Arizona Real Estate Broker Exam — All Questions

Under Internal Revenue Code section 121, how much gain may a married couple filing jointly exclude on the sale of a principal residence?

• a.Up to $500,000✓
• b.Up to $750,000
• c.Up to $250,000
• d.Up to $1,000,000

Section 121 of the Internal Revenue Code excludes gain on the sale of a principal residence up to $250,000 for a single filer and up to $500,000 for a married couple filing jointly. The seller must have owned and used the property as a principal residence for at least two of the five years ending on the date of sale, and the full exclusion is generally available no more than once every two years.

After the 2017 federal tax act, what property still qualifies for a like-kind exchange under IRC section 1031?

• a.A principal residence sold and replaced within the same year
• b.Real property held for a trade, business or investment✓
• c.Any business asset, including equipment and vehicles
• d.Shares in a real estate investment trust held for investment

Since the 2017 Tax Cuts and Jobs Act, section 1031 deferral applies only to exchanges of real property held for productive use in a trade or business or for investment. Personal property such as equipment and vehicles was removed from the section. A principal residence is not held for business or investment, and interests in a REIT are securities, which section 1031 has always excluded.

What are the identification and completion deadlines in a delayed IRC section 1031 exchange?

• a.Ninety days to identify and three hundred sixty days to close
• b.Forty-five days to identify, one hundred eighty days to close✓
• c.Thirty days to identify and one hundred twenty days to close
• d.Sixty days to identify and two hundred seventy days to close

In a deferred exchange, the taxpayer must identify replacement property in writing within forty-five days after transferring the relinquished property, and must receive the replacement property within the earlier of one hundred eighty days after that transfer or the due date of the tax return, including extensions, for the year of the transfer. Both clocks start on the same day, and the one hundred eighty days is not an additional period after the forty-five.

What does A.R.S. 45-141 declare about the surface waters of Arizona?

• a.They belong to the federal government under the Enabling Act
• b.They belong to the county in which the channel lies
• c.They belong to the public and are open to appropriation✓
• d.They belong to the owner of the land the stream crosses

A.R.S. 45-141(A) provides that the waters of all sources flowing in streams, canyons, ravines or other natural channels, or in definite underground channels, and of lakes, ponds and springs on the surface, 'belong to the public and are subject to appropriation and beneficial use.' Subsection B adds that 'beneficial use shall be the basis, measure and limit to the use of water.' Subsection C ends a right that goes unused for five successive years.

How many initial active management areas did the Arizona Groundwater Management Act establish under A.R.S. 45-411?

• a.Two
• b.Six
• c.Ten
• d.Four✓

A.R.S. 45-411(A) states that 'four initial active management areas are established on the effective date of this section' and names them: Tucson, Phoenix, Prescott and Pinal, each defined by its listed sub-basins. Those four are the initial set fixed by statute. A.R.S. 45-412 separately empowers the director to designate subsequent active management areas, so the number of areas in existence today is larger than the statutory initial four.

On what findings may the director designate a subsequent irrigation non-expansion area under A.R.S. 45-432?

• a.Insufficient groundwater for irrigation, and no need for a management area✓
• b.A petition signed by a majority of landowners in the basin
• c.Threatened water quality degradation from any groundwater use
• d.Insufficient groundwater and evidence of land subsidence or fissuring

A.R.S. 45-432(A) lets the director designate a subsequent irrigation non-expansion area only if both conditions are met: 'there is insufficient groundwater to provide a reasonably safe supply for irrigation of the cultivated lands in the area at the current rates of withdrawal' and 'the establishment of an active management area pursuant to section 45-412 is not necessary.' Subsidence and water quality degradation are criteria for an active management area under 45-412, not for an irrigation non-expansion area.

How many categories of grandfathered groundwater rights does A.R.S. 45-462(D) recognise?

• a.Two
• b.Five
• c.Four
• d.Three✓

A.R.S. 45-462(D) provides that 'there are three categories of grandfathered rights': non-irrigation rights associated with retired irrigated land, non-irrigation rights not associated with retired irrigated land, and irrigation grandfathered rights. The first two are commonly called type 1 and type 2 non-irrigation rights, and A.R.S. 45-476 uses that labelling in the certificate application. Grandfathered rights exist only inside an active management area.

How may the owner of an Arizona irrigation grandfathered right convey that right under A.R.S. 45-472(A)?

