Sandra is purchasing a 40-acre ranch property in rural Ravalli County, Montana. The seller's deed of trust lists specific water rights appurtenant to the land. Sandra's lender is requiring a full title review before approving the loan. Which Montana-specific issue is MOST critical for the lender and Sandra to address during the financing and title review process?
Correct Answer
D) Whether the appurtenant water rights are properly documented, disclosed, and included in the transfer
Under the Montana Water Use Act (MCA Title 85, Chapter 2), water rights in Montana are governed by the prior appropriation doctrine and are appurtenant to land but can be separately conveyed. In a rural property transaction, the lender must confirm that appurtenant water rights are properly documented with the Montana Department of Natural Resources and Conservation (DNRC), disclosed in the transaction, and included in the deed transfer. Undisclosed or missing water rights can significantly impair the property's value and the lender's collateral security.
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Related Topics & Key Terms
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Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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