US Montana Broker License Exam

The determination of the correct record retention period is based on a direct application of Montana’s administrative rules. Step 1: Identify the governing regulation. The Montana Board of Realty Regulation’s rules, specifically ARM 24.210.430, dictate record-keeping requirements. Step 2: Determine the retention period for transaction records. ARM 24.210.430(2) states that all records related to a real estate transaction must be maintained for a period of \(8\) years from the date of the transaction’s closing or termination. The complex commercial sale file falls under this category. Step 3: Determine the retention period for trust account records. ARM 24.210.430(3) states that all trust account records, including deposit slips and ledgers, must be maintained for a period of \(8\) years from the date of their creation. The records associated with the terminated residential lease’s security deposit fall under this rule. Step 4: Conclude the required action. Both sets of records, despite the different nature and outcome of the transactions, are subject to the same \(8\)-year retention requirement under Montana law. Montana law establishes specific and stringent requirements for the maintenance of records by real estate brokerages. The supervising broker holds the ultimate responsibility for ensuring these records are properly kept and accessible. According to the Administrative Rules of Montana, specifically ARM 24.210.430, two primary categories of records must be maintained for a period of eight years. First, transaction records, which include everything from initial offers and counteroffers to closing statements and correspondence, must be kept for eight years following the date the transaction either closed or was terminated. This rule applies regardless of the transaction’s complexity or value. Second, trust account records, such as bank statements, deposit slips, canceled checks, and individual ledgers, must also be retained for eight years, with this period beginning from the date each specific record was created. It is critical to understand that these state-mandated retention periods supersede any general industry advice or standards from other jurisdictions. The rule does not differentiate between completed transactions and terminated ones; the obligation to retain the records for the full duration remains the same to ensure a complete history for potential inspection by the Board of Realty Regulation.

The broker, Mateo, is not entitled to a commission. According to the Montana Code Annotated (MCA) 37-51-313, for a protection clause, also known as an override or safety clause, in a listing agreement to be enforceable, specific conditions must be met. This type of clause is designed to protect a broker’s commission if a property is sold after the listing agreement expires to a buyer the broker introduced to the property during the listing term. However, Montana law mandates a critical procedural step. Within 10 calendar days after the listing agreement terminates, the broker must provide the seller with a written list of all individuals and entities with whom the broker or their agents have negotiated during the listing term. This list officially registers the “protected buyers.” In the described scenario, the sale to a previously introduced party occurred within the 90-day protection period. Nevertheless, the broker’s failure to furnish the seller with the required written list of protected buyers within the 10-day statutory deadline after the listing’s expiration renders the protection clause void and unenforceable. Consequently, even though the broker was the procuring cause in a general sense, the non-compliance with this specific statutory requirement means no commission is owed.

The core issue revolves around the Montana Statute of Frauds, specifically outlined in the Montana Code Annotated (MCA) 28-2-903. This statute dictates that certain contracts are invalid unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged. Two distinct agreements are at play: the agreement for the sale of real property between Angus and Beatrice, and the commission agreement between Angus and Chloe. 1. The oral agreement for the sale of the 10-acre parcel of land is an agreement for the sale of real property. According to MCA 28-2-903(1)(d), this type of agreement is required to be in writing to be enforceable. Beatrice’s expenditures on a survey and report, while potentially giving rise to a claim under an equitable theory like promissory estoppel, do not automatically validate the oral contract for sale itself. The primary agreement remains unenforceable under the Statute of Frauds. 2. The oral agreement for Chloe’s commission is an agreement authorizing or employing a broker to sell real estate for compensation. MCA 28-2-903(1)(e) explicitly states that such an agreement is invalid if not in writing. This is a strict requirement in Montana to protect both the public and the broker by ensuring the terms of engagement are clear. Therefore, because both the agreement for the sale of land and the agreement for the broker’s commission are among those listed in the Montana Statute of Frauds, neither oral agreement is legally enforceable as a contract. The Montana Statute of Frauds serves to prevent fraudulent claims and litigation over alleged oral contracts in significant matters. For real estate professionals, the requirement for a written listing agreement is a foundational principle of practice. While doctrines like part performance exist, they are exceptions used by courts in equity and do not override the statutory requirement for a written contract for the sale of land or for a commission. In this scenario, Angus can legally withdraw from the oral agreement with Beatrice, and he is not legally obligated to pay the commission to Chloe, as both foundational agreements lack the required written form.