• a.Freely, separately from the land, to any buyer in the state
• b.Only to another irrigator within the same active management area
• c.Only with the land to which that right is appurtenant✓
• d.Only after the director cancels the certificate of right

A.R.S. 45-472(A) states that 'the owner of an irrigation grandfathered right may convey the right only with the land to which the right is appurtenant.' The right is tied to the acreage it irrigates, so it cannot be sold off on its own. The rest of the section then limits what use the right may be conveyed for, depending on whether the land lies inside or outside the service area of a city, town or private water company.

Which Arizona agency administers the state's environmental quality statutes in Title 49?

• a.The Arizona State Land Department
• b.The Arizona Department of Water Resources
• c.The Department of Environmental Quality✓
• d.The Arizona Department of Real Estate

The Arizona Department of Environmental Quality administers Title 49, which covers water quality, air quality, waste programmes and on-site wastewater treatment facilities. The Department of Water Resources administers Title 45 groundwater and surface water law, the State Land Department manages state trust land under Article X of the Constitution, and the Department of Real Estate regulates licensees under Title 32, Chapter 20.

What does A.R.S. 32-2117 require the Arizona Department of Real Estate to make available regarding earth fissures?

• a.A list of parcels the Department has certified as fissure-free
• b.A soil stability warranty for buyers of unimproved land
• c.An engineering report on every subdivision in the state
• d.Earth fissure maps prepared by the Arizona geological survey✓

A.R.S. 32-2117(A) requires the Department, on receipt of maps from the Arizona geological survey, to provide any earth fissure map to a member of the public on request and to give website access to those maps. A notice printed below each map states that the map 'supplements, and is not a substitute for, a professional inspection of property for defects and conditions.' Subsection B gives a subdivider, owner or licensee immunity where written disclosure or a public report notice of the map and website is given.

What disclosure does federal law require when a pre-1978 dwelling is sold?

• a.An asbestos survey completed by a certified inspector
• b.A lead-based paint disclosure and a chance to inspect✓
• c.A mould remediation certificate from a licensed contractor
• d.A radon test result no more than twelve months old

The Residential Lead-Based Paint Hazard Reduction Act requires sellers and landlords of most housing built before 1978 to disclose known lead-based paint and hazards, to give the buyer the federal lead hazard pamphlet, and to allow a purchaser a ten-day period, unless the parties agree otherwise, to conduct a risk assessment or inspection. There is no parallel federal mandate for asbestos surveys, radon testing or mould certificates in a residential resale.

What is the purpose of a Phase I environmental site assessment in a commercial purchase?

• a.To identify recognised environmental conditions on the site✓
• b.To certify that the property complies with local zoning
• c.To value the property for lender underwriting purposes
• d.To remediate any contamination found on the property

A Phase I environmental site assessment is a due diligence review of records, a site reconnaissance and interviews, aimed at identifying recognised environmental conditions. It is the standard route to the federal all appropriate inquiries requirement that supports the innocent landowner and bona fide prospective purchaser defences. It does not clean anything up, it is not a zoning opinion, and it is not an appraisal.

Under federal Superfund law, what may happen to a buyer who acquires contaminated land without any due diligence?

• a.The buyer's liability is capped at the purchase price
• b.The buyer is immune because the prior owner polluted
• c.The buyer is liable only for contamination the buyer caused
• d.The buyer can be liable for cleanup as a current owner✓

CERCLA imposes liability on current owners and operators of a contaminated site regardless of who caused the contamination. The statutory defences, including the innocent landowner and bona fide prospective purchaser provisions, are available only to a buyer who conducted all appropriate inquiries before acquiring the property. That is why a Phase I assessment done before closing matters so much in a commercial transaction.

Which system serves a property that is not connected to a municipal sewer?

• a.An on-site wastewater treatment facility, such as a septic system✓
• b.A storm water retention basin serving the subdivision
• c.A greywater recycling tank regulated by the water provider
• d.A shared water well permitted by the county recorder

Where no sewer connection exists, sewage is handled by an on-site wastewater treatment facility, of which a conventional septic tank and disposal field is the common form and alternative systems are engineered variants. These facilities are regulated by the Arizona Department of Environmental Quality under Title 49 and its rules, often through delegated county programmes. A retention basin handles storm water, not sewage, and a well supplies water rather than disposing of waste.

What must a metes and bounds description always do?

