Arizona Real Estate Broker Exam — All Questions

In an Arizona financed purchase, which document is the borrower's promise to repay and which is the security?

• a.The promissory note is the promise; the deed of trust is the security✓
• b.Both documents are promises; the deed supplies the security
• c.The purchase contract is the promise; the note is the security
• d.The deed of trust is the promise; the promissory note is the security

The promissory note is the borrower's personal promise to repay the debt on stated terms. The deed of trust is the security instrument: it conveys the trust property to a trustee so the debt can be enforced against the land if the note is not paid. A.R.S. 33-801(4) treats a note or promissory note as a 'contract' that a trust deed secures, which is exactly this division of labour.

Who are the three parties to an Arizona deed of trust under A.R.S. 33-801?

• a.Grantor, grantee and title insurer
• b.Mortgagor, mortgagee and escrow agent
• c.Vendor, vendee and loan servicer
• d.Trustor, trustee and beneficiary✓

A.R.S. 33-801 defines the beneficiary as the person for whose benefit the trust deed is given, the trustee as a person qualified under A.R.S. 33-803, and a trust deed as a deed conveying trust property to a trustee to secure performance of a contract. The borrower who conveys the property is the trustor. A mortgage has only two parties, which is why Arizona lenders overwhelmingly use the three-party deed of trust instead.

How does the trustee under an Arizona deed of trust obtain the power of sale?

• a.Only by a separate order of the superior court
• b.Only if the trust deed expressly grants a power of sale
• c.Only after the beneficiary records an assignment
• d.By virtue of the trustee's position, with no express clause✓

A.R.S. 33-807(A) provides that 'by virtue of his position, a power of sale is conferred upon the trustee of a trust deed under which the trust property may be sold,' and the subsection closes by stating that 'the power of sale may be exercised by the trustee without express provision therefor in the trust deed.' No court order is needed to exercise it, which is what makes the Arizona trustee's sale a non-judicial remedy.