D. Water Rights are being conveyed to Buyer at the close of escrow…. Seller will provide Buyer with a written explanation of the operation of the irrigation system, water right certificates, and inventory of irrigation equipment included in sale.

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D. Water Rights are being conveyed to Buyer at the close of escrow…. Seller will provide Buyer with a written explanation of the operation of the irrigation system, water right certificates, and inventory of irrigation equipment included in sale.

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Vernon and Janene Lesher agreed to purchase an eighteen-acre parcel of real property from the Strids with the intention of using it to raise horses. In purchasing the property, the Leshers relied on their impression that at least four acres of the subject property had a right to irrigation from Slate Creek. The earnest money agreement to the contract provided:

D. Water Rights are being conveyed to Buyer at the close of escrow…. Seller will provide Buyer with a written explanation of the operation of the irrigation system, water right certificates, and inventory of irrigation equipment included in sale.
The earnest money agreement also provided:
THE SUBJECT PROPERTY IS BEING SOLD “AS IS” subject to the Buyer’s approval of the tests and conditions as stated herein. Buyer declares that Buyer is not depending on any other statement of the Seller or licensees that is not incorporated by reference in this earnest money contract [Bold in original].

Before signing the earnest money agreement, the Strids presented to the Leshers a 1977 Water Resources Department water rights certificate and a map purporting to show an area of the subject property to be irrigated, which indicated that the property carried a four-acre water right. These documents were from eighteen years earlier. Both parties believed that the property carried the irrigation rights and that the Leshers needed such rights for their horse farm. The Leshers did not obtain the services of an attorney or a water rights examiner before purchasing the property. After purchasing the property and before establishing a pasture, the Leshers learned that the property did not carry a four-acre water right. Explain whether the Leshers may rescind the contract.

Explanation & AnswerSolution by a verified expert

Explanation

The agreement contains mutual mistake and innocent misrepresentation of facts by both parties. Family L and Family S believed that the property purchased contains water rights, which are required for horses.
There is an innocent misrepresentation of facts of the irrigational land and water rights, as shown in the map, which is found to be years old.

Verified Answer

Family L can void the contract on the basis of mutual mistake of fact and innocent misrepresentation of facts.

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