- Arizona Department of Real Estate (ADRE)
- The Arizona state agency that licenses and regulates real estate salespersons and brokers under A.R.S. Title 32, Chapter 20; headed by the Real Estate Commissioner.
- Real Estate Commissioner (Arizona)
- ADRE's chief officer, appointed by the Governor; issues and disciplines licenses, audits brokerages, and adopts the Commissioner's Rules.
- A.R.S. Title 32, Chapter 20
- The Arizona Revised Statutes governing real estate licensing and practice — the source of ADRE's authority.
- Commissioner's Rules (A.A.C. R4-28)
- Administrative rules adopted by the Commissioner to implement the statutes: CE, advertising, trust accounts, documents, and conduct.
- Arizona Association of REALTORS (AAR)
- A private trade association that creates standard Arizona forms (like the SPDS and purchase contract). It is NOT the regulator — ADRE is.
- Arizona salesperson pre-license hours
- 90 hours of ADRE-approved salesperson pre-license education at a certified school, completed within 10 years of application.
- Arizona Contract Writing course
- A separate 6-hour course required before a salesperson can be licensed in Arizona.
- Fingerprint Clearance Card
- A background-check card from the Arizona Department of Public Safety required to obtain an original Arizona real estate license.
- Arizona license term
- An original or renewed Arizona real estate license is issued for a two-year term.
- Arizona continuing education (CE)
- 24 hours of approved CE are required within each two-year license period to renew.
- Employing broker (Arizona)
- The licensed broker a salesperson must work under; the salesperson cannot operate independently and is paid commission only through the broker.
- Designated broker
- The individual broker responsible for supervising a brokerage's licensees and trust account in Arizona.
- Who administers the Arizona exam?
- Pearson VUE administers the Arizona real estate licensing examination.
- Arizona national portion (salesperson)
- 80 scored questions (plus 5 pretest); 150 minutes; 75% to pass.
- Arizona state portion (salesperson)
- 60 scored questions (plus 5 pretest); 150 minutes; 75% to pass.
- Arizona exam passing score
- 75% on each portion; the national and state portions are scored separately and you must pass both.
- Retaking an Arizona exam portion
- If you pass one portion but fail the other, you may retake just the failed portion.
- Real Estate Recovery Fund (Arizona)
- A fund that compensates the public for an uncollectible court judgment against a licensee for fraud or misrepresentation.
- Effect of a Recovery Fund payment
- When the Fund pays a claim, the Commissioner suspends the licensee's license until the Fund is repaid with interest.
- Recovery Fund prerequisite
- An aggrieved person must obtain a final court judgment and exhaust other collection remedies before recovering from the Fund.
- Arizona broker trust account
- A broker must keep client/trust funds in a designated Arizona trust (escrow) account, separate from operating funds.
- Commingling
- Improperly mixing client trust funds with the broker's own or business funds — a license-law violation.
- Conversion (trust funds)
- Actually using a client's trust funds for the broker's own purposes — more serious than commingling.
- Record retention (Arizona broker)
- An employing broker must keep transaction records for the statutory retention period (generally five years) and make them available to ADRE.
- Subdivision Public Report
- A disclosure report the ADRE Commissioner issues for a subdivision; the subdivider must give it to each lot buyer before sale.
- Subdivider
- A person who offers six or more lots/parcels in a subdivision for sale or lease and must obtain a Public Report from ADRE.
- Unsubdivided land (Arizona)
- A separate ADRE-regulated category for large parcels of land sold in fewer lots; it has its own disclosure requirements.
- Affidavit of Disclosure (A.R.S. § 33-422)
- Required when 5 or fewer parcels of unsubdivided land in an unincorporated area are sold; discloses access, utilities, water, wastewater, and flood status; recorded with the deed.
- SPDS (Seller Property Disclosure Statement)
- The AAR form a residential seller uses to disclose known material facts; delivered to the buyer within 3 days after contract acceptance.
- SPDS vs Affidavit of Disclosure
- SPDS = typical residential resale, not recorded; Affidavit of Disclosure = rural unsubdivided land in an unincorporated area, recorded with the deed.
- Arizona duty to disclose
- Arizona is a full-disclosure state — a seller must disclose known material facts even if the buyer never asks, even if no SPDS is provided.
