Arizona Real Estate Broker Exam — All Questions

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.