The foundational principle governing this scenario is Montana’s Doctrine of Prior Appropriation, summarized as “first in time, first in right.” This legal framework dictates that water rights are not tied to land ownership adjacent to a water source (riparian rights) but are established by the priority date of the appropriation. An appropriation is perfected by diverting water and applying it to a beneficial use. In this case, Ms. Dubois established her right for stock watering in 1968. This pre-dates the 1973 Montana Water Use Act, making it a “use right” that would be formalized through the statewide adjudication process into a decreed right with a 1968 priority date. The Orchard Collective obtained a permit from the Department of Natural Resources and Conservation (DNRC) in 1995, giving them a junior right to Ms. Dubois. The new bottling company’s application, if approved, would establish a right with a current priority date, making it junior to both Ms. Dubois and the Orchard Collective. During a water shortage, the DNRC must enforce this hierarchy strictly. Ms. Dubois, as the senior appropriator, is entitled to receive her full decreed amount of water first. Only after her right is completely satisfied can the next in line, the Orchard Collective, begin to take their permitted amount. The bottling company, being the most junior, would only receive water if any remains after both senior rights are fulfilled. The type of use, such as agricultural versus commercial, does not alter this priority.

The fundamental status of the contract is determined by analyzing its essential elements under Montana law: capacity and legality of object. Elias is 17, a minor, which generally makes the contract voidable at his discretion under MCA 28-2-203. This means he could choose to disaffirm the contract. However, a more critical defect exists. The contract’s stated purpose is to establish a facility for which no legal or licensing framework exists, rendering the object of the contract unlawful. According to MCA 28-2-701, a contract is unlawful if it is contrary to an express provision of law or to the policy of express law. An agreement with an unlawful object is not merely voidable; it is void ab initio, meaning it is a legal nullity from the moment of its creation. A void contract cannot be enforced by either party and creates no legal rights or obligations. While the minor’s lack of capacity is a significant issue that creates a voidable contract, the illegality of the purpose is a more fundamental flaw that renders the entire agreement void. The law will not lend its authority to enforce an agreement for an illegal purpose. Therefore, the primary legal status of the agreement is void due to its unlawful object, superseding its voidable nature due to the party’s minority status.

The legal remedy of specific performance in real estate contracts is fundamentally based on the physical characteristic of uniqueness, also known as non-homogeneity. This principle holds that every parcel of land is distinct and one-of-a-kind; no two parcels are exactly alike. Even adjacent lots have different geographical coordinates and may possess other subtle differences. When a contract for the sale of real property is breached by the buyer, the seller can sue for specific performance, asking the court to compel the buyer to complete the purchase. Courts in Montana, like those in other states, grant this remedy because monetary damages are considered an inadequate substitute. The seller is losing the benefit of a bargain for a unique asset, and money alone cannot replace the specific transaction that was agreed upon. This contrasts sharply with contracts for fungible goods, such as commodities or publicly traded stocks, where a replacement is easily found on the open market and monetary damages can make the non-breaching party whole. While immobility fixes the property’s location and indestructibility speaks to its permanence, it is the inherent uniqueness of the land that serves as the primary legal justification for forcing a party to execute the specific terms of a purchase agreement rather than just paying damages.

No calculation is required for this conceptual question. The core concept being tested is the distinction between the economic characteristics of land. The most significant factor driving the potential future value difference between the two parcels is situs. Situs, or area preference, refers to the economic advantages and desirability of a specific location. In this scenario, Parcel A’s location is being dramatically enhanced by external developments: a new regional medical center and a planned university expansion. These developments create jobs, increase population, and improve local amenities, making the surrounding area far more desirable for both commercial and residential use. This heightened preference is the essence of situs. While other characteristics are present, they are not the primary driver of the value divergence. The medical center and university are indeed improvements, but it is their location and the preference they create (situs) that gives the adjacent land its value, not merely the existence of the buildings themselves. Permanence of investment applies to the capital sunk into these large projects, ensuring their long-term impact, but this concept describes the nature of the investment, not the location-based value it generates for surrounding parcels. Scarcity is also a factor, as land near these new hubs becomes limited. However, scarcity alone does not create value; land must be scarce in a desirable location. Therefore, situs is the fundamental characteristic that synthesizes the effects of scarcity and nearby improvements into a powerful driver of economic value, explaining why Parcel A’s potential will far exceed that of the remote Parcel B.

The core issue revolves around the legality and proper handling of commission structures in listing agreements under Montana law. According to the Administrative Rules of Montana (ARM), specifically ARM 24.210.641, which outlines unprofessional conduct for licensees, a broker must ensure that any exclusive listing agreement contains a definite commission or fee. The rule explicitly prohibits net listings. A net listing is an arrangement where the seller specifies a net amount they wish to receive from the sale, with the broker’s commission being any amount exceeding that net price. This type of arrangement creates a potential conflict of interest, as the broker might be incentivized to prioritize their own profit over the seller’s best interests, and it lacks the required definite commission structure. Therefore, when a seller proposes such an arrangement, the broker has a professional and legal obligation to reject the net listing structure. The correct procedure is to educate the seller on the legal requirements and then restructure the agreement to comply with Montana law. This involves establishing a specific asking price for the property and agreeing upon a definite commission, which could be a specified percentage of the sales price or a fixed dollar amount. This ensures transparency, aligns the interests of the seller and the broker, and creates a legally enforceable contract in the state of Montana. Simply documenting a prohibited arrangement does not make it legal, nor is there a special process to seek an exemption for it.

