Arizona Real Estate Broker Exam — All Questions

How does A.R.S. 32-2101 define a 'designated broker' in Arizona?

• a.Any licensed broker the employing entity has hired
• b.The broker who listed the property in a transaction
• c.A licensed broker designated to act for the employing entity✓
• d.A licensed salesperson delegated to run an office

A.R.S. 32-2101 defines a designated broker as a natural person licensed as a broker under the chapter who is either 'designated to act on behalf of an employing real estate, cemetery or membership camping entity' or 'doing business as a sole proprietor.' The office is personal to that individual, and A.R.S. 32-2125(A) confirms that the entity licence 'shall extend no authority to act as designated broker to any other person.' A salesperson cannot hold the role.

Under A.R.S. 32-2155, from whom may an Arizona salesperson accept compensation for licensed activity?

• a.Any broker who cooperated in the transaction
• b.The escrow company handling the closing
• c.The broker to whom the licensee is licensed✓
• d.The seller directly, if the contract says so

A.R.S. 32-2155(A) provides that a broker shall employ and pay only active licensees, and that a licensee shall accept employment and compensation only from 'the legally licensed broker to whom the licensee is licensed,' or from a narrow second route requiring that the payer hold a licence, that the licensee be its W-2 employee, that both share the same employing broker, and that the employing broker give written permission. Subsection C makes it unlawful for an escrow holder or anyone else to pay compensation for licensed acts outside those channels.

Which conduct is a listed ground for suspension or revocation under A.R.S. 32-2153(A)?

• a.Refusing to present an offer the client considers too low
• b.Advertising a property in a competing broker's market area
• c.Charging a commission rate above the local average
• d.Acting for more than one party without the written consent of all✓

A.R.S. 32-2153(A)(2) lists having 'acted for more than one party in a transaction without the knowledge or written consent of all parties to the transaction' among the grounds on which the commissioner may deny, suspend or revoke a licence. Other listed grounds include a course of misrepresentation, violating any provision of the chapter or the rules, and employing an unlicensed salesperson or associate broker. Commission rates are negotiable and are not fixed by the chapter.

Who may bring an action to collect a real estate commission under A.R.S. 32-2152?

• a.Any person holding a written referral agreement
• b.Any party named in the purchase contract
• c.A person licensed when the services were done✓
• d.Any person who introduced the buyer to the seller

A.R.S. 32-2152 bars an action for compensation for real estate services unless the plaintiff pleads and proves they were a licensed broker or salesperson at the time the claim arose. The rule closes the courthouse door on unlicensed finders, however genuine their introduction. It works with A.R.S. 32-2155, which controls who may lawfully be paid, and with A.R.S. 44-101(7), which requires the employment agreement itself to be in writing.

Under A.A.C. R4-28-1101(I), what care must an Arizona licensee take with information relevant to the transaction?

• a.A duty owed only after a purchase contract is signed
• b.Absolute accuracy, with strict liability for any error
• c.Reasonable care to obtain the information and report it accurately✓
• d.No duty beyond repeating what the seller has stated

A.A.C. R4-28-1101(I) requires a licensee to 'exercise reasonable care in ensuring that the licensee obtains information material to a client's interests and relevant to the contemplated transaction and accurately communicates the information to the client,' and to take reasonable steps to help the client confirm its accuracy. The standard is reasonable care, not a guarantee, and it attaches to the agency relationship rather than to the signing of a contract.

What does A.A.C. R4-28-1101(C) require of a licensee who cannot perform an act the licence requires?

• a.Immediate termination of the employment agreement
• b.A written report to the Department within ten days
• c.Prompt notice to the licensee's own designated broker✓
• d.Referral of the client to another brokerage firm

A.A.C. R4-28-1101(C) requires a licensee to perform all acts required by holding the licence expeditiously and forbids delay 'either intentionally or through neglect.' It then provides that if a licensee is unable to perform any act required by rule or statute, 'they must expeditiously notify their designated broker of their inability to perform.' The report goes up the chain inside the firm, so the designated broker can cover the duty.

Under A.A.C. R4-28-1101(D), how must a licensee handle a controversy with another licensee?

• a.It suspends both licensees' duties until it is settled
• b.It must be submitted to the Department for mediation
• c.It may not be allowed to delay or interfere with the client's transaction✓
• d.It must be resolved before either licensee may act further

A.A.C. R4-28-1101(D) provides that a licensee 'shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the initiation, processing, or finalizing of a transaction on behalf of a client.' The rule adds that this does not oblige a licensee to alter an employment or compensation agreement or to give up the right to sue over the dispute. The client's deal proceeds; the quarrel is settled separately.

