Arizona Real Estate License Real Estate Financing Concepts Questions and Answers

Question 1

In Arizona, a deed of trust is the most common instrument used to secure a loan on real property. Which of the following correctly identifies the parties to a deed of trust?

Accepted Answer

Trustor, Trustee, and Beneficiary

Answer

A deed of trust in Arizona is a three-party instrument. The Trustor is the borrower, the Beneficiary is the lender, and the Trustee is a neutral third party (often a title company or attorney) who holds the legal title to the property as security for the loan.

Question 2

A homeowner in Arizona defaults on their loan, which is secured by a deed of trust. The lender initiates a non-judicial foreclosure. What is the minimum period of time that must pass between the recording of the 'Notice of Trustee's Sale' and the actual sale date?

Accepted Answer

90 days

Answer

Arizona law (A.R.S. § 33-808) requires that a non-judicial foreclosure sale, or Trustee's Sale, cannot take place sooner than the 91st day after the Notice of Trustee's Sale is recorded. This provides a 90-day notice period for the homeowner.

Question 3

A borrower in Phoenix obtains a loan to purchase a single-family home on a half-acre lot and later defaults. The lender forecloses via a trustee's sale, and the sale price is less than the outstanding loan balance. Under Arizona's anti-deficiency statutes, which statement is true?

Accepted Answer

The lender cannot pursue a deficiency judgment against the borrower.

Answer

Arizona's anti-deficiency statute (A.R.S. § 33-814(G)) protects borrowers from deficiency judgments after a trustee's sale if the property is 2.5 acres or less and contains a single one-family or two-family dwelling. Since the property fits this description, the lender's only recourse is the property itself.

Question 4

A loan agreement includes a clause that allows the lender to demand immediate payment of the entire outstanding loan balance if the borrower misses a certain number of payments or otherwise breaches the contract. What is this clause called?

Accepted Answer

Acceleration Clause

Answer

An acceleration clause gives the lender the right to 'accelerate' the due date of the entire loan balance upon a borrower's default. This is a standard clause in most mortgage and deed of trust documents.

Question 5

Regarding Arizona's usury laws for real estate loans between private parties, which of the following is most accurate?

Accepted Answer

Any interest rate may be agreed upon, as long as it is specified in a written contract.

Answer

According to Arizona statute A.R.S. § 44-1201(A), the legal rate of interest is 10% per annum UNLESS a different rate is contracted for in writing. If it is in writing, any rate of interest may be agreed to between the parties, effectively removing a strict ceiling for contractually defined rates.

Arizona Real Estate License Practice Test

Arizona Real Estate License Practice Test

Arizona Real Estate License Real Estate Financing Concepts Questions and Answers