A Montana residential real estate purchase agreement (“Contract for Sale and Purchase of Real Estate”) is a contract which commits a buyer to an offer to purchase real estate, according to specific terms agreed by the buyer and seller. Negotiated specifics include the purchase price, financing method, closing date, and more.
Do Sellers in Montana Have To Disclose Property Defects?
Montana does require real estate sellers to disclose any material defects with a property. In most cases, this is through a standardized disclosure form provided by local realty agents, but any disclosure which provides the required information is valid.
By mutual agreement, it is possible to waive the use of disclosures. However, the seller always has a duty to disclose all material defects that are not obvious on a careful lay inspection of the property, even if the buyer agrees to take the property “as-is.”
The basic duty to disclose cannot be waived, unless the sale falls under a recognized legal exemption. Montana exempts the following common transfers, among others, from the disclosure form requirement:
- Court-ordered sales and transfers
- Sales by foreclosure or other debt default
- Transfer as part of the execution of a will or estate
- Transfer to a spouse, parent, or child
Required Seller Disclosures in Montana
Montana sellers of residential real estate must make the following disclosures, as appropriate, in order for a real estate purchase agreement to be considered legally binding:
- Real Property Condition Disclosure: Discloses material defects with a property that are known to the seller at the time of sale, and details any potential issues and conditions that may affect the value of the property.
- Condominium Disclosure Addendum: When selling a unit that is part of a larger project, sellers must give the prospective buyer a copy of the Unit Ownership Act and any governing documents that list the rules and regulations prescribed by the association/administration.
- Lead-Based Paint Disclosure: Any home constructed earlier than 1978 must come with a disclosure upon the transfer of the property which includes any information about the presence of lead on the premises, as well as educational materials that communicate the health risks associated with lead exposure.
- Methamphetamine Contamination Disclosure: A dwelling deemed unfit to inhabit due to contamination caused by methamphetamine production requires disclosure from the seller that clearly states the property has not received full remedial action.
- Mold Disclosure: Sellers must provide the following information regarding mold contamination:
- A written statement explaining what it is and how it occurs
- Details on its presence within the property
- Results of any previous testing
- Newly Constructed Residences Disclosure: Only applicable to properties that are new and have never been occupied, this disclosure calls for sellers/developers to hand over documentation to the purchaser that is relevant to any inspections/tests conducted by the general contractor. An express warranty with the minimum expiration date of 1 year must also be delivered to the future owner upon entering into an agreement.
- Radon Disclosure: The disclosure statement linked in the title should be included within the content of the purchase agreement and acknowledged by the buyer. If the building for sale has been tested for radon gas, the seller is also obligated to present the buyer with the results of the examination.
- Water Rights Disclosure: The state mandates that the seller of a residential dwelling must inform the purchasing party whether or not the property retains any water rights, and whether these rights will be conveyed to the new owner upon the transfer of property.
Sources
- 1 Mont. Stat. Ann. § 70-20-502
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(1) In any transfer of residential real property in the state, the seller shall provide a disclosure statement to a buyer disclosing any adverse material facts that concern the residential real property and of which the seller has actual knowledge. The disclosure statement must be provided by the seller prior to or contemporaneously with the execution of a contract, either directly or via the real estate agent or other authorized representative of the seller, and must be provided to the buyer or the real estate agent or other authorized representative of the buyer. The disclosure statement must contain, at a minimum, any of the following information of which the seller has actual knowledge:(a) matters affecting legal ownership or title to the residential real property or the seller’s ability to transfer the residential real property;(b) matters affecting water service to the residential real property or the water source serving the residential real property;(c) matters affecting the system for wastewater treatment that serves the residential real property;(d) information concerning utility connections for the residential real property;(e) matters affecting the buildings or other structures designed or intended for occupancy as a residence, including water intrusion, and problems or other issues related to any structural system or improvement, including any well, septic system, roof, foundation, plumbing, electrical system, heating system, windows, doors, or appliances;(f) whether any substantial additions or alterations have been made to the residential real property without a building permit;(g) whether there are any hazardous materials or pest infestations located on the residential real property or in the immediate area;(h) whether there are any problems with settling, soil, standing water, or drainage on the residential real property or in the immediate area;(i) whether any portion of the residential real property has been tested or treated for asbestos, radon gas, lead-based paint, mold, methamphetamine, fuel or chemical storage tanks, or contaminated soil or water; and(j) any other adverse material fact, including environmental issues, structural system issues, mechanical issues, legal issues, physical issues, or others not listed above of which the seller has actual knowledge concerning the residential real property.(2) The disclosure statement must also include statements substantially similar to the following:(a) that the disclosure statement constitutes a statement of the conditions of the residential real property and information concerning the residential real property actually known by the seller;(b) that the seller or the real estate agent or other authorized representative of the seller is not obligated to investigate the residential real property in preparing the disclosure statement and that unless the buyer is otherwise advised in writing, the seller, other than having lived at or owning the property, possesses no greater knowledge than that which could be obtained by a careful inspection of the property by the buyer;(c) that unless the buyer and seller have otherwise agreed in writing, any contract is not effective until 3 days after the buyer has received the disclosure statement, and during that delay the prospective buyer may withdraw or rescind any contract to purchase the residential real property without penalty;(d) that the disclosure statement is not a warranty of any kind by the seller or the real estate agent or other authorized representative of the seller in the transaction involving the transfer of the residential real property; and(e) that the disclosure statement is not a substitute for any inspections conducted by or for the buyer and that the buyer is encouraged to consult independent inspectors to aid in the buyer’s due diligence process prior to the purchase of the residential real property.
Source Link - 2 Mont. Stat. Ann. § 70-20-503
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The written disclosure statement set forth in 70-20-502(1) is not required for the following transfers of residential real property:
(1) transfers pursuant to a court order, including but not limited to a transfer ordered by a probate court during the administration of a decedent’s estate, a transfer pursuant to a writ of execution, a transfer by a trustee in bankruptcy, a transfer as a result of the exercise of the power of eminent domain, or a transfer that results from an order for specific performance of a contract or other agreement between persons;
(2) transfers between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to this decree;
(3) transfers to a mortgagee by a mortgagor or successor in interest who is in default, sales to a beneficiary of a deed of trust by a trustor or successor in interest who is in default, any foreclosure sale after default, any foreclosure sale after default in an obligation secured by a mortgage, a sale under a power of sale or any foreclosure sale under a decree of foreclosure after default in an obligation secured by a deed of trust or secured by any other instrument containing a power of sale, sales by a mortgagee or a beneficiary under a deed of trust who has acquired the residential real property at a sale conducted pursuant to a power of sale under a mortgage or deed of trust or a sale pursuant to a decree of foreclosure or has acquired the residential real property by a deed in lieu of foreclosure, sales to the legal owner or lienholder of a manufactured home or mobile home by a registered owner or successor in interest who is in default, or sales by reason of any foreclosure of a security interest in a manufactured home or mobile home;
(4) transfers from one co-owner to one or more other co-owners;
(5) transfers to a person who is a spouse, child by blood or adoption, or parent of the seller or any other owner of the residential real property; and
(6) transfers when in the contract the buyer has waived the right to receive a disclosure statement at the time of submitting the offer to purchase to the seller.
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