unenforceable by either the buyer or the seller c. Void because the buyer is a minor d. Voidable by the buyer because he is a minor - CORRECT ANSWER d. Voidable by the buyer because he is a minor" "License real estate brokers are given authority to draw those documents necessary in the course of their work by: a. The Arizona Constitution b. The Real Estate Code c. The regulations of the Real Estate Commissioner d. The decision of the Arizona Supreme Court - CORRECT ANSWER a. The Arizona Constitution" "In a real estate transaction, transfer of title from the seller to the buyer occurs at the time of: a. Occupancy of the property by the buyer b. Exchange of money between the buyer and the seller c. Signing of a agreement of sale by both the seller and buyer d. Delivery and acceptance of the deed - CORRECT ANSWER d. Delivery and acceptance of the deed" "How many townships are contained in a twenty-four mile square? a. 24 b. 16 c. 12 d. 8 - CORRECT ANSWER b. 16" "Gail leased a commercial building to Sam for ten years. After six months, Sam moved out without notice. Gail advertised for a tenant. Gailʼs actions most likely relate to: a. Liquidated damages b. Mitigation of damages c. Punitive damages d. Severance damages - CORRECT ANSWER b. Mitigation of damages" "Prior to activating a new real estate sales license, the license is required to complete: a. A 6 hour Contract Writing course which cannot be used to meet the continuing education requirement when the license is renewed b. A 6 hour Contract Writing course which counts as a Contract Law course when the license is renewed c. A 6 hour Contract Writing course which counts as 3 hours of Real Estate Legal Issues and 3 hours of Contract Law when the license is renewed d. A 6 hour Contract Writing course which counts as an Agency Law course when the license is renewed. - CORRECT ANSWER c. A 6 hour Contract Writing course which counts as 3 hours of Real Estate Legal Issues and 3 hours of Contract Law when the license is renewed" "Articles of personal property owned by a tenant and solidly installed in his rented space for use in the business he conducts are known as: a. Fixtures b. Real Estate c. His leasehold interest d. Trade fixtures - CORRECT ANSWER d. Trade fixtures" "Charged Electric contracted with General Construction Corp to complete certain electrical wiring on a building being developed by Developer Co. The project started on September 15, 1999 and Charged Electric completed their part of the project on November 15, 1999. The project was completed on December 31, 1999. Charged Electric was not paid for its work and had previously given proper notice of its lien rights and recorded a mechanics lien against the building developed by Developer Co. on March 15, 2000. The lien was: a. A valid lien against the building since it was recorded before 120 days after completion of the project b. Not a valid lien because Charged Electric was engaged by General Construction Corp. c. Not a valid lien since the lien was recorded more than 60 days after Charged Electric completed their work. d. Not a valid lien since the lien was recorded more than 60 days after completion of the build - CORRECT ANSWER a. A valid lien against the building since it was recorded before 120 days after completion of the project" "For a homeowner to be eligible for a homestead exemption in Arizona, the following must exist, EXCEPT: a. The homeowner must own the property on which the exemption is filed b. The homeowner need not be married c. The homeowner must be a legal resident of Arizona d. The homeowner must record the declaration of homestead - CORRECT ANSWER c. The homeowner must be a legal resident of Arizona" "The 1988 Civil Rights Act prohibits discrimination as to: a. Familial status and age b. Age and sex c. Physical or mental impairment and religion d. Familial status and physical or mental impairment - CORRECT ANSWER d. Familial status and physical or mental impairment" "An individual who engages another to act for him is referred to as: a. Principal b. Testator c. Agent d. Customer - CORRECT ANSWER a. Principal" "Fred Darcy, a banchelor, sells his longtime home. How much capital gain can be realize without owing any federal income tax? a. $125,000 b. $250,000 c. $500,000 d. An unlimited amount - CORRECT ANSWER b. $250,000" "In which of the following appraisal methods DOES an appraiser need to determine a dollar amount for depreciation: a. Income approach b. Cost approach c. Market data approach d. Capitalization approach - CORRECT ANSWER b. Cost approach" "An appraiser is appraising a large house in an area of older