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How to Purchase Water Rights
Investing

How to Purchase Water Rights 

How To Purchase Water Rights

You’ve bought land. Of course, you want to be able to access the water on that land, right? If so, then you might need to know how to purchase water rights. In fact, depending on the state, you might be able to purchase water rights even if you don’t own the land the water sits on. Weird, right? Water is a valuable resources these days, so it’s good to educate yourself about water rights both for your own property and as an investment tool. 

Surface Water Rights vs. Underground Water Rights

There is so much to learn when you want to find out how to purchase water rights. First, you should know that there’s a difference between surface water rights and underground water rights. Surface water rights means the rights to use water from an above-ground source like a stream. Obviously, underground water rights have to do with what you’re allowed to drain from beneath the ground. 

Underground Water Rights

Basically, across the country, there are two different approaches to underground water rights. In some places, if you own the land, then you can drain as much water from underneath that land as is available. That’s called absolute ownership of underground water rights. More commonly, though, states follow the American rule. This is a modified version which allows you to drain as much water from your own land as you can WITHOUT impacting other people’s ability to also access that water. It gets complicated and there are a lot of specific laws across the states but that’s the gist of underground water rights. 

The East, The West, and Then There’s California

As you can see, learning about how to purchase water rights is really complicated. And now we’re going to talk specifically about surface water rights. There are both state laws and county laws that affect use and purchase of surface water rights. Moreover, things are very different from state to state. The Eastern states tend to follow one set of water rights. The Western states tend to follow a different set. But then there’s California, a huge state with a lot of water concerns. It uses a hybrid of the Eastern-Western models.

Eastern States: Riparian Water Right

Unusual Investments explains that Eastern states typically use riparian water rights. In brief, this means that if you own the land then you have the right to the natural water resources on and/or adjacent to your land. So, if a stream runs on your land, then you are allowed to use that water. Of course, there are all sorts of different rules and exceptions. These vary from state to state. One major rule is that you can’t use so much of the water that it affects other people with adjacent land who might also want to use that water. More or less, though, you can expect riparian rights to allow you to use the water on your land if you purchase land in Eastern States.

Western States Except California: Prior Appropriation Rights

In contrast to riparian water rights, most Western states follow prior appropriation rights. This basically means that whoever got to the water first and used it for something beneficial (farming the land is a common example) has those water rights. It doesn’t matter if another land owner is negatively impacted by your use. You were there first, you own those water rights. Again, there are lots of court cases and details, but that’s the general rule about surface water rights in Western states.

California Water Rights

California uses a unique hybrid of riparian and prior appropriation rights. SF Gate explains that this becomes very important in real estate transactions. Why? Because you can sell your land and potentially still keep your water rights. You can also opt to sell your water rights separately. And that’s why you might find a lot of people trying to learn how to purchase water rights in California.

How to Purchase Water Rights: First Steps

As you can see, this all gets real complicated. It depends on where you live. It depends on who owns the land, which may or may not be yourself. Because this is such a complicated issue, you don’t want to jump into it without doing your research. In fact, one of the first steps that you might want to take is to contact a water attorney.

Yes, there are attorneys that specialize in the buying and selling of water rights. It’s worth the investment to have this type of professional on your side. They can help you in different scenarios including:

  • You own land. However, you aren’t sure if you own the water rights.
  • You’re interested in buying land and want to know about purchasing the water rights, too.
  • You want to invest in the purchase of water rights on land that you do not own.
  • As a water rights owner, you want to know your options for selling those rights to a buyer.

Why Purchase Water Rights

People want to learn how to purchase water rights for different reasons. However, the main reason right now is because water is scarce. It’s getting scarcer. Therefore, it’s a valuable commodity. You might purchase the rights now then just wait for some years to pass. When the water is scarcer, the value goes up, and you’ll have water rights to sell. It’s a good investment. Or perhaps you just want to make sure that you’ll always have the right to access the underground and surface water on your own land.

What Your Attorney Might Do To Help You

How your attorney works with you depends on where you live and what your goals are. Generally speaking, though, if you want to purchase water rights, your attorney might do some or all of the following:

  • Find out who the water rights currently belong to, if anybody. Usually they’ll do a state records search to find out this information.
  • Explain the rights and laws about both the underground and surface water rights for your specific plot of land.
  • Work with you do draw up a contract negotiating the terms of a water rights sale.
  • Help you follow all of the legal regulations for the water sale. For example, you might have to have a geological survey completed before a sale is allowed. Similarly, you might have to file for a well permit.

Since each state is different, and each situation is different, buying water rights varies a lot from person to person. However, a water rights attorney in your area can give you the exact details necessary to help make this transaction work to your benefit. Make sure you understand the terms of all contracts, particularly whether you can later sell the water rights with or without selling the land itself.

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