AZ RE Broker cheat sheet

Arizona salesperson and broker licenses are issued by the Arizona Department of Real Estate (ADRE) under the Commissioner; licenses expire and renew on a fixed multi-year cycle requiring continuing education.

A salesperson must be sponsored by a licensed employing broker at all times; a salesperson cannot receive compensation directly from a client, only from the employing broker.

Broker license applicants must document completed experience (transaction points) and pre-licensing education; salesperson applicants complete a shorter pre-licensing course and pass the state exam.

License renewal requires completing the Commissioner-prescribed continuing education hours, including mandatory contract and Commissioner's Rules topics, plus any required fair housing or disclosure hours.

Grounds for discipline include misrepresentation, commingling, failure to supervise, unlicensed activity, undisclosed dual compensation, and failure to disclose a conflict of interest.

A licensee moving to a new employing broker must transfer sponsorship; the license becomes inactive if no broker sponsors it, and inactive licensees may not perform licensed acts.

ADRE may deny, suspend, revoke, or fine; the Commissioner may also issue cease-and-desist orders against unlicensed persons and order restitution to consumers.

Advertising and solicitation must identify the employing broker's name; team names and assumed names require ADRE registration and cannot imply a separate brokerage.

A.R.S. Title 32, Chapter 20 governs licensing and practice; the Commissioner's Rules (A.A.C. Title R-4, Chapter 28) supply the operational detail such as records, advertising, and trust account handling.

The Residential Resale Real Estate Purchase Contract is a promulgated form; licensees using promulgated forms must not alter or delete provisions without client instruction and documentation.

The Seller Property Disclosure Statement (SPDS) is a statutory disclosure form; the seller completes it and the buyer's receipt timing affects inspection and cancellation rights under the contract.

Arizona is a 'caveat emptor' state with statutory disclosure overlays; sellers must disclose known material adverse facts, and licensees must disclose known material facts to all parties.

The Affidavit of Disclosure is required for unincorporated land sales of five or fewer parcels; it addresses access, water, power, and other off-site conditions.

The Buyer-Broker Exclusive Employment Agreement and the listing agreement set agency relationships; the 'Consent to Limited Representation' form must be used when dual agency is contemplated.

The 10-day cure period and the 5-day broker review period (for the broker's review of a purchase contract) are common contract timelines set by the promulgated forms, not by statute.

Commissioner's Rules require retention of transaction records for at least five years and require written policies on agency, advertising, and trust fund handling.

The designated or employing broker is responsible for supervising all affiliated licensees, including review of contracts, advertising, and trust fund activity.

The broker must establish and maintain a written policy and procedures manual covering agency, advertising, trust accounts, transaction files, and complaint handling.

Each transaction file must contain the listing or buyer-broker agreement, the purchase contract, disclosures, addenda, and evidence of broker review.

Broker review of a purchase contract should occur within the contract's stated review period (commonly five days) so deficiencies can be cured before deadlines expire.

Advertising by affiliated licensees must include the brokerage name and be approved under the broker's written advertising policy; the broker is accountable for its content.

Brokers must maintain a current roster of affiliated licensees with ADRE and notify ADRE of changes in employment, address, or entity status.

Supervision includes verifying that unlicensed assistants perform only clerical or ministerial tasks and do not negotiate, show property, or discuss terms.

Brokers must implement reasonable safeguards for confidential client information and for electronic records, including backups and access controls.

Arizona recognizes seller agency, buyer agency, dual agency (limited representation), and designated brokerage; the agency relationship must be disclosed in writing at the earliest practicable time.

Fiduciary duties include loyalty, obedience to lawful instructions, disclosure, confidentiality, reasonable care and diligence, and accounting for funds.

Confidentiality survives termination of the agency relationship, but the duty does not permit concealing known material facts about the property.

Dual agency requires the informed written consent of all parties and a written confirmation of limited representation; the broker cannot advocate for one side over the other.

Designated brokerage assigns different licensees within the same brokerage to represent each side; the broker remains neutral and supervises both.

A licensee may act as a principal (buying or selling for self) only with written disclosure to all parties and consent where required by the contract.

Compensation does not determine agency; a cooperating broker paid by the seller may still represent the buyer, and the agency relationship is set by the written agreement.

An agency relationship may be terminated by performance, expiration, mutual agreement, revocation, or operation of law; termination does not extinguish accrued obligations.

A valid contract requires offer, acceptance, consideration, legal capacity, lawful purpose, and mutual assent; the Statute of Frauds requires real estate contracts to be in writing and signed.

The AAR Residential Resale Purchase Contract includes an inspection period, a financing contingency with a loan contingency deadline, and an appraisal contingency; each has its own deadline and remedy.

Earnest money is deposited with escrow; the contract specifies who holds it and when it becomes non-refundable, typically at the end of the inspection period.

The seller's response to a buyer's offer can be a counteroffer, which terminates the original offer; a counteroffer must be communicated to be effective.

The 'as-is' addendum does not eliminate the seller's statutory disclosure duties or the buyer's inspection rights.