• a.Follow the section lines of a township
• b.Reference a recorded subdivision plat
• c.Return to its own point of beginning✓
• d.State the total acreage of the parcel

A metes and bounds description traces the boundary by courses and distances from a fixed point of beginning and must close by returning to that same point, or the parcel it describes is not enclosed. Monuments, bearings and distances supply the detail. A lot and block description is the one that refers to a recorded plat, acreage is a computed result rather than a requirement, and section lines belong to the rectangular survey system.

Under the rectangular survey system, how many acres are in a standard section?

• a.320 acres
• b.160 acres
• c.640 acres✓
• d.1,280 acres

A standard section is one mile square and contains 640 acres, and a township of thirty-six sections is six miles square and therefore contains thirty-six square miles. Arizona lands are surveyed from the Gila and Salt River Base Line and Meridian, so an Arizona legal description carries township and range references measured from that initial point. A quarter section is 160 acres and a half section is 320.

Under Article X, Section 3 of the Arizona Constitution, how may state trust land be sold or leased?

• a.Only through a licensed broker retained by the state
• b.Only to an adjoining landowner who applies to lease it
• c.Only to the highest and best bidder at a public auction✓
• d.Only by private negotiation with the State Land Department

Article X, Section 3 provides that state trust lands 'shall not be sold or leased, in whole or in part, except to the highest and best bidder at a public auction to be held at the county seat of the county wherein the lands to be affected, or the major portion thereof, shall lie,' after notice by advertisement published once each week for not less than ten successive weeks. The same section makes any mortgage or other encumbrance of those lands invalid.

What price floor does Article X, Section 4 of the Arizona Constitution place on a sale of state trust land?

• a.Not less than the average price of comparable private land
• b.Not less than the appraised true value of the land✓
• c.Not less than the amount owed on any existing lease
• d.Not less than the county assessor's full cash value

Article X, Section 4 requires that all lands, leaseholds, timber and other products of land 'before being offered, shall be appraised at their true value,' and that no sale or other disposal be made 'for a consideration less than the value so ascertained, nor in any case less than the minimum price hereinafter fixed.' It also provides that legal title does not pass until the consideration has been paid. The assessor's valuation is a tax figure and plays no part.

A property owner cannot meet a setback because of the lot's unusual shape. Which zoning relief fits?

• a.A variance✓
• b.A conditional use permit
• c.A rezoning of the parcel
• d.A nonconforming use registration

A variance permits a departure from a dimensional standard such as setback, height or lot coverage where strict application would impose an unnecessary hardship arising from the physical characteristics of the property. A conditional use permit authorises a listed use that needs case-by-case review, a rezoning changes the district classification itself, and a nonconforming use is one that lawfully predates the current ordinance.

A lawful use predates the current zoning ordinance and no longer conforms to it. How is that use treated?

• a.As a legal nonconforming use that may generally continue✓
• b.As a use that requires a variance to continue operating
• c.As an immediate violation that must cease within a year
• d.As a use that automatically becomes conforming on sale

A use that was lawful when established but no longer complies with a later ordinance is a legal nonconforming use, often called grandfathered, and it may generally continue as it was. Ordinances typically restrict expansion, prevent a change to a different nonconforming use, and terminate the protection if the use is abandoned or a destroyed structure is not rebuilt within a set period. Selling the property does not convert the use to conforming.

Within what period must a planned community association or member deliver the resale disclosure package under A.R.S. 33-1806?

• a.Five days after receiving written notice of the pending sale
• b.Ten days after receiving written notice of the pending sale✓
• c.Twenty days after receiving written notice of the pending sale
• d.Thirty days after receiving written notice of the pending sale

A.R.S. 33-1806(A) requires delivery of the resale package within ten days after receipt of a written notice of a pending sale containing the purchaser's name and address. For planned communities with fewer than fifty units the selling member must deliver it; for fifty or more units the association must. A.R.S. 33-1260 imposes the same ten-day structure on condominiums. The package includes the bylaws, rules, declaration and a dated statement of assessments and reserves.

What must a subdivider obtain before a city, town or county may approve a subdivision plat inside an active management area?

