US Montana Salesperson License Exam

The Montana Consumer Protection Act, found in Title 30, Chapter 14 of the Montana Code Annotated, provides broad protection for consumers against unfair or deceptive acts or practices in the conduct of any trade or commerce. This explicitly includes the sale of real estate. A key aspect of the Act is its relationship with other regulatory bodies and statutes. The Act does not require a consumer to exhaust administrative remedies before pursuing a private right of action. This means a person who believes they have been harmed by a deceptive practice from a real estate licensee does not first have to file a complaint with the Board of Realty Regulation and await its outcome. The consumer can directly initiate a civil lawsuit under the Montana Consumer Protection Act to seek remedies. These remedies can include the recovery of actual damages or a statutory amount, whichever is greater. Furthermore, if the court finds the licensee knowingly or willfully engaged in the deceptive practice, it may award up to three times the actual damages, known as treble damages, in addition to attorney’s fees. Therefore, a licensee’s actions can concurrently trigger disciplinary review by the Board of Realty Regulation for professional misconduct and a separate civil liability lawsuit from the consumer under the Consumer Protection Act. The two paths are not mutually exclusive, nor is one a prerequisite for the other.

The correct action is the creation of the 15-acre parcel for sale. The Montana Subdivision and Platting Act (MSPA) defines a subdivision as a division of land that creates one or more parcels containing less than 160 acres, intended for sale, lease, or other conveyance. The primary purpose of the MSPA is to promote public health, safety, and general welfare by regulating the subdivision of land. While the act is broad, it contains several key exemptions to the review process. The gift of a 10-acre parcel to a daughter qualifies for the family transfer exemption, which allows for a one-time gift to a member of the landowner’s immediate family without triggering subdivision review. The creation of a 25-acre parcel leased for grazing, with a covenant restricting its use to agriculture, falls under the agricultural use exemption. Similarly, creating a parcel solely to provide security for a mortgage or other lien is also explicitly exempt from the definition of a subdivision and its review requirements. However, creating a 15-acre parcel with the clear intent of selling it for residential development does not qualify for any of these exemptions. This action is the quintessential example of what the MSPA is designed to regulate, requiring the developer to submit a preliminary plat for review by the local governing body to assess its impact on local services, the natural environment, public health, and other criteria before it can be legally sold.

An acceleration clause is a provision within a loan agreement, such as a mortgage or a trust indenture, that grants the lender the right to demand payment of the entire outstanding loan balance if the borrower defaults on the loan terms. The most common type of default is the failure to make timely principal and interest payments. Other defaults can include failing to pay property taxes, not maintaining required hazard insurance, or transferring ownership of the property without the lender’s permission. When a borrower defaults, the lender can invoke this clause, effectively making the full debt immediately due and payable. However, in Montana, the borrower’s rights are protected under state law, specifically the Small Tract Financing Act which governs trust indentures. This act provides the borrower with a statutory right of reinstatement. This means that even after the lender has issued a notice of default and intent to accelerate, the borrower has the legal right to cure the default. To do this, the borrower must pay all past-due installments, late fees, and any costs incurred by the lender in the foreclosure process. This payment must be made at any time prior to the scheduled trustee’s sale. Upon receiving this curative payment, the lender must cease the foreclosure proceedings and the loan is reinstated to its original terms, as if the default had never occurred. The lender cannot refuse a proper and timely tender of the cure and force the borrower to pay the full accelerated balance. This right to cure balances the lender’s power under the acceleration clause, providing a crucial protection for borrowers facing temporary financial hardship.

The Montana Subdivision and Platting Act (MSPA) provides specific exemptions from the formal subdivision review process. One such exemption, found in MCA 76-3-201, allows for a division of land created to provide security for a mortgage, lien, or trust indenture. This exemption is designed to facilitate financing and does not require the landowner to undergo a full subdivision review simply to use a portion of their property as collateral. However, the exemption’s scope is limited to the act of creating the security interest. It is not intended to be a permanent exemption that allows for the unregulated development or sale of the parcel. When the purpose of the division changes from security to conveyance, the Act’s requirements may be triggered. In the event of a foreclosure, the lender takes title. If the lender then sells or otherwise conveys the parcel to a third party, that action constitutes a transfer of title. This conveyance is subject to the MSPA because it is a sale of a parcel for potential use or development, which is precisely what the Act is designed to regulate. The initial creation for security purposes does not shield the subsequent sale from review. Therefore, the transfer of title to a new buyer after foreclosure necessitates compliance with the subdivision review process to ensure the division meets local planning, zoning, and sanitation requirements before it can be legally developed.

