Arizona Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Article XXVI of the Arizona Constitution lets a licensed broker or salesperson complete the instruments in a transaction the licensee is handling. On what condition?

• a.The licensee completes them without charge✓
• b.The licensee files copies with the Department
• c.The licensee charges a set drafting fee
• d.The licensee has an attorney countersign them

Article XXVI, Section 1 gives a licensee acting as broker, salesperson or agent for a party the right to draft or fill out and complete, in the words of the section, 'without charge, any and all instruments incident thereto.' The 'without charge' clause is the whole bargain: the licensee may prepare the paperwork because no separate fee is taken for doing it. Charging for the drafting turns it into the practice of law for compensation, which the section does not authorize. Nothing in Article XXVI requires an attorney's countersignature, and nothing requires the completed instruments to be filed with the Department.

Which documents does Article XXVI of the Arizona Constitution expressly let a licensee complete in a transaction the licensee is handling?

• a.Only documents in transactions closed through escrow
• b.Only preliminary purchase agreements and earnest money receipts
• c.Only forms the Department of Real Estate has published
• d.Deeds, mortgages, leases and contracts for sale of realty✓

Article XXVI, Section 1 lists the instruments a licensee may complete as 'including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale.' The list is illustrative, not exhaustive, and it plainly reaches beyond the offer stage to conveyancing and security instruments. It is not limited to purchase agreements and receipts, it is not tied to any Department form, and it does not turn on whether the transaction closes through escrow.

Which body administers A.R.S. Title 32, Chapter 20 and the Commissioner's Rules for Arizona real estate licensees?

• a.The Arizona Registrar of Contractors (ROC)
• b.The Arizona Department of Real Estate✓
• c.The Arizona Association of Realtors (AAR)
• d.The Arizona Corporation Commission (ACC)

A.R.S. 32-2102 places administration of Chapter 20 in the state real estate department, and 32-2107 gives the real estate commissioner charge of that department. The Department issues, renews and disciplines real estate licenses. The Corporation Commission handles securities and business entities, the Registrar of Contractors licenses the construction trades, and the state Realtor association is a private trade group that can set membership rules but cannot grant or revoke a license.

How does a person become the Arizona Real Estate Commissioner, and how long is the appointment held?

• a.Appointed by the real estate advisory board for a six-year term
• b.Elected by the voters statewide to a fixed four-year term
• c.Appointed by the governor, serving at the governor's pleasure✓
• d.Elected by the real estate advisory board to a one-year term

A.R.S. 32-2106(A) provides that the real estate commissioner is appointed by the governor and 'shall serve at the pleasure of the governor.' There is no fixed term and no election. Subsection B adds qualifications: at least five years in the real estate, title insurance, banking or mortgage broker industry plus three years of administrative experience, and no financial interest in a brokerage at the date of appointment. The advisory board advises; it does not select the commissioner.

How is the Arizona real estate advisory board composed under A.R.S. 32-2104?

• a.Ten members appointed by the governor to six-year terms✓
• b.Nine members elected by licensees to three-year terms
• c.Five members appointed by the commissioner to four-year terms
• d.Seven members appointed by the legislature to two-year terms

A.R.S. 32-2104(A) states that the real estate advisory board 'is established composed of ten members who are appointed by the governor' and that 'the term of office of each member is six years,' with the terms of three members expiring on January 31 of each odd-numbered year. Subsection B then fixes the mix of brokerage, commercial, multifamily and public members. Licensees do not elect the board, and the legislature does not appoint it.

What does A.R.S. 32-2122 say about acting as a real estate broker or salesperson in Arizona without a license?

• a.It is allowed if a licensed broker supervises
• b.It is unlawful to engage in the activity at all✓
• c.It is allowed for a single transaction each year
• d.It is allowed if the person works without pay

A.R.S. 32-2122(B) makes it 'unlawful for any person, corporation, partnership or limited liability company to engage in any business, occupation or activity listed in subsection A of this section without first obtaining a license.' Subsection A lists real estate, cemetery and membership camping brokers and salespersons. The prohibition has no working-for-free exception, no supervision exception and no one-transaction allowance; those defences appear nowhere in the section.

What prelicensure course must an original Arizona real estate broker applicant complete under A.R.S. 32-2124(C)?