• a.A groundwater withdrawal permit issued by the county board
• b.An adequate water supply report from the county health department
• c.A grandfathered groundwater right certificate for the acreage
• d.A certificate of assured water supply, or a commitment from a designated provider✓

A.R.S. 45-576(B) provides that a city, town or county 'may approve a subdivision plat only if the subdivider has obtained a certificate of assured water supply from the director or the subdivider has obtained a written commitment of water service for the subdivision from a city, town or private water company designated as having an assured water supply.' Subsection A requires the same before the notice of intention is filed with the real estate commissioner. Outside active management areas, A.R.S. 45-108 applies the different adequate water supply evaluation.

Which encumbrance is monetary rather than non-monetary?

• a.A judgment lien recorded against the owner✓
• b.An encroachment by a neighbour's garden wall
• c.A deed restriction limiting the building height
• d.A utility easement crossing the rear of the lot

Encumbrances divide into those that secure the payment of money and those that restrict use or possession. A judgment lien, a tax lien, a mortgage or deed of trust and a mechanic's lien are monetary, since each can be satisfied by paying. Easements, deed restrictions and encroachments limit how the land may be used or where the boundary effectively lies, and no payment removes them as of right.

Within what period must an Arizona mechanic's lien claimant record the notice and claim of lien under A.R.S. 33-993?

• a.One year after completion, or ninety days after a recorded notice
• b.One hundred twenty days after completion, or sixty after a recorded notice✓
• c.Sixty days after completion, or twenty days after a recorded notice
• d.Ninety days after completion, or thirty days after a recorded notice

A.R.S. 33-993(A) requires a claimant to record the notice and claim of lien 'within one hundred twenty days after completion of a building, structure or improvement, or any alteration or repair,' or, 'if a notice of completion has been recorded, within sixty days after recordation of such notice.' Recording a notice of completion is how an owner shortens the window. A.R.S. 33-998 then gives the lien only six months from recording unless an action to enforce it is brought.

What happens to the Arizona homestead exemption when the homestead is voluntarily sold?

• a.It attaches to identifiable cash proceeds for eighteen months✓
• b.It attaches to the proceeds indefinitely until reinvested
• c.It ends at closing and does not follow the proceeds
• d.It attaches to the proceeds only if a declaration is recorded

A.R.S. 33-1101(C) provides that the exemption 'automatically attaches to the person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the property' and continues 'for eighteen months after the date of the sale of the property or until the person establishes a new homestead with the proceeds, whichever period is shorter.' It does not attach to proceeds from refinancing, and only one homestead exemption may be held at a time. The dollar amount in subsection A is adjusted annually for the cost of living under subsection D.

What does a quitclaim deed convey in Arizona?

• a.The interest described, warranted against the grantor's own acts
• b.Whatever interest the grantor holds, with no covenants of title✓
• c.A fee simple estate warranted against all claimants
• d.Marketable title as of the date of the conveyance

A quitclaim deed passes whatever interest the grantor happens to own at the time and makes no promises about it. A general warranty deed warrants title against all claimants, and a special warranty deed warrants only against defects arising from the grantor's own acts. A.R.S. 33-435 implies a limited set of covenants where the words 'grant' or 'convey' are used, unless the conveyance expressly restrains them.

What does A.R.S. 11-1133 require to be appended to a deed at the time of recording?

• a.An affidavit of legal value signed by the parties or an agent✓
• b.A sworn statement of the property's replacement cost
• c.A title insurance commitment naming the county recorder
• d.A certificate of value issued by the county assessor

A.R.S. 11-1133(A) requires each deed evidencing a transfer of title, and any contract relating to the sale of real property, to have appended at the time of recording an affidavit of the seller and buyer, or the agent of either or both, in a form approved by the department of revenue. The affidavit certifies matters including the parties' names and addresses, the legal description, the date of sale, the total consideration and type of financing, and the assessor's parcel number.

How long must adverse possession continue before it bars an Arizona owner's action under A.R.S. 12-526?

• a.Fifteen years
• b.Five years
• c.Ten years✓
• d.Twenty years

A.R.S. 12-526(A) requires an owner with a cause of action to recover land from a person in peaceable and adverse possession, cultivating, using and enjoying it, to bring the action 'within ten years after the cause of action accrues, and not afterward.' Subsection B caps the possession at one hundred sixty acres, or the acreage actually enclosed if less, unless it is held under a duly recorded written memorandum of title fixing the boundaries. Shorter periods apply under A.R.S. 12-523 and 12-524 in narrower circumstances.

What is the effect of failing to record an instrument affecting Arizona real property under A.R.S. 33-411?