- AAR Residential Resale Purchase Contract
- The standard Arizona Association of REALTORS form used in most Arizona resale transactions; it sets disclosure timelines.
- Dual agency in Arizona
- Representing both buyer and seller is legal only with the prior written consent of both parties; the agent must stay neutral.
- Arizona Groundwater Management Act (1980)
- Created Active Management Areas (AMAs) requiring proof of a 100-year assured water supply before new subdivision lots can be sold.
- Assured water supply
- Certification by the Department of Water Resources that a subdivision in an AMA has a 100-year water supply.
- Active Management Area (AMA)
- A region under Arizona's Groundwater Management Act where groundwater use is regulated and an assured water supply is required for new subdivisions.
- Arizona Department of Water Resources (ADWR)
- The state agency that evaluates and certifies a subdivision's assured or adequate water supply.
- Deed of trust (Arizona)
- Arizona's standard security instrument: title is held by a neutral trustee until the loan is repaid.
- Trustee's sale
- Arizona's non-judicial foreclosure under a deed of trust, conducted by the trustee without court action.
- Arizona anti-deficiency statute
- Limits a lender's ability to collect a deficiency judgment after foreclosure on qualifying owner-occupied residential property.
- Affidavit of Value
- An Arizona form recorded with most deeds that reports the sale price and transfer details for county assessment.
- Arizona community property
- Property a married couple acquires during marriage is generally owned equally by both spouses.
- Community property with right of survivorship
- An Arizona ownership form letting spouses pass property automatically to the survivor.
- Arizona Fair Housing Act
- Arizona's state fair-housing law, mirroring the federal protected classes; enforced by the Attorney General's Civil Rights Division.
- Arizona Residential Landlord and Tenant Act
- The Arizona statute governing most residential leases, including security deposits and habitability.
- Advertising rules (Commissioner's Rules)
- A licensee's advertising must include the employing broker's name; blind ads (no broker identified) are prohibited.
- Salesperson compensation rule
- An Arizona salesperson may be paid commission only by the employing broker, never directly by a client.
- Changing brokers (Arizona)
- A salesperson must notify ADRE and transfer the license; the license is held by the new employing broker.
- Disciplinary powers of the Commissioner
- The Commissioner may suspend or revoke a license, impose civil penalties, and issue cease-and-desist orders.
- Arizona Consumer Fraud Act (1967)
- Arizona law prohibiting deceptive practices in the sale of merchandise, including real estate.
- Arizona homestead exemption
- Arizona statutory protection of a portion of a homeowner's equity from certain creditors.
- FIRPTA
- Foreign Investment in Real Property Tax Act — withholding on a sale by a foreign seller, handled at an Arizona closing.
- Public Report 'lot reservation'
- Before a Public Report is issued, a subdivider may take only a reservation, not a binding sale.
- Article 26, Arizona Constitution
- Allows licensed real estate brokers and salespersons to draft certain real estate documents incident to a transaction.
- Unauthorized practice of law
- An Arizona licensee may fill in standard forms but may not give legal advice or draft custom legal provisions.
- Arizona property tax administration
- Property is assessed and taxed at the county level; unpaid taxes become a lien on the property.
- Timeshare regulation (Arizona)
- Timeshare offerings are regulated by ADRE and require their own public report and disclosures.
- Errors and omissions (E&O) insurance
- Professional liability coverage many Arizona brokerages carry to protect against negligence claims.
- Vicarious liability
- A broker can be held responsible for the acts of salespersons performed within the scope of their work.
- Cooperating broker
- A broker (often the buyer's agent) who works with the listing broker and shares the commission.
- Arizona escrow's neutral role
- Escrow/title companies in Arizona act as a neutral third party holding funds and documents until closing conditions are met.
- Title insurance (Arizona closing)
- Protects the buyer and lender against title defects existing before the policy; standard in Arizona closings.
- Lending disclosure at an Arizona closing
- Federal RESPA and TILA (TRID) require the Loan Estimate and Closing Disclosure on most loans.
- Conflict-of-interest disclosure
- An Arizona licensee must disclose in writing any personal interest in a transaction (e.g., buying or selling for themselves).
