A developer in Colorado purchases a large parcel of land and plans to build a 200-unit residential subdivision. The parcel has no existing water rights. The developer plans to rely on a new well to supply the subdivision. A buyer's broker advising a prospective lot purchaser should be aware that which of the following is the most significant water-related risk for buyers in this subdivision?
Correct Answer
D) Subdivision wells may be subject to curtailment during a priority call if they are tributary to an over-appropriated stream and lack senior water rights
Under Colorado's prior appropriation system (C.R.S. § 37-92-101 et seq.), wells that are hydraulically connected (tributary) to a stream system are subject to the priority system. A new well drilled for a 200-unit subdivision would receive a junior priority date. During a priority call on an over-appropriated stream, the State Engineer can order junior wells to stop pumping to protect senior surface water rights. This is a known and significant risk in many Colorado river basins. Buyers' brokers should ensure buyers understand this risk and investigate whether the water supply is legally secure.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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