DOCUMENTATION OF REAL ESTATE TRANSACTIONS Table of Contents 1

Earnest Money Agreement; Letter of Intent ...................................................................... Paul D. Schultz

2

Purchase and Sale Agreement ................................ Christopher T. Matthews Susan B. Cude

3

Right of First Refusal ........................................................ Mark A. Manulik

4

Option to Purchase Real Property ...................................... Mark A. Manulik

5

Contract of Sale ............................................................ Eugene A. Frassetto Andrew I. Davis

6

Mortgage, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling

7

Commercial Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling

8

Residential Trust Deed, Assignment of Rents, Security Agreement, and Fixture Filing .............................................................. Jonathon L. Goodling

9

Commercial Lease ............................................................... Thomas R. Page

10

Ground Lease ...................................................................... Eugene L. Grant

11

Residential Lease .......................................................... David A. Hilgemann

12

Agricultural Lease ......................................................... Paul R. J. Connolly

13

Like-Kind Exchange ......................................................... Ronald A. Shellan

14

Lawyers’ Opinions in Oregon Real Estate Transactions ......................................... David P. Weiner, Editor

15

Lease Assignment and Sublease ............................. Christopher M. Walters Timothy M. Parks

FUNDAMENTALS OF REAL ESTATE TRANSACTIONS Table of Contents 1

The Lawyer in a Real Estate Transaction (1992 ed & 2001 supp) ........................................................ Stanley M. Samuels Randall B. Bateman (2001 supp) ....................................................................... Chresten J. Gram

2

Ethical Considerations in Real Estate Transactions (1992 ed) ........................................................................... Allen E. Gardner (2001 supp) ............................................................................ Peter R. Jarvis

3

Financial Aspects of Real Estate Investment (1992 ed) ............................................................................... Arlie Hutchens (2001 supp) ..................................................................... Laura L. Takasumi

4

Escrows and Closing (1992 ed & 2001 supp) ................................................................ Don G. Carter (2001 supp) ............................................................ Jonathan M. Radmacher

5

Title Insurance (1992 ed & 2001 supp)

............................................................. Dean P. Gisvold David R. Aldrich

6

Securities Issues in Real Estate Transactions (1992 ed) .......................................................................... Gregg I. Eskenazi Robert T. Currey-Wilson (2001 supp) ........................................................................ James G. Harlan

7

Foreign Investment in United States Real Estate (1992 ed) ......................................................................... Michael R. Chellis Stephen M. Seidel (2001 supp) .................................................................... Gregory W. Engrav

8

Warranties in Real Estate Sales (1992 ed & 2001 supp) .......................................................... Stan N. Rotenberg (2001 supp) .............................................................................. Kelly Meltzer

Fundamentals of Real Estate Transactions (continued)

9

Bankruptcy Issues for Real Estate Practitioners (1992 ed) ........................................................................... Kevin D. Padrick David W. Hercher (2001 supp) ........................................................................ John Casey Mills

10

Environmental Liability and Real Estate Transactions (1992 ed) ..................................................................................... Jan L. Betz (2001 supp) .............................................................................. Steven F. Hill Hong N. Huynh

11

Water Rights and Transactions (2001 ed) ........................................................................ William H. Holmes David E. Filippi Jennie L. Bricker

PRINCIPLES OF OREGON REAL ESTATE LAW Table of Contents 1

Estates in Land (1995 ed) ................................................................................ Don K. Lloyd (1999 supp) ......................................................................... Jeffrey S. Davis

2

Concurrent Estates (1995 ed & 1999 supp)

3

........................................................... Jean M. DeFond

Easements .......................................................... Mark A. Manulik .......................................................................... Gary A. Maguire (1999 supp) .................................................................... Gregory D. Fullem (1995 ed & 1999 supp) (1995 ed)

4

Covenants, Conditions, and Restrictions (1995 ed & 1999 supp) ........................................................... Eugene L. Grant

5

Statute of Frauds (1995 ed & 1999 supp)

6

Conveyances (1995 ed & 1999 supp)

7

........................................................... Alan K. Brickley ............................................. Donald A. Gallagher, Jr.

Description of Land (1995 ed & 1999 supp)

........................................................... Thomas R. Page

8

Recording and Priorities (1995 ed & 1999 supp) ....................................................... C. Cleveland Abbe

9

Marketable Title (1995 ed & 1999 supp)

...................................................... Michael G. Magnus

10

Highway Access (1995 ed) ......................................................................... Sandra Campbell (1999 supp) ..................................................................... Linda M. Bolduan Joseph W. West

11

Fixtures ......................................................................... Janet M. Gravdal (1999 supp) ..................................................................... Milton C. Lankton (1995 ed)

REAL ESTATE DISPUTES Table of Contents 1

Remedies of Purchaser for Breach of a Land Sale Contract (1993 ed & 1997 supp) ........................................................ Charles R. Markley