This question does not require a mathematical calculation. The solution is based on the specific procedures outlined in the Montana Residential Landlord and Tenant Act. Under Montana law, specifically MCA 70-24-426, when a landlord reasonably believes a tenant has abandoned a rental unit and left behind personal property, the landlord cannot simply dispose of or sell the items. The law imposes a clear duty on the landlord to protect the tenant’s property while also providing a path for the landlord to clear the unit and recover costs. The first and most critical step is to place all personal property in a secure location for safekeeping. Following this, the landlord must make a reasonable attempt to notify the former tenant in writing. This notice must be sent by certified mail to the tenant’s last-known address. The notice must contain specific information: a description of the property sufficient for identification, the amount of any storage and removal costs, the location where the property can be claimed, and the date by which the property must be claimed. The law provides a specific timeframe for this process. Only after this notice procedure has been correctly followed and the tenant fails to claim the property within the specified time can the landlord proceed to sell or otherwise dispose of the property. Failure to adhere to this strict notification and storage protocol can expose the landlord to liability for the value of the tenant’s property.

The initial lease agreement was an estate for years, which has a definite start and end date and terminates automatically without notice. When the tenant remained in possession after the lease expired on August 31st, her status changed. The landlord’s verbal permission to “stay on for a bit” might suggest an estate at will, which is a tenancy of indefinite duration. However, the landlord’s subsequent action of accepting monthly rent payments for September and October is the legally determinative factor. Under Montana law, when a landlord accepts rent from a tenant holding over after a lease expires, it creates a periodic tenancy. Since the rent was paid monthly, a month-to-month tenancy was established. This is distinct from an estate at sufferance, which would only exist if the tenant stayed without the landlord’s permission. It is also not an estate at will, because the regular payment and acceptance of rent create a defined period. As a month-to-month tenant under the Montana Residential Landlord and Tenant Act, the tenant is afforded specific legal protections. Chief among these is the right to proper notice before the tenancy can be terminated. The law requires the landlord, or the new owner who takes the property subject to the existing tenancy, to provide a written notice of at least 30 days to terminate the month-to-month agreement. Therefore, an immediate demand to vacate is not legally enforceable.

The core issue is the legal status of a contract that contains a provision for an illegal act. A fundamental requirement for a contract to be valid and enforceable is that it must have a legal purpose. The objective of the agreement cannot be for something that violates statutes, ordinances, or public policy. In this scenario, the buy-sell agreement is contingent upon the seller providing a guarantee for a commercial land use that is explicitly forbidden by local zoning regulations. This provision is not merely a difficult condition to meet; it is a condition that requires an illegal outcome. A contract founded upon an illegal purpose is considered void ab initio, meaning it is void from the very beginning. It is not merely voidable, where one party has the option to enforce or rescind the contract. A void contract has no legal force or effect, and neither party can enforce it in a court of law. The law will not compel a party to perform an illegal act or uphold an agreement that has an unlawful objective at its core. Even if other parts of the contract are legal, when an illegal provision is a material part of the consideration or a central contingency for one of the parties, it typically renders the entire contract void, not just the single clause. Therefore, because the agreement’s consummation is dependent on an illegal guarantee, the entire contract lacks legal purpose and is void.

No calculation is required for this question as it assesses the application of legal and ethical duties. Under Montana law and the rules of the Board of Realty Regulation, a real estate licensee has a fiduciary duty to their client and a general duty of honesty and fairness to all parties in a transaction. A core component of this is the requirement to disclose all known adverse material facts. An adverse material fact is information that could negatively impact the property’s value, the health of its occupants, or a party’s ability to perform their contractual obligations. The Montana Hazardous Waste Act and the Comprehensive Environmental Cleanup and Responsibility Act (CECRA) create significant potential liability for owners of contaminated property. In a situation where a property’s history suggests a high risk of contamination, such as its use as a clandestine drug laboratory, the licensee’s duty is activated even without a formal report confirming the presence of hazardous materials. The history itself, coupled with any physical evidence, constitutes a potential adverse material fact. The licensee’s responsibility is not to confirm the contamination, as they are not environmental experts. Instead, their primary duty is to disclose the known history and potential risks to their client. The most prudent and legally required action is to inform the client of the potential issue in writing and strongly recommend that the client engage a qualified professional, such as a certified decontamination specialist or an industrial hygienist, to conduct a proper assessment. This fulfills the licensee’s duty of care, provides the client with the necessary information to make an informed decision, and helps mitigate liability for all parties involved. Simply relying on the seller’s lack of disclosure is insufficient when the licensee has independent knowledge of a significant risk factor.

