Montana Salesperson Exam - P1 Legal Questions and Answers | 2025 Update | 100% Correct

What does listing do? Obligates the commission What are the 5 steps of most real estate transactions? S1 - Listing (only brokers can list prop. not salespeople) S2 - Contract of Sale/ Buy-Sell Agreement (Contains contingencies. Buyer will put down earnest money). S3 - Title Insurance Commitment (Not on test but important to understand this piece of the process) S4 - Acquire Financing; Contract for deed (seller financing) or Mortgage (Bank financing) S5 - Close; Seller gets $ and Buyer gets the deed, keys to property, and Title Insurance Policy What is the difference between a note and a mortgage? A note, also known as a mortgage note, is the promise to pay, or an IOU. It is the best evidence of the debt details. In contrast, the mortgage secures the note by placing a lien on the property ( allows bank to foreclose upon default). The mortgage is the best evidence of the debt. Main Difference: Note = IOU vs Mortgage = right to foreclose What are the reasons a bank would foreclose on a property? Inadequate maintenance of property Not making payments to bank (this is the big one) Not paying property taxes Not buying hazard insurance 8/5/25, 10:08 AM Montana Salesperson Exam - P1 Legal Flashcards | Quizlet clause in a mortgage? Lender can call balance due upon default. How to understand it: If you default, all the payments are accelerated and called due at once. What is an alienation clause in a mortgage? AKA "due on sale clause" - Lender can call balance due upon resale. How to understand it: All payments are due on resale the new "aliens" moving in don't get the same low interest rate from the bank as you had. What are the buyer and seller termed as in the Contract of Sale/ Purchase/Buy-Sell Agreement? The seller is referred to as the vendor and the buyer is the vendee What items are typically included in the Contract of Sale/Purchase/Buy-Sell Agreement? The real price of the property - this is not the asking price that appears on the listing "Adequate" property description - Street address (a must) and legal description (surveyor's description is not necessary) Type of deed - Will it be a quitclaim or a warranty deed? Who's paying for the.... - property inspection, environmental survey, financing, title insurance (typically the seller), etc. Contingencies Closing date Signatures of seller and buyer If a property with a "For Sale" sign is currently under contract can offers still be made? Yes, they can. In the event that the deal falls through this offers a backup. However, an additional sign should be placed under the For Sale sign that says "under contract" so that people are aware. 8/5/25, 10:08 AM Montana Salesperson Exam - P1 Legal Flashcards | Quizlet authorizes a third party to sign on their behalf this is called...? A written power of attorney At the time of the Contract of Sale/Purchase or BuySell Agreement what is the status of the title of the property in terms of the vendor and vendee? The vendor(aka seller) has Title, still has the ownership, while the vendee (aka bu