AZ Real Estate (Focus Cards) Flashcards

Question 1

Q

Large scale residential plan (includes PUDs) with large number of recreation amenities (parks, golf, lakes, bike paths, jogging trails)?

Answer

A

Master Planned Community -

Large scale residential plan (includes PUDs) with large number of recreation amenities (parks, golf, lakes, bike paths, jogging trails)

Chap 2

Question 2

Q

Restrictions imposed by developer for benefit of owners.

Cannot Violate Law or Public policy, follows Fair Housing Laws.
HOA and Owners enforce restrictions. Can seek Injuctive Relief in court.
Zoning vs Restrictions - most restrictive applies.
For Sale, For Rent, Solar Energy devices cannot be prohibited.

chap 2

Answer

A

Deed Restrictions - Restrictions imposed by developer for benefit of owners.

Cannot Violate Law or Public policy, follows Fair Housing Laws.
HOA and Owners enforce restrictions. Can seek Injuctive Relief in court.
Zoning vs Restrictions - most restrictive applies.
For Sale, For Rent, Solar Energy devices cannot be prohibited.

chap 2

Question 3

Q

A right across one property for benefit of the adjacent property.

Permanent Easement.
Dominant Parcel Benefits
Servient Parcel has easement across it.

Chap 2

Answer

A

Easement Appurtenant -

A right across one property for benefit of the adjacent property.

Permanent Easement.
Dominant Parcel Benefits
Servient Parcel has easement across it.

Chap 2

Question 4

Q

Method of taking title to or acquiring an interest in the property of another. Person must demonstrate in court possessed by:

Notorious, Open, Continous, Hostile use.

Chap 2

Answer

A

Adverse Possession -

Method of taking title or acquiring an interest in the property of another. Person must demonstrate in court that possesssion was by:

Notorious, Open, Continous, Hostile use.

Chap 2

Question 5

Q

Liens that are placed against “specific property” are called?

Real Estate Taxes - (Ad Valorem Tax)
Government Assessments
Mechanic’s Liens
HOA Liens

Answer

A

Specific Liens - Liens that are placed against “specific property”

Real Estate Taxes - (Ad Valorem Tax)
Government Assessments
Mechanic’s Liens
HOA Liens

Chap 2

Question 6

Q

Liens that are placed “against an individual” and “all real/ personal property” he or she owns are called?

Judgment Liens: Court Ordered
Income Tax Liens: By Government for nonpayment.

Answer

A

General Liens -

Liens that are placed “against an individual” and “all real/personal property” he or she owns.

Judgment Liens: Court Ordered
Income Tax Liens: By Government for nonpayment.

Chap 2

Question 7

Q

Liens *placed* *by the owner* and considered “specific liens” are called?

Mortgages
Trust Deeds
Land Contracts

Chap 2

Answer

A

Voluntary Liens - Liens *placed* *by the owner* and considered “specific liens.”

Mortgages
Trust Deeds
Land Contracts

Chap 2

Question 8

Q

When are “foreclosure cost” paid, in what priority order?

Answer

A

Lien Priority -

Property Taxes #1
Foreclosure Costs
Special Assessments
Mechanics Liens
HOA Liens

Chap 2

Question 9

Q

What are the 6 essentials for a contract?

Answer

A

6 Essentials for a Contract -

Competent Parties - Incompotent parties may void contract.
Valid Consideration - Money or valuables (labor/love).
Offer and Acceptance - All agree
Legal Object - Lawful
In Writing - per Statute of Frauds
Property Description - APN, Assessors Parcel #, Address

Chap 3

Question 10

Q

As per Statute of Frauds, what agreements must be in writing?

Answer

A

Statute of Frauds - Contracts that must be in writing:

Employment Agreement - Hires Broker
Agreement for Transfer/Sale - (Deeds, Purchase Contracts, Mortgages, Trust Deeds and Options)
Lease - More than Year
Any Agreement - Not to perform in 1 year.

Chap 3

Question 11

Q

A contract created from the actions or conduct of the parties is called?

Answer

A

Implied Contract -

A contract created from the actions or conduct of the parties.

Chap 3

Question 12

Q

Contract created when all terms have been specifically stated: “verbally or in writing.”

Answer

A

Expressed Contract -

Contract created when all terms have been specifically stated: “verbally or in writing.”

Chap 3

Question 13

Q

Right to buy or lease property within a specific period for specified price and terms. It is only binding on the owner.

Answer

A

Option -

Right to buy or lease property within a specific period** for **specified price and terms. It is only binding on the owner (optioner)

Chap 3

Question 14

Q

Right which allows holder to match any offer owner receives, if property is offered for lease or sale.

Answer

A

Right of First Refusal -

Right which allows holder to match any offer owner receives, if propety is offered for lease or sale.

If I decide to sell I will give you first opportunity.

Chap 3

Question 15

Q

When there is no contract at all, or it is not enforceable by law, is what kind of contract?

Answer

A

Void/Invalid Contract -

When there is no contract at all, or it is not enforceable by law.

Chap 3

Question 16

Q

Contract appears to be valid, but one of the elements is missing such as competent party (under 18), or maybe signed under duress, is called?

Answer

A

Voidable Contract -

Contract appears to be valid, but one of the elements is missing such as competent party (under 18), or maybe signed under duress.

Note: Incompetent party must void.

Chap 3

Question 17

Q

Listing not shared with “other agents in company” or MLS?

Answer

A

Pocket Listing -

Listing not shared with “other agents in company” or MLS?

Chap 3

Question 18

Q

Listing where broker is paid if he or another broker finds buyer, but “seller reserves right to sell property” without paying a commission.”

Answer

A

Exclusive Agency Listing -

Listing where broker is paid if he or another broker finds buyer, but “seller reserves right to sell property” without paying a commission.”

Chap 3

Question 19

Q

Listing where no cooperation/compensation is offered to “other companies.”

All Offers must still be presented
Buyer’s Agent may need separate compensation agreement.

Answer

A

“Exclusive” (office) Listing -

Listing where no cooperation/compensation is offered to “other companies.”

All Offers must still be presented
Buyer’s Agent may need separate compensation agreement.

Chap 3

Question 20

Q

Lien for unpaid commissions, only for commercial leases may be placed on lessor’s property is called?

Answer

A

Commission Liens -

Lien for unpaid commissions, only for commercial leases may be placed on lessor’s property. Only ones allowed in AZ.

Chap 3

Question 21

Q

Prohibits anti-competitive practices such as:

Brokerage no fixed commissions or prices
Telling Consumers commission are non-negotiable
Geographic non-compete areas
Boycotting other company listings

Answer

A

Sherman Anti-Trust Act -

Prohibits anti-competitive practices such as:

Brokerage no fixed commissions or prices
Telling Consumers commission are non-negotiable
Geographic non-compete areas
Boycotting other company listings

Chap 3

Question 22

Q

Promise given by seller of business not to compete in agreed area for a specific time.

Answer

A

Covenant Not to Compete -

Promise given by seller of business not to compete in agreed area for a specific time.

Chap 3

Question 23

Q

Who employs the agent?

Answer

A

Principal -

Employs the agent (broker), principal also called the client.

Chap 4

Question 24

Q

What fiduciary duties does the agent owed to customer?

Answer

A

Fiduciary Duties to Customer -

Fairness
Honesty
Good Faith
Compentency
Disclosure of Material facts

Chap 4

Question 25

Q

What are the CARLOD fiduciary duties owed to client?

Answer

A

Fiduciary Duties - owed to client (CARLOD: Confidentiality, Acctg, Reasonable Skill/Care, Loyalty, Obedience, Disclosure)

Confidentiality - Agent keeps actual price seller will accept, and buyer will pay confidential. In effect after expiration of agency indefinitely.
Accounting - Account to parties all moneys
Reasonable Skill/Care -
Contract Preparation
Marketing Efforts
Advising on Price/Market Conditions
Meeting Deadlines
Disclosure of Material Facts/Defects
Loyalty - Client’s Interest First
Obedience - Unless prohibited by Law
Disclosure -
Conflicts of Interest
Other Offers
Material Defects
Agency Relationship Status
Info Material to Client’s Interest

Chap 4

Question 26

Q

Which Fuduciary Duties do these fall under?

Contract Preparation
Marketing Efforts
Advising on Prices/Market conditions
Meeting Deadlines
Disclosure of Material Facts and Defects

Answer

A

Reasonable Skill and Care -

Contract Preparation
Marketing Efforts
Advising on Prices/Market conditions
Meeting Deadlines
Disclosure of Material Facts and Defects

Chap 4

Question 27

Q

Which Fiduciary Duties do these fall under?

Conflicts of Interest
Other Offers
Material Defects
Agency Relationship Status
Info Material to Client’s Interest

Answer

A

Disclousure (Fiduciary Duty)

Conflicts of Interest
Other Offers
Material Defects
Agency Relationship Status
Info Material to Client’s Interest

Chap 4

Question 28

Q

What Fiduciary Duties are owed to customer?

Answer

A

Fiduciary Duties Owed to “Customer -

Fairness
Honesty
Good Faith
Compentency
Disclosure of Material facts

Chap 4

Question 29

Q

What are clients duties to Agent (Broker)?

Answer

A

Clients duties to Agent (Broker) - CIP

Compensation
Indemnification (Hold Harmless)
Performance

Chap 4

Question 30

Q

Does payment of a fee create an Agency?

Answer

A

No -

Payment of a fee “does not” create an Agency.

Chap 4

Question 31

Q

What type of Agency is created by actions alone?

Answer

A

Implied Agency -

Created by actions of the parties.

Chap 4

Question 32

Q

Agency created by specific authorization either oral or written by the principal.

Answer

A

Expressed Agency -

Agency created by specific authorization either oral or written by the principal.

Chap 4

Question 33

Q

In New Home Sales who does the agent represent?

Answer

A

New Homes Sale Agency -

Agent represents Seller-Builder not buyer.

Chap 4

Question 34

Q

When a dual agency exists in brokerage. Agent must obtain permission using what form?

Answer

A

Consent to “Limited Representation” -

Written permission of both parties must be obtained if a dual agency exist in brokerage. This is the form used.

Chap 4

Question 35

Q

In a FISBO when representing the buyer and then taking the list. What form must be used?

Maintains “Single Agency” with buyer
Discloses that agent does not represent seller. but seller agrees to pay compesantion.

Answer

A

“Unrepresented Seller” Compensation Agreement -

Formed used by Buyer’s Agent in a FISBO (For Sale by Owner) when also taking the listing.

Maintains “Single Agency” with buyer
Discloses that agent does not represent seller. but seller agrees to pay compesantion.

Chap 4

Question 36

Q

What relationship is created by authorization of Principal?

Answer

A

Agencies -

Relationship created by Authorization of Prinipal.

Chap 4

Question 37

Q

What type of Agency is used to sell a home or do something specific, give limited authority?

