If you have ever wondered how to divide your water right to sell a portion, the process is called segregation. Let’s suppose that one has a water right with 100 acre feet and wants to sell 50 acre feet to someone. They can purchase the 50 acre feet and segregate the water right. Now you have two different water rights with two different numbers, each with 50 acre feet. People can often do this if they have excess water that they no longer need, or if they have a buyer that only wants to buy a portion of the water right. To segregate a water right one will need to file a “Request to Segregate a Water Right” form in the Utah Division of Water Rights which costs a fee of $50.

Now let’s say someone owns 10 water shares and someone wants to purchase 5 of those shares. Chances are, all of your shares are on 1 stock certificate. To sell 5 shares one will have to split off 5 shares and get a new certificate. This process is usually done with the secretary and president of the irrigation company. It can take several days and sometimes weeks for the new certificate to be issued. Once the new certificate is issued for 5 shares the seller can now sell it to someone else. To make the process less stressful we recommend using a water broker because of their familiarity with irrigation companies and how cities operate.

Please contact us if you have any further information 1.385.498.4339

In the past, people have invested in water shares like stocks on wall street, hoping that the price would go up in the future. This can be dangerous. In Utah, water shares or water rights are meant to be used rather then held onto like an investment. If water hasn’t been used in the previous 5 years, the state can actually take away your water shares or rights to make proper use of them. This is called Beneficial Use.

The State is cracking down. They are auditing cities and irrigation companies to see if the shareholders are actually using the water shares that they own. If you are holding onto your share as an investment, we urge you to reconsider as the state could potentially take your water away.

Take North Union Irrigation Company for instance. In 2016 the state of Utah audited the irrigation company and compared how much water they had, to their usage records. After a lengthy process that took the better part of a year, the state concluded that many shareholders were not using their water. Much of this had to do with original shareholders passing away and leaving their water shares to family members. As a result of the audit, the water shares were devalued by an entire 1.5 acre-feet per share in the city of Pleasant Grove and values are still being determined in nearby cities.

If you own water shares and don’t have a need for them in the foreseeable future, it would be wise to sell them. Holding onto shares for long periods of time without any use will flag the state, and could result in the loss or a devaluation of water shares. This negatively impact every shareholder that is using their water, and is disruptive to cities and irrigation companies. Bottom line. Sell if you don’t have a use.

If any of the above sounds like a situation you may happen to find yourself in, and you have concerns, please contact us and we would have happy to assist you.