Arizona Real Estate License Contract Law and Practice 2 — Questions and Answers
Question 1: In Arizona, for a real estate purchase contract to be enforceable, it must comply with the Statute of Frauds, meaning it must be:
- Notarized by a licensed notary
- In writing and signed by the parties to be charged (Correct answer)
- Recorded with the county recorder
- Approved by the Arizona Department of Real Estate
Correct answer: In writing and signed by the parties to be charged
The Statute of Frauds requires contracts for the sale of real property to be in writing and signed to be enforceable.
Question 2: A buyer signs a purchase offer and the seller crosses out the price and writes a higher one before signing. This action legally constitutes a:
- Valid acceptance
- Counteroffer that rejects the original offer (Correct answer)
- Binding amendment
- Ratification
Correct answer: Counteroffer that rejects the original offer
Changing a material term like price rejects the original offer and creates a counteroffer.
Question 3: Which element is NOT required for a valid real estate contract in Arizona?
- Legally competent parties
- Consideration
- Lawful objective
- A licensed attorney's review (Correct answer)
Correct answer: A licensed attorney's review
Attorney review is not a required element; competent parties, consideration, mutual assent, and lawful purpose are.
Question 4: The Arizona Residential Purchase Contract typically provides the buyer an inspection period, during which the buyer may cancel and receive the earnest money back if disapproving of the property's condition. This period is commonly:
- 3 days
- 10 days (Correct answer)
- 30 days
- 60 days
Correct answer: 10 days
The standard AAR Residential Resale Purchase Contract provides a 10-day inspection period by default.
Question 5: If a minor enters into a real estate contract in Arizona, the contract is generally:
- Void from the start
- Voidable at the option of the minor (Correct answer)
- Fully enforceable
- Automatically valid once recorded
Correct answer: Voidable at the option of the minor
Contracts with minors are voidable at the minor's option because minors lack full contractual capacity.
Question 6: Earnest money in an Arizona transaction is best described as:
- A fee paid to the listing broker
- A good-faith deposit showing the buyer's serious intent (Correct answer)
- A down payment required by the lender
- A penalty for late closing
Correct answer: A good-faith deposit showing the buyer's serious intent
Earnest money is a good-faith deposit demonstrating the buyer's sincere intent to purchase.
Question 7: When a seller accepts an offer exactly as written and communicates acceptance to the buyer, the result is:
- A unilateral contract
- A binding bilateral contract (Correct answer)
- An option agreement
- A revocable letter of intent
Correct answer: A binding bilateral contract
Mutual promises exchanged upon acceptance form a binding bilateral contract.
Arizona Real Estate License Contract Law and Practice 2
In Arizona, for a real estate purchase contract to be enforceable, it must comply with the Statute of Frauds, meaning it must be: