BEWARE OF THE BUYER'S ATTORNEY
Dr. William M. Turner
I recently was going back through some old files to make sure I hadn't dropped the ball in any past water rights sales. I came across a client who I hadn't spoken to in several years. Last time I called, he we just thinking about selling his water rights.
In the meanwhile, the client contacted a prominent developer and offered the water rights. The developer put him in contact with their prominent water rights attorney. The attorney reviewed property records at the county courthouse to prepare a chain-of-title for the State Engineer. The chain-of-title and all warranty deeds are required to prove to the State Engineer that the water rights had not been previously severed and transferred from the property.
The attorney found a warranty deed for part of the seller's property that had not been notarized but was filed of record. Using this as a hammer, the attorney convinced the seller that there was a significant cloud on the validity of the water rights. In the sale contract, the buyer only bought and paid for the water rights that were backed up by the notarized warranty deeds. But, the contract also tied up the other water rights indefinitely for no compensation. If the sale does ever take place, it will take place at a very old price.
Note: In our opinion the failure to notarize a warranty deed does not necessarily invalidate the deed. The notarization is only required for filing purposes. The purpose of filing is to create a paper trail and to protect the owner pursuant to recordation statutes.
