Arizona Real Estate Broker Exam — All Questions

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.