Answer

A

Specific (Special) Agency -

Used to sell a home or do something specific and gives limited authority.Broker is Special Agent.

Chap 4

Question 38

Q

What type of Agency is used for “property management agreements” and give authorization for various business and personal matters?

Answer

A

General Agency -

Used for “property management agreements” and give authorization for various business and personal matters.

Chap 4

Question 39

Q

What type of “agency” that gives authority to represent principal in all matters? Think planets.

Answer

A

Universal Agency -

Agency gives authority to represent principal in all matters (planets)

Chap 4

Question 40

Q

Legal concept that information communicated to agent has been communicated to principal.

Answer

A

Inputed (Communicated) Notice -

Legal concept that information communicated to agent has been communicated to principal.

Chap 4

Question 41

Q

(Respondeat Superior) - Principle is responsible for agents actions.

Answer

A

Vicarios Liability (Respondeat Superior) -

Principle is responsible for agents actions.

Chap 4

Question 42

Q

Insures against claims when 3rd party is injured. Protects Broker and Agents

Answer

A

General Liability Insurance -

Insures against claims when 3rd party is injured. Protects Broker and Agents.

Chap 4

Question 43

Q

Insurance that protects against major claims (rain).

Answer

A

Umbrella Insurance -

Insurance that protects against major claims (rain).

Chap 4

Question 44

Q

Agent is what type of agent to broker?

Answer

A

Agent is General Agent -

He handles mutiple listings and sales for broker.

Chap 4

Question 45

Q

Ways to do what with Agency?

Performance
Mutual Agreement
Expiration of Term
Revocation by Principal/Agent
Destruction of Property
Bankruptcy of Principal
Death/Incapicity of Principal/Broker

Hint: Potential Money Elimated, Reason Destroys Bank Deposit.

Answer

A

Ways to Terminate Ageny (7)

Performance
Mutual Agreement
Expiration of Term
Revocation by Principal/Agent
Destruction of Property
Bankruptcy of Principal
Death/Incapicity of Principal/Broker

Hint: Potential Money Elimated, Reason Destroys Bank Deposit.

Chap 4

Question 46

Q

Death does not terminate what?

Answer

A

Purchase Agreements and Leases -

Death does not terminate.

Chap 4

Question 47

Q

When agent uses trust funds for his/her use is called?

Answer

A

Conversion of Funds -

When agent uses trust funds for his/her use.

Chap 5

Question 48

Q

In an assignment of lease or purchase contract, who has primary liablity?

Answer

A

Assignee Primary Liability -

Assignee has primary liabilty in assignment, and Assignor has secondary liablity in assignment.

Chap 5

Question 49

Q

What clause makes the sale contigent upon a certain event? Failure to fullfill voids the contract.

Answer

A

Contingency Clause -

Claue that makes the sale contigent upon a certain event. Failure to fullfill voids the contract.

Chap 5

Question 50

Q

Clause that makes sale contingent upon buyer obtaining financing. Specifies:

Loan amount,
Interest rate,
Terms
Commitment Date

Answer

A

Mortgage Contingency Clause -

Clause that makes sale contingent upon buyer obtaining financing. Specifies:

Loan amount,
Interest rate,
Terms
Commitment Date

Chap 5

Question 51

Q

What other contingencies are common in purchase contracts?

Answer

A

Common Contingencies in Contract -

Home Inspection
Roof
Mechanical Equipment
Termite Inspection

Chap 5

Question 52

Q

At the time deed and other documents are recorded, what occurs?

Answer

A

Close of Escrow -

At the time Deed and other documents are recorded,

Chap 5

Question 53

Q

A record of insurance losses on a property or related to a specific consumer is?

Answer

A

Claims History (Clue Report/Loss History Report) -

A record of insurance losses on a property or related to a specific consumer.

Chap 5

Question 54

Q

A court order to enforce the terms of a contract. When a person sues of damages is called?

Answer

A

Specific Performance -

A court order to enforce the terms of a contract. When a person sues of damages.

Chap 5

Question 55

Q

Obvious defects - Buyer is responsible. Let the buyer beware in latin?

Answer

A

Caveat Emptor -

Obvious defects - Buyer is responsible. Let the buyer beware in latin.

Chap 5

Question 56

Q

Legal remedy of canceling contract and restoring the parties to their original positions is called?

Answer

A

Recission -

Legal remedy of canceling contract and restoring the parties to their original positions.

Chap 5

Question 57

Q

A dispute resolution process conducted by third-party mediator who helps to resolve differences.

Answer

A

Mediation -

A dispute resolution process conducted by third-party mediator who helps to resolve differences.

Chap 5

Question 58

Q

To increase the “rate of return” through using borrowed money is called?

Answer

A

Leverage -

To increase the “rate of return” through using borrowed money.

Chap 6

Question 59

Q

Who looks for high yield, low risk, and good security?

Answer

A

Lender -

Looks for high yield, low risk, and good security.

Chap 5

Question 60

Q

What “hypothecates” the property as collateral for the debt?

Answer

A

Mortgage or Trust Deed -

“Hypothecates” the property as collateral for the debt. States legal description of property and recorded to establish priority.

Chap 6

Question 61

Q

Level payments of principal and interest is called?

Answer

A

Amortized -

Level payments of principal and interest.

Chap 6

Question 62

Q

Payments of PITI is what type of loan?

Answer

A

Budget loan -

Loan with Payments of PITI.

Chap 6

Question 63

Q

Loan with Interest Only during term, and principal due at maturity?

Answer

A

Straight/Interim/Short Term (Construction) -

Loan with Interest Only during term, and principal due at maturity.

Chap 6

Question 64

Q

Loan with Principal only payments. Interest shortage is added to unpaid principal balance.

Answer

A

Negative Amortization -

Loan with Principal only payments. Interest shortage is added to unpaid principal balance.

Chap 6

Answer 65

A

Conventional Loans -

Loans made with no government guarantee or insurance. Solely based on security and borrower’s ability to repay (20% down).

Chap 6

Answer 66

A

Purchase Money Loan -

Loan where seller becomes the lender, and buyer the borrower. Used when buyer has insuficient down payment.

Chap 6

Answer 67

A

Wraparound Loan -

Seller remains liable for existing loan and agrees to create new loan for buyer (at greater amount - includes first loan amount) at higher interest rate. Buyer takes no liability for existing loan.

Chap 6

Answer 68

A

Adjustable Rate Mortgage -

MTA - Monthly Treasury Average
LIBOR - London Interbank Offered Rate

Chap 6

Answer 69

A

Construction (Interim/Straight/Short Term) Loan -

Funds are advanced in installments as building progresses and with interest payments only. The principal is due at maturity of the debt.

Chap 6

Answer 70

A

Take-Out Loan -

Long-term financing replacing and paying off construction loan. Permanent loan for buyer.

Chap 6

Answer 71

A

Gap/Swing/Bridge Loan -

Short term loan on property “for sale” to allow owner to borrow funds for new home. Also used to bridge gap between time contruction loan expires and take-out loan is placed.

Chap 6

Answer 72

A

Reverse Annuity Loan (RAM) -

Lender makes payments to borower.

Chap 6

Answer 73

A

Non-Recourse Loan -

Loan in which the borrower is “not held” liable for debt.

Chap 6

Answer 74

A

Acceleration Clause -

Allows lender to declare loan balance immediately due and payable upon default

Chap 6

Answer 75

A

Prepayment Clause -

Lenders Yield Maintenance Clause.

Chap 6

Answer 76

A

Defeasance Clause -

Clause that states note/mortgage are null and void, when borrower pays off debt.

Chap 6

Answer 77

A

Release/Partial Release Clause -

Clause when “individual parcels release” from blanket mortgage.

Chap 6

Answer 78

A

Nondisturbance Clause -

Clause where lender agrees “not to terminate leases” in the event of a foreclosure.

Chap 6

Answer 79

A

Personal Guarantee Clause -

Clause that indicates which person is held personally liable if the default occurs. (Corps and LLC’s)

Chap 6

Answer 80

A

Usury -

Charging more than the rate set by law.

Chap 4

Answer 81

A

Contract/Note/Face Rate -

Rate specified on note or contract.

Chap 6

Answer 82

A

Legal Rate -

When no rate appears. Rate applied to judgments or court stipulated rate.

Chap 6

Answer 83

A

Conditional Commitment -

FHA Appraisal. Borrower pays MIP to protect lender.

Chap 6

Answer 84

A

Escape/FHA Amendatory Clause -

Clause that gives buyer a way out, if appraisal is not “equal or greater” than purchase price. Buyer must see appraisal.

Chap 7

Answer 85

A

No -

FHA or VA loans “do not” have prepayment penalties.

Chap 7

Answer 86

A

Certificate of Eligibility -

The certificate issued by the VA to veterans stating eligibilty and “guaranteed amount” (entitlement). When eligibility is paid-off eligibility is restored.

Chap 7

Answer 87

A

VA Funding Fee -

Charges in place of MIP on a VA loan.

Chap 7

Answer 88

A

CRV - Certificate of Reasonable Value -

Appraisal for VA Loan. 100% LTV

Chap 7

Answer 89

A

USDA Guranteed Loans (US Dept Agriculture) -

Assists lenders to provide low/moderate income households homes in eligible rural areas.

Chap 7

Answer 90

A

Down Payment Assistance (Pathway to Purchase) -

AZ Dept of Housing provides housing in hardest hit foreclosure areas.

Chap 7

Answer 91

A

Insured Conventional Loans -

Insured loan 81%-97% of appraised value that requires MI or PMI?

Chap 7

Answer 92

A

Discount Points/Buydown -

Fee charged by lender to increase the lender’s yield or to reduce borrower’s interest rate/payment.

Chap 7

Answer 93

A

HOA Reserve Funding -

Must be at least 10% of HOA “budgeted income”, 20% if “owner-occupancy” is under 50%.

Chap 7

Answer 94

A

DCR - Debt Coverage Ratio (above 1) -

Concerning Commercial Properties -

Gross Rent (YR) - Oper Expenses (YR) = Net Income
Net Income (YR) / Annual PI = DCR

Chap 7

Answer 95

A

Consumer Credit Transaction -

Property acquired for (personal, family or household) purposes - owner occupied 1-4 units.

Answer 96

A

Written Release from Lender (For Seller) -

When seller “does not” want to be liable for the loan, he must get what from lender?

Chap 7

Answer 97

A

Novation -

Process of lender rewriting terms of an existing loan.

Chap 7

Answer 98

A

Reduction Certificate/Assumption Letter -

Buyer receives from lender - verifying loan balance and terms when he takes over existing loan.

