The Right-to-Water in Montana: is governed and controlled by a complex mosaic of Statutes, Rules, Regulations, case law, court adjudications and more. Therefore, the parties to a Real Estate Transaction should exercise special Due-Diligence in investigating and evaluating all water issues which potentially impact any specific subject property or the ability to use it for its intended future purpose(s).
Water Rights Due Diligence Protection: Prior to entering into closing any Real Estate transaction, the parties should obtain a “Water Report” prepared by an independent and neutral third party. Such a written “Water Report” should address all aspects of the subject property’s unique circumstances and issues relative to past, present and future water concerns and issues. At a minimum, any proposed Buy-Sell offer, or contract, should incorporate a “contingency” for the Buyer & Seller to obtain and review such a “Water Report” and conclude their water-related due-diligence prior to the contingency’s “Release Date” or the “Objection Deadline”! Since the Water Report contingency and the Title Report contingency deal with equally important issues, it would seem logical to provide for the protections of each in a similar manner. One such contingency clause using that approach is attached as an example. (See attached.)
At settlement Buyers should:
A) Personally verify that the appropriate documents are correctly prepared and transmitted to the County Courthouse. Such documents should include, but not be limited to, Deed documents, the Realty Transfer Certificate (RTC-Form 488), and the DNRC Water Right “Ownership Update” form (Form #s 608, 640, 641, 642, etc. Ask your Water Specialist for details.)
B) Personally verify that copies of the relevant Water Right “Ownership Update” forms (with attached copies of the deed, maps, Realty Transfer Certificate, well log and related documents) are personally delivered to the regional office of the DNRC. Within 30-45 days after closing it is imperative that the Buyer contact the Montana Dept. of Natural Resource Conservation (DNRC) (http://dnrc.state.mt.us) to verify receipt and approval of the Realty Transfer Certificate (RTC) and Water Right “Ownership Update”. Likewise, Buyer should then arrange for any “changes” the Buyer may wish to request in the specific use(s), point(s) of diversion, point(s) of application, etc. Failure to complete the required steps may result in additional fees!
A copy of the RTC and all water-related documents should be retained with Buyer’s and Seller’s permanent records.
Special Area “Right to Water” Advisories: If the subject property is within (or obtains water from a point of diversion or sources within) State, Federal or Tribal reserved lands, then all parties should pay additional special attention to those specific laws, rules, reserved water agreements, settlements, compacts or treaties, etc. Such lands and locations include, but are not limited to, US Forest Service lands, National Park Service property, Native American Reservations, National Monuments, Bureau of Land Management (BLM) areas, US Military properties or other lands that are federally owned, operated, controlled or held in trust for others, etc. Likewise, subject properties that are in or near areas with other special restrictions should also receive enhanced due-diligence and investigation. Such areas may include, but are not limited to, designated Stream Depletion Zones (SDZ’s), Controlled Groundwater Areas (CGA’s), statutorily closed basins, administratively closed basins, judicially closed areas or basins, over-appropriated sources, and/or other areas subject to special unique considerations. It is further disclosed that there are evolving litigation, legislation, guidance and “Administrative Rule” changes regarding questions surrounding Exempt Wells and/or Combined Appropriations. Likewise there is continuing legislation, litigation and multiple uncertainties regarding unratified compacts, such as the CSKT compact. Therefore, it is strongly recommended that consumers who are contemplating use of, or dependence on, a “permit exempt well” or water that may in any way be affected by the compact controversy should personally consult with the Montana Dept. of Natural Resources DNRC! Regional offices, phone numbers and contact information can be found at www.dnrc.mt.gov. All parties should exercise enhanced Due-Diligence as outlined in “Specific Recommendations” and “Notices” sections below.
Due-Diligence Checklist: For all parties, the checklist should include (at a minimum) their personal or professional’s verification of the following aspects and/or elements of any and all Water Claims at issue:
• A Water Rights Report
• Water Right number(s)
• Current owners names
• Priority date(s)-Initial Date and Enforceable Date
• Purpose and uses (domestic, agricultural, etc.)
• Flow rate – cubic feet per second (cfs)
• Volume – Ac.Ft./Yr. (if appropriate for purpose)
• Maximum acres (irrigation, lawn/garden, etc.)
• Well location (address/legal description, GPS)
• Source name and type
• Point(s) of diversion (including reservoirs)
• Period of diversion
• Means of diversion and transmission
• Static water level
• Well depth
• Flowing or non-flowing well
• Casing diameter
• Acre Feet for each use
• Period for each use
• Place of each use
• Decrees and Court actions (if any)
• Historic use data and documentation
• Record of beneficial use – photos, affidavits, etc.
• Type of historic right (decreed, filed, exempt, etc.)
• Geocode for point-of-diversion (POD)
• Geocode for point-of-use (POU)
• “Call” history, “issue remarks”, or objection
Specific Recommendations: The parties’ Due-Diligence regarding each of the items or issues contained herein should be completed, obtained, addressed, evaluated, and/or performed (and written results and/or reports prepared) by parties: A) who are well qualified by training and professional experience; B) whose reputation, qualification, charges, and associated costs have been personally verified; and C) who are properly licensed, certified, bonded, and insured in the relevant discipline and/or expertise.