Under Montana Code Annotated (MCA) 37-51-313, a seller’s agent has a duty to disclose to a buyer or the buyer’s agent any known adverse material facts concerning the property. An adverse material fact is defined as a fact that should be recognized by a licensee as being significant enough to affect a person’s decision to enter into a contract. This typically includes information that materially affects the value of the property, its structural integrity, or presents a documented health risk to future occupants. In this case, the seller’s observation of a persistent musty smell and visible dark spots in the basement after rain constitutes a known potential adverse material fact. The suspicion of mold, even without professional testing, relates directly to the property’s condition and potential health risks, and therefore must be disclosed. Conversely, Montana law specifically addresses what is NOT considered a material fact. MCA 37-51-102(2) and 37-51-313(5)(b) explicitly state that the fact or suspicion that a property was the site of a suicide, homicide, or other felony, or that it was occupied by an individual with a communicable disease, is not a material fact relating to the property. This principle extends to natural deaths. Therefore, the death of a previous owner in the home is considered stigmatizing information, not an adverse material fact, and there is no legal obligation for the licensee to disclose it, even when asked directly. The licensee’s primary legal duty is to the disclosure of the physical condition of the property.

The Real Estate Settlement Procedures Act, or RESPA, is a federal law designed to protect consumers by requiring disclosures about the nature and costs of real estate settlements and by prohibiting certain practices like kickbacks and unearned fees. Section 8 of RESPA specifically prohibits anyone from giving or accepting a fee, kickback, or anything of value in exchange for the referral of settlement service business. While RESPA allows for Affiliated Business Arrangements (AfBAs), where a real estate brokerage has an ownership interest in a settlement service provider like a title company, it imposes strict conditions. For an AfBA to be compliant, the consumer must be given a written disclosure of the relationship, the consumer cannot be required to use the affiliated company, and the referring party can only receive a return on their ownership interest. In the described scenario, the monthly payment from the title company to the brokerage for “marketing services” is highly problematic. This payment is a “thing of value” that goes beyond the legally permissible return on the brokerage’s ownership interest. Federal regulators would likely view this fee as a disguised kickback for the referrals being sent from the brokerage’s agents to the title company, especially if the fee’s value does not align with the actual market value of the services rendered or if it correlates with the volume of business referred. Therefore, this specific payment structure creates a significant risk of violating RESPA’s anti-kickback provisions under Section 8.

The legal principle at issue is constructive fraud. Under Montana Code Annotated 28-2-406, constructive fraud consists of any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault by misleading another to their prejudice. In this scenario, the licensee, Caspian, had a professional duty to exercise reasonable care and skill. When directly asked about the septic system’s compliance, Caspian made a positive assertion that it was compliant. However, this assertion was not based on current, verified information but on an outdated assumption from the seller. This act constitutes a breach of his duty of care. He did not necessarily intend to deceive the buyer, which would be actual fraud. Instead, his breach of duty misled the buyer, Priya, into believing a material fact that was false. This misleading statement directly led to Priya’s prejudice, as she now faces significant costs to replace the non-compliant system. Caspian and his seller gained an advantage, the completion of the sale, through this misleading act. Therefore, the situation does not meet the criteria for actual fraud, which requires intent to deceive, nor is it undue influence, which involves overpowering someone’s will. It is more than a simple mistake; it is a breach of a professional duty, which the law defines as constructive fraud.

The final step in the appraisal process is reconciliation, where the appraiser analyzes the values derived from the different appraisal approaches to arrive at a final opinion of value. This is not a mathematical average. The appraiser gives weight to each approach based on its relevance to the property type and the quality of the data available. The process can be conceptually represented as: \(\text{Final Value} = (V_{SC} \times W_{SC}) + (V_{C} \times W_{C}) + (V_{I} \times W_{I})\), where V represents the value from each approach (Sales Comparison, Cost, Income) and W represents the weight assigned to it, with the sum of weights equaling 100%. In the case of a unique, single-family residence, even a historic one, the Sales Comparison Approach is generally considered the most reliable indicator of market value. This approach is based on the principle of substitution and analyzes what similar properties have recently sold for, which directly reflects the behavior of buyers and sellers in the market. While finding perfect comparables for a unique property is challenging and requires skillful adjustments, it remains the most persuasive method for this property type. The Cost Approach can be useful, especially with recent restoration, but its reliability is significantly weakened by the subjective nature of estimating depreciation, particularly external obsolescence caused by negative external factors like increased commercial traffic. The Income Approach is the least applicable here, as the property’s primary use is residential, not income generation. An appraiser must analyze the strengths and weaknesses of the data for each approach and assign the most weight to the one that provides the most credible and supportable evidence of value for the specific property being appraised. Therefore, the greatest weight is logically assigned to the Sales Comparison Approach.

