Montana Real Estate Salesperson Exam — All Questions

Which body licenses and regulates real estate salespersons and brokers in Montana?

• a.The Montana Department of Revenue
• b.The Montana Association of Realtors
• c.The county clerk and recorder
• d.The Montana Board of Realty Regulation✓

Real estate licensing in Montana is administered by the Board of Realty Regulation, which operates within the Department of Labor and Industry under the state's real estate license law (Title 37, Chapter 51). The Board issues, renews, and disciplines licenses and adopts rules. A trade association such as the Montana Association of Realtors is a private group with no licensing authority.

In Montana, a salesperson may perform licensed real estate activity only when:

• a.Licensed under and supervised by a licensed broker✓
• b.Registered with the county treasurer
• c.Operating independently once licensed
• d.Approved individually by the Board for each sale

A Montana salesperson's license is valid only while the salesperson is licensed under and supervised by a licensed broker. Licensed activity is conducted for the supervising broker, who is responsible for supervision and trust funds. A salesperson may not accept compensation directly from a consumer; commissions flow through the supervising broker.

The Montana Board of Realty Regulation may discipline a licensee for which of the following?

• a.Referring a client to a licensed inspector
• b.Commingling client trust funds with the broker's personal funds✓
• c.Belonging to a professional association
• d.Advertising a listing with the owner's consent

Commingling or converting client trust money is a serious violation of Montana license law and a common basis for discipline, along with fraud, misrepresentation, and dishonest dealing. The Board may reprimand, fine, suspend, or revoke a license after due process. Authorized advertising, ordinary referrals, and association membership are not violations.

A Montana seller is liable for a misrepresentation made by the seller's agent when:

• a.the misrepresentation concerned the property's condition
• b.the agent acted within the scope of the listing agreement
• c.the buyer relied on the statement to the buyer's detriment
• d.the seller had actual knowledge of the misrepresentation✓

Montana's vicarious liability statute cuts off automatic liability: a party is not liable for an agent's or subagent's misrepresentation unless the party had actual knowledge of it, or the agent was repeating a misrepresentation the party had made. Cite: Mont. Code Ann. 37-51-315(1).

A Montana broker is liable for a subagent's misrepresentation if:

• a.the subagent is the broker's own employee✓
• b.the subagent's error was discovered before the closing
• c.the subagent is licensed with a different brokerage firm
• d.the broker ratifies the sale by accepting a commission

A Montana broker escapes liability for a subagent's misrepresentation unless the broker had actual knowledge of it, the subagent is the broker's employee rather than an independent contractor, or the statement repeats one the broker made. Cite: Mont. Code Ann. 37-51-315(2).

Montana law requires a broker or salesperson holding an active license to:

• a.post a $25,000 surety bond with the department each year
• b.pay $2,500 into the state real estate recovery account
• c.maintain continuous professional liability (E&O) coverage✓
• d.carry a general liability policy naming the board insured

Montana requires continuous professional liability coverage for the whole period of active licensure, obtainable through the board-approved group policy, independently, or through the affiliated firm. The real estate recovery account was repealed effective February 1, 2021. Cite: Mont. Code Ann. 37-51-325(1), (2).

Montana's minimum limits for an independently issued licensee errors and omissions policy are:

• a.$100,000 per claim and $300,000 annual aggregate✓
• b.$50,000 per claim and $100,000 annual aggregate
• c.$250,000 per claim and $500,000 annual aggregate
• d.$100,000 per claim and $1 million annual aggregate

An individually purchased Montana policy must carry at least a $100,000 per-claim limit, a $300,000 annual aggregate, and a deductible no greater than $2,500 per claim. A policy issued to the firm instead carries a $1 million aggregate. Cite: Mont. Code Ann. 37-51-325(6), (7).

