Don’t Be Left Out to Dry: Recognizing and Addressing Water Supply Issues in Arizona Real Estate Transactions

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Mark A. McGinnis, Esq. & R. Jeffrey Heilman, Esq.

Water is and always has been an issue of critical importance in Arizona. Living in Arizona’s desert climate means that all economic activity, from agricultural and industrial enterprises to residential development, is entirely dependent on the state’s limited water supplies. Even today, Arizonans engaged in buying or selling real estate confront significant water issues, both legal and technical. This paper examines several of the issues that commonly arise in the context of real estate transactions. Although these issues most often arise with respect to transactions involving commercial or industrial property, some of the most perplexing problems can arise in the normal course of residential sales.

The potential ramifications of unrecognized water issues are easy to appreciate. For example, a “prime commercial property” with a water supply of adequate quantity and quality is far more valuable than one that lacks such a supply. In most cases, failure to adequately address water supply issues will result in buyers spending substantially more capital to remedy the situation. In other situations, it might be impossible, regardless of the cost, to make such arrangements after the fact. Unlike in other areas, the three most important attributes of a parcel of land in Arizona are “location, location, and water”—and not necessarily in that order.

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