- Licensee disclosure of own license
- An Arizona licensee buying or selling property for their own account must disclose their licensed status.
- Cross-sale controversy
- A dispute between agents on the same transaction is resolved per the brokerage's policies and the Commissioner's Rules.
- Professional competency requirement
- An Arizona licensee must work within their scope of expertise or associate with someone qualified.
- Distressed property / short sale
- A sale for less than the loan balance, requiring lender approval — covered in Arizona's foreclosure/short-sale topics.
- ADRE audits
- ADRE audits brokerage trust accounts and records to ensure compliance with the statutes and rules.
- Earnest money handling (Arizona)
- Earnest money is deposited (often into escrow) and held in trust, then applied to the purchase price at closing.
- Real property
- Land plus everything permanently attached to it and the bundle of legal rights of ownership.
- Personal property (chattel)
- Movable property not affixed to land; the opposite of real property.
- Fixture
- Personal property attached to real property so it becomes part of it and transfers with the land.
- MARIA test
- Tests for whether an item is a fixture: Method of attachment, Adaptability, Relationship, Intention, Agreement.
- Trade fixture
- An item a business tenant attaches; it stays personal property and may be removed before the lease ends.
- Fee simple absolute
- The most complete ownership — absolute, of unlimited duration, freely transferable by deed or will.
- Life estate
- A freehold estate lasting for someone's lifetime; it cannot be willed because it ends at death.
- Bundle of rights
- Possession, use, exclusion, disposition, and control — the rights of ownership.
- Leasehold estate
- A tenant's right to use property for a term without owning it.
- Easement
- A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.
- Easement appurtenant
- A use right benefiting an adjacent parcel that runs with the land.
- Encroachment
- An unauthorized intrusion of an improvement onto a neighbor's land; usually found by survey.
- Encumbrance
- Any claim, lien, or right that limits an owner's title.
- Police power
- Government regulation of land for health, safety, and welfare — zoning and building codes; no payment to owner.
- Eminent domain
- Government's power to take property for public use through condemnation, paying just compensation.
- Escheat
- Property reverts to the state when an owner dies with no will and no heirs.
- PETE
- The four government powers: Police power, Eminent domain, Taxation, Escheat.
- Metes and bounds
- A legal description using distances and compass bearings traced back to a point of beginning.
- Rectangular (government) survey
- Describes land by principal meridians and base lines forming townships, ranges, and sections.
- Section vs acre
- 1 section = 1 square mile = 640 acres; 1 acre = 43,560 square feet.
- Severalty
- Sole ownership by one person or entity.
- Joint tenancy
- Co-ownership with right of survivorship; requires the four unities of time, title, interest, possession.
- Tenancy in common
- Co-ownership with no survivorship; each owner holds a willable, undivided share.
- Right of survivorship
- A deceased co-owner's share passes to the surviving co-owners, not to heirs.
- Four unities
- Time, Title, Interest, Possession — required to create a joint tenancy.
- Deed
- The written instrument that conveys title from grantor to grantee.
- Grantor vs grantee
- Grantor = the party conveying title (seller); grantee = the party receiving title (buyer).
- General warranty deed
- Gives the most protection; warrants clear title against all defects, even before the grantor's ownership.
- Special warranty deed
- Warrants title only against defects arising during the grantor's ownership.
- Quitclaim deed
- Conveys only whatever interest the grantor has, with no warranties; clears clouds on title.
- Delivery and acceptance
- Title transfers when the grantor delivers the deed and the grantee accepts it — not on recording.
- Recording
- Entering a deed in the public record; gives constructive notice and sets lien priority.
- Constructive notice
- Notice the law presumes everyone has because a document is recorded or possession is visible.
- Chain of title
- The recorded history of ownership of a parcel, established by a title search.
- Title insurance
- Protects the insured against loss from title defects existing before the policy date.
- Cloud on title
- A claim or encumbrance that may impair marketable title until resolved.
- Voluntary vs involuntary alienation
- Transfer by the owner's choice (sale, gift, will) vs by law (foreclosure, escheat, adverse possession).
- Adverse possession
- Acquiring title by open, notorious, hostile, continuous possession for the statutory period.
- Market value
- The most probable price under fair, open-market conditions — an opinion of value.