A Montana broker who operates under a national franchise name must:

• a.print the franchisor's corporate headquarters address in each advertisement
• b.obtain the board's written approval of the franchise agreement
• c.work the broker's own name or trade name into the franchise name✓
• d.advertise only under the franchisor's nationally registered name

Montana treats franchise advertising that omits the local identity as misleading advertising and therefore unprofessional conduct: the broker must incorporate the broker's own name, or the trade name the office is known by, into the franchise name or logotype. Cite: Mont. Code Ann. 37-51-321(1)(a).

Using the term 'realtor' when not entitled to do so is, under Montana license law:

• a.grounds for a contractual fine payable to the franchise owner
• b.unprofessional conduct the board may sanction the license for✓
• c.permitted whenever the licensee belongs to any trade association
• d.a civil infraction that the county attorney prosecutes locally

Montana names it directly: using the term realtor without authority, or using another trade name or insignia of membership in an organization the licensee does not belong to, is unprofessional conduct subject to license sanction. Cite: Mont. Code Ann. 37-51-321(1)(d).

A Montana salesperson takes a buyer's earnest money check. The salesperson must:

• a.deposit it in the salesperson's own account within 24 hours
• b.place it with the supervising broker as soon as practicable✓
• c.hold it until the seller has accepted the offer in writing
• d.endorse it to the closing agent and notify the state board

Montana makes it unprofessional conduct for a salesperson to fail to place deposit money or other entrusted money in the custody of the supervising broker as soon after receipt as is practicably possible, with an exception for the salesperson's own personal transaction. Cite: Mont. Code Ann. 37-51-321(1)(r).

Montana makes it unlawful to advertise property belonging to others unless:

• a.the owner has orally authorized that particular advertisement
• b.a signed listing agreement is valid on the ad's date✓
• c.the property is also being advertised by a listing service
• d.the ad names the Montana county where the property lies

Montana requires a signed listing agreement from the owner that is valid on the date the advertisement runs. The statute separately allows a broker to include properties listed by other brokers who will cooperate on the sale. Cite: Mont. Code Ann. 37-51-321(2).

Paying a commission on a Montana sale to someone who holds no Montana license is:

• a.a felony that the Montana Department of Justice prosecutes
• b.permitted when the supervising broker approves it in writing
• c.permitted whenever the recipient resides outside of Montana
• d.unprofessional conduct unless the statute exempts the payment✓

Montana lists paying a commission in connection with a real estate sale or transaction to a person not licensed as a Montana broker or salesperson, unless exempted, among the practices that constitute unprofessional conduct. Cite: Mont. Code Ann. 37-51-321(1)(p).

What follows when a Montana licensee lets required professional liability coverage lapse?

• a.the license converts automatically to inactive status that day
• b.the lapse is itself unprofessional conduct under the license law✓
• c.the board assesses a daily citation fine until the coverage is restored
• d.nothing happens, because the coverage is voluntary in Montana

Montana added failure to maintain continuous professional liability insurance meeting 37-51-325 to the statutory list of unprofessional conduct, and a licensee who cannot produce proof of coverage on request also faces administrative suspension. Cite: Mont. Code Ann. 37-51-321(1)(w); 37-51-325(8).

An unlicensed person who negotiated a Montana sale sues for the commission. The court will:

• a.award the fee to the plaintiff on a quantum meruit theory
• b.cut the fee in half and impose a statutory penalty
• c.send the fee claim to the Board of Realty Regulation
• d.refuse it, since the plaintiff cannot prove licensure✓

Montana bars the courthouse door: no person acting as a broker or salesperson may bring or maintain an action to collect compensation without first alleging and proving that the person was duly licensed when the claim arose. Cite: Mont. Code Ann. 37-51-401.

A Montana licensee's duty about sexual or violent offender registration information is limited to:

• a.handing the buyer a printed registry report at the closing
• b.searching the state offender registry before every showing
• c.warning buyers of any registrant living within a mile of it
• d.saying the information may be kept, and what the licensee knows✓

Montana caps this duty by statute. The licensee must disclose that registration information may be maintained and by whom, and must disclose any actual knowledge the licensee has of registration information pertaining to the property. Cite: Mont. Code Ann. 37-51-105.