Real Estate Sales Licensing - Notes & Facts for Brief Study Flashcards
What rates are used to calculate the assessed value of 1) Residential and 2) Land
Residential 10%
Land 16%
How will property taxes show on Closing Statement
Debit Seller, Credit Buyer
What is lien priority
Property taxes
Special Assessments
When a property tax sale is held. What does the low interest bidder receive
Certificate of Purchase
Property Taxes Would be AHEAD of an IRS lien or a deed of trust
Arizona Property taxes would always be in first lien position
What is a buyer most likely to accept title with….
property tax lien for the current year’s taxes
Which of the deeds have the best warranties
General warranty
Who receives title through a deed of conveyance
Grantee
Deed restrictions that run with the land and liens are
Encumbrances
Escrow Company works for….
Buyer and Seller
A deed is legally enforceable if it is….
Recorded
What is the purpose of a closing statement
Shows all monies / costs involved in a transaction
Who signs the settlement sheet?
Buyer, Seller and Escrow agent
What does the Covenant of Seisin promise?
The grantor has the right to convey the property
Title Insurance has no impact on what?
No impact on property value
When an abstract of title was completed, what does it indicate?
It indicates that a title search was completed
What must be paid when a conventional loan is greater than 80%?
PMI Private Mortgage Insurance must be paid at time of closing.
Owner’s Title Insurance is for the protection of who?
Buyer
What would never show on a closing statement?
Principal payments
What is the (mathematical) difference between debits and credits?
The amount needed to close the escrow and balance.
When the buyer is buying a rental property, the security deposits are….
not prorated
Owner’s title insurance policy would not cover…..
Parties in Possession
What is it called when the escrow company turns the matter over to the court to settle a dispute?
Interpleader
Can a property be sold with no ingress or egress?
Yes, is must be stated in the deed
What is the Affidavit of Value
document recorded along with the deed. (Affidavit literally means “has pledged one’s faith”.
When / Why is Affidavit or Value used by the county assessor
to hep the assessor determine property value for taxation
When is the docket and page number assigned
redecoration
What would an extended policy of title insurance cover
Encroachments
In order to record a deed it must be….?
Signed and Acknowledged
What is Pur Autre Vie
“For the life of another” when a party is given a life estate based on the life of another person.
What is Color of Title
Gives the appearance of title, but is not.
What is Color of Title
Gives the appearance of title, but is not.
When may the seller retain the earnest money?
if the buyer signs a contract and then decides not to complete the terms of the contract
What is is called when a party has the right of rescission in a contract?
Voidable
If a buyer can’t qualify for a loan, what clause in a purchase contract would benefit the buyer?
Contingency
When a purchase contract is signed by the buer and seller, what is not required?
Notarized Signatures
All contracts must have what?
Consideration
When a contract is made between a competent party and a minor, it is?
Voidable by the minor
When an offer is written on another broker’s listing, the selling agent is required to ?
Contact the Listing Broker
What would have priority on a purchase contract with handwritten and reprinted language?
The handwritten language would have priority
All contracts are required to be written per…. what?
Statue of Frauds
When a contract is based on fraud it is….
Voidable by the party the fraud was committed against.
A unilateral contract would be…..
Option
First right of refusal
Reward Poster
A contract is not considered valid until there is ….
An offer of acceptance
When a contract is for an illegal act or purpose it is?
Void
A makes an offer to B, the offer is signed by B who makes a counter and dies before A accepts, what is the contract status?
Unenforceable
What is Specific Performance?
A court action to compel a buyer or seller to carry out the terms of a contract.
What is Specific Performance?
A court action to compel a buyer or seller to carry out the terms of a contract.
When a contract is signed by someone other than the seller is would most likely be…
An attorney- in- fact
What could government power could terminate a purchase contract?
Eminent Domain or Condemnation
What should an agent do is a contract has pre-written language?
Review and alter if necessary
Which agent has the original contract and the earnest money?
Selling Agent
When an option to buy is exercised, the option is….
Unilateral Executed
What is a unilateral contract? Give an example
One party gives a promise in exchange for an act.
Example: Open listing listing contract where a seller agrees to pay the the first broker who brings in a ready, willing and able buyer.
When an option to buy is exercised, the new contract is….