• a.A sixty-hour broker course and a passing course examination
• b.A thirty-hour broker course and two years of college coursework
• c.A ninety-hour broker course followed by a passing course examination✓
• d.A forty-hour broker course and a supervised field internship

A.R.S. 32-2124(C) requires an original broker applicant to complete 'a real estate broker's course that is prescribed and approved by the commissioner and that is at least ninety classroom hours, or the equivalent' at a certified real estate school, and to have 'satisfactorily passed an examination on the course.' A.A.C. R4-28-401(A)(1) sets that course examination score at a minimum of 75 percent. The course may be taken live or by distance learning, but the course examination must be proctored in person.

What licensed experience does an original Arizona real estate broker applicant need under A.R.S. 32-2124(A)(1)?

• a.Active licensure for five of the preceding seven years
• b.Active licensure for one of the preceding three years
• c.Active licensure for two of the preceding four years
• d.Active licensure for three of the preceding five years✓

A.R.S. 32-2124(A)(1) requires that an original real estate broker's license applicant have 'been an active licensed real estate salesperson or real estate broker for at least three years during the five years immediately preceding the time of application.' The statute counts active licensure, not hours worked, so it does not impose a full-time test. Subsection A(7) lets the commissioner accept an equivalent amount of active experience in the same field within the preceding five years as a substitute.

What is the minimum age to receive any license issued under A.R.S. Title 32, Chapter 20?

• a.Twenty-five years of age
• b.Twenty-one years of age
• c.Eighteen years of age✓
• d.Nineteen years of age

A.R.S. 32-2124(D) provides that 'before receiving any license provided for by this chapter, an applicant must be at least eighteen years of age.' The requirement applies to real estate, cemetery and membership camping licenses alike, and it is a condition of receiving the license rather than of sitting the examination. No higher age is set anywhere in Chapter 20, including for the broker classes.

How many continuing education credit hours must an Arizona salesperson or associate broker present to renew under A.R.S. 32-2130(A)?

• a.Thirty-six credit hours each licence period
• b.Twenty-four credit hours a licence period✓
• c.Forty-five credit hours each licence period
• d.Twelve credit hours each licence period

A.R.S. 32-2130(A) conditions renewal on evidence of 'twenty-four credit hours for salespersons and associate brokers' of approved real estate continuing education accrued during each twenty-four-month period of licensure. A.A.C. R4-28-402(A)(2) matches that figure and adds the structure: a minimum of three hours in each mandatory category, with the balance taken in mandatory categories or in business brokerage or general real estate. Courses must come from a school approved under R4-28-404.

A corporation applies for an Arizona broker's licence. What must it do under A.R.S. 32-2125(A)?

• a.Designate a licensed broker who is its officer✓
• b.Register each shareholder as an associate broker
• c.Name an outside broker under a written service contract
• d.Designate any licensed salesperson it employs

A.R.S. 32-2125(A) requires a corporation, limited liability company or partnership seeking an entity broker's license to designate a natural person 'who is licensed as a broker' and who is an officer of the corporation, a manager or member of the limited liability company, or a partner of the partnership, to act as designated broker. The section adds that the license 'shall extend no authority to act as designated broker to any other person,' and the entity licence runs concurrently with that designated broker's licence.

An Arizona employing broker opens a second office in another city. What does A.R.S. 32-2127 require?

• a.A written notice filed with the county recorder
• b.A separate trust account for the branch
• c.A second designated broker for the branch
• d.An additional licence for that office✓

A.R.S. 32-2127(A) provides that if a broker maintains more than one place of business in the state, 'the broker shall procure an additional license for each branch office maintained.' Subsection B requires the branch licence to be issued in the same name as the principal office licence, to be posted in the branch, and to carry a sign conforming to the principal office sign and including the designation 'branch office.' Subsection C requires each branch to be under the management of a broker or a licensed salesperson.

Under A.R.S. 32-2151(A), where must an Arizona broker place money entrusted to the broker as a broker?

• a.In a neutral escrow depository or a trust fund account✓
• b.In the broker's own operating account until closing occurs
• c.In an interest-bearing account owned by the seller
• d.In any account the employing broker chooses to open

A.R.S. 32-2151(A) requires a broker who does not immediately place entrusted money 'in a neutral escrow depository in this state' to place it on receipt 'in a trust fund account in a federally insured or guaranteed account in a depository located in this state.' The parties may agree otherwise in writing, and 32-2151(D) sets the conditions for an out-of-state depository. An operating account is expressly out of bounds: subsection E confirms the section does not permit commingling.

How often must an Arizona broker complete a three-way reconciliation of the trust fund account?

• a.Monthly✓
• b.Quarterly
• c.Annually
• d.Weekly

A.R.S. 32-2151(B)(3) states that 'on a monthly basis the broker must complete a three-way reconciliation between the trust fund account bank statements, client ledgers and trust fund account ledgers and provide an explanation for any variation.' The three legs are the bank statement, the individual client ledgers and the trust account ledger, and they must agree. Subsection C(5) makes failure to reconcile regularly a violation of the chapter in its own right.