Chap 7

Answer 99

A

Financial Intemediaries (Primary Mortgage Market) - Originate Loans directly to borrowers

Commercial Banks/Credit Unions - Buy Loans in 2nd Market
Insurance Companies - Buy Loans in 2nd Market
Portfolio Lenders - Only Provide Loans
Mortgage Bankers/Bankers - “Sell Loans“ in 2nd Market

Chap 7

Answer 100

A

Commercial Banks/Credit Unions -

Who primarily “originates loans” in primary market and “buys loans” in secondary market?

Note: Insurance Companies and Fannie Mae “buy loans.”

Chap 7

Answer 101

A

Insurance Companies -

Makes Large Loans - directly to commercial and industrial borrowers.
Originate “Residential Loans” through Mortgage Companies
Buys Loans in Secondary Market

Chap 7

Answer 102

A

AZ Dept of Financial Institutions -

Licenses Mortgage Brokers and Bankers

Chap 7

Answer 103

A

Mortgage Brokers/Bankers -

Who may represent institutions such as life insurance co, pension funds, private investors in originating loans.
Sell Loans to Secondary Market
License by AZ Dept of Financial Institutions

Chap 7

Answer 104

A

Mortgage Loan Originators represent the Mortgage Brokers/Bankers

License by: AZ Dept of Financial Institutions.

Regulated by: Nationwide Mortgage Licensing System (NMLS)

Chap 7

Answer 105

A

Estoppel Certificate -

When lender assigns a loan/owner sells a property, they obtain a certificate verifying:

Borrower of Loan - Loan Balance and Interest Rate
Tenant of Lease - Lease Terms

Chap 7

Answer 106

A

“Buy loans” in Secondary Market -

Commercial Banks/Credit Unions/Insurance Companies
Fannie Mae

Chap 7

Answer 107

A

“Sell Loans” in Secondary Market -

Mortgage Brokers/Bankers
Ginnie Mae and Fannie Mae (Gov Sells)

Hint: The govenment and Mortgage Companies

Chap 7

Answer 108

A

Ginnie Mae (Gov Nat Mortgage Assoc) -

Issues “certificates” guaranteeing FHA and VA loans to secondary market purchasers
Offers Special Assistance: Federally Assisted “Low Income Housing.”

Chap 7

Answer 109

A

Fannie Mae (Fed Nat Mortgage Assoc) and Freddie Mac (Feddie Home Loan Mortgage Corp) -

Main Purpose: Buy Conventional Loans in secondary market
Sell Loans: by Issued Bonds secured by Mortgages
Conventional Loans: Set Standards
Created Loan App: (FNMA Form 1003)

Chap 7

Answer 110

A

Truth in Lending Act (Regulation Z)

Federal law that required lenders to Disclose All the Terms and Costs in Obtaining a Consumer Loan.

RESPA: Actual Disclosure of Settlement Costs (Loan Estimate/TRID Disclosure)

Chap 8

Answer 111

A

Truth in Lending Act (Regulation Z) -

Lender must Disclose All Terms and Costs to Obtain a Consumer Loan under this Federal Law.

Requires disclosure of
APR - Interest, discount pts, loan costs
Finance Charges
Owner-occupied: (1-4 units)
Institutional Lenders: Commercial Banks, Credit Unions, Investment/Insurance/Mortgage Companies - not Private Lenders
Advertising Trigger Terms - down/no/amount/period** of **payments, and finance charges - APR alone is okay.
Refinances

Chap 8

Answer 112

A

Real Estate Settlement Procedures Act (RESPA) -

Loan Estimate - 3 business days of loan application
Your Home Loan Tool Kit - CFPB’s settlement costs
TRID Closing Disclosure - 3 days prior to closing
Federal Mortgages Only - FHA, VA, USDA
Excess Money in Impounds - Prohibited
Affiliated Business Relationships
Kickbacks - unearned fees prohibited.
Title Companies - Seller cannot make buyer use

Chap 8

Answer 113

A

FCRA - Fair Credit Reporting Act -

Act that protects public against “inaccurate information” reported by credit bureaus.
Consumer has right to inspect credit bureau information reported and have corrected

Chap 8

Answer 114

A

ECOA - Equal Credit Opportunity Act -

Prohibits discrimination** in the **extension of credit on basis of race, color, national origin, religion, sex, but also

Marital Status
Age
Public Assitance Programs

Hint: Revoking Credit Never Really Sounds “Morally Accepted” or “Publicly Allowed“

Chap 8

Answer 115

A

ADA - Americans with Disabilities Act -

Prohibits discrimination against persons with disabilities by requiring equal access to public accomodations.

Commerical Properties required:

Handicapped Parking Spaces
Wheel Chair Ramps
Handicapped Restrooms

Chap 8

Answer 116

A

“Consumer Privacy” Act of 1974 -

Establishes a code of fair practices governing: collection, use, maintenance and dissemination of information** **about individuals. Must have written consent.

Chap 8

Answer 117

A

Federal Fair Housing Laws 1968 - Prohibits discrimination in the sale/rental advertising, and financing of housing based on:

Race
Color
Religion
Sex
Handicapped (1988)
Familial (1988)
National Origin

Hint: Realtors Can Really Sell Houses Fast Now

Chap 8

Answer 118

A

Federal Fair Housing Act 1968 (Prohibits -

Refusing to sell/rent/negotiate, and making housing unavailable.
Quoting different terms,conditions, services to different races, religions, etc
Advertising to certain people
Steering: Denying housing, steering people away or towards certain areas
Blockbusting: Encouraging owners to sell/rent because minorities moving in.
Redlining: Lender altering terms in specific areas.

Chap 8

Answer 119

A

Handicap (disability) -

Visual
Hearing
Speech Impairment,
Mental Illness
Heart Disease
Cancer
HIV Infection
Zoning/Deed Restrictions to prevent Group Homes “prohibited.”

Chap 8

Answer 120

A

Exemptions: Federal Fair Housing Act 1968 -

Sale of SFR (3 max units owned) -

Broker not used
Discriminatory Advertising “not used”

Rental of Rooms (1-4units)
Religious Organizations - race, color, national origin are not restricted
Private Clubs - Restricted to own members okay. (if not commercially operated)

Chap 8

Answer 121

A

Familial Status -

Refusing to rent or sell home to families with children under 18 is part of the Fair Housing Amendment of 1988

Chap 8

Answer 122

A

Equal Housing Poster -

Broker must obtain from HUD and display in his office or considered discrimination.

Chap 8

Answer 123

A

Discriminatory Advertising -

No Wheelchairs
Christian Handyman wanted
Close to Catholic Schools
White Neighborhood
Group pic with only some races

Chap 8

Answer 124

A

Fair Housing Act 1968 and 1988 / Complaint Process -

1 year - to file compaint to HUD
Investigation - try to conciliate problem
After Investigation (Report Prepared) may:
Dismiss Charges
If Guilty may:
Award Damages
Attorney General - Send Findings
Recommend: Suspension/Revocation

Chap 8

Answer 125

A

Civil Rights Act of 1866 (race and color) -

2 years to file complaints in federal court.

Chap 8

Answer 126

A

4 Major Elements of Value -

Demand - Desire
Utility - Marketability (unearned increment)
Scarcity - Supply
Transferability - Liquid

Chap 9

Answer 127

A

Market Value (Willing) -

Buyer/Seller willing to pay.

Appraisers estimate market value
Arm’s Length transaction - parties have equal bargaining positions
Non Arm’s Length transaction - foreclosures, relative sales, condemnation sales.

Chap 9

Answer 128

A

Market “Price” -

Actual amount paid for property.

Note: “Market Value” is what parties “willing” to pay.

Chap 9

Answer 129

A

Insurance Value -

Value of physical items subject to loss due to hazards.

Chap 9

Answer 130

A

Principle of Supply and Demand -

Value is affected by “scarcity” and “desire” for a product.

Chap 9

Answer 131

A

Principle of Highest and Best Use:

Use of property which will produce the greatest “Net Return”

Only One “Highest and Best Use” at any one time
Highest and Best Use based on - zoning, bldg codes*, and *surrounding market
Excess Land - Not used to support use.

Chap 9

Answer 132

A

Principle of Change -

Principle that real estate values “do not”remain constant. Changing economy and social conditions affect value.

Chap 9

Answer 133

A

Principle of Development, Equalibrium, and Disintegration -

Principle that property goes through phases of growth, stability, and decline.

Chap 9

Answer 134

A

Development -

Also known as “Growth”

Chap 9

Answer 135

A

Equilibrium -

Stability, Opposing forces balanced.

Chap 9

Answer 136

A

Disintegration -

Decline

Answer 137

A

Principle of Competition -

Principle where “profit breeds competition” and then reduces profit.

Chap 9

Answer 138

A

Principle of Anticipation -

Principle that values affected by expectation of future events.

Chap 9

Answer 139

A

Principle of Eternalities -

Principle that factors outside property can have positive or negative effect on value.

Chap 9

Answer 140

A

Directional Growth -

Direction that city/community is growing.

Chap 9

Answer 141

A

Earned Increment -

Increase due to effort of owner.

Chap 9

Answer 142

A

Unearned Increment -

Increase due to positive zoning changes, inflation, population increase, or increase in demand.

Chap 9

Answer 143

A

Deterioration -

Loss of value due to “wear and tear,” such as termites, weather damage, leaky roof, cracked paint.

Chap 9

Answer 144

A

Functional Obsolescense -

Loss due to “outdated features,” poor design, and “technological advances.”

Chap 9

Answer 145

A

Economic Obsolescense -

Loss due to outside factors, usually “incurable.”

Neighborhood conditions (Air/Noise Pollution)
Over-Improvement of Property
Negative Legislative Changes (Adverse zoning)
Business/Market Conditions

Chap 9

Answer 146

A

Plottage (Assemblage) -

Increase value by merging small parcels under one ownership.

Chap 9

Answer 147

A

Comparison-Direct Sales Approach/Market Data -

Estimating value of “subject property” by comparing similar recently sold properties (principle of substitution).

Relies Heavily On: Homes/Vacant Land
Relies on “lots of buyers” active in market
Comparables: “At Arms Length” (Equal Bargaining Position)
Adjustments: (Sold Date, Local, Financing, Features, Special Concessions - Cash, FSBO, REO)

Chap 9

Answer 148

A

Hybrid Appraisals -

Drive-By Appraisal - Exterior Inspections (Lender Comparables

Desktop Appraisal - No physical inspection - uses tax records or MLS data.

Automated Valuation Model (AVM) - Mathematical Model (Algorithm) combined with a database.

Chap 9

Answer 149

A

Replacement Cost -

Cost to produce “reasonable” duplicate

Reproduction Cost -

Cost to produce “exact” duplicate

Chap 9

Answer 150

A

Cost Approach/Summation -

Building Cost

- Depreciation

+ Land Value

Apraised Value

Heavily Relies: Churches, Muni Bldgs, New Construction - One of a Kind Properties

Chap 9

Answer 151

A

Square Footage - Living Area -

Measuring “exterior of building,” but only areas heated/cooled.