• a.It transfers no interest at all until it has been recorded
• b.It may be recorded only with a court order after one year
• c.It gives no notice of its contents to a later purchaser for value without notice✓
• d.It is void as between the grantor and the grantee themselves

A.R.S. 33-411(A) provides that no instrument affecting real property 'gives notice of its contents to subsequent purchasers or encumbrance holders for valuable consideration without notice, unless recorded.' A.R.S. 33-412(B) confirms that unrecorded instruments remain valid between the parties, their heirs, and later purchasers who take with notice or without valuable consideration. Recording protects priority; it does not create the conveyance.

What does an owner's title insurance policy protect against?

• a.Loss in the property's market value after purchase
• b.Any defect arising after the policy date is issued
• c.Title defects that existed on or before the policy date✓
• d.Physical defects discovered in the building's structure

An owner's title policy is a contract of indemnity against loss from covered defects, liens and encumbrances that existed as of the policy date, together with the cost of defending covered claims. The premium is paid once. It does not reach defects created later by the owner, it says nothing about the condition of the improvements, and it does not insure market value.

What is the escrow agent's role in an Arizona closing?

• a.A neutral depository acting on joint instructions✓
• b.A licensed broker representing both parties equally
• c.The seller's agent, acting to secure the sale proceeds
• d.The buyer's agent, acting to protect the buyer's deposit

An escrow agent is a neutral third party that holds documents and funds and acts only in accordance with the escrow instructions the parties have jointly given. It owes duties to both sides and may not favour either, and it cannot vary the instructions on its own. A.R.S. 32-2151(A) recognises the neutral escrow depository as one of the two lawful destinations for money entrusted to a broker.

How will an Arizona examination question tell a candidate to prorate an item at closing?

• a.It will always assume a 360-day year and a seller day
• b.It will leave both assumptions to the candidate's judgment
• c.It will always assume a 365-day year and a buyer day
• d.It will state the day basis and whose the closing day is✓

The Pearson VUE Arizona candidate handbook states that if a question requires the calculation of prorated amounts, the question will specify whether the calculation should be made on the basis of 360 or 365 days a year, and whether the day of closing belongs to the buyer or the seller. Both conventions are used in practice, which is why the exam supplies them rather than assuming one. The handbook also tells candidates to memorise 43,560 square feet per acre and 5,280 feet per mile.

To whom may an escrow holder lawfully disburse a commission earned by an Arizona salesperson?

• a.To whichever party the closing statement designates
• b.To the broker to whom the salesperson is licensed✓
• c.To the salesperson's own limited liability company
• d.To the salesperson directly, if the contract so provides

A.R.S. 32-2155(C) makes it unlawful for a person, firm or corporation, 'whether an obligor, escrow holder or otherwise,' to pay or deliver compensation for licensed acts to anyone other than through the lawful channel, and subsection A confines a licensee to accepting compensation from the broker to whom the licensee is licensed. Subsection B allows payment through a licensed professional corporation or professional limited liability company only where the licensee is licensed through that entity.

Under FIRPTA, what must a buyer generally do when the seller is a foreign person?

• a.Obtain a certificate of good standing from the seller's country
• b.Report the sale to the state department of revenue only
• c.Pay the seller's entire capital gains tax before closing
• d.Withhold part of the amount realised and remit that✓

The Foreign Investment in Real Property Tax Act makes the transferee responsible for withholding a portion of the amount realised on the disposition of a United States real property interest by a foreign person, and for remitting it to the Internal Revenue Service. The withholding is an advance against the seller's eventual tax liability, not the tax itself, and exemptions and reduced rates apply, including for certain lower-priced residences the buyer will occupy.

Which characteristics are protected against discrimination in the sale or rental of a dwelling under A.R.S. 41-1491.14?

• a.Race, color, religion, sex, familial status and national origin✓
• b.Race, color, religion, sex, source of income and student status
• c.Race, color, religion, age, marital status and occupation
• d.Race, color, creed, income level, sex and political affiliation

A.R.S. 41-1491.14(A) makes it unlawful to refuse to sell or rent after a bona fide offer, to refuse to negotiate, or otherwise to make a dwelling unavailable to any person 'because of race, color, religion, sex, familial status or national origin.' Disability is addressed separately, at A.R.S. 41-1491.19, which also covers reasonable modifications and accommodations. Age, marital status, income and occupation are not protected characteristics in this section.