The Montana Subdivision and Platting Act, along with local zoning regulations, establishes the legal framework for how governing bodies, such as a county commission, must evaluate proposed subdivisions. A core component of this process is public participation, which is facilitated through legally mandated public hearings. The purpose of the public hearing is to allow affected parties and the general public to provide testimony, voice concerns, and present evidence regarding the proposed development. However, the role of this testimony in the final decision is specific and legally constrained. The governing body is required to create a record of the hearing and must genuinely consider all public comments. This consideration means they must listen to and acknowledge the input. But, their ultimate decision to approve, approve with conditions, or deny the subdivision cannot be based solely on the volume or sentiment of public opinion. The decision must be grounded in substantial, credible evidence and a rational analysis of whether the proposed plat complies with the specific criteria outlined in the state and local subdivision regulations. These criteria often include impacts on public health and safety, agriculture, local services, wildlife, and the natural environment. A decision based purely on popular opposition without reference to these legal standards would be considered arbitrary and capricious and could be overturned by a court. Therefore, while public opposition is an important factor to be considered, it does not automatically compel a denial if the application otherwise meets all legal and regulatory requirements. The commission’s duty is to apply the law to the facts presented, including the facts and concerns raised in public testimony.

For a deed to be valid and enforceable in Montana, it must contain several essential elements. These include a competent grantor, an identifiable grantee, a granting clause expressing the intent to convey, adequate consideration, a sufficient legal description of the property, and the signature of the grantor. Furthermore, for the deed to provide protection against the claims of third parties, it must be recorded in the county where the property is located. Under Montana law, specifically MCA 70-21-203, a deed cannot be recorded unless the grantor’s signature has been acknowledged, typically by a notary public. This acknowledgement serves as proof that the signature is genuine. The act of recording the deed provides constructive notice to the entire world, meaning that subsequent potential buyers or creditors are legally considered to be aware of the conveyance. Montana operates under a race-notice recording statute. This means that a subsequent bona fide purchaser, one who pays valuable consideration without any notice of a prior unrecorded interest, will have superior title to the property if they record their deed first. In a conflict between an earlier, unrecorded deed and a later, recorded deed held by a bona fide purchaser, the law protects the party who recorded their instrument first without knowledge of the competing claim. Therefore, the failure to acknowledge and record a deed makes the grantee’s interest vulnerable to being defeated by a subsequent purchaser who acts in good faith and properly records their own deed.

Under the regulations set forth by the Montana Board of Realty Regulation, all advertising conducted by a real estate licensee must adhere to strict standards to prevent misleading the public. A foundational rule is that any form of advertisement, including digital posts, print media, or signs, must clearly and conspicuously state the name of the real estate brokerage with which the licensee is associated. This requirement is absolute and serves several key purposes. It ensures that the public is aware they are dealing with a licensed professional operating under the supervision of a licensed broker, rather than a private individual. It also establishes a clear line of accountability, as the supervising broker is ultimately responsible for the actions of their affiliated licensees. This is considered a per se violation because the act of omitting the brokerage name is, in itself, a breach of the rules, irrespective of the truthfulness or accuracy of any other claims made in the advertisement. Other statements, such as projections of future value or claims about property features, may also be violations, but their status as a violation often depends on whether they are factually incorrect or presented in a misleading manner. A statement about a new roof is only a violation if the roof is not new. A projection of value is a violation if it is presented as a guarantee or lacks a reasonable basis. However, the failure to identify the brokerage is a violation on its face, regardless of any other content.