The initial ownership structure is a joint tenancy among Elias, Fiona, and Graham. A key characteristic of a joint tenancy is the right of survivorship, which requires the four unities of time, title, interest, and possession to be present for all owners. Each co-owner holds an equal, undivided one-third interest. When Fiona conveys her one-third interest to Isabella, this action severs the joint tenancy only with respect to that share. The unities of time and title are broken because Isabella acquired her interest at a different time and through a different instrument than Elias and Graham. Consequently, Isabella becomes a tenant in common with Elias and Graham, holding a one-third interest. However, the original joint tenancy between Elias and Graham remains intact for their combined two-thirds interest, as the four unities are still present between them. The ownership structure at this point is: Isabella holds a one-third interest as a tenant in common, while Elias and Graham hold a combined two-thirds interest as joint tenants with each other. When Elias subsequently dies, the right of survivorship, which is the defining feature of his joint tenancy with Graham, is triggered. Elias’s one-third interest automatically passes to the surviving joint tenant, Graham. This transfer occurs by operation of law and supersedes any provisions in Elias’s will. Therefore, Elias’s son inherits no interest in this specific property. Following Elias’s death, Graham’s interest becomes the original two-thirds held by him and Elias. Graham is now the sole owner of that two-thirds share. Since there is no longer a joint tenancy, Graham’s relationship with Isabella is that of tenants in common. The final state of the title is that Graham holds a two-thirds interest and Isabella holds a one-third interest, both as tenants in common.

Not applicable. The primary mortgage market is where loans are created and funded directly for borrowers. The key players in this market include commercial banks, savings institutions, credit unions, and mortgage banking companies. These entities have different operational models that significantly impact their lending practices. Mortgage bankers typically originate loans with the intention of promptly selling them on the secondary market to investors like Fannie Mae or Freddie Mac. This business model requires them to adhere strictly to the underwriting guidelines established by these secondary market purchasers. Any loan that does not conform to these standards is considered non-conforming and cannot be easily sold, posing a financial risk to the originator. In contrast, depository institutions like credit unions and community banks often function as portfolio lenders. This means they have the capacity to originate loans and hold them within their own investment portfolios instead of selling them. By retaining the loan, the institution is not bound by the rigid requirements of the secondary market. They can establish their own internal underwriting criteria based on their risk tolerance and understanding of the local market. This provides the flexibility to approve non-conforming loans, such as those for unique properties or for borrowers with unconventional income streams, as long as the loan is deemed a sound investment for the institution’s own portfolio. While these institutions are still heavily regulated for safety and soundness by bodies like the NCUA and the Montana Division of Banking and Financial Institutions, this oversight pertains to the overall health of their portfolio rather than the strict salability of each individual loan.

Logical Deduction: 1. Identification of the core issue: The contract contains a subjective contingency (“contingent upon Anja’s approval”) without a specific deadline for that approval, but the overall contract has a firm closing date. 2. Analysis of the contingency type: This is a satisfaction contingency that relies on the personal, subjective approval of the buyer, Anja. It requires an affirmative action from her to be satisfied. Her silence cannot be construed as approval. 3. Relationship between contingency and closing date: In Montana real estate contracts, all contingencies are conditions precedent. They must be satisfied or waived before the obligation to close becomes absolute. The closing date, especially when “time is of the essence” is stated or implied, serves as the final deadline for all conditions to be met to keep the contract on track for performance. 4. Application to the scenario: Anja was required to perform the action of approving the well test results. This approval was a necessary step to remove the contingency and obligate both parties to proceed to closing. By failing to provide this approval by the closing date of August 15th, she failed to perform a required action under the contract. 5. Conclusion: Because a material condition precedent was not met by the performance deadline (the closing date), the contract is rendered unenforceable by Anja. Mateo, the seller, is likely released from his obligation to perform and can terminate the agreement due to the buyer’s failure to satisfy the contingency in a timely manner. A critical element of a Montana Buy-Sell Agreement is the clear articulation of contingencies. A contingency is a condition that must be met for the contract to become binding and proceed to closing. In this case, the contingency is subjective, meaning it depends on the personal judgment and approval of the buyer, Anja. While the contingency itself did not contain a specific deadline for her approval, the contract as a whole contained a firm closing date. In contract law, all conditions precedent, such as satisfying contingencies, must be fulfilled before the final performance date. The closing date acts as the ultimate deadline for these conditions. Anja’s failure to provide her affirmative approval of the well test results before the closing date of August 15th means a crucial condition of the contract was not met. Her inaction does not automatically waive the contingency in her favor or extend the contract. Instead, it constitutes a failure to perform on her part. Consequently, the seller, Mateo, is no longer bound by the contract and has the right to declare it terminated due to the buyer’s non-performance of a material condition within the agreed-upon timeframe for the entire agreement. The responsibility was on the buyer, for whose benefit the contingency was written, to act affirmatively to satisfy it before the transaction’s final deadline.