What does Section 8 of the Real Estate Settlement Procedures Act prohibit?

• a.Paying a cooperating broker a share of the commission
• b.Requiring the buyer to purchase an owner's title policy
• c.Charging a borrower for a required credit report
• d.Fees or kickbacks for referring settlement business✓

RESPA Section 8 bars giving or accepting any fee, kickback or thing of value pursuant to an agreement to refer settlement service business involving a federally related mortgage loan, and bars splitting charges other than for services actually performed. Paying for a genuine service at market value remains lawful, and a commission split between cooperating real estate brokers is expressly outside the prohibition.

What does Title III of the Americans with Disabilities Act require of an existing place of public accommodation?

• a.A written accessibility plan filed with the local government
• b.Accessibility only in buildings constructed after 1990
• c.Complete reconstruction to current accessibility standards
• d.Removal of architectural barriers where readily achievable✓

Title III requires existing places of public accommodation to remove architectural and communication barriers where removal is readily achievable, meaning easily accomplishable without much difficulty or expense. New construction and alterations face stricter design and construction standards. There is no requirement to rebuild an existing facility outright, and no federal filing of an accessibility plan is required.

What distinguishes an estate for years from a periodic tenancy?

• a.It arises only when rent is paid monthly
• b.It may be ended by either party at any time
• c.It has a fixed ending date and needs no notice✓
• d.It renews automatically unless notice is given

An estate for years runs for a definite, stated term and expires on its own at the end of that term, so no notice to quit is required. A periodic tenancy runs from period to period and renews automatically until one party gives the notice the law or the lease requires. A tenancy at will is the one either party may end at any time, and it is not defined by how often rent is paid.

In a gross lease, who pays the operating expenses of the property?

• a.The landlord, out of the rent received✓
• b.The property manager, from a reserve account
• c.The tenant and landlord, split equally by statute
• d.The tenant, in addition to base rent

Under a gross lease the tenant pays one rent figure and the landlord absorbs taxes, insurance and maintenance out of it. A net lease shifts one or more of those categories to the tenant on top of base rent, and a triple net lease shifts taxes, insurance and maintenance. Nothing in Arizona law imposes a statutory split, and a property manager's reserve is the owner's money held in trust.

What is the defining feature of a percentage lease?

• a.Rent varies with the tenant's gross sales✓
• b.Rent varies with an annual inflation index
• c.Rent varies with the landlord's operating costs
• d.Rent varies with the appraised value of the space

A percentage lease sets rent as a percentage of the tenant's gross sales, often above a stated breakpoint and usually on top of a base minimum rent. It is common in retail, where the landlord shares in the success of the location. Rent tied to an inflation index is an escalation clause, and rent tied to the landlord's costs is an expense pass-through in a net lease.

What is a ground lease?

• a.A lease of the ground floor of a commercial building
• b.A lease of farmland limited by statute to one year
• c.A lease that ends when the land is sold to a new owner
• d.A long-term lease of land on which the tenant builds✓

A ground lease lets a tenant lease land for a long term, typically decades, and erect and own improvements on it for the life of the lease, with the improvements usually reverting to the landowner at the end. The long term is what makes the tenant's investment in construction financeable. It has nothing to do with which floor is leased, and a sale of the land does not by itself end a lease.

How does an assignment of a lease differ from a sublease?

• a.An assignment releases the original tenant automatically
• b.An assignment transfers only part of the remaining term
• c.An assignment transfers the entire remaining interest✓
• d.An assignment requires no writing under the statute of frauds

An assignment transfers the whole of the tenant's remaining interest to the assignee, who comes into direct relationship with the landlord. A sublease transfers less than the whole, keeping a reversion in the original tenant, who remains the landlord's tenant. In neither case is the original tenant released from the covenants unless the landlord agrees to a novation, and both are interests in land within A.R.S. 44-101(6) when they run more than a year.

What is the maximum security a landlord may demand under A.R.S. 33-1321(A)?

• a.Two and one-half months' rent
• b.One and one-half month's rent✓
• c.Three-quarters of one month's rent
• d.Three and one-half months' rent

A.R.S. 33-1321(A) provides that 'a landlord shall not demand or receive security, however denominated, including prepaid rent in an amount or value of more than one and one-half month's rent.' The cap covers everything taken as security, whatever it is called, and includes prepaid rent. The same subsection allows a tenant to volunteer more than that in advance, and subsection B requires the purpose of any nonrefundable fee or deposit to be stated in writing.