2

Reformation of Contracts (1993 ed) ............................................................................ Peter Livingston (1997 supp) ..................................................................... Wendy Beth Oliver

3

Forcible Entry and Detainer (1993 ed) ............................................................... Hon. Michael H. Marcus (1997 supp) ................................................................... Paul B. Heatherman Kevin J. McCarty

4

Ejectment (1993 ed & 1997 supp)

5

Suits to Quiet Title (1993 ed & 1997 supp)

6

................................................................. Fred B. Miller ......................................................... Patrick L. Hadlock

Suits for Partition .................................................. Christopher M. Walters ........................................................................ Phillip E. Joseph

(1993 ed & 1997 supp) (1997 supp)

7

Adverse Possession and Prescription (1993 ed) ............................................................................... Tracy J. White (1997 supp) ..................................................................... Andrea L. Bushnell

8

Eminent Domain ............................................................ Richard C. Bemis ............................................................................... D. Joe Willis Karen K. Law

(1993 ed & 1997 supp) (1997 supp)

9

Boundary Line Disputes; Encroachments (1993 ed & 1997 supp) ............................................................ Theodore Herzog

10

Waste and Injuries to Land (1993 ed) ............................................................................. Harold D. Gillis (1997 supp) ........................................................... Alexandra E. Sosnkowski

Real Estate Disputes (continued)

11

Judgments, Execution, and Exemptions (1993 ed & 1997 supp) ............................................................ Leslie M. Roberts

12

Sellers’ Liability ........................................................... Gregory R. Mowe .................................................................................. Kelly Knivila

(1993 ed & 1997 supp) (1993 ed)

REGULATION AND TAXATION OF REAL ESTATE Table of Contents 1

Ad Valorem Taxes (1995 ed) .............................................................................. John H. Gadon (1999 supp) ................................................................ Christopher Robinson

2

Special Assessments (1995 ed & 1999 supp) ........................................................ Adrianne Brockman

3

Dedication of Private Land to Public Use (1995 ed) ............................................................................ Kathy A. Lincoln (1995 ed & 1999 supp) ........................................................... Gerald G. Watson

4

Vacation and Abandonment (1995 ed & 1999 supp) ..................................................... Marilyn Moylan Wall

5

Partitions and Subdivisions (1995 ed & 1999 supp) .................................................................. Dan R. Olsen (1999 supp) ............................................................................. Shelley Fuller

6

Real Estate Licensees (1995 ed & 1999 supp) ............................................................... Gile R. Downes

7

Development and Sale of Condominiums (1995 ed & 1999 supp) ..................................................... P. Stephen Russell III J. David Bennett

8

Timesharing ............................................................... A. Richard Vial ....................................................................... Thomas M. Johnson

(1995 ed & 1999 supp) (1995 ed)

9

Representing Homeowner Associations (1995 ed & 1999 supp) ........................................................ Karna R. Gustafson (1995 ed) ............................................................................ J. David Bennett P. Stephen Russell III

10

Development and Sale of Planned Unit Developments and Planned Communities (1995 ed & 1999 supp) ............................................................. J. David Bennett (1995 ed) ..................................................................... Karna R. Gustafson

Regulation and Taxation of Real Estate (continued)

11

Regulations Affecting Real Estate Loans and Sales (1995 ed & 1999 supp) ............................................................... John A. Lusky

12

Mobile Homes (1995 ed) .................................................................... Michael C. Robinson (1999 supp) ............................................................. Dennis M. Paterson III

13

Building Codes (1995 ed) ................................................................................ Bill Manlove (1999 supp) ...................................................................... Benjamin Walters

14

Americans with Disabilities Act Requirements for Public Accommodations (1995 ed) ....................................................................... Keith W. Wingfield (1999 supp) .......................................................................... Robert W. Pike

11

WILLIAM H. HOLMES DAVID E. FILIPPI JENNIE L. BRICKER

WATER RIGHTS AND TRANSACTIONS

I.

(§11.1)

SCOPE OF CHAPTER

II.

(§11.2)

INTRODUCTION

III.

(§11.3)

OVERVIEW OF WATER TRANSACTIONS

IV.

DUE DILIGENCE: INVESTING IN PROPERTY THAT DEPENDS ON WATER A. (§11.4) Determining the Required Quantity and Quality of Water B. How Water Rights Are Evidenced 1. (§11.5) Water from Municipalities and Special Districts 2. (§11.6) Exempt Groundwater Uses

WILLIAM H. HOLMES, B.A., University of Texas (1981); J.D., University of Michigan (1984); member of the Oregon State Bar since 1986; member, Stoel Rives LLP, Portland. DAVID E. FILIPPI, B.S., M.A. (Rhetoric), Kansas State University (1991, 1993); J.D., Northwestern School of Law, Lewis and Clark College (1996); member of the Oregon State Bar since 1996; associate, Stoel Rives LLP, Portland. JENNIE L. BRICKER, B.A., M.A. (English), University of Oregon (1986, 1988); J.D., Northwestern School of Law, Lewis and Clark College (1997); member of the Oregon State Bar since 1997; associate, Stoel Rives LLP, Portland. The case citations in this chapter were checked for overrulings and reversals through December 2000. The ORS citations in this chapter were checked through 1999.

