A buyer and seller in Farmington execute a purchase agreement for a property that includes a certificated water right for irrigation. The purchase agreement is silent on the water right—it neither includes nor excludes it. At closing, the seller conveys the property by general warranty deed but does not execute a water rights transfer. The buyer later discovers the water right was not transferred. Under New Mexico law, who most likely retains the water right?
Correct Answer
B) The seller, because water rights in New Mexico are a separate property interest and are not conveyed by a deed that is silent on the matter
Under New Mexico's prior appropriation doctrine (NMSA 1978, Chapter 72), water rights are a separate and severable property interest from land ownership. A deed that is silent on water rights does not convey them. Unlike appurtenant easements or other interests that may pass with land, certificated water rights in New Mexico must be explicitly transferred through a separate instrument and the transfer must be approved by the New Mexico Office of the State Engineer. Because the purchase agreement was silent and the deed did not address the water right, the seller retains it.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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