The correct priority of payment from the foreclosure sale proceeds is: first, the 2023 property tax lien; second, the 2019 first mortgage; third, the supplier’s construction lien; fourth, the home equity loan recorded on June 5, 2023; and fifth, the judgment lien docketed on July 15, 2023. Under Montana law, real property tax liens hold a superior position to all other private liens, mortgages, or encumbrances, regardless of when those other claims were recorded or attached. Therefore, the delinquent 2023 property taxes must be satisfied first. Following the tax lien, lien priority is generally determined by the principle of ‘first in time, first in right’, based on the date of recording or attachment. The first mortgage, having been recorded in 2019, is senior to all other subsequent liens. The critical determination involves the priority between the construction lien and the home equity loan. Montana Code Annotated 71-3-542 establishes that a construction lien’s priority relates back to the date the first materials or labor were furnished to the property. In this scenario, materials were first delivered on May 10, 2023, establishing this as the construction lien’s effective priority date, even though the lien was formally filed in August. Because the home equity loan was recorded on June 5, 2023, which is after the construction lien’s priority attached, the construction lien is senior to the home equity loan. The judgment lien attached on July 15, 2023, making it junior to both the construction lien and the home equity loan.

The determination of just compensation in a partial taking under Montana’s eminent domain law is governed by Montana Code Annotated (MCA) § 70-30-302. This statute requires a two-part assessment. First, the value of the property actually taken must be determined. This is typically its fair market value. Second, if the property taken is part of a larger parcel, the law requires an assessment of the depreciation in value to the portion of the parcel not sought to be condemned. This depreciation is often called severance damages. It accounts for the loss in value to the remaining property caused by the taking and the construction of the public project. In this scenario, the taking of the highway frontage and parking spaces directly and negatively impacts the utility and value of the remaining commercial property. Therefore, just compensation is not limited to the value of the small strip of land alone. It must also include the diminution in value of the remaining parcel with the building, which has now lost its prime frontage and essential parking. The condemnation commission is legally obligated to calculate both the value of the part taken and the damage to the remainder to arrive at the total just compensation award owed to the property owner. Any potential benefits to the remaining property from the public improvement could theoretically be offset against these damages, but the core calculation involves both the value of the taken land and the severance damages.

The legal analysis begins by recognizing that the inspection contingency and the appraisal contingency are two separate and independent conditions within the standard Montana REALTORS® Buy-Sell Agreement. Each provides the buyer with distinct rights and remedies. In the described scenario, the inspection contingency was activated first. The inspection revealed defects, and the buyer, Amara, properly submitted a Notice of Defects requesting a credit. The seller, Chen, formally refused this request. This action by the seller triggers a specific clause in the contract, granting the buyer a defined period to either terminate the agreement and have her earnest money returned, or to waive the objection and accept the property in its current condition. This creates a clear and immediate right to terminate. Subsequently, but before the resolution of the inspection issue, the appraisal contingency was triggered when the property appraised for less than the agreed-upon purchase price. This event creates a second, independent basis for Amara to potentially exit the contract. The financing contingency is now in jeopardy because the lender will likely only loan based on the lower appraised value, and the contract condition that the property must appraise for the purchase price has not been met. Amara now possesses two distinct contractual grounds for termination. A supervising broker’s fiduciary duty is to provide competent advice. This requires a full explanation of all contractual rights. The broker must clarify that Amara can terminate based on the unresolved inspection issue, and she also has rights under the appraisal contingency, which typically include termination, renegotiation, or covering the value gap. The broker must advise on the specific deadlines and procedures for exercising the rights under both contingencies, ensuring the client can make a fully informed decision.

The core legal principle governing land use regulation in Montana is that when multiple regulations apply, the developer must adhere to the most restrictive one. This situation involves a conflict between a local subdivision regulation and a state-level environmental rule. Local governments, such as counties or municipalities, derive their authority to regulate land use, including zoning and subdivisions, from the state through enabling statutes like the Montana Subdivision and Platting Act. However, this authority is not absolute. State agencies, like the Montana Department of Environmental Quality (DEQ), are tasked with enforcing statewide laws and rules designed to protect public health and the environment, such as ensuring safe drinking water and proper sanitation. Local governments cannot enact or enforce regulations that are less stringent than, or in direct violation of, minimum standards set by state law. In this scenario, the DEQ’s 50-foot setback requirement for septic systems is a minimum standard for environmental protection in that specific area. The county’s 20-foot setback is less restrictive. Therefore, the state’s more stringent requirement takes precedence. The local governing body, in this case the county, is legally obligated to ensure the proposed subdivision plat complies with all applicable state laws and cannot approve a plan that violates the DEQ’s rule. The developer must design the lots to accommodate the 50-foot setback.

