Transfer of Water Interests

8
16-6a-606
73-1-10
73-1-11
0
Transfer of Water Interests
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Doug Owens
Senate Sponsor: Derrin R. Owens
LONG TITLE
General Description:
This bill addresses water rights, shares in water companies, and their relationship to land
conveyances.
Highlighted Provisions:
This bill:
modifies provisions related to the transfer of shares in water companies;
addresses that ownership of a share of stock is not maintained on the records of the state
engineer;
addresses the nature of water company shares and the relationship to water companies;
and
makes technical and conforming amendments.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
16-6a-606
, as last amended by Laws of Utah 2017, Chapter 358
73-1-10
, as last amended by Laws of Utah 2013, Chapter 363
73-1-11
, as last amended by Laws of Utah 2025, First Special Session, Chapter 17
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
16-6a-606
is amended to read:
16-6a-606
. Transfers.
(1)
Except as provided in Subsection
(3)
, and unless otherwise provided in the articles of
incorporation or the bylaws, a member of a nonprofit corporation may not transfer:
(a)
a membership; or
(b)
any right arising from a membership.
(2)
Except as provided in Subsection
(3)
, where transfer rights have been provided in the
articles of incorporation or the bylaws of a nonprofit corporation, a restriction on
transfer rights may not be binding with respect to a member holding a membership
issued before the adoption of the restriction, unless the restriction is approved by the
affected member.
(3)
(a)
For a water company, unless otherwise provided by the articles of incorporation or
bylaws
,
:
(i)

ownership of
shares
a share
is transferrable
.
; and
(ii)
notwithstanding Subsection
(3)(a)(i)
:
(A)
a shareholder may not transfer a share on or after May 14, 2013, except in
accordance with Title 70A, Chapter 8, Uniform Commercial Code - Investment
Securities; and
(B)
a share is not appurtenant to land.
(b)
Any
A
restriction on the transfer of ownership under Subsection
(3)(a)
(3)(a)(i)
:
(i)
shall be reasonable;
(ii)
shall be adopted in good faith and for a legitimate purpose;
(iii)
shall be adopted in the best interest of the water company and
its
the water
company's
shareholders; and
(iv)
may not discriminate against
any
an
individual shareholder or class of
shareholders, but in a
water
company where there are classes or divisions of stock,
restrictions may differ between the classes or divisions.
(c)
A person who receives a water company share transferred under this section assumes
the obligation for any unpaid assessment related to the share.
(d)
When a water company's articles of incorporation or bylaws authorize the water
company to designate a specific unit of land or location on the unit of land to which
the water company will deliver water, the designation obligates the water company to
deliver water only to the unit of land or location so designated unless the water
company consents in writing for the water to be delivered to a different unit of land
or a different location.
(c)
(e)
Nothing in this section is intended to alter any right or remedy a shareholder
may have under Sections
16-6a-612
,
16-6a-808
,
16-6a-809
,
16-6a-822
,
16-6a-824
,
and
16-6a-825
, or any other applicable law.
Section 2. Section
73-1-10
is amended to read:
73-1-10
. Conveyance of water rights -- Deed -- Exceptions -- Filing and
recording of deed -- Report of water right conveyance.
(1)
(a)
A
water right
person shall transfer a water right by deed in substantially the same
manner as real estate
, whether
the water right is
evidenced by
:
(i)

a decree
,
;
(ii)

a certificate of appropriation
,
;
(iii)

a diligence claim to the use of surface or underground water
,
;
or
(iv)
a water user's claim filed in general determination proceedings
, shall be
transferred by deed in substantially the same manner as is real estate
.
(b)
The deed must be recorded
A person shall record the deed described in Subsection
(1)(a)

in the office of the recorder of
:
(i)