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3. 4. 5. 6.

C. D. E.

(§11.7) (§11.8) (§11.9) (§11.10)

Exempt Surface Water Uses Springs and Seeps Certificated Water Rights General Adjudications, Registration Statements, and Filed Claims 7. (§11.11) Permits 8. (§11.12) Limited Licenses 9. (§11.13) Applications (§11.14) Using the Documentation in Due Diligence (§11.15) Cancellation and Forfeiture Water Delivery Systems 1. (§11.16) Easements 2. (§11.17) Condemnation

V.

TRANSACTIONS INVOLVING PROPERTY WITH WATER RIGHTS A. (§11.18) Disclosure Requirements 1. (§11.19) Notice Regarding Wells 2. (§11.20) Written Disclosure on Acceptance of Offer 3. (§11.21) Notice to the Water Resources Department 4. (§11.22) Disclosures on Sale of Residential Property B. (§11.23) Assigning and Conveying Water Rights

VI.

CREATING AND CONVEYING WATER RIGHTS A. (§11.24) Obtaining a New Water Right 1. (§11.25) New Surface Water Right 2. (§11.26) New Groundwater Right 3. (§11.27) Reclaimed Water B. (§11.28) Transferring an Existing Water Right 1. (§11.29) Change of Use Within an Irrigation District 2. (§11.30) Permanent Transfer 3. (§11.31) Temporary Transfers 4. (§11.32) Transfers of Conserved Water 5. (§11.33) Documenting Transfer Transactions

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Water Rights and Transactions / §11.2

I. (§11.1) SCOPE OF CHAPTER This chapter introduces water transactions that may arise in connection with any real estate transaction in Oregon. Water transactions may arise in buying and selling property, developing property for residential use, or changing the use of property in other ways. The lawyer’s client may be the buyer, the seller, the developer or other investor, or the lender. This chapter begins with an overview of water transactions and reviews the importance of due diligence in transactions that involve water. This chapter also discusses the applications, permits, and licenses required to evidence a water right in Oregon. Last, the chapter examines the steps involved in obtaining a new water right or transferring an existing water right. Throughout the chapter, terms peculiar to water law are defined and discussed. II. (§11.2) INTRODUCTION In Oregon, water is a unique type of property. All water in the state belongs to the public but may be appropriated for “beneficial use.” ORS 537.110, 537.120. Like other western states, Oregon follows the principle of “first in time, first in right”; that is, the first person who applies water to beneficial use has the most senior right to that water. Thus, each water right in Oregon has a priority date based on the date on which it was first applied to a beneficial use or, in the case of water rights issued under the permit system adopted in 1909, on the date on which the water user applied for the right. The right to use the water is appurtenant to the land where the water is used, and the right passes with title to the land. Except where water is obtained from a municipal supplier, a right to use water is usually evidenced by a decree, certificate, or permit. The water right document specifies the rate at which water may be taken from the source, the total volume of water that can be used, the purpose of the use, and the season during which the water can be used. Since 1909, surface water rights in Oregon have been obtained through a permit and certification process that is now managed by the Oregon Water Resources Department. A statewide permit and certification process for groundwater rights has been in place since 1955.

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§11.3 / Water Rights and Transactions

III. (§11.3) OVERVIEW OF WATER TRANSACTIONS A real estate lawyer may encounter three basic transaction situations involving water. First, the lawyer may represent a party interested in property that relies on water drawn from a surface or groundwater source. The property may be used for a farm, a business, a residence, or any other activity that requires water. The interested party may be a buyer, a seller, a developer, a lender, or an investor. In this type of transaction, the lawyer will want to fully understand the water right that authorizes the use of water on the property. The lawyer needs to know enough about water rights to be able to perform effective “due diligence” on behalf of his or her client. See §§11.4–11.17, infra. A title insurance policy offers no comfort here because standard owner’s policies exclude “water rights, claims or title to water” from coverage. See chapter 5, supra. Second, a lawyer may need to document a transaction in which a water right is being conveyed along with other assets, usually real property. The lawyer should consider the kinds of representations and warranties that should be obtained from (or offered by) the owner of the property, the disclosures required by law, and the instruments required to give effect to the transaction. Third, a lawyer may represent a party who wants to buy or sell water rights and transfer those rights to a different place of use, or who wants to change the nature of the use or the point of diversion. Because new water rights are very difficult to obtain in most parts of Oregon, a transfer may be the only means of acquiring water needed to develop property.

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