A buyer and seller in Bozeman, Montana execute a purchase agreement for a residential property. The agreement states that the seller's deed of trust securing a prior loan will be paid off at closing. At closing, the title company discovers the existing lender has not yet issued a payoff statement. Under Montana law, which instrument is most likely used to secure the seller's existing mortgage obligation in Montana?
Correct Answer
B) A deed of trust
Under the Montana Trust Indenture Act (MCA Title 71, Chapter 1, Part 3), deeds of trust are the primary security instrument used in Montana real estate transactions. Unlike many eastern states that use traditional mortgages, Montana lenders and borrowers use deeds of trust, which involve three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee. The deed of trust is the standard instrument the seller would have used to secure their existing loan.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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