Not Included: Porches, Garages, Carports

Chap 9

Answer 152

A

Square Footage Under Roof -

Area of building “under roof.”Includes: Garages, Patios, and eaves.

Chap 9

Answer 153

A

URAR -

Uniform Residential Appraisal Report

Chap 9

Answer 154

A

Capitalization -

Process of converting “net income into value”.

Chap 10

Answer 155

A

Economic Life -

Period of time over which property will produce income.

Chap 10

Answer 156

A

Net Operating Income - (Formula)

Gross Income

- Operating Expenses

Net Operating Income

Chap 10

Answer 157

A

Capitalization Rate (Cap Rate) -

The “Rate of Return” an investor wants to receive or that property will produce.

Note: If risk, Cap Rate Increases, value decreases.

Chap 10

Answer 158

A

Capitalization (Income Approach) - IRV

Net (Income) Per Year

Value x Cap (Rate)

Chap 10

Answer 159

A

GRM - GROSS RENT MULTIPLIER -

Used to estimate values of “small income properties.”

Value (SP)

Gross Inc (Mo) x GRM

Answer 160

A

Reconciliation of Data -

Process of bringing data together from three appraisal methods to determine final value.

Chap 10

Answer 161

A

Licensed Appraiser -

May appraise 1-4 units under $1,000,000.

Chap 10

Answer 162

A

Certified Residential - Appraiser:

May appraise all types of 1-4 units residential.

Chap 10

Answer 163

A

Certified General - Appraiser -

May appraise all types of properties.

Hint: All Generals go to war in ALL lands

Chap 10

Answer 164

A

Appraisal Management Company -

A company that “acts as a firewall” between lender and an appraiser to prevent lender from choosing appraiser directly.

Chap 10

Answer 165

A

CMA - Competitive Market Analysis -

Analysis of current market conditions to help consumers to determine list price, sales price** or **purchase price.

Chap 10

Answer 166

A

BPO - Broker Price Opinion -

Evaluation prepared by broker/salesperson for lender who is considering short sale, foreclosure** or **home equity line of credit.

May not be called an appraisal!

Chap 10

Answer 167

A

ADEQ - AZ Dept of Environmental Quality -

Sets “state environmental” standards

Chap 10

Answer 168

A

ADWR - AZ Dept of Water Resources -

Regulates ground water use.

Chap 10

Answer 169

A

ADRE - AZ Dept Real Estate -

Commissioner’s rules require disclosure.

Chap 10

Answer 170

A

Lead-Based Paint -

This requirement under HUD Title X and pertains to homes built before 1978.

Disclose Presense.
Provide Records/Reports
Provide Lead-Based Paint Pamphlet
Provide 10days+ Inspect Property or Waive Right
Sales/Lease Contracts: Language Disclosure/Acknowlegements

Chap 10

Answer 171

A

Radon -

Ordorless, tasteless, radioactive gas - lung cancer.

Chap 10

Answer 172

A

Asbestos -

Airborne fibers - Respitory Diseases.

Chap 10

Answer 173

A

Mold -

Caused by “excess moisture” in buildings. Airtight windows (poor ventilation).

Chap 10

Answer 174

A

Contamination of “Surface/Groundwater” -

Contaminated Well Sites
Underground Plums
Waste Disposal Systems
LUST - Leaking Underground Storage Tanks

Chap 10

Answer 175

A

Soil Contamination -

Pesticides/Herbicides
Fertilizers/Solvents

Hints: Pest goto Herbs / Fertilizers Solve Problems

Chap 10

Answer 176

A

Fissures:

Caused by extensive groundwater withdrawals. Cracks in valley floors.

Chap 10

Answer 177

A

Discovery/Due Dilligence -

Process of “investigating property” to determine if “hazardous substances/pollution exist on property.

Chap 10

Answer 178

A

Brownfield -

Defunct, abandoned commercial/industrial building contaminated by hazardous wastes.

Chap 10

Answer 179

A

Phase 1 Assessment -

Inspecting property**, **reviewing public records, and “interviewing owners/tenants” (1) if contamination exists.

Chap 10

Answer 180

A

Phase II Assessment -

Taking samples (2) to analyze if pollution exist.

Chap 10

Answer 181

A

Superfund/Mini-Superfund Sites -

Properties within these sites, must be disclosed by Realtors.

Chap 10

Answer 182

A

Phase III Assessment -

Core Samples and more detailed assessments and actual clean-up of contamination.

Chap 10

Answer 183

A

Superfund -

Set up by the federal “Comprehensive Environmental Response - Compensation and Liablity Act (CERCLA) to bear cost of clean-up of polluted property.

Strict Liability - Current/Previous Owners

Chap 10

Answer 184

A

Mini-Superfund -

Set up under AZ (State) Law known as “Water Quality Assurance - Revolving Fund (WQARF) to bear cost of clean-up “not covered” under CERCLA.

Strict Liability - Current/Previous Owners

Chap 10

Answer 185

A

Floodplain -

Flat portion of land located along rivers/streams which are subject to flooding.

Floodplain Maps are developed by FEMA (Federal Emergency Mgmt Agency). If home deemed within this area, the lender requires “flood insurance” purchased.
National Flood Insurance Program - Operated by FEMA, provides insurance for owners/tenants/businesses.
Flood Elevation Certificates - Used by FEMA and private insurance companies “to rate” flood insurance policies.

Chap 10

Answer 186

A

Floodplain Maps

Maps developed by FEMA (Federal Emergency Mgmt Agency). If home deemed within this area, the lender requires “flood insurance” purchased.

Chap 10

Answer 187

A

National Flood Insurance Program -

Operated by FEMA, provides “insurance” for owners/tenants/businesses located in floodplain areas.

Note: Floodplain Maps are developed by FEMA (Federal Emergency Mgmt Agency). If home deemed within this area, the lender requires “flood insurance” purchased.

Chap 10

Answer 188

A

Flood “Elevation” Certificates -

Used by FEMA/Private Insurance Co: “to rate“ flood insurance policies.

Note: Floodplain Maps are developed by FEMA (Federal Emergency Mgmt Agency). If home deemed within this area, the lender requires “flood insurance” purchased.

Chap 10

Answer 189

A

Wetlands -

Land where “groundwater near the surface” so as to produce wetland community. Subject to federal, state, and local environmental controls for perservation and conservation.

Chap 10

Answer 190

A

“Arizona On-site Wastewater Facilities” (Septic Tanks) - Seller Responsibilities -

Within 6 mos Prior to Transfer - System inspected, pumped/cleaned and certified.
Inspection Report - to Buyer

Chap 10

Answer 191

A

“Arizona On-site Wastewater Facilities” (Septic Tanks) - Buyer’s Responsibilities -

Notice of Transfer - Buyer Complete - 15 days of purchase.

Chap 10

Answer 192

A

Percolation -

Ability of ground to absord/drain water.

Chap 10

Answer 193

A

Perc Test -

Test done to determine suitability of site for “installation of septic tank.”

Chap 10

Answer 194

A

Compaction -

Compressed Soil - added to site to fill in low areas.

Chap 10

Answer 195

A

Freehold Estate -

An Ownership Interest. Exclusive rights to enjoy the possession of a property for an undefined length of time.

Estate: degree/extent of interest in property (right, interest, tenancy, equity)

Chap 11

Answer 196

A

Leasehold Estate -

Right to possess/use property of another. Less than freehold estate.

Chap 11

Answer 197

A

Defeasible Fee Simple -

Ownership last as long as “certain conditions are met.”
Reverts back to grantor (reverter) if conditions violated.

Chap 11

Answer 198

A

Life Estates -

Ownership created for the life of one person. Holder is a life tenant.

Chap 11

Answer 199

A

Conventional Life Estate -

Life Estate created by one person, “for life of another person (life tenant).

Cannot “Will” interest
Cannot commit “waste (damage)” to property or its value.

Life Estate: Ownership created by the life of certain person. Holder is “life tenant.”

Chap 11

Answer 200

A

Estate in Reversion -

If Son creates “life estate” for Mom, and at Mom’s death reverts by to son. Son holds “Reversionary Interest”

Chap 11

Answer 201

A

Reversionary Interest -

Interest held by grantor “reverter” when property will be re-aquired.

Chap 11

Answer 202

A

Estate in Remainder -

Son creates a “life estate” for Mom. At Mom’s death it is passed to Sister.

Chap 11

Answer 203

A

Remainder Interest -

Interest held by one person “other than grantor” that will “aquire interest in future.”

Chap 11

Answer 204

A

Remainder Interest -

Mom conveys fee simple title to Son, but reserves a life estate for herself.

Person who holds interest is a Remainderman.

Chap 11

Answer 205

A

Demise -

Lease

Chap 11

Answer 206

A

Estate for Years (Tenancy) -

Rent paid for a “specified” and “definate period of time.”

Chap 11

Answer 207

A

Estate of Periodic Tenancy (Period to Period) -

Tenancy month to month, year to year, but for “indefinte period.”

Automatically renews, no termination date
Notice required

Chap 11

Answer 208

A

Estate at Will -

Estate where lessor gives “permission” to lessee to use property. A form of license or privilege.

Unspecified Time
No Notice to Terminate

Chap 11

Answer 209

A

Estate in Sufferance -

Estate with existing lease terminated but tenant is holding over wrongfully (holdover tenancy)

Rent is neither being paid or accepted.

Chap 11

Answer 210

A

Gross Lease -

Fixed Rent by tenant. Lessor pays all property expenses.

Chap 11

Answer 211

A

Net Lease/Triple Net Lease - (means everything paid by little man)

Tenant pays rent plus:

Property Expenses
Utilities
Real Estate Taxes
Insurance Premiums
Maintenance

Lessor just pays Debt Service (Mortgage Payments PI)

Chap 11

Answer 212

A

Percentage Lease -

Base Rent paid plus percentage of “gross sales volume.” Common in leasing retail space.

Chap 11

Answer 213

A

Sale Leaseback -

Owner sells property to investor who leases it back to seller. Seller becomes tenant.

Benefits for Seller

Frees Working Capital
Rent “Tax Deduction”
No Property Managment Anymore

Chap 11

Answer 214

A

Graduated Lease -

Increases/Decreases in rent. Lease with “escalator clause.”

Note: Grades go up and down

Chap 11

Answer 215

A

Index Lease -

Rent tied to Consumer Price Index. Can go up/down.

Chap 11

Answer 216

A

Anchor Lease -

Lease with “major tenant” such as department store.

Chap 11

Answer 217

A

Proprietary Lease -

Lease in “co-op” where tenant has right to rent particular unit.

Chap 11

Answer 218

A

Sublease/Sandwich Lease -

Lease where tenant (sub-lessor) rents to new tenant (sub-lessee).

