Does a shared well agreement prohibit STR usage?

[Tom Evans]

Hi all - I'm looking at purchasing a property in Scottsdale, AZ for usage as an STR. It's outside Scottsdale city limits (Maricopa County jurisdiction) so it is not subject to Scottsdale's restrictions.

It does, however, have a shared well agreement with one other parcel (as almost all in this area seem to). The agreement stipulates:

"The owners agree, that no water shall be used for commercial purpose, but only for their private domestic use including vegetable gardens and livestock maintenance."

Commercial purpose is not defined, so I'm not sure if an STR would violate that covenant. It does later say in the agreement that it is:

"binding upon persons who own, lease, sublease, or occupy any parcel or portion thereof"

The inclusion of which seems to imply that long term renting and/or subleasing would NOT be commercial use.

I'm trying to figure out if I'm taking a significant risk buying this property for use as an STR. There are so many rentals in the area, probably on shared wells, so those people have either decided the STR use is okay or they are comfortable risking it.

My intuition is that any actual disagreement over water usage could be handled with the other owner; but the risk would be if the other owner just doesn't like the STR and wants to use the well agreement as a reason to demand it be shut down.

Any advice would be greatly appreciated!

Tom

[James Mc Ree]

Are the other parties to the agreement the property owner sharing the well and maybe an HOA? Those are the people you want to talk with about this. The snippet you provided is a bit ambiguous which may itself make it unenforceable.

I think your goal should be to get a signed doc from the parties to the agreement saying an STR is permitted under the agreement.

[Mason Weiss]

Hey Tom, no matter what I would have a real estate lawyer look over this before you purchase the property. Although the forum input can be helpful, you need to have proper legal precautions in place rather than opinion.

[Jackson Harris]

Hey Tom I have an RE attorney I've used before in the area I'd be happy to connect you with.

Congrats on getting an STR as well, my partner and I specialize in STR and flip investments in the area so we have a lot of local connections that could be useful for you.

Feel free to reach out if you need anything!

[Lorraine Hadden]

@Tom Evans

Congrats on the potential STR in AZ.

As for a shared well agreement, they can be tricky (even when it does not involve STR usage). This could include an easement(ingress/egress), shared costs(s) to maintain the well, or usage/owner. 

As such, I agree that legal advice is necessary for this one.