Montana Real Estate Contracts: What the Exam Tests

Montana contract law follows general real estate principles with Montana-specific considerations around water rights and deed of trust.

Essential Elements Offer and acceptance, consideration, legal capacity (18+), legal purpose, in writing (Statute of Frauds).

Earnest Money - Salesperson delivers to broker by next business day - Broker deposits in trust account promptly; 5-year record retention - Retained by seller if buyer defaults; returned to buyer if seller defaults

Deed of Trust in Montana Montana uses deeds of trust: trustor (borrower) conveys title to trustee; beneficiary (lender) holds the note. Default enables non-judicial foreclosure (trustee's sale).

Water Rights in Contracts Montana contracts for agricultural/rural property should address: - Are water rights appurtenant (transfer with deed)? - Priority date of the water right - Permitted use (irrigation, stock, domestic) - Whether water rights are being excluded from the sale

Failure to address water rights in rural contracts can lead to disputes at closing.

Common Exam Question **Q**: A Montana buyer purchases a ranch without realizing irrigation water rights were not included. The listing agent knew but didn't disclose. This is: **A**: Failure to disclose a material fact — Board discipline warranted.

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