The conclusion is that the listing agreement is invalid from its inception. The reasoning is based on the Administrative Rules of Montana (ARM) governing real estate licensees. Specifically, ARM 24.210.641(1)(g) mandates that every listing agreement must be in writing and contain a definite expiration date. While the agreement specifies an initial 120-day term, it also includes an automatic renewal clause, sometimes referred to as a rollover or extender clause. This type of provision is explicitly prohibited by ARM 24.210.641(2), which states that a listing agreement may not contain a provision requiring the party signing the listing to notify the broker of their intention to cancel the listing after the definite expiration date. The purpose of this rule is to protect the public from indefinite listing periods and to ensure that the termination of the agency relationship is clear and unambiguous. The inclusion of a prohibited automatic renewal clause renders the agreement non-compliant with Montana law. An agreement that violates these specific administrative rules is considered invalid and unenforceable by the broker. Therefore, the presence of the automatic renewal provision invalidates the entire agreement from the moment of its creation, not just the renewal portion.

The primary legal issue is whether the fermentation tanks constitute fixtures, which would become part of the real property owned by the landlord, or trade fixtures, which would remain the personal property of the tenant. In Montana, as in most jurisdictions, the courts apply a series of tests to determine fixture status: the method of attachment, the adaptation of the item to the property, and the intention of the party making the attachment. However, the relationship between the parties is a critical factor that often reframes the interpretation of these tests. In a commercial landlord-tenant relationship, there is a strong legal presumption in favor of the tenant. Items installed by a commercial tenant for the express purpose of conducting their business are known as trade fixtures. The law presumes that a tenant does not intend to make a permanent gift of their business equipment to the landlord. Therefore, even if an item is securely attached to the property, its classification as a trade fixture means it remains the tenant’s personal property. The tenant has the right to remove trade fixtures at or before the termination of the lease, provided they repair any damage caused by the removal. In this scenario, the fermentation tanks were essential for the tenant’s brewery business. Despite being bolted down, their purpose was tied to the trade, not to the general improvement of the warehouse. Therefore, the relationship of the parties and the intended use of the items for business operations establish the tanks as trade fixtures, belonging to the tenant.

This question requires an understanding of the distinction between general and specific liens as they apply to real property in Montana. A lien is a charge or claim against property to enforce payment of a debt. Liens are categorized based on the scope of assets they attach to. A specific lien attaches to a single, particular piece of property. The debt is directly associated with that property. Common examples in Montana include mortgages, real property tax liens, special assessment liens, and construction liens (often called mechanic’s liens in other states). For instance, a construction lien filed by an unpaid contractor attaches only to the specific property where the work was performed. Similarly, a mortgage loan is secured only by the property purchased with that loan. In contrast, a general lien attaches to all property, both real and personal, owned by the debtor within the county where the lien is recorded. It arises from a personal obligation of the debtor, not from a debt related to a specific property. The most common types of general liens are judgment liens and liens for unpaid federal or state income taxes. A judgment lien is created when a court issues a judgment for a monetary award. For this lien to attach to real property in Montana, the judgment must be docketed with the clerk of the district court in the county where the property is located. If a debtor owns property in multiple counties, the judgment must be docketed in each of those counties to create a lien on the respective properties. Therefore, a judgment lien from a lawsuit is a general lien, encumbering all of the debtor’s real estate in any county where it has been properly docketed.

The conveyance from Anselm to the conservation trust created a fee simple subject to a condition subsequent. This type of defeasible estate is characterized by specific conditional language, such as “on the condition that,” “provided that,” or “but if,” followed by a clause granting the grantor the right to re-enter the property if the condition is breached. Unlike a fee simple determinable, where the estate automatically terminates upon the breach of the condition, a fee simple subject to a condition subsequent does not end automatically. The breach of the condition merely creates a power of termination, also known as a right of entry, for the grantor or their heirs. To terminate the grantee’s estate and reclaim the property, the holder of the right of entry must take an affirmative action. This action typically involves filing a lawsuit to quiet title or, in some cases, making a formal re-entry onto the land. In this scenario, the deed’s language “on the express condition that” and the explicit “right to re-enter and repossess” are clear indicators of a fee simple subject to a condition subsequent. Therefore, when the Trust breached the condition by building a commercial visitor center, the title did not automatically revert to Anselm’s heir, Beatrice. Instead, Beatrice acquired the power of termination and must now take a legal step to enforce her right and terminate the Trust’s possessory estate.