May an Arizona broker keep any of the broker's own money in the brokerage trust fund account?

• a.Yes, up to one month of operating expenses
• b.Yes, but only during the first year of the account
• c.No, not one dollar under any circumstances
• d.Yes, up to $5,000 to keep the account open✓

A.R.S. 32-2151(C)(2) treats depositing money belonging to others in the broker's personal account, or commingling it with personal money, as a violation, then adds: 'it is not commingling if a broker deposits personal monies of not more than $5,000 to keep the account open or to avoid charges for an insufficient minimum balance.' The allowance is capped at that figure and tied to that purpose. Nothing in the section permits an operating-expense cushion or a first-year grace period.

Within what period must an Arizona designated broker review and initial an executed listing agreement or purchase contract?

• a.Twenty business days after execution
• b.Ten business days after execution✓
• c.Thirty calendar days after execution
• d.Three business days after execution

A.R.S. 32-2151.01(G) requires the designated broker to review each listing agreement, purchase or nonresidential lease agreement or similar instrument 'within ten business days after the date of execution by placing the broker's initials and the date of review on the instrument on the same page as the signatures of the parties.' Subsection K defines a business day as any day other than a Saturday, Sunday or Arizona legal holiday. The designated broker may authorise an employed associate broker in writing to review and initial on the broker's behalf.

What does A.R.S. 32-2163 require before an out-of-state broker conducts activity in Arizona that would need an Arizona licence?

• a.A written cooperation agreement entered into before the activity✓
• b.A temporary licence issued by the commissioner
• c.A reciprocal licence from the broker's home state
• d.A surety bond posted with the Department of Real Estate

A.R.S. 32-2163(C)(1) allows an Arizona broker to cooperate with an out-of-state broker who would otherwise need an Arizona licence only if the two 'enter into a written cooperation agreement before the out-of-state broker conducts any activity otherwise requiring a broker's license,' listing the activities to be conducted. Subsection A separately allows an Arizona broker to pay and receive compensation from a broker lawfully operating in another state, and subsection B makes clear that paying compensation does not by itself authorise the out-of-state broker to work here.

Which term must appear in every Arizona property management agreement under A.R.S. 32-2173?

• a.A ninety-day cancellation notice period
• b.A minimum management fee percentage
• c.A guaranteed occupancy level for the year
• d.A beginning date and an ending date✓

A.R.S. 32-2173(A)(1)(c) requires a property management agreement to 'specify a beginning and an ending date.' The same paragraph requires the agreement to state all material terms, to be signed by the owner and the firm's designated broker or authorised licensee, to contain cancellation provisions agreeable to both parties, and to provide for the disposition of all money collected, including tenant deposits. The statute sets no minimum fee, no fixed notice period and no occupancy guarantee.

How must property management accounts be designated on an Arizona broker's records?

• a.As reserve accounts
• b.As trust accounts✓
• c.As escrow subaccounts
• d.As operating accounts

A.R.S. 32-2174(A) states plainly that 'all property management accounts shall be designated as trust accounts on the broker's records.' Subsection B requires a broker's trust account for all of the owner's money unless the owner directs the broker to deposit it directly into the owner's own account, to which the broker must not have access, and permits trust accounts to be interest bearing. The designation is what brings the account within the Department's audit reach.

Within what period must an Arizona property management firm deposit money it receives that is not subject to dispute or contingency?

• a.Three banking days after receipt✓
• b.Ten banking days after receiving it
• c.One banking day after receiving it
• d.Five banking days after receiving it

A.R.S. 32-2174(D) requires that 'within three banking days after receiving monies that are not subject to dispute or contingency, the property management firm shall deposit the monies in either the owner's direct account or the property management firm's trust account for the benefit of the owner.' The clock runs in banking days, and the qualifier matters: money that is genuinely in dispute or held pending a contingency is outside the three-day rule.

A property management agreement terminates. Within what period must the firm give the owner a list of all tenant security obligations?

• a.Five days✓
• b.Thirty-five days
• c.Ten days
• d.Seventy-five days

A.R.S. 32-2173(C) sets a staged final accounting on termination: within five days a list of all tenant security obligations, within thirty-five days reimbursement of money remaining in the property accounts except what is needed for unpaid obligations incurred during the term, and within seventy-five days both a final accounts receivable and payable list and a final bank account reconciliation. The tenant security list is the first item due because the tenants' money is the most exposed.

