Exam (elaborations)
ARIZONA REAL ESTATE EXAM
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ARIZONA REAL ESTATE EXAM
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ARIZONA REAL ESTATE EXAMJohn makes an offer to Joe, and Joe makes a counter offer. Joe dies before the counter
offer is accepted. What is the contract status?
A. Valid
B. Void
C. Enforceable
D. Bilateral - Answers -B. Void
1031 Exchange - Answers -A transaction that, under provisions of Section 1031 of the
Internal Revenue Code, allows a taxpayer to sell an investment property and purchase
another investment property in its place without paying capital gains on the proceeds
from the sale.
1099-Misc - Answers -The Internal Revenue Service form that is used to report various
types of miscellaneous income earned other than salary earned from an employer
Abandonment of a Homestead - Answers -The loss of a homestead exemption if the
owner moves to another state, sells the property, turns the property into a rental or no
longer occupies the home as a primary residence
Abutting - Answers -Refers to parcels that share a boundary
Acceleration Clause - Answers -A clause in loan documents that allows the lender to
call the note all due and payable if the borrower breaches the terms
Accretion - Answers -The gradual addition of land by natural causes, such as shoreline
movements
Acre (in square feet) - Answers -43,560 square feet
Administrator's Deed - Answers -A document that transfers title to real estate from an
intestate person to his or her heirs
Adverse Possession - Answers -Acquiring title to land because of a long-term, open and
notorious use of the land. The legal process is called PRESCRIPTION. The required
time period in Arizona is 10 years.
Advisory Board - Answers -A 10-member board appointed by the Governor that advises
and gives recommendations to the Commissioner of the Arizona Department of Real
Estate. Member serve a 6-year term
Affidavit of Affixture - Answers -A document for owners of mobile homes certifying that
the home is immobilized, i.e., anchored to real property
,Affidavit of Disclosure - Answers -A disclosure document that may be required when
selling property that is either in an unincorporated area (not in a city or town), NOT in a
subdivision, or if five or fewer parcels are involved in the transaction. It provides
information about certain aspects of the property and allows the buyer an opportunity to
rescind the contract.
Affidavit of Value - Answers -A sworn statement under oath that indicates the purchase
price paid by the buyer in a trascaction; must be filed with the deed and signed by both
buyer and seller.
Agency - Answers -A relationship of trust between one person (the principal) and
another (the agent) in which the agent has the authority to act on behalf of the principal.
Agency creates a fiduciary duty on the part of the agent to act in good faith.
Agent - Answers -One who represents a principal; In Arizona, the designated agent is
the agent of the principal. Associated licensees in the office are considered subagents
to the principal. Both the agent and the subagents are fiduciaries to the principal (client).
Agreement for Sale - Answers -A carryback document between buyer and seller. The
seller does not give a deed to the buyer until paid in full; therefore the seller retains legal
title and the buyer has equitable title. Also called Land Contract, Contract for Deed or
Installment Sale
Air Lot - Answers -The ownership of the interior of a condominium; a property that is
above the base elevation of the land as in a multi-level building
Air Rights - Answers -The right to undisturbed use and control of the airspace over a
parcel of land (within reasonable limits for air travel); may be transferred separately from
the land.
Alienation - Answers -The transfer of ownership or an interest in property from one
person to another by any means
Alienation Clause - Answers -A clause used in a mortgage allowing the lender to
demand the full and immediate payment of the mortgage because the owner transferred
ownership of the property. Also called Due on Sale Clause.
Allodial System - Answers -A concept of land ownership that allows private individuals
to own property
Alluvion - Answers -Solid material deposited along a shore by accretion
American Land Title Association (ALTA) - Answers -A national association of title
companies, abstractors and attorneys whose members agree to promote uniformity,
quality and professional standards in title insurance policies
,Amortization - Answers -Payment of debt in regular, periodic installments of principal
and interest (as opposed to interest-only payments)
Amortization Schedule - Answers -A table or chart that shows the periodic payments,
interest and principal requirements and unpaid load balance for each period of the life of
a loan
Annexation - Answers -Attaching personal property to land so that the law views it as
part of the real property
Annual Percentage Rate (APR) - Answers -The relationship between the cost of
borrowing and the total amount financed, represented as a percentage
Appurtenance - Answers -Something that belongs to property and passes with property,
but need not be attached to it (e.g. outbuildings, easements). An appurtenance "runs
with the land."
Arbitration - Answers -A method for resolving disputes out of court whereby an impartial
third party renders a binding decision. This is the method by which disputes between
REALTOR brokers may be resolved
Arizona Department of Environmental Quality (ADEQ) - Answers -The state department
tasked with protecting and enhancing public health and the environment in the state;
enforces the state's environmental laws and delegated federal programs to prevent air,
water and land pollution and ensure cleanup.
Arizona Department of Real Estate (ADRE) - Answers -The state agency that regulates
real estate, cemetery and membership camping brokers and salespersons. The
Department oversees the activities of licensees, investigates complaints and
participates in administrative hearings. It also regulates the sale of subdivisions,
unsubdivided lands, timeshares, condominiums, membership campgrounds and
cemeteries.
Arizona Department of Water Resources (ADWR) - Answers -The state department
created in 1980 to secure long-term dependable water supplies for Arizona's
communities; enforces the state's groundwater code and surface water rights.
Acre Foot - Answers -One foot of water over the entire surface of an acre; contains
325,851 gallons of water
Active Management Area (AMA) - Answers -Areas within Arizona where water
management programs, such as restriction governing groundwater use, are in place;
requires demonstration of Assured Water Supply
, Actual Eviction - Answers -The physical removal of a tenant from a leased property with
the tenant relieved of any further responsibility to pay rent
Actual Notice - Answers -Express knowledge of a fact (compared to Constructive
Notice, which is notice given by publication)
Ad Valorem - Answers -A concept for property taxes that means "according to value"
Adequate Water Supply - Answers -The standard required from developers OUTSIDE
of an Active Management Area (AMA); if adequate water supply cannot by
demonstrated, the developer must disclose this fact in all advertising and promotional
material
Adjustable Rate Mortgage (ARM) - Answers -A mortgage loan that has an interest rate
on the note that periodically adjusts based on an index that reflects the cost to the
lender; also called Variable Rate Mortgage
Adjusted Basis - Answers -The purchase price of a property (basis) minus accumulative
depreciation, plus acquisition costs, plus capital improvements; also called Adjusted
Purchase Price
Adjusted Sales Price - Answers -Sales price minus costs of sale (commission and
closing costs)
Administrator - Answers -Court-appointed personal representatives of an estate for
someone who dies intestate (without a will)
Arizona Revised Statutes (A.R.S.) - Answers -The codified collection of laws that have
been passed by the Arizona State Legislature. The part that talks about real estate is
Title 32 chapter 20z
Arm's Length Transaction - Answers -A transaction that occurred under typical
conditions in the marketplace, with each of the parties acting in their own best interests
Arrears - Answers -Owing payment on things for which one has the use of but has not
yet paid for, such as property taxes that are paid in arrears, or the state being in arrears
with a debt obligation
Article XXVI - Answers -Article of the Arizona Constitution that permits licensed, active
real estate brokers and agents to prepare the documents necessary in a real estate
transaction handled by their brokerage without charging a fee
Asbestos - Answers -Fibrous material derived from a naturally occurring group of
minerals commonly used in insulation. Asbestos fibers released into the air are
carcinogenic.
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