- Market value vs market price
- Market value is an opinion of probable price; market price is the actual price paid.
- Highest and best use
- The legal, possible, feasible, most profitable use — the basis of value.
- Principle of substitution
- A buyer pays no more than the cost of an equally desirable substitute.
- Principle of conformity
- Value is maximized when a property fits its surroundings.
- Progression and regression
- A modest home gains value near larger ones; a fine home loses value near lesser ones.
- Sales comparison approach
- Compare the subject to recently sold similar properties; best for homes.
- Cost approach
- Land value + cost to rebuild new − depreciation; best for new or special-use property.
- Income (capitalization) approach
- Value = net operating income ÷ capitalization rate; best for income property.
- Net operating income (NOI)
- Effective gross income minus operating expenses, before mortgage payment.
- Capitalization rate
- Rate of return on income property: NOI ÷ value. A higher cap rate means more risk and lower value.
- Reconciliation
- Weighing the three approaches' indications into one final opinion of value — not averaging.
- Depreciation (appraisal)
- Loss in value from physical deterioration, functional obsolescence, or external obsolescence.
- CMA
- A licensee's estimate of value from recent comparable sales to help price a listing — not an appraisal.
- Appraisal
- An impartial, USPAP-compliant opinion of value by a licensed appraiser as of a specific date.
- Gross rent multiplier (GRM)
- A quick value estimate = price ÷ gross monthly (or annual) rent.
- Valid contract elements
- Mutual agreement, consideration, legal purpose, and competent parties — plus writing for real estate.
- Statute of frauds
- Requires real estate sales contracts (and most leases over a year) to be in writing to be enforceable.
- Void vs voidable
- Void = missing an essential element; voidable = a party may rescind (e.g., a minor's contract).
- Executory vs executed
- Executory = not yet fully performed; executed = all parties have performed.
- Unilateral vs bilateral
- Unilateral = a promise for an act; bilateral = a promise for a promise.
- Express vs implied contract
- Express = stated in words; implied = inferred from conduct.
- Counteroffer
- A response that changes terms; it rejects the original offer and creates a new one.
- Earnest money
- A buyer's good-faith deposit held in trust and usually applied to the price at closing.
- Liquidated damages
- An agreed amount (often the earnest money) a party keeps if the other defaults.
- Contingency
- A condition (financing, inspection, appraisal) that must be met for a contract to become binding.
- Equitable title
- The buyer's interest in property after a sales contract is signed but before closing.
- Specific performance
- A court order compelling a defaulting party to complete the sale because land is unique.
- Option contract
- A buyer pays for the right, but not the obligation, to buy within a set time and price.
- Listing agreement
- A contract employing a broker to find a buyer in exchange for compensation.
- Exclusive right-to-sell
- The listing broker earns the commission no matter who finds the buyer.
- Exclusive agency listing
- The broker earns the commission unless the owner sells it themselves.
- Open listing
- Only the broker who actually finds the buyer earns the commission.
- Agency
- A fiduciary relationship in which an agent represents a principal in dealings with third parties.
- Fiduciary duties (OLD CAR)
- Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care.
- Confidentiality (duration)
- The duty not to reveal a client's information; it survives the end of the agency.
- Dual agency
- Representing both buyer and seller; legal only with both parties' informed written consent.
- Procuring cause
- The agent whose actions set in motion an unbroken chain of events leading to the sale; earns the commission.
- Transaction (non-agency) broker
- Assists parties without representing either as an agent; owes honesty and fair dealing.
- Fair Housing Act (1968)
- Bans housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.
- Federal protected classes
- Race, color, religion, national origin, sex, familial status, disability — seven classes.
- Steering
- Illegally guiding buyers toward or away from areas based on a protected class.
- Blockbusting
- Inducing owners to sell by claiming a protected class is moving in — illegal.
- Redlining
- A lender's illegal refusal to lend or insure in an area based on its makeup.
- Reasonable accommodation
- A rule change (like allowing a service animal) a housing provider must allow for a person with a disability.
- Reasonable modification
- A physical change a person with a disability may make to a unit (often at their expense).
- Familial status
- Protects households with children under 18 and pregnant persons.