Bilateral Executory
When can a real estate agent modify a contract
Only if it is signed by the buyer and seller
What is not recorded when a real estate transaction is set to close escrow?
Purchase Contract
When would a buyer get the earnest money deposit back
If the contract contained a Contingency Clause
When a buyer defaults on a purchase contract and the seller keeps the earnest money, this is called….?
Liquidated Damages
A makes an offer to B, all parties sign, and then B dies,. Is the contract valid or invalid?
Valid Contract
When a buyer enters into a lease - purchase….
the buyer is OBLIGATED TO BUY THE PROPERTY ON A SPECIFIC DATE.
When a salesperson has a buyer sign a “buyer brokerage agreement” it must have what?
A beginning and ending date
What is Intentional misrepresentation?
A false statement made with the intention of inducing another party
What should the salesperson do is PERSONAL PROPERTY is included in a sale?
Take an inventory
If a sales contract is signed by one spouse, what is the status?
Unenforceable against both.
When a purchase contract is signed under duress, the contract is?
Voicable
An illusory contract is?
Unenforceable
What is an illusory contract?
Seems to be a contract… buy may not be.
In a listing agreement the seller is also known as what?
Client or Principal
What is a client (or principal) owed from their agent?
Fiduciary duties
What is a third party in a real estate transaction?
Customer
What listing gives the broker the least protection
Open listing
What type of listing gives the broker the greatest protection
Exclusive Right to Sell
All listings must have what?
Beginning and End date
What is a dual agency
When the brokerage company represents both the buyer and seller.
Legal as long as all parties AGREE IN WRITING
What is an Exclusive Agency Listing
Owner hires one broker but may sell the property for sale by owner and not pay a commission
In an exclusive agency listing who would a commission be paid to?
MLS agents and sub-agents
Why is a net listing illegal in some states
Because a broker may undervalue the property
What is implied agency
Of an agent makes a person think they’re their agent
When would a listing be terminated
Bankruptcy
What is it called when a broker speaks for a seller without their authority?
Ostensible
What are an Agents Fiduciary Duties?
CARLOAD: Confidentiality Accountability Reasonable CARE and Skill Loyalty Obedience Advocacy Disclosure
How is the broker’s right to a commission established
the Listing Agreement
When does a mechanics lien take priority
the day the work began
How long does a general contractor have to file after their Notice of Completion?
120 days to file their lien.
The sub-contractor also has 120 days
How long does a Mechanics Lien stay Valid?
Six Months from the fay of recordation - a lawsuit must be filed within six months for the lien to remain valid
Who may file a Mechanic’s Lien?
General Contractor, Sub-Contractor, Architect, Engineer Provider of Materials
If a tenant imroves a property and fails to pay the contractor, the Mechanics Lien will….
encumber the tenant’s leasehold interest
What does the Arizona Homestead Exemption protect.?
Protects the Equity in a personal residence up to $150,000.
What does the Arizona Homestead NOT protect?
a person against any action they voluntary entered into, secured liens, or rights of the government.
When is homestead protection lost?
When the person sells or moves out of the property
How long are judgments valid for?
5 years
When may judgments be renewed?
May be renewed within the last 90 days of the five years
How are judgments from another state recorded in Arizona?
Foreign Judgment
Where would judgments appear?
Title report, credit report and in the county recorder’s office
Judgement are what type of lien?
A general lien. They attach to real and personal property.
What determines Value
Utility, Scarcity, and Transerability
When conducting a neighborhood analysis, the appraiser is interested in
Economic Depreciation
What is an example of external (economic) obsolence?
Air pollution; Noise
What are the CAP rate and Capitalized value based on?
Net Income
What approach would an appraiser use when appraising special property (church)
Cost Approach
What are appraisers paid based on?
Time, travel, work
What is Integration and Disintegration (Development, Stability & Decline).
What an appraiser looks for when studying an area for growth and decline.
Is a building has a poor floor plan it is an example of
Functional Obsolescence.
What happens when the CAP rate goes up?
The value goes down
What approach must an appraiser use when appeasing land
The Market Approach
What is the Cost Approach
Also known as summation.This is an estimate of value based on reproduction / replacement costs. Used for new construction, custom homes, special use or service property (churches, theaters) where comps are unavailable.
What is the Market Approach
Also known as comparative analysis, used when appraising land and “used” residential property.