Sub-Lessee (new tenant) pays Sub-Lessor
Sub-Lessor liable to/pays Lessor (as usual).

Chap 11

Answer 219

A

Assignment of Lease -

The Lessee (Assignor) transfers all rights to lease to “Third Party” (Assignee) who takes over lease.

Assignee (third party) pays Lessor
****Both Assignor/Assignee liable to Lessor.

Chap 11

Answer 220

A

Excess Rent -

Difference between contract rent and economic rent.

Chap 11

Answer 221

A

Positive Leasehold -

When “economic rent is higher” than contract rent.

Chap 11

Answer 222

A

Negative Leasehold -

When “contract rent is higher” than economic rent. (negative excess rent).

Chap 11

Answer 223

A

Tenant Improvements (TIs) -

Alterations or improvements to leased space for tenant.

Chap 11

Answer 224

A

Building Shell -

Roof, walls, floor, windows, and doors. Seperates inside from outside of building.

Chap 11

Answer 225

A

Certificate of Occupancy -

A certificate issued by government agency stating “building in compliance with building codes” and suitable for occupancy.

Chap 11

Answer 226

A

CAMs - Common Area Maintenance Charges -

Fees charged to commercial tenants to maintain parking lots***, ***walkways***, ***area lighting, etc.

Chap 11

Answer 227

A

Expense Stop -

Limits Landlord’s “Operating Expenses“
Tenant Pays Increases: In Taxes; Heating/Cooling Costs, etc.

Chap 11

Answer 228

A

Termination of Leases - 6 Ways -

Surrender and Acceptance - Mutual Agreement
Expiration of Term - Estate for Years
Breach of Terms - Actual Eviction** (Tenant); **Contructive Eviction (Landlord)
Destruction of Property
Eminent Domain - Condemnation Clause cancels lease
Foreclosure of Mortgage - Protecting Tenants at Foreclosure Act
Tenant - 90days Notice to Vacate/Honor Lease

Note: Death Does Not Terminate: in “Sale of Property/Death of Lessor/Lessee

Chap 11

Answer 229

A

Lessor Rights -

Receive Rent
Reversionary Rights - At Termination of Lease reverts back to Lessor.

Chap 11

Answer 230

A

Rights of Lessee -

Right to Quiet Enjoyment - Use of property without interference by lessor.
Trade Fixtures (Commercial) - Personal property of tenant’s business. Example: Partitions, Drapes, Machinery - Must be removed by termination of lease.

Chap 11

Answer 231

A

Decedent -

Person who died

Chap 12

Answer 232

A

Inheritance -

At death decedent’s estate is probated.

Chap 12

Answer 233

A

Probate -

Court Proceeding that validates the will, totals assets of deceased. and distributes them to heirs.

Chap 12

Answer 234

A

Testate -

Dies with a “will”.

Hint: T for Testimonial

Chap 12

Answer 235

A

Intestate -

Dies with “no will”.

Chap 12

Answer 236

A

Executor/Executrix -

“Person named in will” to carry out its provisions.

Hint: Executor “executes will.”

Chap 12

Answer 237

A

Administrator/Admnistratrix -

“Person appointed by Court” when no executor is named.

Hiint: Courts always have administrators.

Chap 12

Answer 238

A

Involuntary Alienation -

“Forced Transfer” through any of following:

Eminent Domain - Right of Gov to Take Property
Adverse Possession - Take Title by Court Action (Notorious, Open, Continuous, Hostile)
Foreclosure - Trust Deed, Mortgage Default

Chap 12

Answer 239

A

Voluntary Alienation -

“Uncoerced Transfer” by gift (dedication) or deed.

Chap 12

Answer 240

A

Tenancy in Severalty (Sole and Separate) -

Severalty Ownership by one person.

Natural or Legal Persons - Corps, Cities, etc
At Death - Decedent’s estate passes to heirs.

Chap 12

Answer 241

A

JTWRS - Joint Tenancy with Right to Survivorship -

Right to Survivorship. No Corporations, Convey interest of Joint Tenant, to a “Tenant in Common”

Time - Interest same time
Title - Same Deed
Interest - Equal Interest
Possession - Equal Rights to Possess

Chap 12

Answer 242

A

Community Property - Property acquired by spouses during marriage.

Both Spouses - Must Convey
At Death - Spouses half goes to heirs
Property received - by gift***, ***inheritance***, ***separate funds or acquired before marriage is “separate property.”

Chap 12

Answer 243

A

Tenancy in Common -

Co-ownership by two or more persons (natural or legal persons) with no right of survivorship.

AZ law assumes property is held as such unless otherwise specified.
Each holds separate and distinct undivided interest
Possession is only unity
At decedent’s (person who dies) death, goes to heirs.

Chap 12

Answer 244

A

Suit for Partition -

Legal action used to terminate a “tenancy in common” or “joint tenancy.”

Chap 12

Answer 245

A

Real Estate Syndications -

Pool of resources for Investment.

Chap 12

Answer 246

A

General Partnership -

Each partner has full liability of debts in partnership.

Chap 12

Answer 247

A

Limited Partnerships -

Composed of general and limited partners.

General Partners

Have full liability for debts
Actively manage the partnership

Limited Partners

Liability limited to original agreement
Passive Investors (Put Up Money)

Chap 12

Answer 248

A

Corporation -

Business entity made up of one or more persons (who receive stock shares) that is treated as a separate entity.

Chap 12

Answer 249

A

Trust -

Arrangement under which legal title to property is transferred and managed by trustee, for benefit of beneficiary.

Chap 12

Answer 250

A

REIT - Real Estate Investment Trust -

A company with at least 100 investors.

Own “income producing” real estate.
Investors received “favored tax treatment.”
Must invest 75% of assets in real estate
Payout to shareholders - 90% taxable income.

Chap 12

Answer 251

A

With any “Business Entity” -

Must determine who is authorized to sign on its behalf.

Chap 12

Answer 252

A

Security -

The sale interest of any entity is considered a “security”.

Chap 12

Answer 253

A

Blue Sky Laws -

Regulates “Securities” or interest in a company

Enforced by:

Securities & Exchange Commission (SEC) - Federal
Arizona Corporation Commission - State

Note: Real Estate Agents - Need Securities License.

Chap 12

Answer 254

A

Condominium -

Individual fee simple “ownership of a unit” plus** shared **ownership of common areas (bldg, land, parking, stairs, pool).

Can be Residential**, **Office, Industrial
Rules governing in Bylaws
Board of Directors - Meet Annually

Chap 12

Answer 255

A

Cooperative -

A corporation holds title to building and unit. Buyer “purchases shares” (stock) in corporation. Stockholder receives long term “Proprietary Lease” for apartment.

No Deed - to unit holder
Owner Sells - stock/leasehold interest
One Tax Statement - entire cooperative.
Cooperative: is a legal entity owned by a group of people who come together voluntarily for their mutual benefit.

Chap 12

Answer 256

A

Deed -

Transfers ownership of real property.

Chap 12

Answer 257

A

Bargain and Sale Deed -

Conveys the grantor’s interest but has no expressed warranty, only “implied warranty“ - Grantor has right to convey.

Types - Guardian’s Deeds, Executor’s Deeds, Trustee’s Deeds

Chap 12

Answer 258

A

Beneficiary Deed -

Grantor specifies who will receive real estate at death.
Grantor records deed (can be recinded or changed).
Supercedes Grantor’s Will
Property being sold when grantor dies, the contract enforceable after death.

Chap 13

Answer 259

A

Disclaimer Deed -

Document signed by one spouse prior to other spouse acquiring property, preventing community property.

Chap 13

Answer 260

A

Valid Deed Requirements (Signed,Acknowledged,Delivery/Accept)

Signed by the Grantor
Acknowledgment by Grantor:

Acknowledgment/Notarization - Formal declaration made before Notary Public. Protects against forgery. “Recorded.”

Delivery/Acceptance:

Recording implies delivery/acceptance - grantee accepts deed final step. Does not have to be recorded to be valid.

Chap 13

Answer 261

A

Constructive Notice -

Notice given when document recorded in county where property exists. Means by operation of law.

Note: Whatever deed is recorded 1st has stronger claim.

Chap 13

Answer 262

A

Actual Notice -

‘Notice** **by inspection of property**”, “**other records**,” or by “**actual knowledge” of a fact.

Note: Whatever deed is recorded 1st has stronger claim.

Chap 13

Answer 263

A

Affidavit of Value -

Must accompany deed when recorded
Signed by both parties
Sales Price/Property Description stated
Informs County Assessor of Sales Price
No “Transfer Tax” Stamps in AZ

Chap 13

Answer 264

A

Habendum Clause -

Clause that “defines interest” in deed. Also means “to have and to hold.”

Chap 13

Answer 265

A

Reservation/Exception Clause -

Clause where Grantor holds back (reserves) some interest or list.

Chap 13

Answer 266

A

Granting Clause -

Clause that “conveys interest” in deed.

Chap 13

Answer 267

A

Testimonium Clause -

Witness Clause in deed citing act/date of execution.

Chap 13

Answer 268

A

Merchantable/Marketable Title -

Title without cloud or defect.

Chap 13

Answer 269

A

Owner’s Title Policy -

Protects Buyer against defects -

Forged/Misfiled and Improperly Drawn/Delivered Docs
Incompetent Grantors
Only One Spouse Signed
Uknown/Undiscovered Heirs

Chap 13

Answer 270

A

Page of Exceptions -

Existing liens/encumbrances of record
Mechanic’s Liens unrecorded
Persons in Possession
Encroachments and Errors - Survey reveals

No Policy Covers: Existing Ecumbrances, Zoning Ordinances, Defects Known to insured. Encumbrances include liens, deed restrictions, easements, encroachments, and licenses

Chap 13

Answer 271

A

ALTA Title Policy (Lenders) -

Insurance Policy that “protects lender“ against defects found by Constructive Notice: public records, or Actual Notice: inspection of property.

Buyer usually purchases, premium by loan amount. Protects Lender against:

Forged/Misfiled and Improperly Drawn/Delivered Docs
Incompetent Grantors
Only One Spouse Signed
Uknown/Undiscovered Heirs………..but also
Mechanic’s Liens unrecorded
Persons In Posession
Encroachments or Errors - Survey Reveals.

No Policy Covers: Existing Encumbrances, Zoning, Defects Known. Encumbrances: include liens, deed restrictions, easements, encroachments, and licenses.

Chap 13

Answer 272

A

Title Plant -

Duplicae set of public records with Title Company.

Chap 13

Answer 273

A

Preliminary Title Report -

Commitment of Title Insurance issued prior to closing of sale.

Chap 13

Answer 274

A

Subrogation -

Substitution of third person in claim or debt.

Example: Buyer gives rights to title company to sue seller after insurance company pays claim.

