It’s Your Water! Do You Know Your Rights?
For real estate buyers and sellers, the availability of water on a site can make or break a deal. Due to the increasing scarcity and the resulting increasing value of water, the water markets in most states are rapidly changing and becoming more sophisticated. This is especially true in Texas, and other western states where water is scarce. The publicity of transactions by various municipalities has increased the awareness of the demand for, and the importance of, water rights ownership. As the public becomes aware of the value of their water rights and ways to protect them, conveyances, reservations, and severances of water rights will become increasingly significant in general and more specifically, to the western United States.
Think someone is trying to rip you off and charge you for water rights? While water rights alone cannot raise the price of real estate, often a seller will list this as a selling point for his or her property. Since many prospective buyers do not do research on water rights and the impact of those rights, this can sometimes cause a buyer to pay more for a piece of real estate. On the other hand, the price to utilize the water to which you own the rights can have an impact on the overall cost of a piece of property. For example, if the cost of water is .5 cents per gallon in one area, but .75 cents per gallon in another, the price of the land will usually be higher in the second area. This is typically true when purchasing a new site-built home, or when having new water lines ran to an existing property with no current water rights.
Make sure your water rights are transferred! In most states, water rights are considered normal property rights, and as with all property rights, water rights can be retained after the sale of real estate by reserving those rights in a deed. At this time, all rights remain with the original owner and are then leased to the new purchaser of that land. This is usually known as a ‘capture.’ Once someone has owned the rights, and has put the water to beneficial use, most areas cannot and do not require that person to give up those rights. The original seller will however have to convey the water rights in the same manner as they would a normal property deed. Most states also require a written explanation of with whom the current water rights belong.
If you are thinking about running a business such as a fishing hole, or private recreational area, consider this; sll water rights should be transferred to the current owner in order to use a private lake, pond, stream, river, or any other body of water for profit or public recreational use. When allowing persons to use said bodies of water, the current owner is leasing, or transferring temporary rights to the user of the water. These rights do not allow the user to transport any portion of the water off of the private property. It does, however, allow the user to use the water for any means that is not derogatory or illegal. Proper deeds and documentation must be filed in order to use a private body of water as a recreational business or profit maker.
If you are looking into beach front property on a private body of water here are some things to think about. There are quite a few states that have passed laws requiring owners to remove fences and no trespassing signs in public bodies of water. Recently, in Michigan, local courts have passed a law allowing persons to walk along the shoreline of public lakes “if the owners allow it.” Otherwise, the trespassers are forced to wade through the water. The courts can not force a person to stay out of public body of water if they are using it as a means of transportation no matter how close they may come to someone’s property. Docks, ramps, and other privately owned land improvements on public bodies of water do not automatically give water rights in that area. The owner of the improvement is, by law, only borrowing water rights from the state.
Now you are armed, so go forth and buy your waterfront property, just make sure no one is trying to yank your chain!
