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Water Rights - Valuable in Your Market?

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PropertyEconomics

Thread Starter
Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Water issues are becoming supreme in many parts of the country right now and here in the high desert is no different.
Do your states recognize a property owners right of subsurface water ownership and can these water rights be sold separately from the realty in your market?
Is there a market for the rights if so and has any one ever appraised any?
I thank each of you in advance for your answers.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
In wisconsin the DNR wants to own all the water rights. above you head, on your land and under your land.

Someday someone it going to take them to court as to how the state can claim rights and control that is part of the bundle of rights to real estate.


Yep, I am waiting to see that 25' water line to LA from the great lakes.
 

farmguy

Member
Joined
Jun 27, 2007
Professional Status
Banking/Mortgage Industry
State
Texas
Texas has always been a rule of capture state in that I own the water under my land and I can drill and pump all I want. Only in the last few years has the reservation of water rights become popular. We have very specific laws, and much case law for oil and gas, but little for water. There are no standard reservation clauses, etc. T Boone Pickens is probably most famous here for severing the water rights and selling them. He did it west central panhandle. We have started seeing more and more sales where people are reserving some or all of their commercial water, (what ever commercial means) The market has discounted the sales prices little if any. It kills some deals, however. Over the next few years case law will decide most of our water issues.

Irrigation rights out of rivers has been regulated for years and we have a pretty good handle on values.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
For Nevada

As it was explained to me by the Water Resources Board, the State of Nevada owns all of the water except any that may be owned by the feds. The state engineer has to approve your permit to drill a well on your property for residential use. In the two farming areas I cover, they have water districts that regulate the water for the state. You can sell your water rights in these areas but generally they have to be sold to someone that utilize the water to the best use possible in most cases this would be farming or ranching. I took this to mean that water can't be sold to an individual that just wants to control the water and eventually become their own water company. As it is in many places, there is usually always a lot of water in areas where the number of humans is low. Las Vegas is looking many miles away to locate and pump water to their fair city to eventually build more houses. The water usually comes from the ranching areas where the number of cattle significantly outnumber the people.
 
Joined
Jun 3, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Do your states recognize a property owners right of subsurface water ownership and can these water rights be sold separately from the realty in your market?

Colorado Water Law is based on the doctrine of prior appropriation -- water is considered a finite resource, and whoever was first in time to appropriate it's use, is first in right for continued use.

The Colorado Constitution gives priority to Municipal use, then Commercial, and Agriculture last. In the 1970's, several cities began condemnation proceedings for the water rights controlled by agricultural irrigation ditch companies. Since they were going to lose anyway, most of the ditch companies negotiated a settlement, receiving 110% of what they gave up in treated effluent.

In a low runoff year, the senior users get their full share, while the junior right holders get nothing.

Last year, the State Water Board ordered the majority of the agricultural wells in the Platte River Basin to be shut down, because they were depleting the aquifer. Many of the these wells dated back to the 1940's, but because they were junior rights and an over appropriation of the resource, they were shut down. Long time irrigated farms were left high and dry.

State Water Law allows for a domestic well permit for any residential use where a water tap is not available, but does not allow the use of this water for lawns and landscaping.

Arizona has long maintained the fiction that aquifers are resources that can be tapped, without regard to the effect on surface resources. As water tables have fallen, they have slowly come around -- but without the CAP water from the Colorado, they would be in a world of hurt.

As for New Mexico, I don't have a clue as to their water laws -- but I doubt the State would look kindly on a landowner appropriating and selling sub surface rights without regard to the rights of other users.

An illegal diversion of water was the central theme of the Milagro Beanfield War -- and that case was resolved in favor of the farmers, under the doctrine of prior appropriation.

http://www.google.com/search?num=10...+doctrine+of+prior+appropriation?&btnG=Search
 
Last edited:

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Quite often IN MY MARKET water rights are worth more than the real estate.
 

PropertyEconomics

Thread Starter
Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
In wisconsin the DNR wants to own all the water rights. above you head, on your land and under your land.

Someday someone it going to take them to court as to how the state can claim rights and control that is part of the bundle of rights to real estate.


Yep, I am waiting to see that 25' water line to LA from the great lakes.


Ray do you think water rights are a portion of the bundle of rights tied to Realty?
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
This issue has recently come up in the Ukiah Valley of Mendocino County. Due to Fish and Game requirements that the flow of the Russian River be maintained to protect the salmon, the main reservoir, Lake Mendocino, has been depleted to record proportions. All water uses are restricted and no new wells are permitted. Riparian rights have been set aside for the most part by the courts. So, you can throw away your text books that say water rights run with the land.
 

PropertyEconomics

Thread Starter
Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Mr Mike Boyd, and others, given the court decisions that water rights DO NOT run with the land, it would be surmised they are not a part of the bundle of rights.
To that end, they would be considered chattel, severable from the land to be sold essentially as personal property.
Would a certified residential appraiser be qualified to appraise water rights, if it were found they had a market value, separate from the land?
I hope some USPAP instructors will weigh in on this topic.
Again thanks for your answers in advance.
 

Vegan702

Senior Member
Joined
Feb 24, 2005
Professional Status
Certified Residential Appraiser
State
Nevada
Water rights in NV are considered real property.
 
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