Total SID Assessment = $12,000 Assessment Term = 10 annual installments Annual Installment Amount = \($12,000 / 10 = $1,200\) Number of installments paid by Mr. Chen = 2 Total amount paid by Mr. Chen = \(2 \times $1,200 = $2,400\) Remaining Assessment Balance = \($12,000 – $2,400 = $9,600\) This remaining balance of $9,600 constitutes a lien against the real property itself. The obligation to pay this lien transfers with the title to the property. Therefore, the new owner, Ms. Rodriguez, assumes the responsibility for the remaining 8 annual installments, unless the buy-sell agreement explicitly required Mr. Chen to pay the entire assessment in full at closing. The lien’s existence and the buyer’s future payment obligation is a material fact. In Montana, a special assessment for a Special Improvement District, or SID, creates a specific, involuntary lien against the property that benefits from the improvement. This lien is not a personal obligation of the owner at the time of the levy; rather, it attaches to and runs with the land. This means that the lien remains on the property until it is paid in full, regardless of who owns the property. When a property is sold, the responsibility for paying the remaining installments of the special assessment transfers to the new owner. While it is possible for the buyer and seller to negotiate for the seller to pay off the entire remaining balance at closing, this must be explicitly stated in the buy-sell agreement. Absent such an agreement, the standard practice is that the buyer assumes the future payments. The lien for a special assessment has a high priority, often equal to that of general ad valorem property taxes and superior to private liens like mortgages, regardless of when the mortgage was recorded. A broker has a duty to discover and disclose the existence of any SIDs and the status of the assessment to all parties in the transaction.

The legal analysis hinges on the specific requirements for creating easements by prescription and by necessity under Montana law. For a prescriptive easement to be established in Montana, the claimant must demonstrate use that is open, notorious, adverse, continuous, and uninterrupted for the statutory period of five years. In this scenario, Anya’s use of the logging road across Leo’s property was open, as it was not hidden, and continuous for six years, exceeding the five-year requirement. The critical element is whether the use was adverse. Adverse use means it was without the landowner’s permission. Leo’s awareness and failure to object does not automatically equate to granting permission. In Montana, such silent acquiescence in the face of open and notorious use is often interpreted as non-permissive, thereby satisfying the adversity requirement. Conversely, an easement by necessity arises only under conditions of strict necessity, not mere convenience or economic advantage. This type of easement is typically created when a conveyance of property renders a parcel landlocked, with no legal access to a public road. The scenario explicitly states that an alternative, though undeveloped and costly, route to a public road exists for Anya’s parcel. The existence of this alternative access, regardless of the expense or difficulty of developing it, defeats the claim for an easement by necessity because the strict necessity standard is not met. Therefore, Anya’s strongest and most viable legal claim is for a prescriptive easement, as the elements of open, continuous, and adverse use for the statutory period appear to be fulfilled, while the requirements for an easement by necessity are not.

Logical Analysis: Step 1: The initial ownership is established. Anya, Ben, and Chloe acquire the property as joint tenants with right of survivorship. This means they each hold an undivided one-third interest, and the four unities of time, title, interest, and possession are present. The key feature is the right of survivorship. Step 2: Chloe conveys her one-third interest to David. Under Montana law, a joint tenant has the right to sell their interest without the consent of the other joint tenants. This action unilaterally severs the joint tenancy only for the conveyed share. The unities of time and title are broken for David’s interest because he acquired his title at a different time and through a different instrument. Step 3: The ownership structure is re-evaluated after Chloe’s conveyance. David now holds a one-third interest as a tenant in common with Anya and Ben. Anya and Ben, however, did not have their unities broken relative to each other. They continue to hold their combined two-thirds interest as joint tenants with right of survivorship. Step 4: Ben dies. Because Anya and Ben were still joint tenants, the right of survivorship between them is activated. Ben’s one-third interest automatically passes directly to Anya, the surviving joint tenant. This transfer occurs outside of probate and is not affected by David’s status as a tenant in common. Step 5: The final state of the title is determined. Anya now holds her original one-third interest plus Ben’s one-third interest, giving her a total undivided two-thirds interest. David continues to hold his one-third interest. Since the joint tenancy element is now completely extinguished (as there is only one person left from the original joint tenancy group), Anya and David hold their respective interests as tenants in common. Final Conclusion: Anya owns an undivided two-thirds interest and David owns an undivided one-third interest, as tenants in common. In Montana, co-ownership of property is governed by specific legal principles. The default form of co-ownership is tenancy in common, as established by Montana Code Annotated section 70-20-105. For a joint tenancy to be created, the deed must expressly declare the intention to create a joint tenancy, typically with the phrase “with right of survivorship”. A defining characteristic of a joint tenancy is the right of survivorship, where a deceased joint tenant’s interest automatically passes to the surviving joint tenants. However, a joint tenancy is fragile and can be severed. If one joint tenant sells or transfers their interest to an outside party, the joint tenancy is severed for that share. The new owner takes title as a tenant in common, as they do not share the unities of time and title with the original joint tenants. Importantly, the remaining original joint tenants continue to hold their interests as joint tenants with each other. When one of these remaining joint tenants dies, the right of survivorship still applies between them, and the decedent’s share passes to the surviving joint tenant, not to the tenant in common or the decedent’s heirs. This process continues until only one owner remains or all joint tenancy relationships have been severed.