After a tenancy ends, within what period must an Arizona landlord provide an itemised list of deductions and any amount due?

• a.Forty-five calendar days after the tenant vacates
• b.Fourteen calendar days, including weekends and holidays
• c.Fourteen days, excluding weekends and legal holidays✓
• d.Thirty days, excluding weekends and legal holidays

A.R.S. 33-1321(D) requires that 'within fourteen days, excluding Saturdays, Sundays or other legal holidays, after termination of the tenancy and delivery of possession and demand by the tenant the landlord shall provide the tenant an itemized list of all deductions together with the amount due and payable to the tenant.' Subsection E lets a tenant recover the property and money due plus damages equal to twice the amount wrongfully withheld if the landlord fails to comply.

How much notice must an Arizona landlord normally give before entering a dwelling unit under A.R.S. 33-1343?

• a.At least two days' notice, entering at reasonable times✓
• b.No notice, provided the entry is for a repair
• c.At least twenty-four hours' notice, entering at any time
• d.At least seven days' notice, entering at reasonable times

A.R.S. 33-1343(D) forbids a landlord to abuse the right of access or use it to harass the tenant, and provides that 'except in case of emergency or if it is impracticable to do so, the landlord shall give the tenant at least two days' notice of the landlord's intent to enter and enter only at reasonable times.' Subsection C allows entry without consent in an emergency, and subsection B treats a tenant's maintenance request as permission to enter for that request.

What does a home warranty typically cover that a homeowner's insurance policy does not?

• a.Breakdown of covered systems and appliances✓
• b.Fire and smoke damage to the dwelling structure
• c.Loss of personal belongings after a burglary
• d.Liability for injury to a guest on the property

A home warranty is a service contract covering the repair or replacement of specified systems and appliances when they fail through normal wear, subject to a service fee and exclusions. A homeowner's insurance policy instead indemnifies against sudden accidental loss from covered perils such as fire, and includes personal property and liability coverage. Buyers frequently hold both, because neither substitutes for the other.

What does replacement cost coverage pay compared with actual cash value coverage?

• a.The outstanding balance of the mortgage loan
• b.The cost to rebuild without deducting depreciation✓
• c.The original purchase price stated in the policy
• d.The property's current market value at the time of loss

Replacement cost coverage pays what it costs to repair or rebuild with materials of like kind and quality, without a deduction for depreciation. Actual cash value coverage pays replacement cost less depreciation, so an older roof recovers less. Neither is measured by market value, purchase price or loan balance, since the land under the structure is not what burns.

Which approach to value does an appraiser rely on most for a single-family home in an established subdivision?

• a.The sales comparison approach✓
• b.The cost approach
• c.The gross rent multiplier approach
• d.The income capitalization approach

The sales comparison approach analyses recent sales of similar properties and adjusts them for differences, which is the most reliable evidence of value where an active market of comparable homes exists. The cost approach carries most weight for new or special-purpose buildings with few comparables, and income capitalization for income-producing property. A gross rent multiplier is a rough screening tool, not a full approach.

How does a broker's comparative market analysis differ from an appraisal?

• a.It must follow the same standards as an appraisal report
• b.It is more accurate because the broker knows the local market
• c.It may be used in place of an appraisal by a mortgage lender
• d.A pricing opinion, not a certified valuation by an appraiser✓

A comparative market analysis is a licensee's opinion of a likely selling price, prepared to help a client set a listing or offer price. An appraisal is an independent valuation prepared by a licensed or certified appraiser under professional standards, and it is what a lender relies on for underwriting. The two are not interchangeable, and presenting a market analysis as an appraisal misleads the client.

Which form of depreciation is generally considered incurable in an appraisal?

• a.Functional obsolescence from an outdated kitchen
• b.External obsolescence from causes off the property✓
• c.Physical deterioration from deferred maintenance
• d.Physical deterioration of a worn floor covering

External or economic obsolescence arises from influences outside the property boundary, such as a new industrial neighbour or a decline in the local economy, and the owner cannot cure it by spending money on the property. Physical deterioration and most functional obsolescence are curable where the cost to fix is justified by the value added. Curability in appraisal turns on that cost-benefit test, not on how visible the defect is.