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.