Free Montana Contracts Practice Test — LicenseIQ

Question 1

Under a land contract (contract for deed), during the payment period the buyer holds:

Accepted Answer

In an installment/land contract the buyer has equitable title and possession; the seller keeps legal title until the final payment.

Question 2

A seller agrees with a broker that the seller will receive $200,000 and the broker keeps anything above that. The home sells for $240,000. This arrangement is a:

Accepted Answer

In a net listing the broker's fee is the excess over a set net ($40,000 here). It encourages the broker to underprice and is illegal in many states, including NJ.

Question 3

A Montana licensee holds a raffle for a TV, open only to buyers who sign a buyer broker agreement. Under the Board's rules this is:

Accepted Answer

MCA 37-51-321(1)(m) prohibits lotteries to influence buyers, and ARM 24.210.641 extends this to raffles and contests. Door prizes are allowed only when no payment or contract is required.

Question 4

A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

Accepted Answer

Implied agency arises from conduct; the agent then owes full fiduciary duties. Express agency is created by stated agreement, ideally in writing.

Question 5

Under Montana law and Board rules, a licensee must have which document before acting as a buyer agent?

Accepted Answer

MCA 37-51-313(10) requires an appropriate written buyer broker agreement before acting as a buyer agent, and ARM 24.210.641 makes acting as a buyer agent without one unprofessional conduct.

Question 6

A contract that has all legal elements but where one party may cancel is:

Accepted Answer

A voidable contract is valid but one party may rescind it (e.g., a minor, or a party induced by misrepresentation or duress). A void contract lacks an essential element and has no legal effect.

Question 7

Under Board rules, when may a Montana licensee announce that an offer has been accepted?

Accepted Answer

ARM 24.210.641 prohibits announcing an accepted offer without possession of a party-signed acceptance. Verbal or texted agreement is not enough.

Question 8

A buyer pays $10,000 for a 12-month option to buy a house for $250,000. During the option period:

Accepted Answer

The option binds only the optionor. The optionee may exercise or let it lapse (forfeiting the option money).

Question 9

A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

Accepted Answer

A counteroffer is a rejection and a new offer; the original offer cannot be revived by the buyer.

Question 10

Under Board rules, a Montana listing agent may tell other buyer agents:

Accepted Answer

ARM 24.210.641 prohibits a listing agent from disclosing the bidder, amount, or terms of an offer, while permitting disclosure that an offer exists.

Question 11

A licensee persuades a seller to back out of a signed contract so the licensee's own buyer can buy at a higher price. This violates the prohibition on:

Accepted Answer

MCA 37-51-321(1)(j) prohibits inducing a party to a contract of sale or lease to break it in order to substitute a new contract with another principal.

Question 12

An offer or counteroffer becomes a binding contract when:

Accepted Answer

Acceptance must be unconditional and communicated back to the offeror; any change creates a counteroffer instead.

Question 13

A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

Accepted Answer

At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.

Question 14

A Montana listing agreement expires on August 31 without a sale. When did the seller agent relationship end?

Accepted Answer

MCA 37-51-313(11)(a) ends the relationship at the earliest of performance, the expiration date in the agreement, or an authorized termination. Expiration came first here.

Question 15

An agent signs a contract to sell real property on behalf of the owner. Under MCA 28-2-903, for the contract to bind the owner:

Accepted Answer

MCA 28-2-903(1)(d) provides that when an agent makes a sale or long-lease agreement, the agent's authority must be in writing and subscribed by the party to be charged.

Question 16

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 17

A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

Accepted Answer

RESPA prohibits kickbacks and unearned referral fees between settlement service providers and real estate licensees, even if disclosed.

Question 18

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 19

A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

Accepted Answer

In a unilateral contract only one party is bound (to pay if the act is performed); the other party has no obligation to act. Most real estate contracts are bilateral.

Question 20

A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

Accepted Answer

Specific performance compels the breaching party to perform; it is available because land is unique. The buyer could alternatively seek monetary damages.

Question 21

Under the statute of frauds, a real estate sales contract must be:

Accepted Answer

The statute of frauds requires real estate sales contracts to be in writing and signed to be enforceable.

Question 22

A financing contingency in a purchase agreement protects the:

Accepted Answer

A financing (mortgage) contingency lets the buyer cancel without penalty if unable to secure the specified loan by the deadline.

Question 23

A broker sells a ranch after an oral agreement with the owner for a 5% commission. The owner refuses to pay. Under Montana law the broker:

Accepted Answer

MCA 28-2-903(1)(e) requires a written agreement, subscribed by the party to be charged, to employ an agent or broker to buy or sell real estate for compensation.

Question 24

Under Montana's internet advertising rule, after a material change in a listing (such as going under contract), the licensee's online ad must be updated within:

Accepted Answer

ARM 24.210.430(5) requires internet ads to be current and updated within seven days of a material change, with created and last-updated dates shown.

Question 25

A buyer agent calls a seller directly to negotiate, knowing the seller has an exclusive listing with another broker and without the listing broker's agreement. This is:

Accepted Answer

MCA 37-51-321(1)(l) prohibits negotiating directly with a party the licensee knows is bound by an exclusive listing with another broker. Board rules require any agreement allowing direct negotiation to be documented.

Montana real estate contracts practice test

1. Under a land contract (contract for deed), during the payment period the buyer holds:

2. A seller agrees with a broker that the seller will receive $200,000 and the broker keeps anything above that. The home sells for $240,000. This arrangement is a:

3. A Montana licensee holds a raffle for a TV, open only to buyers who sign a buyer broker agreement. Under the Board's rules this is:

4. A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

5. Under Montana law and Board rules, a licensee must have which document before acting as a buyer agent?

6. A contract that has all legal elements but where one party may cancel is:

7. Under Board rules, when may a Montana licensee announce that an offer has been accepted?

8. A buyer pays $10,000 for a 12-month option to buy a house for $250,000. During the option period:

9. A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

10. Under Board rules, a Montana listing agent may tell other buyer agents:

11. A licensee persuades a seller to back out of a signed contract so the licensee's own buyer can buy at a higher price. This violates the prohibition on:

12. An offer or counteroffer becomes a binding contract when:

13. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

14. A Montana listing agreement expires on August 31 without a sale. When did the seller agent relationship end?

15. An agent signs a contract to sell real property on behalf of the owner. Under MCA 28-2-903, for the contract to bind the owner:

16. A licensee representing the seller who learns the buyer will pay more than the offer must:

17. A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

18. Under an open listing, the seller owes a commission to:

19. A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

20. A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

21. Under the statute of frauds, a real estate sales contract must be:

22. A financing contingency in a purchase agreement protects the:

23. A broker sells a ranch after an oral agreement with the owner for a 5% commission. The owner refuses to pay. Under Montana law the broker:

24. Under Montana's internet advertising rule, after a material change in a listing (such as going under contract), the licensee's online ad must be updated within:

25. A buyer agent calls a seller directly to negotiate, knowing the seller has an exclusive listing with another broker and without the listing broker's agreement. This is:

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