Operating Expenses do not include
Vacancies and loss of credit
What is reconciliation?
Also known as correlation. This is the final step when an appraiser used all three appraisal approaches (Cost, Market and Income Approach).
What is the least important factor when using the Market Approach?
Property in Foreclosure
What may you have at the end of the economic life?
Salvage Value
What is the highest price a property will demand?
Market Value
Economic Depreciation is always…. what?
Incurable
What would an appraiser do is the comps in the area has less features than the subject property?
Add dollar value to the subject property.
What is substitution?
The benefits of one property when compared to another
What can the landlord keep if the lessee pays upfront deposits and then cancels the lease
Security Deposit
When must a licensee notify the RE dept of a felony or misdemeanor
10 days
All contracts must be initialed by a designated broker or delegated associate broker… when?
Within 10 business days
Who regulated Arizona Environmental policies?
AZ Department of Environmental Quality
When is the seller responsible to give HOA documents to the buyer?
Less than 50 units
When is the HOA responsible to giver the buyer documents regarding HOA?
50 units or more
What are Arizona “Superfund” sites?
Water Quality Assurance Revolving Fund
A revocable permission to use property for weekends only would be a
License
When does the seller receive the buyers earnest money?
COE
What is similar to medical malpractice insurance?
Errors and Omissions insurance
Fair dealing is the same as what
Honesty
How long is a broker required to keep rejected offers
one-year
When a property owner is requesting a variance, they must show what?
They are required to show a hardship
What is required when 5 or fewer parcels other than subdivided land are located in an unincorporated area of a county?
Land Disclosure Affidavit
What is RESPA
Real Estate Settlement Procedures Act
(The purpose of RESPA is to help consumers become better shoppers for settlement services and to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services)
What types of RE does RESPA cover?
Residential real estate, 1-4 plex
What types of loans would RESPA not cover?
Seller Carryback and Loan Assumptions
A limited partnership is closest to a …. what?
Syndicate
How is a master planned community defined?
Two or more platted subdivisions with CC & R’s
What does CC & R stand for?
Covenants, Conditions and Restrictions
What is an assignment? Who is involved?
The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee).
Regulation Z shows all costs of borrowing the money except for….
Document Preparation Fees
What is an interest only payment loan called?
Term loan
What type of lien is a mortgage
A voluntary lien
If RE companies agreed not to do business in each other’s areas what would this violate?
The Sherman Anti-Trust Act
What is the rate the Federal Reserve charges when loaning money to banks?
Discount Rate
What is the fee called that a lender charged to cover their overhead?
Origination Fee
Trustor =
Borrower
Beneficiary =
Lender
Trustee =
Hold Legal Title “Bare & Naked”
Mortgagor =
Borrower
Mortgagee =
Lender
Vendor =
Seller
Vendee =
Buyer
When is an Agreement for Sale used?
Between two private parties in a carryback
AMA
Active Management Area
In relation to Water Rights
Why are areas designated to be an AMA?
Overdraft of the underground water supply
Assured Water Supply
Water Available for 100 years. Needed for residential RE Development in an AMA
Outside of an AMA, subdivider must provide an
Adequate Water supply
A grandfathered water right that remains with the land but could be used for non-irrigation purposes is called….
Type 1
A grandfathered water right that may be sold separate from the land is called
Type II
Who regulated Arizona water usage?
Department of Water Resources
Civil Rights of 1866
prohibits any type of discrimination by race
What is Redlining
limiting loans or insurance to a geographical area
What is the Fair Housing Penatly (fine for first offense)
$16,000
Who administers Federal Fair Housing Law?
HUD
ADA Title I
Requires employers to make reasonable accommodations that enable person with disability to perform a job.
Applies to employer with 15 or more employees
ADA First Offense Fine? All future Fines?
$55,000 for First Offense
$110,000 for all future fines.
What are the dimensions of a section? How many acres are in a section?
1 mile by 1 mile.
640 acres.
What are the dimensions of a township?
How many square miles?
How many sections?
6 miles square
36 sq miles.
36 sections
How is the distance of townships measured?
In a span
Which direction do tiers run?
East and West
Which direction do range lines run?
North and South
What is the distance between range lines?
6 miles
How many sq rods are in an acre
160