How does A.R.S. 32-2101 define 'subdivision' or 'subdivided lands' in Arizona?

• a.Land divided for sale or lease into ten or more lots
• b.Land divided for sale or lease into six or more lots✓
• c.Land divided for sale or lease into four or more lots
• d.Land divided for sale or lease into two or more lots

A.R.S. 32-2101 defines a subdivision or subdivided lands as improved or unimproved land 'divided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into six or more lots, parcels or fractional interests.' The definition takes in stock cooperatives, land divided under a common promotional plan and residential condominiums, and excludes leasehold offerings of one year or less and divisions into parcels of thirty-six acres or more.

A subdivider sells a lot without delivering the public report to the buyer. What does A.R.S. 32-2183(I) make of that sale?

• a.It is valid once the deed is recorded
• b.It is void from the moment of signing
• c.It is voidable only by the commissioner
• d.It is rescindable by the purchaser✓

A.R.S. 32-2183(I) forbids selling or leasing subdivided lots without first obtaining a public report, then provides that 'the sale or lease of subdivided lands before issuance of the public report or failure to deliver the public report to the purchaser or lessee shall render the sale or lease rescindable by the purchaser or lessee.' The remedy belongs to the purchaser, not to the commissioner, and the same subsection requires the rescission action to be brought within three years of the date the contract was executed.

How does A.R.S. 32-2101 define 'unsubdivided lands' in Arizona?

• a.Six or more parcels of at least ten but under thirty-six acres each
• b.Any parcel of at least six hundred forty acres offered for lease
• c.Six or more parcels of thirty-six to under one hundred sixty acres✓
• d.Two or more parcels of at least one hundred sixty acres each

A.R.S. 32-2101 defines unsubdivided lands as land divided or proposed to be divided for sale or lease 'into six or more lots, parcels or fractional interests and the lots or parcels are thirty-six acres or more each but less than one hundred sixty acres each,' or offered under a common promotional plan. The acreage band is what separates unsubdivided lands from subdivided lands, since a division into parcels of thirty-six acres or more is carved out of the subdivision definition.

When does A.R.S. 33-422 require a seller to furnish a buyer with an affidavit of disclosure?

• a.On six or more parcels in an unincorporated area of a county
• b.On any parcel of thirty-six acres or more anywhere in the state
• c.On any residential resale located within a city or town
• d.On five or fewer parcels in an unincorporated area of a county✓

A.R.S. 33-422(A) applies to 'a seller of five or fewer parcels of land, other than subdivided land, in an unincorporated area of a county and any subsequent seller of such a parcel,' who must complete and furnish a written affidavit of disclosure to the buyer at least seven days before the transfer. Subsection D gives the buyer five days to rescind after the affidavit is furnished, and subsection E requires the executed affidavit to be recorded at the same time as the deed. A sale inside a city or town is outside the section.

What are the Arizona real estate recovery fund's liability limits under A.R.S. 32-2186(B)?

• a.$30,000 for each transaction and $90,000 for each licensee✓
• b.$15,000 for each transaction and $45,000 for each licensee
• c.$50,000 for each transaction and $100,000 for each licensee
• d.$25,000 for each transaction and $75,000 for each licensee

A.R.S. 32-2186(B) caps the fund's liability at 'thirty thousand dollars for each transaction, regardless of the number of persons aggrieved or the number of licensees or parcels of real estate involved' and at 'ninety thousand dollars for each licensee.' Subsection C then terminates the fund's liability for that licensee once orders authorising payments reach the aggregate cap. The fund pays only actual and direct out-of-pocket loss, including reasonable attorney fees and court costs.

Can an Arizona licensee who was a party to a transaction recover from the real estate recovery fund?

• a.Yes, but only up to half of the per-transaction cap
• b.No, a licensee in the transaction has no claim✓
• c.Yes, if the licensee held an inactive licence
• d.Yes, if the licensee was not the listing broker

A.R.S. 32-2186(D) provides that 'a licensee acting as a principal or agent in a real estate transaction has no claim against the fund,' and extends the bar to marital communities, corporations, limited liability companies and partnerships in which the licensee is a principal, member, general partner, officer or director, or in which the licensee holds a direct or indirect interest of at least ten per cent. The fund exists for the aggrieved public, not for licensees on the other side of the deal.

How long does an Arizona timeshare purchaser have to rescind the purchase agreement without cause?

