Environmental
Under Arizona law, a property located within a Special Flood Hazard Area (SFHA) requires:
AAutomatic cancellation of the purchase contract
BFederal flood insurance if the buyer is obtaining a federally backed mortgage✓ Correct
CSeller-financed transactions only
DDisclosure and ADRE approval prior to sale
Explanation
Properties within FEMA-designated Special Flood Hazard Areas require the purchase of federal flood insurance as a condition of obtaining a federally backed mortgage (FHA, VA, USDA, or conventional conforming loans).
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
State-Specific Concepts
DRE Regulation
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