- Trust (escrow) account
- Where a broker must keep client funds, separate from the broker's own money.
- Antitrust (price fixing)
- Brokers may not agree with competitors to fix commission rates; rates are always negotiable.
- Gross lease
- The landlord pays the property's operating expenses.
- Net lease
- The tenant pays some of the property's operating expenses.
- Percentage lease
- Retail rent tied partly to the tenant's sales.
- Property management agreement
- A contract employing a manager to operate property — leasing, maintenance, and accounting for funds.
- Lessor vs lessee
- Lessor = landlord (owner); lessee = tenant.
- Material fact
- A fact that would affect a buyer's decision or price; it must be disclosed.
- Latent defect
- A hidden defect not found by ordinary inspection; a known one must be disclosed.
- Caveat emptor (limited)
- 'Let the buyer beware' — now limited by modern disclosure laws.
- Lead-based paint disclosure
- Pre-1978 housing: disclose known lead paint, give the EPA pamphlet, and allow a 10-day test window for sales.
- Title X (1992)
- The federal Residential Lead-Based Paint Hazard Reduction Act behind the lead-paint disclosure rule.
- Radon
- An odorless radioactive soil gas that can accumulate indoors; a recognized environmental hazard.
- Asbestos
- A fiber in old insulation/flooring; controlled by removal or encapsulation.
- Mold
- Grows in damp areas; may require disclosure and remediation.
- Underground storage tank
- Can leak and contaminate soil and groundwater, creating cleanup liability.
- CERCLA / Superfund
- Federal law imposing liability for cleanup of hazardous-substance contamination.
- Phase I environmental assessment
- A review of a property's history and records to identify potential contamination before purchase.
- Stigmatized property
- A property psychologically impacted by an event; disclosure rules vary by state.
- Brownfield
- A property whose redevelopment is complicated by real or perceived contamination.
- Promissory note
- The borrower's written promise to repay; the evidence of the debt.
- Mortgage vs deed of trust
- A mortgage has two parties; a deed of trust adds a trustee — Arizona uses deeds of trust.
- Amortization
- Repaying a loan with regular principal-and-interest payments so the balance reaches zero by term's end.
- Loan-to-value ratio (LTV)
- Loan amount ÷ value; a higher LTV means a smaller down payment and more lender risk.
- Private mortgage insurance (PMI)
- Usually required on a conventional loan when LTV exceeds 80%.
- Conventional loan
- A loan not backed by the government; may require PMI.
- FHA loan
- A loan insured by the Federal Housing Administration; low down payments.
- VA loan
- A loan guaranteed by the VA for eligible veterans; often 0% down.
- Discount points
- Prepaid interest paid at closing to lower the rate; one point = 1% of the loan.
- Acceleration clause
- Lets the lender demand the full balance on default.
- Due-on-sale (alienation) clause
- Requires the loan to be paid in full when the property is sold.
- RESPA
- Requires settlement-cost disclosures and bans kickbacks on federally related mortgage loans.
- TILA
- Requires disclosing the cost of credit, including the APR (Regulation Z).
- TRID / Loan Estimate & Closing Disclosure
- Combined RESPA/TILA disclosures: LE within 3 business days of application; CD at least 3 business days before closing.
- Commission formula
- Commission = sale price × commission rate.
- Price for a target net
- Price = net ÷ (1 − commission rate). A $282,000 net at 6% needs $300,000.
- Square feet to acres
- Divide square feet by 43,560 to get acres.
- Acre and mile
- 1 acre = 43,560 sq ft; 1 mile = 5,280 ft — memorize for the Arizona exam.
- Area of a rectangle
- Area = length × width.
- LTV calculation
- LTV = loan ÷ value. An 80% LTV on a $300,000 home is a $240,000 loan.
- Mill rate
- 1 mill = $0.001 of tax per dollar of assessed value, so 18 mills = 0.018 = 1.8%.
- Annual property tax
- Assessed value × tax rate (or assessed value × mills × 0.001).
- Value (income approach)
- Value = net operating income ÷ capitalization rate.
- Proration
- Splitting taxes, rent, and interest by days of ownership; Arizona questions specify 360- or 365-day basis.
- Profit/loss percent
- Percent of profit or loss = gain or loss ÷ original cost.
