Montana Real Estate Salesperson
Examination Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. A property is listed for sale with a brokerage firm. The seller discloses that
the basement has experienced water intrusion in the past but has been
remediated. The listing agent, without verifying the effectiveness of the
remediation, states to a potential buyer that "the basement is completely
dry." This statement is best described as:
A) An opinion based on the seller's representation
B) A material misrepresentation if the agent knew or should have known it
was false
C) An acceptable puffing statement in real estate marketing
D) A disclosure that shifts liability to the seller
Answer: A material misrepresentation if the agent knew or should have known
it was false
Under Montana law, licensees must exercise reasonable care and cannot make
representations they know or should know are false. The agent has a duty to verify
material facts, especially when the seller has disclosed prior issues.
2. Under the Montana Real Estate Commission rules, which of the following
scenarios would most likely constitute an unlawful practice of law by a real
estate licensee?
A) Recommending that a buyer obtain title insurance
, B) Advising a seller on the tax implications of a 1031 exchange
C) Preparing a purchase agreement using a form approved by the Montana
Association of Realtors
D) Explaining the difference between joint tenancy and tenancy in common
Answer: Advising a seller on the tax implications of a 1031 exchange
Providing specific tax advice constitutes the unauthorized practice of law. Real
estate licensees may explain legal concepts but cannot provide legal advice or
interpretations that require professional legal judgment.
3. A buyer submits an offer on a property, and the seller signs a counteroffer
that increases the purchase price by $5,000. The buyer never signs the
counteroffer. Which of the following is true regarding the legal status of this
transaction?
A) A binding contract exists because the seller signed the counteroffer
B) No contract exists because the buyer never accepted the counteroffer
C) A binding contract exists under the doctrine of equitable conversion
D) The original offer becomes binding after 72 hours of no response
Answer: No contract exists because the buyer never accepted the counteroffer
A counteroffer operates as a rejection of the original offer and creates a new offer
that requires acceptance by the original offeror. Without the buyer's signature, no
meeting of the minds occurs.
4. A Montana real estate broker has a fiduciary duty to all of the following
parties EXCEPT:
A) The seller in a listing agreement
B) The buyer in a buyer representation agreement
C) The lender providing financing for the transaction
D) A tenant who has entered into a property management agreement
Answer: The lender providing financing for the transaction
Fiduciary duties are owed to clients with whom the broker has an agency
,relationship. Lenders are typically third parties to the transaction and are not
owed fiduciary duties, though brokers must still deal honestly with them.
5. In a commercial real estate transaction, the buyer discovers after closing
that the property's zoning designation does not permit the business
operations the buyer intended. The buyer's due diligence period expired
prior to closing. The most likely outcome is:
A) The seller is liable for fraudulent misrepresentation
B) The buyer has no recourse because they failed to exercise due diligence
C) The broker is liable for negligence
D) The contract is voidable for mistake of law
Answer: The buyer has no recourse because they failed to exercise due diligence
Buyers have a duty to investigate property conditions and zoning matters during
the due diligence period. Failure to do so generally waives any claims against the
seller, absent fraud or active concealment.
6. A Montana licensee is representing both the buyer and the seller in a
residential transaction. The licensee has obtained written informed consent
from both parties. Which of the following actions is the licensee prohibited
from taking in this dual agency scenario?
A) Disclosing the buyer's maximum budget to the seller
B) Preparing the purchase agreement and all addenda
C) Coordinating the home inspection and appraisal
D) Facilitating the closing process with the title company
Answer: Disclosing the buyer's maximum budget to the seller
In dual agency, the licensee must remain neutral and cannot disclose confidential
information from one client to the other. This would breach the duty of
confidentiality and loyalty to the buyer.
, 7. The Montana Real Estate Recovery Account was established primarily to:
A) Compensate clients for any financial loss caused by a licensee
B) Reimburse licensees for unpaid commissions
C) Fund continuing education programs for licensees
D) Provide low-interest loans for first-time homebuyers
Answer: Compensate clients for any financial loss caused by a licensee
The Recovery Account exists to provide compensation to individuals who have
suffered monetary losses due to the misconduct of licensed real estate
professionals. It is a consumer protection mechanism.
8. A property owner installs a new chain-link fence that encroaches 2 feet
onto the neighboring property. The neighbor does not object for 15 years.
Under Montana law, the encroaching owner may have acquired rights
through:
A) Adverse possession only if the fence was built in good faith
B) Prescriptive easement after the statutory period
C) No legal rights because encroachment cannot ripen into ownership
D) Acquiescence if the neighbor acknowledged the boundary
Answer: Prescriptive easement after the statutory period
Montana's statutory period for prescriptive easement is typically 5 years. However,
adverse possession requires payment of taxes and other elements. Prescriptive
easement is more appropriate for the continued use of a small encroachment.
9. A seller fails to disclose that a property was the site of a methamphetamine
laboratory that was professionally remediated five years ago. The
remediation was certified by the Montana Department of Environmental
Quality. The buyer discovers this information after closing. Which statement
is most accurate?