The correct legal analysis rests on the principle that governs conflicts between private restrictive covenants and public zoning ordinances. In Montana, as in most jurisdictions, when these two types of land use controls are in conflict, the more restrictive or stringent of the two will prevail. In this scenario, the restrictive covenant permits only single-family dwellings, while the zoning ordinance permits duplexes. A single-family dwelling restriction is more limiting than a duplex allowance. Therefore, the private restrictive covenant is the governing rule for the property. A change in public zoning to be less restrictive does not automatically invalidate or terminate a pre-existing, more restrictive private covenant. These covenants are considered private contractual obligations that run with the land and are binding on all subsequent owners within the subdivision. Any property owner within the same subdivision who benefits from the covenant has legal standing to enforce it against another property owner who attempts to violate it. This enforcement is typically sought through a civil lawsuit for an injunction to halt the non-conforming construction or use. The age of the covenant alone does not render it unenforceable unless there is a specific termination date, or a court determines it has been abandoned or that the character of the neighborhood has changed so drastically that the covenant’s original purpose can no longer be achieved. The zoning change by itself is not sufficient to prove such a drastic change.

Depreciation in real estate appraisal refers to a loss in property value from any cause. It is categorized into three distinct types: physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration is the loss in value due to wear and tear, age, and the elements. This can be curable, such as replacing a worn-out carpet, or incurable, where the cost to fix the item exceeds the value it would add, like a major foundation failure. Functional obsolescence is a loss in value resulting from outdated design features, poor layout, or features that are no longer considered desirable by the market. This is a flaw inherent to the property itself. Examples include a five-bedroom home with only one bathroom or a commercial building with low ceilings. Functional obsolescence can also be curable or incurable depending on the cost-effectiveness of the remedy. External obsolescence, also known as economic obsolescence, is a loss in value caused by negative factors located outside the subject property’s boundaries. These factors are external to the property and are beyond the control of the property owner. Examples include adverse zoning changes in the neighborhood, the construction of a nearby landfill, increased traffic noise from a new highway, or a major local employer shutting down. Because the owner cannot fix or eliminate these external influences, this form of depreciation is almost always considered incurable from the owner’s perspective.

This valuation problem does not require a mathematical calculation. The solution is based on the correct application of a core appraisal principle. The principle of conformity is a fundamental concept in real estate appraisal that states a property achieves its maximum value when it is in harmony with its surroundings. This includes architectural style, quality of construction, and general property maintenance within a neighborhood. When a property’s characteristics are significantly different from those of the surrounding area, its value can be negatively impacted. This scenario illustrates the principle of regression, which is a direct consequence of a lack of conformity. Regression occurs when the value of a superior or over-improved property is brought down by its association with properties of a lesser standard or, in this case, a starkly different character. The historic preservation district in Butte has a clear and established architectural identity. An ultra-modern home, regardless of its construction quality or cost, is a non-conforming improvement. Potential buyers for a home in a historic district are typically seeking a property that aligns with that specific character. Therefore, the market for this non-conforming house is much smaller, and its value is penalized for its lack of harmony with the neighborhood standard. The high cost of construction does not translate directly to market value because the design is functionally obsolete in that specific location. The principle of highest and best use is considered before development, while the principle of conformity assesses the value of an existing improvement within its environment.

Logical Deduction: 1. Establish the governing principle: Under Montana Code Annotated (MCA) § 85-2-424, a water right is considered appurtenant to the land and is presumed to transfer with the land upon conveyance. 2. Analyze the instrument of conveyance: The deed transferring a portion of the ranch was silent regarding the appurtenant water right. 3. Apply the initial presumption: Due to the deed’s silence, a legal presumption arises that a proportionate share of the water right was conveyed with the land to the buyer. 4. Introduce the concept of rebuttal: This statutory presumption is not absolute; it is rebuttable. It can be overcome by evidence demonstrating a contrary intent by the grantor at the time of the conveyance. 5. Evaluate the grantor’s actions: The seller’s continued, open, and exclusive use of the entire water right on the retained portion of the property immediately following the sale serves as strong evidence of their intent not to transfer any part of the water right. 6. Final determination: A court would likely conclude that the seller’s actions successfully rebutted the presumption of transfer. Therefore, the seller retained full ownership of the water right, and no portion of it passed to the buyer. In Montana, water rights are a distinct and valuable property interest, legally considered appurtenant to the land on which the water is used. The principle of appurtenance means the right is attached to the land and is expected to pass to a new owner when the land is sold. Montana law codifies this by creating a presumption that if a deed is silent about water rights, any rights appurtenant to the conveyed land are included in the transfer. However, this is a rebuttable presumption. The law recognizes that a grantor may intend to sever the water right from the land and retain it or sell it separately. Evidence of this contrary intent can overcome the presumption. Such evidence can include express reservations in the purchase agreement, even if omitted from the final deed, or the circumstances surrounding the transaction. Crucially, the grantor’s subsequent actions, such as their continued and exclusive use of the water right on their remaining property, are powerful indicators of their original intent to retain the right. A broker must understand this nuance to properly advise clients on the critical importance of explicitly addressing water rights in any purchase and sale agreement and deed to avoid future litigation.