What must every Arizona real estate employment agreement contain under A.R.S. 32-2151.02(A)?

• a.A definite duration, showing inception and expiration✓
• b.A clause naming the escrow agent for the transaction
• c.A minimum commission fixed by the employing broker
• d.An automatic renewal clause running month to month

A.R.S. 32-2151.02(A) requires all real estate employment agreements to be written in clear and unambiguous language, to fully set forth all material terms including the terms of broker compensation, to 'have a definite duration or expiration date, showing dates of inception and expiration,' and to be signed by all parties. Automatic renewal is not required and is not mentioned; commission terms must be stated, not set at a minimum by anyone.

May an Arizona employing broker assign a real estate employment agreement to another broker?

• a.Yes, whenever the brokerage is sold as a going concern
• b.No, an assignment is prohibited in every circumstance
• c.Yes, on written notice to the client after the assignment
• d.Only with the express written consent of all the parties✓

A.R.S. 32-2151.02(B) provides that 'an employing broker shall not assign a real estate employment agreement to another broker without the express written consent of all parties to the agreement at the time of the assignment.' Consent must come from all parties and must exist at the time of the assignment, so notice given afterwards will not do. A sale of the firm does not create an exception.

A seller is already under an exclusive listing. What does A.R.S. 32-2151.02(C) require of a licensee who seeks a second agreement?

• a.Written release of the first agreement from the other broker
• b.A ninety-day waiting period after the first agreement ends
• c.Approval of the second agreement by the Department
• d.Written acknowledgment from the party of exposure to extra commissions✓

A.R.S. 32-2151.02(C) forbids a licensee from procuring or attempting to procure an employment agreement from a party already subject to an existing exclusive real estate employment agreement 'unless the licensee has received written acknowledgment from the party that the execution of additional real estate employment agreements could expose the party to liability for substantial additional commissions.' The subsection expressly preserves any civil liability the licensee may incur from the conduct.

Is a written employment agreement required before an Arizona licensee may represent a party in a transaction?

• a.Yes, unless the client waives it in writing
• b.Yes, in every transaction without exception
• c.Yes, except in commercial lease transactions
• d.No, representation may exist without one✓

A.R.S. 32-2151.02(D) states that 'a real estate employment agreement is not required for a licensee to represent a party in a transaction.' What the agreement does is entitle the broker to compensation: subsection E defines it as the written agreement by which a broker is entitled to compensation under A.R.S. 44-101, paragraph 7. Representation and the right to be paid are separate questions, and only the second one turns on the writing.

Where must an Arizona designated broker's licence certificate be kept under A.R.S. 32-2128(A)?

• a.Prominently displayed in the office of that broker✓
• b.Posted on the brokerage's public-facing website
• c.Filed with the county recorder in the broker's county
• d.Carried on the designated broker's person at all times

A.R.S. 32-2128(A) requires the designated broker's and, where applicable, the employing broker's licence certificate to be 'prominently displayed in the office of the broker,' with all other licence certificates 'readily available.' A salesperson's or associate broker's certificate stays in the employer's possession until it is cancelled, terminated, suspended, revoked, or the licensee is severed. Subsection B lets the broker satisfy the possession rule using the Department's public database record.

A designated broker will be unable to act for two weeks. What does A.R.S. 32-2127(D) permit?

• a.A written designation of another licensee, not exceeding thirty days✓
• b.A written designation of another licensee for up to one year
• c.Closure of the office until the designated broker returns
• d.An oral designation confirmed at the next office meeting

A.R.S. 32-2127(D) lets a designated broker who is unable to act within twenty-four hours designate an employed licensee or another designated broker to act on their behalf. The designation must be in writing, the original must be kept at the office for one year from its effective date, a copy must be attached to any hire, sever or renewal form signed by the designee, and the designation 'shall not exceed thirty days' duration.'

An Arizona employing broker abandons the business location without notifying the commissioner. What happens under A.R.S. 32-2126(A)?

• a.The licence continues until its next scheduled renewal
• b.The employing broker's licence is cancelled and its licensees severed✓
• c.The commissioner issues a letter of concern to the broker
• d.The licence is suspended for thirty days pending a hearing

A.R.S. 32-2126(A) requires each employing broker to maintain a definite place of business or an active statutory agent on file with the corporation commission, and to notify the commissioner in writing of any change. It then provides that 'change or abandonment of a business location or statutory agent without notice shall automatically cancel the employing broker's license and shall sever the license of any salesperson or associate broker employed by the employing broker.' If the licence is later reinstated, those licensees may be rehired.