Montana Agency Law and Water Rights: What the Exam Tests

Montana has two unique exam topics: prior appropriation water rights and specific agency disclosure requirements.

Montana Water Rights: Prior Appropriation

Montana follows the prior appropriation doctrine — "first in time, first in right": - Water rights allocated based on date first put to beneficial use - Senior rights (established earlier): get water first in shortage - Junior rights (established later): may receive no water in drought years - Water rights are separate property rights that can be sold independently of land - Appurtenant rights: attached to land, transfer with deed - Non-appurtenant rights: held independently, can be sold separately

For real estate: water rights status is a material fact that must be disclosed. Agricultural properties without adequate water rights may be worth significantly less.

Agency in Montana

Seller's Agent: Full fiduciary duties (OLDCAR) to seller. Must disclose known material facts to buyers.

Buyer's Agent: Requires written buyer agency agreement. Full fiduciary duties to buyer.

Dual Agent: Written informed consent from both parties required before relationship begins. Cannot fully advocate for either party.

Disclosure of the agency relationship is required at first substantive contact.

Common Exam Questions

Q: A Montana ranch has senior irrigation rights from 1887. A junior rights holder from 1972 demands water during drought. Who has priority? A: The 1887 senior rights holder gets water first.

Q: A Montana licensee sells a rural property without disclosing that it has no water rights. This is: A: Failure to disclose a material fact — license law violation.

[Practice Montana agency questions at CARealestate.com/states/montana](https://carealestate.com/states/montana)