Montana Real Estate Broker Exam — All Questions

In Montana, water rights are:

• a.Always transferred automatically with any deed and never separate
• b.Regulated only by the federal government
• c.Governed by prior appropriation and may be a separate, valuable property interest✓
• d.Irrelevant to real estate value

Montana water rights are governed by the prior-appropriation doctrine and can be a separate, valuable property interest tied to irrigation, livestock, or other uses. Whether and how water rights transfer with the land is material to value, so a broker should ensure the parties understand how the rights are being handled.

A buyer purchasing Montana land should understand that mineral rights:

• a.Are always included with the surface estate
• b.May be severed and owned separately from the surface, so the buyer may not receive them✓
• c.Cannot be owned by anyone
• d.Are licensed by the Board of Realty Regulation

Mineral rights, including oil and gas, may be severed from the surface estate and owned separately, so a buyer of the surface may not automatically receive them. A severed mineral estate can affect the surface owner's use and value. Brokers should disclose known facts and advise buyers to investigate the mineral title.

When water or mineral rights on a Montana property are severed or uncertain, the licensee should:

• a.Say nothing to avoid alarming the buyer
• b.Guarantee the buyer will receive all rights
• c.Wait until after closing to mention it
• d.Disclose known material facts and recommend the buyer investigate the title✓

Montana licensees must disclose known material facts and must not conceal them. Because severed or uncertain water or mineral rights can be material to a buyer's decision, the licensee should disclose what is known and recommend the buyer investigate the title with appropriate professionals, rather than staying silent or making guarantees.