Chap 13

Answer 275

A

(UCC) Uniform Commercial Code -

Governs:

Commercial/Business Transactions
Sales/Financing of Personal Property

Chap 13

Answer 276

A

Security Agreement -

Places lien on personal property.
UCC-1 establishes “Lien Priority” by “Filing UCC-1” with Secretary of State.
Property Sold: Title Company does “UCC-1 search“ through Seretary of State. to determine if liens outstanding.
Solar Leased - UCC-1 is Filed.

Chap 13

Answer 277

A

Bulk Sales Affidavit -

Provides buyer of business with “Seller’s Creditors LIst”.

Chap 13

Answer 278

A

Personal Property Documentation -

Bill of Sale
Security Agreement
UCC-1 Filling of Security Agreement

Chap 13

Answer 279

A

Closing Statement -

Detailed accounting of escrow company showing:

Cash received
All Charges (Debts/Credits)
Money Paid Out
TRID Closing - Terms of Loan to Borrower

Chap 13

Answer 280

A

Seller’s Debit Only on Closing Statement -

1st Loan - Payoff
Owner’s Title Policy
Commission

Answer 281

A

Buyer Debits/Credits Only on closing statement -

Debits:

Loan Origination Fee
ALTA Policy
Impounds

Credits:

Earnest Money
New 1st Loan

Chap 14

Answer 282

A

Items charges to both seller and buyer on closing statement?

Sales Price: Credit Seller / Debit Buyer
Escrow Fees: Debit both… Seller/Buyer

Chap 14

Answer 283

A

Gross Scheduled Income -

Projected rent if it was 100% occupied (actual rents plus economic rents).

Chap 14

Answer 284

A

Effective Gross Income is -

Gross Scheduled Inome

Vacancies

- Credit Losses (uncollected rent)

Chap 14

Answer 285

A

Operating Expenses (Not Morgage/Debt Service)

Property Management Fees
Utilities
Repairs/Mantenance
Taxes/Insurance
Advertising

Chap 14

Answer 286

A

Net Operating Income -

Effective Gross Income - Operating Expenses

Remember: Effective Gross Income (Gross Sched Inc - vacancies/credit losses).

Chap 14

Answer 287

A

Debt Service -

Principal/Interest only of payments.

Chap 14

Answer 288

A

Cash Flow Before Income Taxes - After paying all “operating expenses” and “debt service”

Formula:

Gross Scheduled - Vacancies/Credit Losses (unpaid)
Effective Gross Income - Operating Expenses
Net Operating - Debt Services =
Cash Flow Before Income Taxes

Chap 14

Answer 289

A

Ordinary Income -

Income from salaries, wages, commissions and interest.

Chap14

Answer 290

A

Capital Gains -

Profit Income realized from sale of an asset.

Short Term - Less than 1 year
Long Term - More than 1 year

Chap 14

Answer 291

A

Tax Deductions for Owner-Occupied/Second Residence.

Real Property Taxes - upto $10,000
Loans upto $750,000 Purchase/Improve - Interest Deduction.
Not: Home Equity Loans

Chap 14

Answer 292

A

Capital Gain exclusions

Personal Residence Capital Gain Exclusion from being taxed (Owner Occ - 2 years out of 5 years).

Single: $250,000 of gain exclusion
Married: $500,000 of gain exclusion

Chap 15

Answer 293

A

(FIRPTA) Foreign Investment in Real Property Tax Act -

Federal law which subjects non-resident aliens to pay US Income Tax on “gain from sale” of US real property.”
Escrow must withhold 15% of sale amount. Buyer could be liable.

Chap 15

Answer 294

A

Tax Deductions for Investment Properties:

Operating Expenses/Interest on Loans
Depreciation (Cost Recovery)
Land/Personal Residence - No Depreciation
Recovery Periods:
1. 27.5 yrs - Residential (Income)
2. 29 yrs - Non-Residential (Commercial)
3. Straight Line Depreciation - Same each year.
4. None - Land/Residential

Chap 15

Answer 295

A

Recovery Period -

Period over which the owner may take deductions to recover investment.

Recovery Periods (Depreciation):

27.5 years - Residential (Income)
39 years - Non-Residential (Commercial)
Straight Line Depreciation - Same each year.
None - Land/Residential

Answer 296

A

1031 Exchanges -

Allows tax on gain to be deferred into future years.

Like Kind - Properties held for Income or Investment
Simultaneous Exchange - Property traded for another.
Delayed Exchange - “New Property” must be acquired by specific time frame.
Boot: “Unlike kind” property received in exchange.

Chap 15

Answer 297

A

Like Kind (Income) -

Properties held for Income or Investment for exchange (deferred gains).

Chap 15

Answer 298

A

Simultaneous (traded) Exchange-

Property traded for another (deferred gains).

Chap 15

Answer 299

A

Delayed (Specific Time) Exchange -

“New Property” must be acquired by “specific time” frame (deferred gains).

Chap 15

Answer 300

A

Boot -

“Unlike kind” property received in exchange (deferred gains).

Chap 15

Answer 301

A

Article XXVI of Arizona Constitution - Gives agents authority to “prepare real estate contracts,” but only if incidental to their fuction and there is no fee.

Statute of Frauds - Real Estate Contracts must be in writing
Commissioner’s Rules - Force/Effect of Law, but not law
(SPS) Substantive Poliy Statement - Establish/Clarify ADRE policies on statute/rules.

Chap 15

Answer 302

A

Statute of Frauds -

Real Estate Contracts must be in writing.

Chap 15

Answer 303

A

Commissioner’s Rules -

Force/Effect of Law, but “not law.”

Chap 15

Answer 304

A

(SPS) Substantive Policy Statement -

Establish/Clarify ADRE policies on statute/rules.

Chap 15

Answer 305

A

Case Law -

Legal Cases that have settled or established law.

Revised Arizona Statutes: www.azleg.gov

Chap 15

Answer 306

A

Arizona Revised Statutes (Actual Laws) -

Articles 1-10 of Title 32, Chap 20

Titile 32: Professions and Occupations
Chap 20: Real Estate

Chap 15

Answer 307

A

Real Estate Commissioner (3yr-Admin/5yr-Real Estate)

Appointed by Governor
Qualifications: Admin: 3 yrs / Real Estate: 5 yrs
Cannot: “hold real estate license” after appointed
Duties (P A M I)
Promulgate: Commissioner’s Rules by pubic process.
Audit: Licensees Books/Records
Manage: AZ RE Dept - Daily Operations (hire/fire)
Investigate: Written Complaints against Agents
Commissioner can “Subpeona Documents.”
Ask Superior Court to “Compel Complance with Subpeona.”

Chap 15

Answer 308

A

Real Estate Advisory Board (10 Members)

Appointed by Governor/Meet Quarterly/No Compensation
2 Real Estate Brokers
2 Subdividers
2 Persons engaged in residential real estate (last 5yrs)
1 Persons engaged in multi-family real estate (last 5yrs)
3 Public Members

Chap 15

Answer 309

A

Police Power -

Gives state the right to license brokers and salespersons.

Chap 15

Answer 310

A

Real Estate Broker -

Someone who is compensated to perform real estate services for another.

Chap 15

Answer 311

A

Real Estate Broker (3 in 5yr Exp/90 Hour)-

Qualifications -

3yr Experience (last 5 years) as licensee or equivalent.
90 Hour broker prelicensing course (last 10 years)
Pass both school and state examination.

Other Requirements:

Definite “place of business” - tell commissioner
Display “Sign” at the Entrance,
Brokers License/Fair Housing Sign in Office
Separate Branch Office Licenses (Broker/Agent can run)

Chap 15

Answer 312

A

Real Estate Salesperson (90 and 6Hrs)-

Qualifications:

18 year old
90 Hour licensing (past 10 years)
6 Hour Contract Class (activate)
Pass both school and state examination

Other Requirements:

License is held in employing broker’s office
Must be “licensed to broker” (DRE: Hire Form/Sever Forms)
License with Cemetery/Membership Camping Broker okay.

Chap 15

Answer 313

A

Brokers and Agents can have licenses issued to:

(PLLC) - Professional Limited LIability Company
(PC) - Professional Corporation

Chap 15

Answer 314

A

Individuals “not required” to be Licensed -

Persons/Corp Officers - Buying/Selling/Leasing/Renting/Exchanging their own or corp properties
Attorney in Fact - Holds Power of Attorney to do specific thing.
Bankruptcy Referee - Person acting under court order.
Trustee - Under Deed of Trust
Government Employee - Performing duties
Manager/Lease Agent - Res Rental Property - one location
Personal Admin - Clerical, acctg, bookkeeping, etc.

Chap 15

Answer 315

A

Activation of License -

Broker/Agent - 1 year of exam date to get licensed.
License Issued (Active) - 2 years (end of month of activation)
Agent: 6-Hour Contract Class
Broker: Broker Management Clinics

Chap 15

Answer 316

A

Renewal of Broker/Sales Agent Licenses -

Licenses - Renew every 2 years (last business day of month)

Expired - 12 months (grace) and late fee charge

Agent/ Assoc Bkr (Cont Ed) - 24hours

Broker/Self Emp/Ass Bkrw/Authority (Cont Ed) : 30hrs (Includes: 3 Bkr Mgmt Clinics)

Chap 15

Answer 317

A

Temporary Broker License:

Broker Deceased or Incompetent - May be issued for 90 day period to surviving spouse, next of kin or executor of will .

Chap 15

Answer 318

A

Trust Accounts Requirements -

Deposits: with deposit slips (date/amt/party names)
Monies: only for purposes specifiied
Records: (Main/Branch Office)
GAAP: General Accepted Acctg Principles shall be used. Includes receipt, disbursement journal, client ledger.
Client Ledger: Balance Monthly
Excess Interest Earned - Remove Yearly
Not Commingling - Deposits not exceed $3000

Chap 15

Answer 319

A

Closed/Terminated Transactions/Binding Offers (Signed/Cancelled) -

Broker must keep records for - 5 years

Chap 15

Answer 320

A

Earnest money must be -

Cash, Check, Promissory Note and stated in purchase contract. Places in a neutral escrow, or trust fund (federally insured bank)

Chap 15

Answer 321

A

Transaction Folders -

Confirmation monies handled properly.
Copies: Listing Agreement, Employment and Purchase Contract, Escrow Instructions and Receipts, Closing Statement.

Chap 15

Answer 322

A

All Contracts -

All contracts must be reviewed by Broker in 10 days of execution, but still valid.

Note: Except Residential Lease Agreements

Chap 15

Answer 323

A

Rejected Offers (Purchase Contract) -

Rejected Offers of Purchase Contract - retained for 1 year(s).

Answer 324

A

Employment Contracts (Listing/Buyer Broker Agreement) -

Contract hiring broker to buy/sell property for compensation.

Must be written, all material facts, inception/expiration, and signed by all parties.

