Whenever water rights change hands there is an opportunity for title problems to develop. A "title problem," as discussed in this article, is whenever the buyer doesn't obtain clear title to water rights from the seller. Buyers of water rights should be aware of common title problems.

The doctrine of appurtenancy can result either in transferring unintended water rights with the transfer of land or in not transferring water rights intended to be transferred. Under Utah law, perfected water rights that are appurtenant to land are transferred with the land even if the deed is silent as to water rights. To be "perfected," a water right must be certificated, be recognized in an adjudication, or be a diligence right. To be appurtenant, the water right must be used upon the land and be a benefit to the land. The use must be in existence at the time of the transfer or within a reasonable time prior thereto. Finally, at the time of the transfer, the land and water right must be owned by the same person or entity.

To avoid a title problem due to appurtenancy, any conveyance of land should explicitly include or exclude water rights. This way it will be clear what water, if any, is to be transferred with the land.

A second common title problem arises from forfeitures. Utah's forfeiture statute allows a water right to be declared forfeited if there is a five year period of non-use within the last twenty years. A law suit must be filed to have the courts declare the water right forfeited. However, because such a law suit could be brought up to fifteen years after the end of the five year period of non-use, a buyer having no knowledge of a recent five year period of non-use may suddenly find himself or herself in court trying to keep the water right alive. In order to protect against this type of problem, a buyer should request and obtain some sort of verification from the seller that the water has been beneficially used during the last twenty years and that there are no five year periods of non-use within the last twenty years. This should be done in a sworn and notarized statement or in a similar document that can be submitted to the court if the water right is challenged.

Another common problem arises when a buyer and/or a seller relies solely on the ownership records maintained in the State Engineer's Office. The State Engineer's files are only a secondary repository for water title documents. The primary repository, and therefore the official location for water title documents, is the county recorder's office in each of the 29 counties in the State. Copies of water title documents filed in the county recorder's office frequently do not get sent to the State Engineer's office. This makes the State Engineer's records incomplete and subject to change when other documents show up there. When new documents show up that affect existing ownership interests, the State Engineer typically sends out a notice indicating that his records have been changed and that ownership interests have been changed accordingly. The only way to protect against such changes is to make sure that the State Engineer's records are current and correct by having a title search conducted of the county recorder's records. The State Engineer's office recommends that buyers and sellers obtain professional assistance in making water title determinations and expressly cautions against relying on the accuracy of the State Engineer's records.

If a buyer does not take the appropriate precautionary steps, he or she may find himself or herself in a costly lawsuit trying to determine whether there is any water with the water rights the buyer believed he or she was getting. Unfortunately, such law suits are all too common.

Your comments and questions are welcome. The authors can be reached at (801) 413-1600.

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