Arizona Real Estate Broker Exam — All Questions

Which agreements must be in writing to be enforceable under Arizona's statute of frauds, A.R.S. 44-101(6)?

• a.A sale of real property or a lease for longer than one month
• b.A sale of real property or a lease for longer than one year✓
• c.Any lease of real property regardless of its stated term
• d.Any agreement affecting real property worth over $500

A.R.S. 44-101(6) bars an action 'upon an agreement for leasing for a longer period than one year, or for the sale of real property or an interest therein' unless the agreement or a memorandum of it is in writing and signed by the party to be charged. The same paragraph adds that where the agreement is made by an agent, it is invalid unless the agent's authority is itself in writing. A lease of a year or less falls outside the paragraph.

Under A.R.S. 44-101(7), what must be in writing before a broker can sue for a commission?

• a.The listing broker's advertisement of the property
• b.The buyer's written offer to purchase the property
• c.The closing statement showing the commission split
• d.The agreement employing the broker to buy or sell✓

A.R.S. 44-101(7) places within the statute of frauds any action 'upon an agreement authorizing or employing an agent or broker to purchase or sell real property, or mines, for compensation or a commission.' A.R.S. 32-2151.02(E) then defines a real estate employment agreement by reference to that paragraph. Together they mean a broker who wants to be paid needs a signed written employment agreement, whatever else the file contains.

Which element is required for a valid real estate contract in Arizona?

• a.Acknowledgment before a notary public
• b.Approval by a licensed real estate broker
• c.Recording in the county where the land lies
• d.Consideration bargained for by the parties✓

A contract to buy or sell Arizona real property needs offer and acceptance, legally competent parties, a lawful object, consideration and, under A.R.S. 44-101(6), a signed writing. Notarisation and recording are requirements for the deed rather than the contract: A.R.S. 33-401(B) requires a deed to be signed and acknowledged, and A.R.S. 33-411 governs the effect of recording. A broker's involvement is not an element of contract validity at all.

What formal requirements does A.R.S. 33-401 place on a conveyance of a freehold estate in Arizona?

• a.An oral transfer followed by the grantee taking possession
• b.A written instrument prepared only by a licensed attorney
• c.A written instrument witnessed by two disinterested persons
• d.A signed written instrument, delivered and duly acknowledged by an officer✓

A.R.S. 33-401(A) provides that no estate of inheritance, freehold, or for a term of more than one year shall be conveyed 'unless the conveyance is by an instrument in writing, subscribed and delivered by the party disposing of the estate,' or by an agent authorised in writing. Subsection B requires every deed to be signed by the grantor and 'duly acknowledged before some officer authorized to take acknowledgments.' Witnesses are not required, and Article XXVI lets a licensee prepare the instrument.

What is the defining feature of an option to purchase real property?

• a.The optionor may withdraw the offer at any time
• b.The optionee may buy but is not obliged to buy✓
• c.The price is fixed by appraisal at the time of exercise
• d.Both parties are obliged to complete the purchase

An option is a unilateral contract: the optionor is bound to keep the offer open for the option period, while the optionee holds a right to buy and no duty to do so. Consideration paid for the option is what makes the optionor's promise binding, so the optionor cannot simply withdraw. Price is whatever the option states; it is not set by later appraisal unless the option says so.

How does a right of first refusal differ from an option to purchase?

• a.It gives the holder title without any further act
• b.It may be exercised only after the owner's death
• c.It obliges the owner to sell within a fixed period
• d.It is triggered only when the owner decides to sell✓

A right of first refusal is a pre-emptive right: the holder gets the chance to buy on stated terms only if and when the owner decides to sell or receives an offer the owner is willing to take. An option, by contrast, lets the holder force a sale during the option period whether the owner wants to sell or not. The right of first refusal transfers no title and is not tied to the owner's death.

A buyer makes an offer and the seller returns it with a changed closing date. In contract terms, what has the seller done?

• a.Created a binding contract on the buyer's terms
• b.Rejected the offer and made a counteroffer✓
• c.Accepted the offer subject to a minor variation
• d.Suspended the offer until the buyer responds

An acceptance must mirror the offer. A response that changes any term operates as a rejection of the original offer and a new offer back to the first party, who is then free to accept, reject or counter again. Because the original offer is extinguished, the buyer cannot later revive it by purporting to accept; the seller would have to renew it.

What is the effect of a valid liquidated damages clause in an Arizona purchase contract?

• a.It allows either party to cancel without any liability
• b.It fixes in advance the sum payable for a specified breach✓
• c.It requires the parties to submit the dispute to arbitration
• d.It bars the seller from keeping the earnest money

A liquidated damages clause sets, at the time of contracting, the amount recoverable if a specified breach occurs, so the parties avoid proving actual loss later. Courts enforce such a clause where the anticipated loss was difficult to estimate and the sum is a reasonable forecast rather than a penalty. It does not displace arbitration provisions, and it is not a licence to walk away free.

A buyer assigns a purchase contract to a third party. What is the general effect on the original buyer?

• a.The original buyer becomes a guarantor for one year only
• b.The original buyer is discharged the moment of assignment
• c.The original buyer remains liable unless the seller grants a release✓
• d.The assignment is void unless recorded with the county

Assignment transfers the assignor's rights under the contract, but it does not by itself transfer away the assignor's duties. Absent a novation, in which the seller agrees to substitute the assignee and release the assignor, the original buyer stays on the hook if the assignee fails to perform. Contracts commonly restrict or bar assignment; recording is not a condition of validity.

Which contract is voidable rather than void in Arizona?

• a.One whose stated purpose is an unlawful act
• b.One signed by a minor for the purchase of a home✓
• c.One that lacks any consideration whatsoever
• d.One signed by a person the court has adjudicated incompetent

A voidable contract is valid until the protected party elects to disaffirm it, and a minor's contract is the classic example: the minor may disaffirm, while the adult party cannot. A contract for an unlawful purpose is void from the outset, as is a contract signed by someone already adjudicated incompetent, because no capacity existed. A promise wholly without consideration never forms a contract at all.