Chap 15

Answer 325

A

Civil Courts: Collection of Compensation Actions -

Taken in Civil Courts of Arizona,
Commissioner: Does Not handle!

Chap 15

Answer 326

A

Statute list 30 reasons -

How many reasons does statute list for denying, suspending, revoking license according to commissioner’s rules (included violations).

Cease and Disist Order** - used if “**Act, Practice or Transaction” violated by Statute or Commissioner’s Rules

Chap 15

Answer 327

A

Cease and Disist Order (Commission Issued) -

Used if “Act, Practice or Transaction” violated by Statute or Commissioner’s Rules

Chap 15

Answer 328

A

Written Cooperation Agreement with AZ Broker -

Neede for “Out-of-State Broker” to perform real estate services in Arizona.

Chap 15

Answer 329

A

Managers/Leasing Agents -

May receive “performance bonuses”.
Bonus: paid monthly only.
Not Exceed: 1/2 regular compensation.

Chap 15

Answer 330

A

SPS - Substantive Policy Statement -

Regulates Unlicensed Assistants.

Chap 15

Answer 331

A

Real Estate Company Name (Real Estate Team Marketing)-

Must be included in all marketing of the “Real Estate Teams”

Chap 15

Answer 332

A

Real Estate Recovery Fund (5yr Lawsuit/45dy Notice/C30k/A90K) -

Performance Acts, Fraud or Misrepresentation.
Lawsuit: Must be filed within 5 years
Commissioner Notified: in 45 days of action
Max per Cause: $30,000/Agent: $90,000
License Terminated until paid back w/ interest.

Chap 15

Answer 333

A

Recovery Fund Fees (under 600K by 6/30 Renew) -

Originating License:

Broker $20 / Agent $10

Renewing License (Dips under $600K by 6/30):

Broker $20 / Agent $10

Chap 15

Answer 334

A

Public Report (Subdivison Disclosure) -

Statement of important facts relating to subdivision which allows purchaser to make decision on property. (Buyer Receipt Kept- 5 years)

Name/Address (Owner/Subdivider)
Condition of Title/Liens and Conditions/Terms of Sale
Map of Subdivision / Restrictive Covenants
***Permanent Access*** to site/parcels
If AMA - Certificate of Assured Water Supply (ADWR)

Chap 16

Answer 335

A

Amended Public Reports - 10 days review

As per Commissioner, buyer has 10 days to review or cancel.

Chap 16

Answer 336

A

Exemptions to Pubic Report - (1byr Bulk/Lease 6+/160+/Commercial)

One Buyer- Bulk Sale or Leases 6 or-more lots
160 acres or more - Sale/Lease
Commercial/Industrial Zoned - Sale/Lease
Subsequent Owner Exempt - Report in past 5 years can use if accurate public report.

Chap 16

Answer 337

A

Lot Reservations - ($5000/15dy Rpt Delivery/7dys to Lot End)

Max $5,000 deposits - (in escrow) per lot.
Public Report Delivered - 15 days of issuance to buyer.
Termination Lot Reserve** - **7 business days of buyer’s receipt of Public Report (unless Purchase Contract Signed)
Cancel Lot Reserve - Buyer may cancel prior to Purchase Contract

Chap 16

Answer 338

A

Public Report (Sale Contract):

No Approval/Not Provided: (Void/3yr Legal Action)

Purchaser may void sale** and has **3 years to take legal action.

Chap 16

Answer 339

A

Unsubdivided Lands -

Property divided:

6 or more lots; 36-159 acres each.

Chap 16

Answer 340

A

Lot Splits - (Effective for 10 years)

Ochestrationg scheme to circumvent subdivision laws is illegal.

Example: Land split into 5 lots, One buyer buys one lot and splits into 2.

Chap 16

Answer 341

A

Unimproved Land/Affidavit of Disclosure: Record w/Deed (7dy Rpt Delivery/5dy Recind) -

***Improved/Unimproved Property*** - in unincorporated area of county (not subdivided).

Requires Disclosure: water availability***, ***sewer/septic***, ***legal access***, ***easements, etc.
Deliver to Buyer: 7 days prior to close. Buyer can recind in 5 days.

Chap 16

Answer 342

A

Timeshare Public Report -

Required for 12 or more timeshare estates.

Chap 16

Answer 343

A

Timeshare Pubic Report Requirements -

Name/Address - (Owner/Developer)
Timeshare Program - *Comprehensive Stmt*.
Legal Description/Location of Land
Statement of Assurance - Improvement Installs (Offsite included).

Chap 16

Answer 344

A

Timeshare Purchase (Recind 7 days w/o Cause) -

May recind offer in 7 days without cause.

Chap 16

Answer 345

A

Timeshare Public Report not issued/delivered -

Sale Voidable. Legal Action 3yrs to void sale.

Chap 16

Answer 346

A

License “General Requirements” -

***Licensee Disclosure Questionaire***
Fingerprints, Social Security Number
Filing Business/Residence Addresses
Commissioner (10 days Notify):
Misdeanor/Felony
Real Esate Civil Suits - Judgments
Professional License - Restrictions/Suspensions/Revocations

Chap 16

Answer 347

A

Late Renewal of License -

Late Penalty Fee required. (12 month grace period)

Chap 16

Answer 348

A

Administrative Severance (Dept of RE) -

When an agent wants to sever with their employing broker, the can process it with the Admin Severance.

Chap 16

Answer 349

A

Owner-Agent -

Licensed Agent advertising own property must disclose that he/she is agent.

Chap 16

Answer 350

A

Web Pages -

Broker Name should appear on “top of every page.”

Chap 16

Answer 351

A

Promotional Activities -

Licensee “shall not” describe “premium offer” (sales promotion) at no cost or reduced cost as an “award/prize” or use similar term.
Terms/Cost/Conditions/Restrictions/Expire Date of “premium offer” shall be clearly disclosed “in writing” before offeree may participate in offer.
Licensee “may not” solicit/sell/offer to sell ‘interest **i**n development’: as lottery or game of chance, drawing, contest to “influence purchaser.”

Chap 16

Answer 352

A

Subdivider/Timeshare Developer/Campground Memebership Operator may apply for:

Approval of: Conduct Lottery, Game of Chance, Contest, or Drawing.

Chap 16

Answer 353

A

Compensation Sharing Disclosure -

Real Estate Broker shall disclose** to all parties “**in writing before closing**” all **employing brokers who will receive compensation from transaction.

Chap 16

Answer 354

A

Offers Requirements:

During listings: All offers must be submitted
Upon Permission: Agent may disclose existence and terms of all additional offers on property.
Prior to Closing: Submit all Offers
Volutarily Submit Offers: Dispite limitations in Listing.

Chap 16

Answer 355

A

Professional Conduct (Duites to Client) -

To Clients: Fiduciary duties and protect interest.
Material/Adverse affects to money paid by:
Seller/Buyer and Lessor/Lessee: unable to perform
Material Defects
Liens/Encumbrance: on property being transferred.
Area Disclosures:
1. Public/Private/Military Airport
2. Ancillary Military Facility
3. Military Training Route
Expeditiously Perform: All Acts
Controversy: shall not impeded transaction
Prospective Interest/Conflict:
1. Agent principal in contract
2. Buyer/Seller member of Agent’s Family
3. Buyer/Seller relation to Broker
4. Agent or Fam Memeber - Financial Interest
Dual Compensation - Written Consent needed.

Chap 16

Answer 356

A

Lack of Experience Disclosure -

If Agent is hired to complete a task out of the scope of this expertise. He must disclose this in writing first.

Chap 16

Answer 357

A

Seller (Principal) Waive Right in Writing -

May waive right in writing, if broker/agent not available n 24 hours.

Chap 16

Answer 358

A

Broker Supervision and Control -

Establishes and Enforces:
1. Written Polices;
2. Rules;
3. Procedures; and
4. Systems.
Governs: Activities of employed Agents/Brokers

Chap 16

Answer 359

A

Voluntary Liens -

Mortgages, Trust Deeds, Agreements of Sale

Chap 17

Answer 360

A

Hypothecation -

Pledge of real estate property as security without giving possession of property to lender.

Chap 16

Answer 361

A

Promissory Note -

Serves as evidence of debt. A promise to repay the debt.

Chap 17

Answer 362

A

Mortgage -

Secures note with real property as collateral.

Mortgagor - Borrower Gives

Mortgagee - Lender Recieves

Chap 17

Answer 363

A

Defeasance -

Same as Pay-Off.

Chap 17

Answer 364

A

Satisfaction of Mortgage -

Lender required to deliver pay-off in 30 days.

Chap 17

Answer 365

A

Mortgage (Judicial Foreclose) 6 mos Stat Right of Redeem after Sale -

Equity of Redemption - Before Sale, Until Sale
Lis Pendens - Litigation pending (lawsuit)
Court Action - takes place
Sheriff’s Sale - Highest Bidder gets “_Sheriff’s Cert of Sale_”
Statutory Right of Redemption- 6 mos
Sheriff’s Deed - After Redeem Period, If no redemption

Chap 17

Answer 366

A

Excess Money Bid -

Excess Funds belongs to foreclosed borrower.

Chap 17

Answer 367

A

Foreclosure costs paid from “_Excess Money Bid_.” and paid “after property taxes.”

Chap 17

Answer 368

A

Trust Deed - Secures note with property as collateral

Trustor - Borrower / Beneficiary - Lender

Trustee (Third Party): Acts behalf of Beneficiary

Acts when Trust Deed Paid-Off/Default, as per written instructions from Beneficiary.

Deed of Reconveyance (Pay-Off) - Beneficiary instructs Trustee to send in 30 days of payoff.

Chap 17

Answer 369

A

Deed of Reconveyance (Pay-Off) / Trust Deeds -

Beneficiary instructs Trustee to send in 30 days of payoff of a Trust Deed.

Chap 17

Answer 370

A

Trust Deed Default (Non-Judicial) - 90dy Reinstate then Trustee’s Sale Final

Notice of Default /Trustee’s Sale - Recorded and sent to Trustor and anyone requesting.
Right of Reinstatement (90 days) - Trustor/Borrower may payback cost/penalties.
Trustee’s Sale (Final!) - Trustee’s Deed to bidder.
No Deficiency Judgements after sale - If property 2 1/2 acres or less (Single Fam Res).

Chap 17

Answer 371

A

Agreement for Sale / Land Contract / Contract for Deed / Vendor’s Lien / Contract for Sale of RE -

Sale of Property/Financing Instrument all in one. Deed not delivered at closing, must pay-off first.

Vendor - Seller / Vendee - Buyer

Contract - Recorded at Closing; shows ownership

Chap 17

Answer 372

A

Lien Theory -

The mortgage/trust deed does not convey any ownership to lender. Arizona supports this theory.

