rod dean water title rights

7/22/2019 Rod Dean Water Title Rights

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Presented byRod Dean, Managing Member

The Water Title Guy, LLC,

Water Right title and the Real Estate Agent

Utah County

Association of RealtorsOrem,Utah

January 22, 2013


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Example of Water Right Title Issues

Water rights are considered real property, they havesubstantially the same title issues and problems asother real property.

Title to water rights passes when documentsare recorded at the local County RecordersOffice, title is not always as shown on the records of

the State Engineer/Utah Division of Water Rights(DWRor Division). If you are relying on title as itis shown at the Division, you are looking in the wrongplace.


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REPC Section 1.4 Water Service

The Purchase Price for the Property shallinclude all water rights/shares, if any, that arethe legal source for Sellers current culinary

water service and irrigation water service, if any,to the Property. The water rights/water shareswill be conveyed or otherwise transferred toBuyer at Closing by applicable deed or legal

instruments. The following water rights/watershares, if applicable, are specifically excludedfrom this sale: ______________.


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What duty does a realtor have to reviewthis paragraph and make sure it is

complied with? What if it is a sellers intent to specifically

exclude the water rights but the deed is

prepared with no reservation regardingwater?


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Conveyance of Water rights

!When a conveyance document is silentregarding water and if the water is appurtenantto the land, the title to the water rights passeswith the land. Prior to May 4, 1998 onlyperfected rightspassed through

appurtenance.


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Post 1998 Appurtenance

All water rights except unapprovedapplications pass by appurtenance unless

specifically reserved in the transferdocument.

There are other exceptions that canreserve the water rights but basically if adeed is silent regarding water the waterpasses with the land by appurtenance.


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Title Problems Example 1

In 1977, Joe Sellerbought 167 acresof irrigated land.

The deed was silent as to water rights,

so the water right used on the landpassed to Joe by appurtenance.

This water right was a decreed rightunder the local river basinadjudication.

It was used to irrigate all 167 acres,plus other acreage owned by otherco-owners of the water right.


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Subsequent Sales

In July of 1990, Joe sold his entire portion of thiswater right to GHI Irrigation Companyand thatdeed was promptly recorded with the CountyRecorder.

In 2011, an officer of the Irrigation Company found acopy of the recorded deed in the Companys files andchecked on the status of the water right at DWR.He found that:

DWR listed 10 owners, including Joe Seller, butnot the Irrigation Company.

The DWR printout also showed 57 water rightssegregated off from Joes portion of this water

right, each with a change application moving thesegregated water elsewhere.


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Subsequent Sales

All of the 57 buyers got their water from JoeAFTERhe had deeded his portion of the water right to theIrrigation Company.

Therefore, all 57 buyers got deeds from Joe for waterthat he did not own at the time of the transfers.

One of the buyers is a City, which bought 30 a.f.Others bought 1 to 10 a.f. each.

I was asked to sort out who owned what, when andwhy.


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My Findings I found that in 1989 and 1990 BEFORE he sold his

portion of this water right to the Irrigation Company Joehad sold five portions of his 167 acres totaling 65 acres.

Those deeds were also silent as to water so aportion of Joes water right (about 1/3) went to

the buyers of the 65 acres and was not availablefor sale to the Irrigation Company later in 1990.

The 57 segregated rights, and 8 co owners of the waterright, if the conveyances had been valid, would haveaccounted for another 1/3 of Joes water right. So, he

sold the same water two or three times. The Irrigation Company got only about 2/3s of what

they paid for and the 57 buyers got none of what theypaid for.


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Why

What happened? Joe didnt know that his water passed to

buyers of land because deeds were silentregarding water.

Joe looked at the Divisions database andsaw his name on the water right andthought that he still owned the waterright.


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System Prior Appropriation

Water Right A water right is required fordiversion of groundwater orsurface water

Court Approval Court approval is not required fordiversions of surface water orgroundwater

Buying/Selling Water rights may be sold;however, changes in water rightusage requires State Engineerapproval

Disputes State Engineer and District court

Active Legislation Yes, and litigation


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All of the water in the statebelongs to the Public

The right to usethe water is obtained in anumber of different ways:

!Diligence Claims (Water use prior to 1903 surface 1935ground)

!Application to Appropriate

!Adjudication Proceedings


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What is a water right?

! A water right gives an individual or entity the right to use amaximum quantity of water from a specific source, at a specifiedpoint of diversion or withdrawal, for a specified use, and aspecified time.

! Each water right also has a particular priorityin relation toother water rights in the same source.

! Priority is the order of ranking in which the owner of the rightmay take his or her entitlement; a senior appropriator may take

his or her full measure of water before a junior appropriator ispermitted to take any from the same source.

