2.2 Montana Disclosure Requirements

Disclosure questions are heavily weighted on the Montana state portion. The unifying principle is the licensee's duty to disclose known adverse material facts (MCA 37-51-313), layered with specific statutory and federal disclosures.

Agency Relationship Disclosure (MCA 37-51-314)

A licensee must disclose the nature of the relationship in writing:

• Seller's agent: at or before the listing agreement is executed.
• Buyer's agent: at or before the buyer-representation agreement is executed.
• Before sharing or receiving confidential information, and before substantive negotiation.

The disclosure identifies who the licensee represents (or that the licensee is a statutory broker), names the brokerage, and is acknowledged by the consumer.

Seller's Property Disclosure (Owner's Property Disclosure Statement)

Montana does not rely on a single mandatory statewide seller-disclosure form the way some states do; instead, sellers commonly complete an Owner's Property Disclosure Statement (a Montana Association of REALTORS market form), and the licensee's statutory duty to disclose known adverse material facts always applies. In practice, the disclosure is delivered before the buyer is bound so the buyer can evaluate the property's condition.

Typical disclosure categories

Licensee rule (MCA 37-51-313): Even if a seller chooses not to disclose, a licensee who knows of an adverse material fact must disclose it. Silence about a known defect is a violation.

Water Rights Disclosure (the Montana differentiator)

Water is the signature Montana topic. Because much of Montana is arid and agricultural, water rights can be the most valuable attribute of a parcel — and they may be severed and sold separately from the land.

Why it matters

What to disclose / verify

• Whether water rights exist and their type (irrigation, domestic, stock, etc.).
• The source (river, stream, groundwater) and priority date if known.
• Whether the rights transfer with the property or are reserved/severed.
• Easements and covenants affecting water use (ditch rights, headgates).

Exam point: Montana follows the prior appropriation doctrine, not riparian rights. The senior (earlier priority date) appropriator is satisfied first in a shortage.

Mold, Environmental, and Lead Disclosures

Mold disclosure

Montana's mold disclosure statute requires a seller who knows a building has mold to disclose it before or at the time of contracting, and to provide any mold test results and information about remediation performed.

Environmental hazards

Known environmental hazards — underground storage tanks, contamination, hazardous-waste proximity — must be disclosed. Rural Montana parcels often raise well, septic, and underground-tank issues.

Federal lead-based paint (pre-1978)

For housing built before 1978, federal law (the Residential Lead-Based Paint Hazard Reduction Act) requires:

Lead disclosure is federal, so it applies in Montana like everywhere else — distinguish it from Montana-specific water and mold rules.

Licensee Disclosure Duty (MCA 37-51-313) and Stigmatized Property

The licensee's duty is independent of the seller's. Under MCA 37-51-313, a licensee must disclose adverse material facts that the licensee actually knows and that the party does not know and could not discover through ordinary diligence. This includes:

• Known physical defects (failing septic, structural problems).
• Known title/use limitations (easements, boundary disputes).
• The licensee's personal interest in the transaction.

A licensee is generally not required to investigate beyond what is known, but cannot conceal what is known. Many states, including Montana's general approach, treat purely psychological or "stigma" facts (e.g., a prior occupant's illness) differently from physical defects; focus your exam answers on physical and legal adverse material facts that affect value or desirability.

Statute-of-limitations note: Claims related to property condition/disclosure are subject to Montana's general limitations periods; do not assume an indefinite window. The takeaway for the exam is the affirmative duty to disclose known adverse material facts — that is the rule most often tested.

"As-Is" Sales Do Not Erase the Duty

A common misconception worth testing yourself on: an "as-is" clause does not relieve the seller or licensee of the duty to disclose known adverse material facts. "As-is" shifts the burden of discoverable conditions to the buyer (the buyer accepts the property's condition), but it does not permit active concealment or fraud. A licensee who knows the basement floods cannot hide behind an "as-is" sign.

Septic, Well, and Rural Diligence

Because so much Montana property is rural and unsewered, disclosure questions frequently involve on-site systems:

Exam framing: Pair the physical system (well/septic) with its legal counterpart (water right, access easement). A property can have a working well but no valid water right, or a house with no legal access — both are adverse material facts a knowledgeable licensee must disclose.