The analysis begins by establishing that the two parcels of land are physically comparable in size and terrain and are both undeveloped. This neutralizes the physical characteristics as the primary reason for the value disparity. The core of the issue lies in the external factors influencing each parcel. Parcel A’s location near a booming city with a strong job market and new infrastructure creates high demand. Parcel B’s remote location with a stagnant economy results in low demand. This difference is not due to any physical changes or additions made to the land parcels themselves, as they are undeveloped. Therefore, the concept of improvements, which refers to man-made additions on the land, is not the primary driver. While land in a desirable location is scarce, the underlying reason for that scarcity and desirability is the location’s favorability. The economic characteristic that specifically captures the effect of location preference, economic opportunity, and external influences like infrastructure on property value is situs. Situs, or area preference, is the sum of all factors that make one location more desirable than another. The permanence of investment refers to the long-term, fixed nature of capital invested in real estate, which is a relevant concept but does not explain the initial difference in land value between two distinct locations. Therefore, the immense valuation gap between Parcel A and Parcel B is most directly and comprehensively explained by the difference in their situs.

Voluntary alienation is the legal term for the voluntary transfer of title to real property from one owner to another. This can occur through various methods, including sale, gift, or devise by a will. In this scenario, the transfer of the ranch is intended to occur upon the owner’s death, which is a devise. The validity of this transfer hinges on whether the handwritten document constitutes a legal will in Montana. Montana law, specifically under the Montana Uniform Probate Code, recognizes a specific type of will known as a holographic will. According to Montana Code Annotated 72-2-522, a will that is not witnessed is still valid as a holographic will, whether or not it is notarized, if the signature and the material portions of the document are in the testator’s handwriting. The testator is the person who has made the will. In the described situation, Alistair wrote the entire document himself and signed it. The document clearly states his intent to leave his property to a specific person, Beatrice. These facts meet the requirements for a holographic will in Montana. Therefore, the document is a valid instrument to convey title. The lack of witnesses, which would be a fatal flaw for a standard formal will, is not a defect for a holographic will under Montana statutes. Consequently, this act represents a valid form of voluntary alienation through devise, and upon completion of the probate process, title to the ranch would transfer to Beatrice.

In Montana, water rights are governed by the doctrine of prior appropriation, summarized by the principle first in time, first in right. This means that senior water right holders have priority to use water over junior right holders during times of scarcity. A water right is considered a property right that is appurtenant to the land, meaning it typically runs with the land when the property is sold. However, a water right can be severed from the original land and transferred to another property. For a water right to be valid, the water must be put to a beneficial use. When the owner of a water right wishes to change the place of use, point of diversion, or purpose of use, they cannot simply do so at will, even if they own the right outright. They must file an Application for Change of Water Right with the Montana Department of Natural Resources and Conservation (DNRC). The central purpose of this process is to protect other water users on the same source from being negatively impacted. The applicant bears the burden of proving, through substantial credible evidence, that the proposed change will not adversely affect the water rights of other users. This includes demonstrating that the historical consumptive use of the water will not be exceeded after the change. The DNRC reviews the application, provides public notice, and may hold a hearing if objections are filed. Only after the DNRC issues an authorization for the change can the water right be legally used at the new location or for the new purpose. The Montana Water Court’s primary function is the statewide adjudication of water rights that existed prior to July 1, 1973, not the approval of change applications.

A Phase I Environmental Site Assessment (ESA) is a non-intrusive investigation designed to identify potential or existing environmental contamination liabilities. Its purpose is to identify what are known as Recognized Environmental Conditions (RECs). A REC is the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release into the ground, groundwater, or surface water. When a Phase I ESA identifies a REC and recommends a Phase II assessment, this becomes a significant material fact about the property. Under Montana law, a real estate licensee has a fiduciary duty of disclosure to their client, which includes revealing all known adverse material facts. An adverse material fact is information that could impact a party’s decision to enter into a contract or would materially affect the value or desirability of the property. The recommendation for a Phase II ESA, which involves physical sampling and analysis of soil, air, or water, clearly qualifies as such a fact. The licensee’s duty of reasonable care and skill compels them to ensure their client fully understands the implications of the Phase I report. This includes strongly advising the client to follow the expert recommendation to conduct the Phase II assessment to determine the actual extent and nature of any contamination. This allows the client to make an informed decision about proceeding with the purchase, renegotiating terms, or terminating the contract. A licensee must not interpret the technical findings themselves or downplay the risks, as this would be acting outside their area of expertise and could constitute negligence.

