Greg is a licensed South Dakota broker helping a client purchase agricultural land in Hamlin County. The seller's disclosure statement does not mention water rights. During due diligence, Greg discovers the property has senior prior appropriation water rights worth significant value for irrigation. The seller claims the water rights will not transfer with the land. Greg's client insists the water rights should be included in the sale. Which of the following actions should Greg advise his client to take?
Correct Answer
C) Require that the purchase agreement be amended to expressly include the water rights, or negotiate a price adjustment if they are excluded.
Under SDCL Chapter 46-1 through 46-6, South Dakota's prior appropriation doctrine means water rights are separate from land title and do not transfer automatically. Since the seller has indicated the water rights will not transfer, Greg must advise his client to address this expressly in the purchase agreement — either by requiring the water rights be included in the sale or by negotiating a reduced purchase price that reflects their exclusion. Failing to address water rights in a rural transaction can constitute a material omission affecting the client's interests.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
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