A Colorado broker represents a buyer purchasing a mountain property. The property relies on a spring for its water supply. The seller claims the spring is a 'tributary spring' and the buyer will have the right to use it. The buyer's broker researches the issue and discovers the spring is classified as a tributary to a fully appropriated stream system. Which of the following best describes the risk this creates for the buyer?
Correct Answer
B) The spring water may be subject to a priority call, potentially requiring the buyer to cease use of the spring to satisfy senior downstream water rights holders
Under Colorado's prior appropriation system (C.R.S. § 37-92-101 et seq.), tributary water sources — including springs that contribute flow to a stream — are subject to the priority system. If the stream to which the spring is tributary is fully appropriated, senior rights holders downstream can place a 'priority call,' requiring junior users (including the buyer's spring use) to cease diverting water. Unless the buyer has a decreed water right with a sufficiently senior priority date, the spring use could be curtailed during dry periods. This is a significant risk that the buyer's broker must communicate clearly.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
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