The three fundamental physical characteristics of land are its immobility, indestructibility, and uniqueness. Uniqueness, also known as non-homogeneity, is the principle that no two parcels of real estate are exactly alike. While two parcels may be very similar, they can never be identical because each has its own specific geographic location. This concept is critical in contract law, particularly concerning the remedy of specific performance. Specific performance is an equitable remedy where a court orders a party to fulfill the precise terms of a contract, rather than awarding monetary damages for the breach. In real estate transactions, courts frequently grant specific performance to a buyer when a seller breaches the sales contract. The legal reasoning is that land’s unique nature makes monetary damages an inadequate remedy. The buyer contracted for a specific, one-of-a-kind asset. No amount of money can enable the buyer to purchase an identical substitute property elsewhere, because one does not exist. Therefore, the only way to make the buyer whole and provide them with the benefit of their original bargain is to compel the seller to transfer ownership of the specific parcel of land as originally agreed. The immobility and indestructibility of land are also important characteristics, but it is the uniqueness that forms the primary legal basis for demanding the transfer of the property itself.

The legal interpretation of a property description containing conflicting elements is governed by a well-established principle known as the hierarchy of control. This hierarchy dictates the order of priority for different types of evidence within the description to determine the original surveyor’s intent and the true location of the boundary. The universally accepted order of priority is as follows: first, natural monuments, such as rivers, trees, or rock outcroppings; second, artificial monuments, like iron pins, stakes, or concrete markers; third, courses or directions, which are the bearings of the boundary lines; fourth, distances, which are the measured lengths of the lines; and finally, the stated area or quantity of land. In the given scenario, there is a direct conflict between a stated distance and a natural monument. The description calls for a line to extend a specific number of feet to a specific, identifiable tree on a riverbank. According to the hierarchy of control, the natural monument, the cottonwood tree, takes precedence over the conflicting distance measurement. Therefore, the boundary line is legally considered to extend to the physical location of that tree, even if the actual distance is different from what is written in the deed. This rule exists because physical monuments are considered more permanent and less susceptible to clerical or measurement error than written numbers for distances and courses.

The correct outcome is that upon the transfer of title from Alistair to Beatrice, the lender has the legal right to demand the immediate and full repayment of the entire outstanding mortgage balance. An alienation clause, also commonly known as a due-on-sale clause, is a standard provision in most modern mortgage contracts in Montana and across the United States. Its primary purpose is to protect the lender’s financial interests. This clause is triggered by the voluntary or involuntary transfer of title or a significant interest in the mortgaged property from the borrower to a new owner. When this transfer, or alienation, occurs, the clause gives the lender the option to accelerate the loan, meaning they can declare the entire unpaid principal balance, along with any accrued interest, immediately due and payable. This prevents a new buyer from assuming the seller’s existing loan, which is particularly important to lenders during periods of rising interest rates. If a buyer were able to assume a loan with a below-market interest rate, the lender would lose the opportunity to issue a new loan at the current, higher rate. The clause does not automatically void the sale, nor does it inherently impose a penalty; its function is to call the debt. The lender may choose to waive this right and allow an assumption, but they are not obligated to do so.

The Montana Board of Realty Regulation (BRR) is tasked with enforcing the state’s real estate license laws and administrative rules to protect the public. When a written complaint is filed against a licensee, the process is governed by specific statutes and rules. The complaint is first reviewed by a screening panel of the board. The purpose of this panel is not to determine guilt or innocence but to assess whether the allegations, if true, would constitute a violation of Montana’s license laws or rules, specifically those defining unprofessional conduct under MCA 37-51-313. The panel determines if there is reasonable cause to believe a violation occurred. If the panel finds sufficient evidence, it will refer the matter for further proceedings, which may include a contested case hearing. In situations involving a salesperson and their supervising broker, both individuals can be held accountable for their respective duties. A salesperson is directly responsible for their own actions, such as failing to disclose a known material fact. Concurrently, a supervising broker has a distinct legal duty to supervise the salespersons associated with them. According to the Administrative Rules of Montana (ARM 24.210.641), a supervising broker is responsible for the real estate-related activities of their salespersons. A failure to provide adequate supervision is, in itself, a form of unprofessional conduct. Therefore, the BRR can investigate and potentially discipline the supervising broker for a breach of their supervisory duties, even if the broker had no direct knowledge of the salesperson’s specific wrongful act. The board can take separate disciplinary actions against both the salesperson and the broker based on their individual violations. This process is entirely separate from any civil action the aggrieved party might pursue in court for damages.

