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Water Rights in Utah

The process of transferring and updating water rights can be an intricate and complex process, whether such is part of a real estate transaction or involves just a water right. As more and more demand is placed on this scarce natural resource, the value of water rights continues to grow. Given the urbanizing of more and more rural lands, the need to change the traditional irrigation and stock watering uses to culinary use is also growing and driving the resale of these water rights in order to keep up with the future development. Further, many municipalities now require water rights or shares to be transferred as part of the subdivision approval process. Given these pressures and that no “new” water is available, water rights are being sold without the land and transferred elsewhere. Other recent changes and requirements made by the Division of Water Rights can also affect the transfer and updating of the water right ownership records.

First American Title’s Water Right Division has long recognized the importance of these water rights, both as they affect the land they are appurtenant to and as a stand-alone property right, which may be bought and sold like real property. Further, trust deeds, mortgages, liens, agreements, easements and encumbrances can also affect water rights.

First American Title can now protect your water rights with a Water Right Title Insurance Policy. A few of the highlights of this Water Right Insurance Policy and process are as follows:

  • A Commitment for Water Right Title Insurance will be issued on the water right. This commitment is similar to a commitment a Seller would provide a Buyer on a real property transaction but describes the water right and any associated applications, as well as the exceptions to the coverage we will give under our water right title insurance policy.
  • Applications to Appropriate, Change Applications, or Non-Use Applications may require post-policy action by the Buyer (the new Owner of the water right), in order to perfect the water right. Often Buyers are unaware of these future actions that will need to be completed in order to fully perfect their water right. First American will provide additional notice of pending Applications to Appropriate, Change Applications, or Non-Uses Applications in the Owners Affidavit and the Report of Water Right Conveyance (“ROC”) application.
  • Buyers who have concerns about whether the water right has been put to beneficial use or not can request additional “Forfeiture” coverage. This extended “Forfeiture” coverage can be given to insure against partial or total forfeiture of the water right due to non-use. (The applicable portion of standard exception No. 3, below, will be omitted from the policy if it meets underwriting guidelines and the Seller signs the Water Right Owners Affidavit and Indemnity.)

Access to and from the Point of Diversion is another concern that is covered under the Water Right Title Insurance Policy.

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