Free Montana State Law Practice Test — LicenseIQ

Question 1

An unlicensed homeowner tells a salesperson, 'Go ahead and advertise my house.' No listing agreement is signed. If the salesperson openly advertises it, she:

Accepted Answer

MCA 37-51-321(2)(a) makes it unlawful to openly advertise property belonging to others without a signed listing agreement valid on the date of the ad. The exceptions cover cooperating brokers' listings and owner-posted website ads.

Question 2

The deed clause that defines the extent of the estate granted, often beginning 'to have and to hold,' is the:

Accepted Answer

The habendum clause defines the estate conveyed; the granting clause contains the words of conveyance.

Question 3

Under Board rules, a Montana licensee who contacts an owner seeking information about the owner's property must:

Accepted Answer

ARM 24.210.641 makes it unprofessional conduct to fail to disclose licensee status when first seeking information about a property, and to fail to disclose licensee identity at first contact.

Question 4

A Montana home sells for $460,000. The listing brokerage's commission is 2.5%, and the listing salesperson receives 65% of it. What is the salesperson's share?

Accepted Answer

Brokerage commission: $460,000 x 0.025 = $11,500. Salesperson's share: $11,500 x 0.65 = $7,475. $11,500 is the brokerage total and $4,025 is the brokerage's retained 35%.

Question 5

When may a Montana broker take a commission out of earnest money held in trust?

Accepted Answer

ARM 24.210.426(3)(i) prohibits taking commission from earnest money until the transaction closes or terminates.

Question 6

Which activity may an unlicensed assistant generally perform?

Accepted Answer

Unlicensed staff may perform clerical tasks like typing licensee-prepared ads, but may not compose ads, negotiate or show property.

Question 7

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 8

A developer still holds a majority of the votes in a Montana condominium association. A buy-sell agreement for a unit cannot take effect until how long after the buyer receives the requested act, bylaws, and regulations?

Accepted Answer

MCA 70-23-613 requires the buy-sell agreement to state that it is not effective until 72 hours after the buyer receives the documents, during which the buyer may withdraw without penalty. '3 business days' is not the statutory phrasing and can be longer than 72 hours.

Question 9

Which statement about Montana's radon disclosure law is correct?

Accepted Answer

MCA 75-3-606 provides that compliance shields the seller and seller agent from liability based on radon, that providing results is not a warranty, and that no rescission right is created unless the contract provides one. The section addresses sales.

Question 10

A licensee's advertising must generally:

Accepted Answer

Ads must identify the licensed broker/brokerage; salespersons cannot advertise under only their own name.

Question 11

A home sells for $520,000 with a 5% commission. The listing broker pays 2.5% to the buyer's broker and splits the listing side 60/40 with the listing salesperson (salesperson gets 60%). How much does the listing salesperson earn?

Accepted Answer

Total = $520,000 x 0.05 = $26,000. Buyer broker gets 2.5% = $13,000, leaving $13,000 for the listing side. Salesperson = $13,000 x 0.60 = $7,800.

Question 12

A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

Accepted Answer

Money belonging to others goes into a trust account; depositing it in an operating account is commingling.

Question 13

A salesperson wants to buy a FSBO home for his own investment. He must:

Accepted Answer

A licensee acting as a principal must disclose licensed status, because the licensee has superior knowledge and expertise.

Question 14

Under Montana's Small Tract Financing Act, a trust indenture may be used to secure property of not more than:

Accepted Answer

MCA 71-1-304 limits trust indentures under the act to real property not exceeding 40 acres.

Question 15

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 16

Which is the most common and desirable way a real estate sales contract terminates?

Accepted Answer

Contracts ideally end by performance. They can also end by mutual agreement, impossibility, operation of law, or breach.

Question 17

Under Montana's definition of broker, which activity done for another and for compensation requires a license?

Accepted Answer

MCA 37-51-102 includes collecting rents in the definition of broker. Newspapers, oil and gas leasing, and court-appointed probate appraisers are exempt under 37-51-103.

Question 18

A licensee may manage property for an owner for a fee only if there is:

Accepted Answer

Property management agreements must be written and signed; they make the manager a general agent and define duties, authority and fees.

Question 19

A seller wants to net $250,000 after paying a 6% commission and $6,000 in other closing costs. To the nearest dollar, what must the sale price be?

Accepted Answer

Net + other costs = $256,000, which equals 94% of the price (100% - 6%). Price = $256,000 / 0.94 = $272,340.43, about $272,340. Adding 6% to $256,000 ($271,360) understates the price.

Question 20

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 21

A state charges a transfer tax of 0.5% on the first $100,000 of the price and 1.5% on the amount above $100,000. What is the tax on a $320,000 sale?

Accepted Answer

First $100,000 x 0.005 = $500; remaining $220,000 x 0.015 = $3,300; total = $3,800.

Question 22

Which action may a life tenant take WITHOUT the remainderman's consent?

Accepted Answer

A life tenant may occupy or lease the property for the duration of the life estate but cannot sell, mortgage or commit waste that harms the remainderman's future interest.

Question 23

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 24

Which statement about FHA-insured loans is correct?

Accepted Answer

FHA loans are made by approved lenders and insured by FHA, with down payments as low as 3.5% and mortgage insurance premium (MIP) required on all FHA loans, for 1-4 family homes.

Question 25

On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

Accepted Answer

Earnest money and loan proceeds are sources of funds that reduce what the buyer must bring, so they are buyer credits.

Montana real estate state law practice test

1. An unlicensed homeowner tells a salesperson, 'Go ahead and advertise my house.' No listing agreement is signed. If the salesperson openly advertises it, she:

2. The deed clause that defines the extent of the estate granted, often beginning 'to have and to hold,' is the:

3. Under Board rules, a Montana licensee who contacts an owner seeking information about the owner's property must:

4. A Montana home sells for $460,000. The listing brokerage's commission is 2.5%, and the listing salesperson receives 65% of it. What is the salesperson's share?

5. When may a Montana broker take a commission out of earnest money held in trust?

6. Which activity may an unlicensed assistant generally perform?

7. 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:

8. A developer still holds a majority of the votes in a Montana condominium association. A buy-sell agreement for a unit cannot take effect until how long after the buyer receives the requested act, bylaws, and regulations?

9. Which statement about Montana's radon disclosure law is correct?

10. A licensee's advertising must generally:

11. A home sells for $520,000 with a 5% commission. The listing broker pays 2.5% to the buyer's broker and splits the listing side 60/40 with the listing salesperson (salesperson gets 60%). How much does the listing salesperson earn?

12. A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

13. A salesperson wants to buy a FSBO home for his own investment. He must:

14. Under Montana's Small Tract Financing Act, a trust indenture may be used to secure property of not more than:

15. 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:

16. Which is the most common and desirable way a real estate sales contract terminates?

17. Under Montana's definition of broker, which activity done for another and for compensation requires a license?

18. A licensee may manage property for an owner for a fee only if there is:

19. A seller wants to net $250,000 after paying a 6% commission and $6,000 in other closing costs. To the nearest dollar, what must the sale price be?

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

21. A state charges a transfer tax of 0.5% on the first $100,000 of the price and 1.5% on the amount above $100,000. What is the tax on a $320,000 sale?

22. Which action may a life tenant take WITHOUT the remainderman's consent?

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

24. Which statement about FHA-insured loans is correct?

25. On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

Sources