Water Rights in Commercial Real Estate Sales: Jurisdictional Differences, Due Diligence Requirements, Key Provisions

Description

The term water rights refers to a property's legal access to a water source including a river, lake, or underground aquifer. In any commercial real estate sales transaction, understanding water rights tied to the property is critical because these rights affect the property's value and how the property may be used.

This is even more significant for businesses in certain industries such as manufacturing and agriculture that may rely heavily on water access. And given that water rights may not be insurable by title insurance, it is imperative that counsel understand due diligence requirements related to water rights and key provisions for purchase and sale agreements.

Key due diligence considerations include: (1) the extent of the water rights being conveyed in the transaction; (2) whether the available water supply will sufficiently fill business needs; (3) regulatory considerations such as any necessary permits, certifications, or environmental requirements; (4) maps/aerial photos or surveys of the property for any water features that may be on the property; and (5) in what manner water may be used on the property including whether/where it may be diverted.

Listen as our expert panel examines the importance of water rights due diligence in commercial real estate sales transactions. The panel will discuss water rights doctrines and how these are implemented in various jurisdictions and impact due diligence. The panel will also offer best practices for drafting contractual provisions related to water rights for the transaction.