§ 11.5 - Transfers of a Title and Changes to Water Rights

• Jurisdiction: Washington

§11.5 TRANSFERS OF A TITLE AND CHANGES TO WATER RIGHTS

As each year passes, more and more streams and lakes become fully appropriated and the difficulties attendant to the establishment of new water rights have become larger and larger. As a result, rather than attempting to establish new rights, persons with water supply needs in most areas of the state now pursue the alternative course of acquiring existing water rights held by others with the objective of changing these rights to satisfy their needs.

(1) Acquisition of a water right associated with appurtenant lands

"[A] water right, or an interest in a water right, is real property, and it is so treated under all the rules of law appertaining to such property." Madison v. McNeal, 171 Wash. 669, 675, 19 P.2d 97 (1933). Thus, the general rule is, absent express reservation, the voluntary conveyance of title to lands includes the transfer of appurtenant water rights. Drake v. Smith, 54 Wn.2d 57, 61, 337 P.2d 1059 (1959). No notification or filing with DOE is required if water rights have been vested to the property.

Water rights, as real property, may also be conveyed separate and apart from the lands upon which water associated with the rights has been previously used. Excise tax must be paid on the conveyance. WAC 458-61A-111. Additionally, to accomplish a transfer of title where the water rights are conveyed for use on other lands, one of several pathways set forth in RCW 90.03.380 relating to changes of water rights must be satisfied. See §11.5(2), below.

The owner of a water right application or permit is not necessarily the owner of the property. One appellate court has opined in the context of a water right application that only a fully perfected water right becomes appurtenant to real property. Hanson Indus., Inc. v. Kutschkau, 158 Wn.App. 278, 294-95, 239 P.3d 367 (2010) (citing Madison v McNeal, 171 Wash. 669, 675, 19 P.2d 97 (1933), for the proposition that an "inchoate or incomplete right is not real property"). While the facts of Hanson concerned a water right application rather than a permit, the court found a ruling of the PCHB holding that the rights associated with a water permit remain with the permit holder unless assigned to the property holder "instructive." Hanson Indus., 158 Wn.App. at 295 (quoting Buck v. Dep't of Ecology, PCHB No. 06-018, 2006 WL 2330265 (Order Granting Summary Judgment) (Aug. 3, 2006), http://www.eluho.wa.gov/Global/RenderPDF?source=casedocument&id=479),review denied, 171 Wn.2d 1011 (2011). When acquiring lands with an associated water right application or permit, the prudent course of action is to file an "assignment of application" or "permit to appropriate or store water" with DOE.

Permits, evidencing water rights not yet certificated, may be assigned from one person or entity to another. However, before such an assignment is valid or binding, the assignment must be filed with DOE. RCW 90.03.310. Applications for water rights filed with DOE may also be assigned from the applicant to another person or entity; however, until consent to transfer (assign) is obtained in writing from DOE (and filed for record therewith), no assignment is valid. Id.

(2) Changing water rights

Under both statutory and common law of Washington, many of the attributes of a water right may be changed, including the place of use, point of diversion or withdrawal, purpose, and season of use. See Neubert v. Yakima-Tieton Irrig. Dist., 117 Wn.2d 232, 238, 814 P.2d 199 (1991); Haberman v. Sander, 166 Wash. 453, 460, 7 P.2d 563 (1932); In re Water Rights in Ahtanum Creek, 139 Wash. 84, 100, 245 P. 758 (1926); In re Water Rights in Alpowa Creek, 129 Wash. 9, 16, 224 P. 29 (1924); United States v. Big Bend Transit Co., 42 F.SUPP. 459, 468 (E.D...