• a.Seven calendar days after signing it
• b.Fifteen calendar days after signing it
• c.Ten calendar days after signing it✓
• d.Three calendar days after signing it

A.R.S. 32-2197.03(B) lets the purchaser rescind the purchase agreement 'without cause of any kind by sending or delivering a written notice of rescission by midnight of the tenth calendar day following the day on which the purchaser or prospective purchaser executed the purchase agreement.' The right must be disclosed conspicuously immediately before the purchaser's signature line, and a developer may give a longer period, in which case the disclosure must state the longer one.

Under A.A.C. R4-28-1101(A), what does a licensee owe to the client and what is owed to everyone else in the transaction?

• a.Fair dealing with the client and silence toward all others
• b.A fiduciary duty to both the client and the other parties
• c.A duty of confidentiality to every party in the transaction
• d.A fiduciary duty to the client, fair dealing with others✓

A.A.C. R4-28-1101(A) states that 'a licensee owes a fiduciary duty to the client and shall protect and promote the client's interests. The licensee shall also deal fairly with all other parties to a transaction.' The two duties are deliberately different in kind: fiduciary loyalty runs only to the client, while everyone else in the deal is owed honesty and fair dealing. Extending fiduciary duty to the other side would put the licensee in an impossible position.

Which of these must an Arizona licensee disclose in writing to all other parties under A.A.C. R4-28-1101(B)?

• a.A known adverse material fact or defect in the property✓
• b.The commission split agreed with the cooperating broker
• c.The client's reason for selling or buying the property
• d.The client's lowest acceptable price in the negotiation

A.A.C. R4-28-1101(B) requires written disclosure to all other parties of any information the licensee possesses that materially or adversely affects the consideration to be paid, and lists four examples: that the seller or lessor may be unable to perform, that the buyer or lessee may be unable to perform, 'any known adverse material fact concerning the property or material defect existing in the property being transferred,' and the existence of a lien or encumbrance. A client's bottom line and motive are confidential and are protected by the fiduciary duty in subsection A.

When may an Arizona licensee accept compensation from, or represent, more than one party to a transaction?

• a.Only when the transaction is a commercial lease
• b.Whenever the licensee discloses it at closing
• c.Only with prior written consent of all parties✓
• d.Whenever both parties are separately represented

A.A.C. R4-28-1101(F) provides that 'a licensee shall not accept compensation from or represent more than one party to a transaction without the prior written consent of all parties.' Consent must be written and must come first, not at closing. A.R.S. 32-2153(A)(2) reinforces this by making acting for more than one party without the knowledge or written consent of all parties a ground for suspension or revocation of the licence.

What does A.A.C. R4-28-1101(E) require of a licensee who is acting as a principal in a transaction?

• a.Oral notice to the other parties at the first showing
• b.Written notice to the other parties before any binding agreement✓
• c.Notice to the Department within ten days of the contract
• d.Written notice to the other parties on the day of closing

A.A.C. R4-28-1101(E) bars a licensee from acting directly or indirectly in a transaction 'without informing the other parties in the transaction, in writing and before the parties enter any binding agreement, of a present or prospective interest or conflict.' The listed conflicts include that the licensee holds a licence and is acting as a principal, that the buyer or seller is in the licensee's or designated broker's immediate family, and that the licensee or an immediate family member has a financial interest beyond the ordinary commission.

An Arizona licensee is asked to handle a property type outside the licensee's field of competence. What does A.A.C. R4-28-1101(H) allow?

• a.Engaging a competent person, or disclosing first✓
• b.Accepting the work if the fee is reduced accordingly
• c.Accepting the work and learning on the transaction
• d.Referring the client to the Department for guidance

A.A.C. R4-28-1101(H) requires a licensee's services to meet the standards of practice and competence recognised in the professional community for that discipline, and forbids undertaking services on a property or service type outside the licensee's field of competence 'without engaging the assistance of a person who is competent to provide those services, unless the licensee's lack of expertise is first disclosed to the client in writing and the client subsequently employs the licensee.' Either route works; simply taking the work does not.

Under A.A.C. R4-28-1102, when may an Arizona licensee contact a principal who is represented by another licensee?

• a.After the other side is unavailable for a full day✓
• b.Only through the principal's own attorney of record
• c.At any time, provided the contact is put in writing
• d.After the other side has been unavailable for one week

A.A.C. R4-28-1102(A), as amended effective December 13, 2025, provides that licensees 'may not contact a principal represented by another licensee unless the principal's Designated Broker, broker representative with delegated authority, and the licensee are unavailable for 24 hours,' and lets a principal waive or alter the requirement by written instructions. Subsection B applies a matching rule to buyer-side negotiations. This is a live example of a Commissioner's Rule that changed after the 2019 broker outline was written.