lower priced houses. He notes that the property has four bedrooms but only one bathroom and no closets. The lack of closets and bathrooms is best defined as: a. Physical deterioration b. External obsolescence c. Functional obsolescence d. Curable depreciation - CORRECT ANSWER c. Functional obsolescence" "In determining the full cash value of real property for taxation purposes, the county assessor utilizes all of the following data EXCEPT: a. Comments from the local zoning authority b. Building permits issued for renovation purposes c. Reports from the assessor's field appraisers d. Affidavits of property value filed for comparable property - CORRECT ANSWER a. Comments from the local zoning authority" "At the end of the two-year license period, a licensee has NOT completed the required education courses to allow renewal of the license. The license is: a. Automatically reinstated for 30 days b. Automatically reinstated for 6 months c. Automatically reinstated for one year d. Expired - CORRECT ANSWER d. Expired" "Lou sells a property to Bud under an oral agreement for $100,000. Bud pays Lou $50,000 and agree to pay $25,000 each year for two years. Bud makes substantial improvements to the property and makes the first payment on time. One month before the final $25,000 payment is due, Lou declares the contract void. In this case, which of the following statements is CORRECT? a. The contract can be voided as long as it is done before the last payment is made b. The contract can be voided because it was an oral contract c. The contract cannot be voided because the statute of limitations had expired d. The contract cannot be voided due to the actions of the parties over time - CORRECT ANSWER d. The contract cannot be voided due to the actions of the parties over time" "Rank the following liens in the order of their priority for payment from highest to lowest: IRS tax lien; real property taxes; special assessments. a. IRS tax lien, real property taxes, special assessments b. Real Property taxes, special assessments, IRS tax lien c. Real property taxes, IRS tax lien, special assessments d. IRS tax lien, special assessments, real property taxes - CORRECT ANSWER b. Real Property taxes, special assessments, IRS tax lien" "Which statement BEST describes the prepayment clause in a mortgage? a. It stipulates the prorated amounts of taxes and insurance that must be included in the monthly payment b. It establishes the lender's position with regard to payments made before any liens are satisfied c. It allows the lender to accelerate the date of the mortgage under specific terms and conditions d. It allows the borrower to pay off the mortgage early under specific terms and conditions - CORRECT ANSWER d. It allows the borrower to pay off the mortgage early under specific terms and conditions" "The reason for submitting construction plans to the city before obtaining a building permit, is to: a. Supercede conflicting deedterm-7 restrictions b. Provide evidence of compliance with local regulations c. Prevent adjacent construction of incompatible uses d. Maintain municipal control over the density of land use - CORRECT ANSWER b. Provide evidence of compliance with local regulations" "Which of the following is true? a. All agency agreements must be in writing b. Since agency is a contract, there must be consideration c. A salesperson cannot create an agency relationship for his broker d. None of the above - CORRECT ANSWER d. None of the above" "The relationship between the seller and a listing broker is that of: a. Principal and agent b. Attorney and client c. Optioner and optionee d. Seller and purchaser - CORRECT ANSWER a. Principal and agent" "The owner of a property with a condition subsequent has: a. A remainder interest b. An estate for years c. Less than a freehold interest d. A defeasible estate - CORRECT ANSWER d. A defeasible estate" "The commissioner may deny the issuance of a Public Report for a new subdivision, if the developer is unable to: a. Deliver title or interest contracted for b. Meet the opening day deadline c. Provide floor plans and elevations d. Provide paved roads - CORRECT ANSWER a. Deliver title or interest contracted for" "When all parties to a contract have agreed to its terms, this is referred to as: a. Legality of contractual object b. Meeting of the minds c. Contractual competency d. Specific performance - CORRECT ANSWER b. Meeting of the minds" "What type of loan can change in payment, interest rate and amount owed? a. Open-end mortgage b. Take out mortgage c. Amortized mortgage d. Package mortgage - CORRECT ANSWER a. Open-end mortgage"