A) The seller has no disclosure obligation because the remediation was
certified
Examination Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. A property is listed for sale with a brokerage firm. The seller discloses that
the basement has experienced water intrusion in the past but has been
remediated. The listing agent, without verifying the effectiveness of the
remediation, states to a potential buyer that "the basement is completely
dry." This statement is best described as:
A) An opinion based on the seller's representation
B) A material misrepresentation if the agent knew or should have known it
was false
C) An acceptable puffing statement in real estate marketing
D) A disclosure that shifts liability to the seller
Answer: A material misrepresentation if the agent knew or should have known
it was false
Under Montana law, licensees must exercise reasonable care and cannot make
representations they know or should know are false. The agent has a duty to verify
material facts, especially when the seller has disclosed prior issues.
2. Under the Montana Real Estate Commission rules, which of the following
scenarios would most likely constitute an unlawful practice of law by a real
estate licensee?
A) Recommending that a buyer obtain title insurance
, B) Advising a seller on the tax implications of a 1031 exchange
C) Preparing a purchase agreement using a form approved by the Montana
Association of Realtors
D) Explaining the difference between joint tenancy and tenancy in common
Answer: Advising a seller on the tax implications of a 1031 exchange
Providing specific tax advice constitutes the unauthorized practice of law. Real
estate licensees may explain legal concepts but cannot provide legal advice or
interpretations that require professional legal judgment.
3. A buyer submits an offer on a property, and the seller signs a counteroffer
that increases the purchase price by $5,000. The buyer never signs the
counteroffer. Which of the following is true regarding the legal status of this
transaction?
A) A binding contract exists because the seller signed the counteroffer
B) No contract exists because the buyer never accepted the counteroffer
C) A binding contract exists under the doctrine of equitable conversion
D) The original offer becomes binding after 72 hours of no response
Answer: No contract exists because the buyer never accepted the counteroffer
A counteroffer operates as a rejection of the original offer and creates a new offer
that requires acceptance by the original offeror. Without the buyer's signature, no
meeting of the minds occurs.
4. A Montana real estate broker has a fiduciary duty to all of the following
parties EXCEPT:
A) The seller in a listing agreement
B) The buyer in a buyer representation agreement
C) The lender providing financing for the transaction
D) A tenant who has entered into a property management agreement
Answer: The lender providing financing for the transaction
Fiduciary duties are owed to clients with whom the broker has an agency
,relationship. Lenders are typically third parties to the transaction and are not
owed fiduciary duties, though brokers must still deal honestly with them.
5. In a commercial real estate transaction, the buyer discovers after closing
that the property's zoning designation does not permit the business
operations the buyer intended. The buyer's due diligence period expired
prior to closing. The most likely outcome is:
A) The seller is liable for fraudulent misrepresentation
B) The buyer has no recourse because they failed to exercise due diligence
C) The broker is liable for negligence
D) The contract is voidable for mistake of law
Answer: The buyer has no recourse because they failed to exercise due diligence
Buyers have a duty to investigate property conditions and zoning matters during
the due diligence period. Failure to do so generally waives any claims against the
seller, absent fraud or active concealment.
6. A Montana licensee is representing both the buyer and the seller in a
residential transaction. The licensee has obtained written informed consent
from both parties. Which of the following actions is the licensee prohibited
from taking in this dual agency scenario?
A) Disclosing the buyer's maximum budget to the seller
B) Preparing the purchase agreement and all addenda
C) Coordinating the home inspection and appraisal
D) Facilitating the closing process with the title company
Answer: Disclosing the buyer's maximum budget to the seller
In dual agency, the licensee must remain neutral and cannot disclose confidential
information from one client to the other. This would breach the duty of
confidentiality and loyalty to the buyer.
, 7. The Montana Real Estate Recovery Account was established primarily to:
A) Compensate clients for any financial loss caused by a licensee
B) Reimburse licensees for unpaid commissions
C) Fund continuing education programs for licensees
D) Provide low-interest loans for first-time homebuyers
Answer: Compensate clients for any financial loss caused by a licensee
The Recovery Account exists to provide compensation to individuals who have
suffered monetary losses due to the misconduct of licensed real estate
professionals. It is a consumer protection mechanism.
8. A property owner installs a new chain-link fence that encroaches 2 feet
onto the neighboring property. The neighbor does not object for 15 years.
Under Montana law, the encroaching owner may have acquired rights
through:
A) Adverse possession only if the fence was built in good faith
B) Prescriptive easement after the statutory period
C) No legal rights because encroachment cannot ripen into ownership
D) Acquiescence if the neighbor acknowledged the boundary
Answer: Prescriptive easement after the statutory period
Montana's statutory period for prescriptive easement is typically 5 years. However,
adverse possession requires payment of taxes and other elements. Prescriptive
easement is more appropriate for the continued use of a small encroachment.
9. A seller fails to disclose that a property was the site of a methamphetamine
laboratory that was professionally remediated five years ago. The
remediation was certified by the Montana Department of Environmental
Quality. The buyer discovers this information after closing. Which statement
is most accurate?
A) The seller has no disclosure obligation because the remediation was
certified