!FIRST in time isFIRST in Right


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Perfected Water Rights

!Both decreed and certificated water rightsare sometimes referred to a perfected

water rights.!Diligence claims are also perfected water

rights.


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Perfected Water Rights

Established by:Application to AppropriateAdjudication Proceedings Diligence Claims

(water use prior to 1903-surface, 1935-ground)

Met all statutoryrequirements

Are considered real propertyand are transferred in thesame manner as other realproperty

Can be forfeited for non-use


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Conveyance of Water Rights

!Because perfected water rights are considered realproperty they have substantially the same title issuesand problems as other real property.

!!The office of record for ownership of water rights is the

county recorders officefor the county or countieswhere the water is diverted and/or used.

!Title to water rights passes in the county, notin theoffice of the Division of Water Rights. If you are relyingon title at the Division you are looking in the wrongplace.


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Conveyance of Water rights

!Water rights can be deeded separately fromland.

!Water rights can be encumbered or mortgagedindependent from land.!When a conveyance document is silent

regarding water and if the water is appurtenantto the land, the title to the water rights passeswith the land. Prior to May 4, 1998 onlyperfected rightspassed throughappurtenance.


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Post 1998 Appurtenance

All water rights except unapprovedapplications pass by appurtenance unless

specifically reserved in the transferdocument.

There are other exceptions that canreserve the water rights but basically if adeed is silent regarding water the waterpasses with the land by appurtenance.


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The Purchase Price for the Property shallinclude all water rights/shares, if any, that arethe legal source for Sellers current culinary

water service and irrigation water service, if any,to the Property. The water rights/water shareswill be conveyed or otherwise transferred toBuyer at Closing by applicable deed or legal

instruments. The following water rights/watershares, if applicable, are specifically excludedfrom this sale: ______________.


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What are water shares?

!People may own shares of stock in an irrigation, canal ormutual water company. Owning shares in the companygives one the right to use a certain amount of water thatis provided from the company.

!They do not own any of the underlying water right.There is usually an annual assessment charged by the

company.

!How are water shares transferred?(The underlying water rights are owned by the irrigation company)


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Water Shares

Are treated as personalproperty

Water from shares does nottransfer by appurtenance

Transferred by surrenderingshares to water company andgetting new shares issued

Transfers also requireconsideration of specific issuesoutside of those that areapplicable to water righttransfers


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Water Certificates

Bank took a Water Certificateas securityfor a loan.

Its intent was to take shares of stock in awater company It had a Certificate of Appropriation in its

file which is akin to having a Patent toland in your file and thinking that it givesyou title to the property.

f h


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Report of Water RightConveyance

!House Bill 184 effective May 1, 2000 nowrequires that Report of Water Rights

Conveyance be filed with the Division ofWater Rights to update title in theirrecords.

!In certain situations the Report may beprepared by the water right owner


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Report to be prepared bylicensed professionals

Reports must be prepared andcertified by:

!Engineers!Land Surveyors!Title Insurance Agents!Attorneys


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Division of Water Rights Disclaimer

Notice

No agency of the State of Utah warrants orguarantees title to certain water rights. TheState Engineers Office serves only as an officeof public record. The water right informationprovided here reflects that which has been filedwith the State Engineers Office by the public.

If an opinion of title assurance is desired, anattorney or other qualified professional shouldbe retained.


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Additional Disclaimer

The filing and processing of a report ofwater right conveyance with the state

engineer is neither an adjudication ofwater right ownership nor an opinion as totitle or validity of the water right.


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It is a truism to say that in Utah water rights are animportant property interest. They are adownright obsession given the fact that most ofthe State being over appropriated.

This over appropriationhas applied pressure to relyon the older water rights. It is now necessary for

anyone wanting to develop new water uses andsources (or buy, sell or transfer current ones) toacquire existing water rights by purchase.

Utah


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! Why is water right title an issue now when it wasnt 10 or 20years ago?

! For the past twenty years Utah has gradually become closed tonew appropriations.

! New markets are developing for water rights acquisitions.! Strict administration by State Engineer.! House Bill 184 (Report of Water Right Conveyance)! Ownership, Ownership, Ownership !!!!!!!!


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Why worry about title towater rights?

Prior to the time that most of the state becameclosed to new appropriations, you couldgenerally solve a water right title issue by filing anew application to appropriate.

Now, in most parts of the State, you can nolonger solve the title issues by filing a new

application. If you need to acquire water youhave to purchase an existing water right. Titlehas become an important concern.


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Contact information:The Water Title Guy, LLC,

Visit our Website:

Watertitleguy.com

OrCall

Rod Dean

1-801-300-0755

Or

EmailRod Dean

[email protected]

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