Contingencies must be removed in writing by the stated deadline; failure to remove can result in the buyer being in breach or the seller issuing a cure notice.

The contract's dispute resolution provision typically requires mediation before arbitration or litigation, and the prevailing party may recover attorney fees.

Amendments and addenda must be in writing and signed by both parties; oral modifications are generally unenforceable.

Estates in land include fee simple absolute, fee simple defeasible, life estate, and leasehold; the type of estate determines transferability and duration.

Co-ownership forms include tenancy in common (no survivorship, unequal shares allowed), joint tenancy (right of survivorship, equal shares, four unities), and community property (Arizona is a community property state).

Arizona uses deeds of trust as the primary security instrument, but the statute also recognizes mortgages; both are liens on title.

Title transfer requires a valid deed (grant, bargain, quitclaim, or special warranty), delivery, and acceptance; recording provides constructive notice but is not required for validity between parties.

Title insurance protects against covered defects; a preliminary title report identifies exceptions such as easements, CC&Rs, and liens.

Easements, licenses, encroachments, and CC&Rs are encumbrances that may run with the land; they must be disclosed and reviewed in the title commitment.

Adverse possession in Arizona requires statutory elements including open, notorious, hostile, exclusive, and continuous possession for the statutory period.

Arizona is a race-notice recording state; a subsequent bona fide purchaser who records first without notice of a prior unrecorded interest prevails.

A mortgage or deed of trust pledges real property as security for a debt; the promissory note is the borrower's personal obligation, and the deed of trust is the lien.

Arizona deeds of trust typically include a power of sale; nonjudicial foreclosure follows statutory notice periods and a trustee's sale, while judicial foreclosure applies to mortgages without a power of sale.

Loan types include conventional, FHA, VA, USDA, and jumbo; each has different down payment, mortgage insurance, and underwriting requirements.

The loan estimate and closing disclosure are federal TRID disclosures; the closing disclosure must be delivered at least three business days before consummation.

RESPA prohibits kickbacks and unearned fees and requires disclosure of settlement service providers and affiliated business arrangements.

The loan-to-value ratio equals loan amount divided by appraised value or purchase price, whichever is lower; PMI is generally required above 80% LTV on conventional loans.

The debt-to-income ratio equals total monthly debt obligations divided by gross monthly income; underwriting limits vary by loan program.

Settlement statements allocate debits and credits between buyer and seller, including prorated taxes, HOA dues, and prepaid interest; the closing date drives proration.

The sales comparison approach estimates value by adjusting comparable sales for differences in location, size, condition, and features; adjustments are applied to the comparable, not the subject.

The cost approach estimates value as replacement cost minus depreciation plus land value; it is most reliable for new or special-purpose properties.

The income approach capitalizes net operating income; value equals NOI divided by the capitalization rate.

Gross rent multiplier equals sale price divided by gross monthly rent; it is a quick screening tool, not a full appraisal method.

A CMA is a broker price opinion prepared for listing or buying decisions; it is not an appraisal and must not be represented as one.

External obsolescence is loss of value from outside the property, such as a nearby nuisance or market decline; it is generally incurable by the owner.

Highest and best use is the reasonably probable, legally permissible, physically possible, financially feasible use that produces the greatest value.

Market absorption and days-on-market data indicate supply and demand; a buyer's market favors buyers in price and concession negotiations.

Zoning ordinances divide land into use districts and set bulk regulations such as setbacks, height, lot coverage, and density.

A nonconforming use is a use that existed before a zoning change and may continue; it typically terminates if abandoned or substantially destroyed.

A variance grants relief from a dimensional or use restriction due to hardship; a special use permit authorizes a use listed as conditional in the district.

Subdivision and platting are regulated; lot splits may require approval and compliance with access, water, and septic requirements.

Arizona requires disclosure of known environmental hazards, and the seller's property disclosure statement addresses items such as asbestos, lead-based paint (pre-1978), and underground storage tanks.

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) imposes liability for hazardous substance releases and can reach current owners.

Wetlands and floodplains are regulated at the federal and local level; flood insurance may be required for federally related loans in special flood hazard areas.

Arizona's groundwater management areas and assured water supply requirements affect new development; the Arizona Department of Water Resources administers them.

Trust funds include earnest money, security deposits, rents, and any funds held for others; they must be deposited in a trust account promptly, as required by Commissioner's Rules.

A broker must maintain a separate trust account for client funds and must not commingle personal or operating funds in it.

Trust account records must include a ledger for each beneficiary, a journal, reconciliation statements, and bank statements, retained for the required period.

A three-way reconciliation matches the bank statement balance, the checkbook balance, and the sum of individual beneficiary ledgers.

Arizona allows a broker to hold earnest money only if the contract so provides; otherwise escrow holds it, and the broker must account for and disburse funds as directed in writing.

Disbursements from trust accounts require written authorization from the parties or a court order; disputed funds may be held until resolved or interpleaded.

Property management trust accounts must separate owner funds from tenant security deposits where required and must account for interest as provided by agreement.

Recordkeeping rules require retention of trust records for at least five years and production of records on demand by the Commissioner.