Timeline and Rule Application: 1. Salesperson Amara receives the earnest money check from the buyer on Friday. Per Administrative Rules of Montana (ARM) 24.210.431(1), a salesperson must deliver all funds to their supervising broker “immediately upon receipt.” Holding the check from Friday afternoon until Tuesday morning does not meet the standard of “immediately.” The fact that the office was closed does not absolve the salesperson of this duty; arrangements for secure and immediate transfer should be in place. Therefore, the salesperson’s action constitutes a violation. 2. Supervising Broker Mr. Chen receives the check from Amara on Tuesday morning. The rule states the supervising broker must deposit the funds into the trust account “within three business days of receiving the funds.” The day of receipt is Tuesday. The three business days following receipt are: Business Day 1: Wednesday Business Day 2: Thursday Business Day 3: Friday The deadline for Mr. Chen to deposit the check is the end of the business day on Friday. He deposited the funds on Thursday. This action is well within the legally mandated three-business-day period. Therefore, the supervising broker’s action is compliant with Montana law. The core of this issue lies in the distinct and separate responsibilities placed upon the salesperson and the supervising broker. The salesperson has a duty of immediate delivery to the broker. The broker’s three-day clock for depositing the funds does not begin until the broker has physically received the funds from the salesperson. A delay by the salesperson does not shorten the broker’s legally allotted time for making the deposit, but the salesperson’s delay is itself a violation.

Step 1: Identify the legal instrument and the relevant clause. The instrument is a trust indenture governed by the Montana Small Tract Financing Act, and the clause is a due-on-sale clause. Step 2: Identify the borrower’s action. The borrower, Kenji, transferred the property title to a revocable living trust where he is the sole trustee and beneficiary and continues to occupy the property. Step 3: Identify the controlling law. While the trust indenture is a Montana instrument, the enforceability of due-on-sale clauses is primarily governed by the federal Garn-St. Germain Depository Institutions Act of 1982. Step 4: Analyze the action under the controlling law. The Garn-St. Germain Act provides specific exemptions where a lender cannot enforce a due-on-sale clause. One such exemption, found in 12 U.S.C. § 1701j-3(d)(8), is for “a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.” Step 5: Apply the law to the facts. Kenji’s transfer was to a living trust, he remains the beneficiary, and he continues to occupy the property, meaning there was no transfer of occupancy rights. His action fits perfectly within this federal exemption. Step 6: Determine the final outcome. Because the transfer is a federally protected activity, the lender is prohibited from using it as a basis to accelerate the loan under the due-on-sale clause. A due-on-sale clause, also known as an acceleration clause, is a provision in a mortgage or trust indenture that gives the lender the right to demand full payment of the outstanding loan balance if the property is sold or transferred without the lender’s prior consent. While these clauses are standard, their enforceability is not absolute. The federal Garn-St. Germain Depository Institutions Act of 1982 established a uniform national standard that makes these clauses broadly enforceable, preempting state laws that might have restricted them. However, the same Act also carved out several important non-waivable exemptions to protect consumers in common life-event scenarios. One of the most significant exemptions applies to the transfer of a property into an inter vivos trust, commonly known as a living trust, for estate planning purposes. The critical conditions for this exemption are that the original borrower must remain a beneficiary of the trust and that the transfer does not involve a change in the rights of occupancy. In the given scenario, the borrower’s actions meet these specific conditions, placing the transfer squarely within the protected class of transactions defined by federal law. Therefore, despite the language in the trust indenture, the lender is legally barred from accelerating the loan.

The deed in this scenario creates a fee simple subject to a condition subsequent. This type of defeasible fee estate is identified by specific language in the conveyance. Phrases like “on the condition that,” “provided that,” or “but if,” coupled with a statement reserving the grantor’s right to re-enter and reclaim the property, are hallmarks of this estate. The interest retained by the grantor, Elias, or his heirs is known as a right of entry or a power of termination. A critical distinction between a fee simple subject to a condition subsequent and a fee simple determinable is what happens when the specified condition is violated. In a fee simple determinable, the estate automatically terminates and reverts to the grantor. However, with a fee simple subject to a condition subsequent, the breach of the condition does not automatically end the grantee’s estate. The grantee, the Yellowstone Corridor Trust, continues to hold title to the property. The breach merely gives the grantor or their heirs the option or power to terminate the estate. To exercise this power, they must take an affirmative step, such as making a formal demand or initiating a legal action like a lawsuit to quiet title. Therefore, immediately after the Trust fences the property, but before Elias’s heirs act, the Trust still owns the property, but their ownership is now encumbered by the matured right of entry held by the heirs.