The core legal principle governing this situation is Montana’s Doctrine of Prior Appropriation, encapsulated by the phrase “first in time, first in right.” A water right is defined not just by its priority date but also by its continuous application to a “beneficial use.” Under Montana Code Annotated 85-2-404, if an appropriator fails to use all or part of a water right for a specified period, there is a rebuttable presumption of abandonment for the unused portion. In this case, Amelia’s adjudicated right was for 80 acres, but her consistent beneficial use for over a decade was limited to 50 acres. Therefore, her defensible water right has effectively been reduced to the amount needed for those 50 acres. The right for the other 30 acres is presumed abandoned due to non-use. Furthermore, water rights in Montana are generally appurtenant to the specific land where the water has been beneficially used. When Amelia subdivided her property and sold the 30-acre parcel to Cora, the water rights remained appurtenant to the 50 acres that were actively being irrigated. Since the deed of sale was silent on the matter of water rights, the law presumes the rights stay with the land of historical use. The parcel Cora purchased had no history of beneficial use associated with the 1958 water right. Consequently, no water rights were conveyed with the land sale. For Cora to obtain water from Pine Creek for her newly acquired land, she must go through the current legal process, which involves applying for a new water use permit from the Montana Department of Natural Resources and Conservation (DNRC). Any permit granted would be new and therefore have a priority date junior to all existing valid rights on the creek, including Amelia’s remaining right and Ben’s right.

Under Montana law, the creation of a joint tenancy requires a specific and express declaration of intent to create a right of survivorship. Montana Code Annotated § 70-1-307 states that an interest in property created in favor of several persons is an interest in common unless it is expressly declared in its creation to be a joint interest. Montana courts have interpreted this to mean that the instrument of conveyance, such as a deed, must contain explicit language like “with right of survivorship” or “as joint tenants with right of survivorship”. The mere phrase “as joint tenants” is generally considered insufficient to overcome the statutory presumption of a tenancy in common. In the given scenario, the deed conveyed the property “to Anya, Ben, and Chloe, as joint tenants.” This language lacks the express declaration of survivorship required by Montana statute. Therefore, despite the use of the term “joint tenants,” the law treats the ownership as a tenancy in common. As tenants in common, each owner holds a distinct, undivided fractional interest that is inheritable and devisable by will. When Ben died, his one-third interest did not automatically transfer to the surviving co-owners, Anya and Chloe. Instead, his interest became part of his estate and passed according to the terms of his will. Since his will devises all property to his son, David, Ben’s one-third interest in the land is transferred to David. Consequently, the new ownership structure consists of Anya, Chloe, and David as tenants in common, each holding an undivided one-third interest in the property.

The core legal principle at issue is the doctrine of merger and its exceptions. The buy-sell agreement, a contract, contained a specific, material promise from the seller to perform a particular action: installing a specific type of roof. This promise is separate from the promise to convey title. The doctrine of merger generally states that upon closing and acceptance of the deed, the terms of the purchase contract merge into the deed, and the contract is extinguished. However, this doctrine is not absolute. There is a significant exception for promises that are considered collateral to the main purpose of the contract, which is the conveyance of the property’s title. A collateral agreement is an independent promise that does not concern the title, quantity, or quality of the land itself but relates to an ancillary matter. A promise to perform construction or make a specific repair, like installing a particular roof, is a classic example of a collateral agreement. Because this obligation is independent of the conveyance of title, it is not extinguished by the merger doctrine. Therefore, the seller’s contractual obligation to install the specified roof survives the closing. The buyer’s acceptance of the deed does not waive their right to sue the seller for the breach of this separate, collateral promise. The buyer retains the right to seek damages for the seller’s failure to perform as stipulated in the original buy-sell agreement.

For a real estate sales contract to be valid and enforceable in Montana, it must comply with the Statute of Frauds, as codified in MCA 28-2-903. This statute requires that an agreement for the sale of real property be in writing and contain all essential terms. One of the most critical essential terms is the description of the property. The description must be legally sufficient, meaning it identifies the specific parcel of land with reasonable certainty without requiring oral testimony to supply the description. While street addresses and tax parcel numbers are helpful, they may not be sufficient on their own, especially for large, irregularly shaped rural parcels. A formal legal description, such as one from the Public Land Survey System or a metes and bounds description, is the gold standard. A description that relies solely on a common name and a tax ID number is vulnerable to a legal challenge that it is too indefinite to be enforced. In contrast, other seemingly vague terms have more established legal interpretations. A financing contingency based on the buyer’s satisfaction is generally held to be enforceable, as Montana law imposes an implied covenant of good faith and fair dealing, requiring the buyer to make a genuine effort to obtain financing. Similarly, a closing date specified as “on or about” a certain day is typically interpreted by courts to mean performance is required within a reasonable time frame of that date and does not, by itself, render the contract void. Therefore, the most substantial legal vulnerability that could lead a court to find the contract unenforceable is the potential failure of the property description to satisfy the stringent requirements of the Statute of Frauds.