Chap 17

Answer 373

A

Title Theory -

Legal title is conveyed to the lender. (Not used in AZ)

Chap 17

Answer 374

A

Deficiency Judgment -

Judgement obtained by lender when foreclosure sale brings less than amount owed.

Arizona Prohibits Deficiency Judgment for:

2.5 acres or less and SFR or 2-Family Residence
If married couple quit claims spouse out, still liable for judgement.

Chap 17

Answer 375

A

Deed in Lieu of Foreclosure -

Instead of going through foreclosure, the borrower gives lender property, for cancellation of debt.

Chap 17

Answer 376

A

Junior Lien holder has right to cure prior lien defaults and then foreclose the junior lien.

Chap 17

Answer 377

A

If Junior Lien is foreclosed -

Property given to highest bidder but subject to higher priority liens.

Chap 17

Answer 378

A

Short Sale (Loan Higher than Value) -

Sale in which the loan balance is higher than property’s value and lender agrees to accept a reduced (short) payoff.

Chap 17

Answer 379

A

Bank Owned Property (REO Real Estate Owned) -

Property acquired through foreclosure auction by lender.

Chap 17

Answer 380

A

Forebearance -

Lender agrees to delay foreclosure.

Chap 17

Answer 381

A

Fix and Flips -

Licensed Contractors (not req’d improvements) - Properties “intended to be owner-occupied**” and “**not sold**” or “**leased.”

Licensed Contractors (required improvements) - Properties offered to be “sold/leased” within one year of completion or “certificate of occupancy” issued. Improvements $1,000 plus.

Chap 17

Answer 382

A

Lien -

Claim against property to secure debt, money encumbrance.

Chap 18

Answer 383

A

Full Cash Value -

FCV Determined: Start of Year (for next year)**. **To Owner by mail.
FCV High (Appeal): to Assessor; then State Board of Equalization (SBOE)***; and then ***Tax Court.
New Construct / Supplemental Notice: - September to owner. 25 days to appeal to (SBOE). May be revalue as “partial complete.”

Chap 18

Answer 384

A

LPV - Limited Property Value -

All real property taxes are calculated based on the LPV. Cannot exceed FCV (Mkt Value).** Limited to **5% previous year’s LPV.

Limited Property Value
x Assessed Value Ratio
= Assessed Value
- Assessed Value
x Tax Rate
= Real Property Taxes

Chap 18

Answer 385

A

Assessed Value Ratio -

18% - Commercial (Class 1)
15% - Vacant Land (Clase 2)
10% - Owner-Occ Residential (Class 3)
10% - Residential- Income Property (Class 4)
Residential Income Property Registration Form - must be filed with County Assessor for (Class 4)

Example: Owner-Occupied Res with tax rate of $18 per $100 of assessed value (180 mills)

$100,000 Limited Property Value
x .10__Assessed Value Ratio (Res Tax Rate)
10,000 Assessed Value
x .18__Tax Rate
1,800 Taxes

Chap 18

Answer 386

A

TaxesDueLate

1st half (Jan-June) Oct 1 Nov 1

2nd half (July-Dec) Mar 1 May 1 (next year)

Hint: Owe No More Money

Chap 18

Answer 387

A

TaxesDueLate

1st half (Jan-June) Oct 1 Nov 1

2nd half (July-Dec) Mar 1 May 1 (next year)

Hint: Owe No More Money

Chap 18

Answer 388

A

Deliquent Tax Lien Sale Foreclosure (Treasurer Sale, then 3yr Redeem):

Deliquent Tax: 16% interest per annum
Treasurer’s Sale: Highest bidder issued “Certificate of Purchase (Tax).” (Auction live or online)
3-Year Redemption: Pay amt due plus interest
No-Redemption Process:
1. Owner Notified: by Cert-Mail 30 days b4 Action.
2. Treasurer’s Deed: At Judicial Foreclosure Action
3. Within 10 Years: Accrue interest, then foreclosure action within that period.

Chap 18

Answer 389

A

CFD - Community Facilities District -

Special taxing districts formed to finance (through bonds) “public infrastructure” in a planned community.

Handles:

Aquisition, Construction, Operation, and Maintenance of same..
Charged On: Property Tax Bill

Chap 17

Answer 390

A

Special Assessments -

Lien against property for public improvements (Paving, Sewers, Sidewalks, etc)

Note: Lien Priority

Property Taxes - #1
Special Assessments - #2
Mechanic’s Liens - by Start Work Date
HOA Assessment Liens

Chap 18

Answer 391

A

Mechanic’s Lien - Lien for labor/materials supplied/ Forclose 180dys (6mos)

Preliminary Lien Notice - Contractors/Suppliers must noitce to owner in 20 days of starting work.

Mechanic’s Lien - Record in 120 days of completion of work.

Foreclose - 6 months (180dys) of recording Mechanics Lien

Chap 18

Answer 392

A

HOA Assessment Liens -

Lien Subordinate priority to first mortgage, deed of trust and agreement of sale liens.

Foreclosure (Judicial)**: **Not paid over 1 year**, must be **$1200 or more due.

Chap 18

Answer 393

A

Judgements -

Court ordered general lien; renewed every 10 years. Levied by attachment (writ of execution).

Revealed by:

Title Report
County Recorder’s Records
Credit Reports

Chap 18

Answer 394

A

Income Tax Liens -

Claims placed by the IRS/AZ government for nonpayment of income taxes “General Lien”.

Priority is established when recorded.
No special priority over other recorded liens.

Chap 18

Answer 395

A

Landlord Obligations -

Tenant Must Receive: Signed lease, Move-In Form; Move-Out Inspection Notice (to be present)
Security Deposits: 1 1/2 months rent max (prepaid rent and deposits included).
Cleaning/Redecorating Deposits: Refundable unless stated otherwise
Itemized Written Statement: 14 Days of Termination; Tenant must receive for landlord to collect from deposits.
Landlord does not Comply: Subject to 2x security deposit for damages
Non-Refundable Fees: Cleaning/Pet Fees above security deposit.

Chap 19

Answer 396

A

Landlord must Disclose -

Premise Manager
Service of Process Person: Owner/Agent
Landlord Tenant Act (AZ Dept of Housing)

Chap 19

Answer 397

A

Landlord must comply to provide:

Comply with: health,safety and building codes
Premises: Fit, Habitable and Safe
Mechanical Equipment: In Working Order
Trash: Receptable and Removal
Hot/Cold Water and Heat/Air Conditioning
Emergencies: Landlord give 2day Notice to Enter

Chap 19

Answer 398

A

Tenant Obligations -

Use Premises: Safe Manner/Keep Clean

Use Mechanical Equip: Reasonable Care

Neighbors Quiet Enjoyment: Dont Disturb

Rules/Regulations: Follow and Obey

Emergencies: Landlord give 2day Notice to Enter

Chap 19

Answer 399

A

Landlord Non-Compliance -

Tenant may deliver “notice to terminiate” lease by:

5 Day Notice - Health/Safety Hot/Cold Heat/Air Breaches

10 Day Notice - Other breaches.

Chap 19

Answer 400

A

Self-Help for Minor Defects -

Landlord gets 5 days - Health/Safety

Tenant Cost ($300 or 1/2 Rent) - Which ever is higher in cost.

Chap 19

Answer 401

A

Periodic Tenancy (Month to Month) -

Terminate by 30 day Notice

Example: Landlord give notice on March 15th. Tenant will vacate on May 1st.

Chap 19

Answer 402

A

Tenant fails to pay rent -

Landlord gives 5 Days Notice to pay rent.

Chap 19

Answer 403

A

Abandonment of Tenant -

Notice of Abandoment - Certified Mail and Post Notice on Door (5 days).
Hold Personal Property - 14 days and then apply to outstanding rent.

Chap 19

Answer 404

A

Victim of Domestic Violence -

Tenant may terminate lease without penalty.

Chap 19

Answer 405

A

Distraint -

Holding tenant’s personal property for back rent (abolished in Arizona).

Chap 19

Answer 406

A

Landlord Tenant Act is enforced in “civil courts.”

Chap 19

Answer 407

A

Bedbug Control -

Current Bedbug Infestation - Landlord may not enter into contract with tenant.
Bedbug Educational Material - Provide to tenants
Items with Bedbugs - Tenants shall not move in infested materials.
Presence of Bedbugs - Written/Electronic Notice
SFR - excluded from provisions.

Chap 19

Answer 408

A

Property Management -

Aspect of real estate that deals with leasing**, **managing**, **marketing**, and **maintenance of property for others.

Broker: General Agent of Owner. Ficudiary duty to Owner.

Chap 19

Answer 409

A

Property Manager -

Who is concerned with getting “highest net return” on owner’s investment and protecting owner from foreseeable risk.

Chap 19

Answer 410

A

Property Manager Duties -

Collecting Rents Keeping Accounts
Leasing Units Filing Reports
Vacancies Buying Supplies
Advertising Remodeling
Hiring Employees

Recommendations:

Maintenance, Fire Insurance, Liability/Workmans Compensation Insurance

Chap 19

Answer 411

A

Property Management Agreements:

Terms/Conditions: Firm’s Service, Obligations, Duties, Responsibilities to owner
Compensation: Terms/Conditions
Cancellation Provisions: Agreed by both parties
Monies Collected: Disposition
Status Reports: Frequency
Operating Reserve Monies - Purpose/Amounts
Trust Acct Interest: Disposition/Allocation

Chap 19

Answer 412

A

Property Management Accounts:

Desginated at “trust accounts.” Only desginated brokeer, licensees, employees may sign checks (owners may not sign checks).

Chap 19

Answer 413

A

Property Management Record Keeping -

Residential:

Leases/Finder Fees - 1 year
Financial - 3 years

Commercial:

All Records - 5 years

Chap 19

Answer 414

A

Terminated Management Agreement -

Security Deposits: 5 days
Property Mgmt Accts: 35 days
Accounts Receivable/Payable: 75 days
Bank Account Reconciliation: 75 days

Chap 19

Answer 415

A

Tenant Finders Fees -

Paid only as rent credit/reduction.

Chap 19

Answer 416

A

Planned Community -

Real Estate Development with real estate owned by association, created to manage, maintain, improve property.

Separate parcel owners are mandatory members and pay association assessments.

Chap 19

Answer 417

A

Resale of Units in Planned Community -

Within 10 Days:

By-laws and Association Rules
Planned Community Declaration
Contact of Association
Association’s Assessments
Reserve Money Amounts
Current Operating Budget/Annual Financial Rpt
Alterations/Improvements that violate Com Dec
Litigation Pending: against Owner/HOA

Chap 19

Answer 418

A

FCV High -Owner May Appeal to:

Assessor
State Board of Equalization (SBOE); and then
Tax Court.

Chap 18

Answer 419

A

New Construct Cash Value

Supplemental Notice: Sent September to owner.

Appeal: In 25 days to (SBOE). May be revalue as “partial complete.”

Chap 18

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