To determine if a defect represents incurable functional obsolescence, we perform a cost-to-cure analysis. Let \(C\) be the cost to cure the defect and \(V\) be the value added by the cure. The defect is the undersized, single-car garage in a market that demands two-car garages. Estimated cost to demolish the existing garage, expand the foundation, and construct a new two-car garage: \(C = \$55,000\). Estimated increase in market value from upgrading to a two-car garage: \(V = \$30,000\). The analysis shows that the cost to cure is substantially greater than the value added (\(C > V\), or \(\$55,000 > \$30,000\)). Therefore, the deficiency is classified as economically incurable. Depreciation in an appraisal context refers to any loss in a property’s value and is broken down into three categories: physical deterioration, functional obsolescence, and external obsolescence. Functional obsolescence is a loss of value due to factors within the subject property’s boundaries, related to its design, layout, or features that are outdated or no longer meet market expectations. A key distinction within this category is whether the obsolescence is curable or incurable. A defect is considered incurable if the cost of fixing it would be greater than the resulting increase in the property’s value. In the described situation, a single-car garage in a market where a two-car garage is the established norm is a design deficiency. Expanding the garage would involve significant structural work, including demolition, new foundation work, framing, and finishing. The cost of such an extensive project would likely exceed the value it would contribute to the home, making it economically unfeasible to correct. This is the definition of incurable functional obsolescence. It is a loss in value inherent to the property’s design that cannot be practically fixed.

Based on an original property value of $400,000, the loan balance required for a borrower to request Private Mortgage Insurance (PMI) cancellation under the Homeowners Protection Act (HPA) is 80% of that value. \[\$400,000 \times 0.80 = \$320,000\] The loan balance for automatic termination of PMI is 78% of the original value. \[\$400,000 \times 0.78 = \$312,000\] The federal Homeowners Protection Act of 1998, also known as the PMI Cancellation Act, provides specific rights to borrowers with conventional loans regarding the cancellation of Private Mortgage Insurance. This federal law applies to all such transactions, including those in Montana. The act establishes two primary pathways for PMI removal. The first is automatic termination, where the lender must automatically end PMI coverage when the loan’s principal balance is scheduled to reach 78% of the original property value, provided the borrower is current on their payments. The second pathway is borrower-requested cancellation. A borrower has the right to request PMI cancellation once the principal balance is paid down to 80% of the original value. However, the HPA also allows a borrower to request cancellation sooner if significant improvements or market appreciation have increased the property’s value, thereby reducing the loan-to-value (LTV) ratio. In such cases, the borrower must initiate the request in writing. The lender is entitled to verify the new value and can require the borrower to pay for a new appraisal. The borrower must also have a good payment history and no subordinate liens on the property.

This problem does not require mathematical calculation. The solution is based on a correct interpretation of the Montana Residential Landlord and Tenant Act of 1977. Under Montana law, a landlord must follow specific notice procedures before initiating an eviction for a lease violation. The type of notice required depends on the nature of the breach. For a curable breach of the lease agreement, such as creating a disturbance or violating a house rule for the first time, the landlord must provide the tenant with a 14-day notice to cure or quit. This notice gives the tenant 14 days to remedy the violation. If the tenant corrects the issue within that timeframe, the tenancy continues. The scenario describes a tenant, Mateo, who is creating a noise disturbance, which is a new and distinct violation from his previous unauthorized pet issue. The unauthorized pet required a 3-day notice to remove the pet or vacate, which is a specific notice for that particular breach. The noise issue is a separate, general lease violation. Therefore, the landlord, Chen, must treat it as a new, initial breach and serve the appropriate 14-day notice. A 5-day notice to quit is only applicable if the tenant commits the same violation again within 6 months of receiving a 14-day notice for that specific type of conduct. Since this is the first noise complaint, the 14-day notice is the mandatory first step. A landlord cannot immediately file for eviction without first providing the correct statutory notice.

The scenario describes the creation of a fee simple subject to a condition subsequent. This is a type of defeasible freehold estate where the grantee’s ownership is contingent upon fulfilling a specific condition. The key to identifying this estate is the language used in the conveyance. Phrases like ‘on the condition that’, ‘provided that’, or ‘but if’, coupled with a statement that the grantor retains a ‘right of entry’ or ‘power of termination’, signal this type of interest. Unlike a fee simple determinable estate, the transfer of ownership back to the original grantor or their heirs is not automatic if the condition is broken. The holder of the right of entry must take affirmative legal action to terminate the estate and reclaim the property. This action could involve filing a quiet title lawsuit or physically re-entering the premises. Until such action is successfully taken, the grantee’s defeasible fee estate continues, even after the condition has been violated. In this case, the nonprofit’s agreement to sell for a different use constitutes a breach of the condition, which then activates the right of the grantor’s heirs to initiate proceedings to recover the property. The estate is not voided automatically.