MT Real Estate key terms

The state agency within the Montana Department of Labor and Industry that issues real estate licenses, adopts the rules licensees must follow, investigates complaints against licensees, and imposes discipline such as fines, suspension, or revocation.

A person holding a Montana real estate broker license who may operate a real estate office, supervise affiliated salespersons and property managers, and remains accountable to the Board for the office's transactions, trust funds, and records.

A Montana licensee who performs real estate acts for compensation only while affiliated with and supervised by a licensed broker; a salesperson may not operate independently or hold client money outside the broker's trust account.

A separate bank account a broker uses to hold money belonging to other people, such as earnest money and security deposits, kept apart from the broker's own funds and disbursed only as the transaction or the law allows.

A relationship created when one person, the agent, agrees to act on behalf of another, the principal, subject to the principal's direction, which creates fiduciary duties and legal consequences for both parties.

The party who has an agency relationship with a licensee and therefore receives fiduciary duties, full loyalty, and confidential treatment; in the same deal the other side is a customer, not a client.

A person a licensee helps in a transaction without any agency relationship, who is entitled to honesty, accurate information, and fair dealing but not to loyalty or confidential advice.

The heightened legal obligations an agent owes a client, commonly summarized as care, obedience, accounting, loyalty, and disclosure, requiring the agent to place the client's interests ahead of the agent's own.

A situation in which one licensee represents both buyer and seller, or both landlord and tenant, in the same transaction; it requires informed written consent from both parties and limits how strongly the agent may advocate for either side.

The most complete ownership estate in land, lasting indefinitely, freely transferable by deed or will, and limited only by government powers such as taxation, eminent domain, police power, and escheat.

An ownership interest lasting only for the lifetime of a named person; the holder may possess and use the property but may not permanently impair its value, and the interest ends when that person dies.

A nonpossessory right to use another person's land for a specific purpose, such as a driveway or utility line; it burdens the property it crosses and does not transfer ownership of the land itself.

Any right, interest, lien, or claim held by someone other than the owner that burdens or limits title to real property, including easements, mortgages, liens, and recorded deed restrictions.

A legal claim against property that uses the property as security for a debt or obligation; a lien may be voluntary, such as a mortgage, or involuntary, such as a tax or mechanic's lien.

Local government regulation that divides land into districts and specifies permitted uses, lot sizes, building heights, and density; it is an exercise of the police power and may not go so far as to take property without compensation.

A private promise written into deeds or subdivision plats that limits how land may be used, such as minimum house size or no commercial use; it is enforceable between owners but may not discriminate against protected classes.

The Montana water rights doctrine under which the first person to put water to a beneficial use obtains a priority right measured by the date of appropriation, regardless of whether the water source touches that person's land.

The two essential steps in forming a contract: one party makes a definite proposal and the other agrees to its exact terms. Any change to the terms creates a counteroffer rather than an acceptance.

A contract condition that must be satisfied before a party is obligated to complete the deal, such as a financing, inspection, or appraisal contingency; if the condition fails, that party may cancel without penalty.

The legal rule requiring certain contracts, including contracts for the sale of real property and leases longer than one year, to be in writing and signed by the party to be charged before they can be enforced.

A deposit a buyer gives to show good faith and bind the purchase contract; it is typically held in the broker's trust account and later applied to the price, returned to the buyer, or forfeited under the contract terms.

A three-party security instrument in which the borrower conveys title to a trustee to hold as security for a lender until the debt is paid; it is common in Montana and is foreclosed by trustee's sale rather than through court action.

The written promise by a borrower to repay a loan on stated terms, including principal, interest rate, payment schedule, and maturity; the note is the primary evidence of the debt while the mortgage or deed of trust secures it.

The relationship, expressed as a percentage, between the loan amount and the property's appraised value or sale price, whichever is lower; lenders use it to gauge risk and to set mortgage insurance requirements.

The most probable price a property should bring in a competitive and open market under all conditions of a fair sale, with buyer and seller acting prudently and knowledgeably and the price unaffected by undue pressure.

An appraisal method that estimates value by comparing the subject property to recently sold similar properties and adjusting those sale prices for differences in features, location, condition, and date of sale.

A rate that converts a property's net operating income into an estimate of value; value equals net operating income divided by the capitalization rate, and a higher rate generally signals greater perceived risk.

The reasonably probable use of a property that is legally permissible, physically possible, financially feasible, and produces the greatest value; it frames every appraisal even when the current use is something else.

A deed in which the grantor guarantees clear title and promises to defend the grantee against title defects, including defects that arose before the grantor owned the property; it carries the broadest warranties.

A deed that transfers whatever interest the grantor may have in the property without any warranty of title, leaving the grantee to bear the risk of unknown defects or competing claims.

The act of filing a deed, lien, or other document with the county clerk and recorder so that it becomes part of the public record and gives constructive notice of the interest to the world.

A one-time policy protecting a buyer or lender against losses from title defects that existed before the policy date but were missed in the title search, such as forged documents, undisclosed heirs, or prior liens.

A written form Montana residential sellers complete to tell buyers about known material defects and conditions, such as roof problems, water damage, or boundary disputes, before the buyer becomes committed to the purchase.

A group of people whom fair housing laws shield from discriminatory treatment in the sale, rental, or financing of housing, including classification by race, color, religion, sex, national origin, familial status, and disability.

The illegal practice of guiding buyers or renters toward or away from particular neighborhoods because of race, religion, national origin, or another protected characteristic, even when the motive is described as helpful.

An antitrust violation in which competitors agree on commission rates or fees instead of each firm setting its own; brokers may discuss general market conditions but may never agree with rivals on pricing.

A federal requirement that sellers and landlords of housing built before 1978 disclose known lead-based paint hazards and give buyers or tenants the EPA pamphlet plus a period to conduct testing.

Money a tenant gives a landlord to cover possible damage or unpaid rent, held for the tenant's benefit and returned with a written accounting of deductions within the time Montana law allows after the tenancy ends.

A situation in which a landlord's failure to maintain the property makes it substantially unfit for its intended use, allowing the tenant to treat the lease as ended and move out without further rent liability.

The division of an expense or income item, such as property taxes, rent, or loan interest, between buyer and seller at closing in proportion to the number of days each party owned or occupied the property.