A buyer, Thornton, closes on a Wyoming farm and receives a general warranty deed that conveys 'all land and improvements.' The seller held a valid adjudicated water right used for irrigation but never mentioned it during the transaction, and the purchase agreement contained no reference to water rights. Six months after closing, Thornton discovers the seller has been diverting water under the old right and claims to still own it. Which of the following best describes the legal situation under Wyoming law?
Correct Answer
C) The seller likely retains the water right because it was not expressly conveyed in the deed or purchase agreement, and water rights are a separate property interest in Wyoming
Under Wyoming law, water rights are a distinct property interest separate from real property and do NOT transfer automatically with a deed, even a general warranty deed conveying 'all land and improvements.' Because the purchase agreement and deed contained no express reference to the water right, the seller almost certainly retains ownership of it. Wyoming courts have consistently held that water rights must be specifically and expressly conveyed. Thornton's failure to conduct due diligence with the Wyoming State Engineer's Office and to require express conveyance in the purchase agreement is a significant oversight. This scenario illustrates why the seller disclosure form (W.S. 34-1-401 et seq.) requires disclosure of water rights, and why buyers' agents must specifically address water rights in every agricultural transaction.
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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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