the county where the point of diversion of the water is located
;
and
in
(ii)
the county where the water is used.
(c)
A recorded deed of a water right shall from the time of
its
the deed's
recording in
the office of the county recorder constitute notice of
its
the recorded deed's
contents
to all persons.
(d)
(i)
Beginning July 1, 2011, a deed under Subsection
(1)(a)
may include a water
rights addendum as provided in Section
57-3-109
.
(ii)
The state engineer shall consider a water rights addendum that is recorded and
forwarded to the state engineer by a county recorder, in accordance with Section
57-3-109
, as a submitted report of water right conveyance under Subsection
(3)
.
(2)
(a)
A transfer of ownership of a share of stock in a water company, as defined in
Section
16-4-102
, is accomplished only in accordance with Section
16-6a-606
.
(b)
The records of a water company, and not the records of the state engineer, determine
a person's ownership of a share of stock in the water company.
(2)
The right to the use of water evidenced by shares of stock in a corporation shall be
transferred in accordance with the procedures applicable to securities set forth in
Title
70A, Chapter 8, Uniform Commercial Code - Investment Securities
.
(3)
(a)
To update water right ownership on the records of the state engineer, a water right
owner shall submit a report of water right conveyance to the state engineer.
(b)
The report of water right conveyance shall be on forms provided by the state
engineer.
(c)
The report shall be prepared by:
(i)
or prepared under the direction of and certified by, any of the following persons
licensed in Utah:
(A)
an attorney;
(B)
a professional engineer;
(C)
a title insurance producer; or
(D)
a professional land surveyor; or
(ii)
the water right owner as authorized by rule of the state engineer.
(d)
The filing and processing of a report of water right conveyance with the state
engineer is neither an adjudication of water right ownership nor an opinion as to title
or validity of the water right.
(e)
The state engineer shall
adopt
make
rules
, in accordance with Title 63G, Chapter 3,
Utah Administrative Rulemaking Act,
that specify:
(i)
the information required in a report of water right conveyance; and
(ii)
the procedures for processing
the reports
a report of water right conveyance
.
Section 3. Section
73-1-11
is amended to read:
73-1-11
. Appurtenant water rights pass to grantee of land -- Exceptions --
Conveyance of a portion of irrigated land -- Right to the use of water evidenced by shares
of stock -- Appurtenant water rights -- Evidence -- Where appurtenant -- Partial
conveyances of water and land.
(1)
(a)
A water right appurtenant to land
shall pass
passes
to the grantee of the land
unless the grantor:
(i)
specifically reserves the water right or any part of the water right in the land
conveyance document;
(ii)
conveys a part of the water right in the land conveyance document; or
(iii)
conveys the water right in a separate conveyance document
prior to
before
or
contemporaneously with the execution of the land conveyance document.
(b)
If a county recorder records a document that conveys a water right appurtenant to
land as described in Subsection
(1)(a)
and relies on the document to maintain a tract
index described in Section
17-71-302
, the state engineer shall rely on the document
as an effective conveyance of a water right appurtenant to land.
(2)
(a)
If the water right has been
exercised
beneficially used
in irrigating different
parcels of land at different times, it shall pass to the grantee of a parcel of land on
which the water right was
exercised
beneficially used
next preceding the time the
land conveyance was executed.
(b)
Subsection
(2)(a)
applies only to land conveyances executed before May 4, 1998.
(3)
In any conveyance, the grantee assumes the obligation for any unpaid assessment

described in Subsection
73-5-1(3)
.
(4)
(a)
The right to the use of water evidenced by shares of stock in a corporation
A
share of stock in a water company, as defined in Section
16-4-102
:
(i)
is not a water right
;
(ii)
unless specifically provided for in Section
16-6a-606
, is not
appurtenant to land
.
;
and
(iii)
is transferred only as provided in Section
16-6a-606
.
(b)
A person may not use a share of stock in a water company, as defined in Section
16-4-102
, for which the water company designates a specific unit of land or a
location on a specific unit of land where the water company delivers water in
accordance with Section
16-6a-606
as the basis for transferring ownership of or
changing title to a water right belonging to the water company.
(b)
On or after May 14, 2013, unless provided otherwise in a corporation's articles of
incorporation or bylaws, the right to the use of water evidenced by shares of stock in
a corporation shall transfer only as provided in Subsection
73-1-10(2)
.
(5)
(a)
This Subsection
(5)
governs land conveyances executed on or after May 4, 1998,
and has no retrospective operation.
(b)
For purposes of land conveyances only, a water right evidenced by any of the
following documents is appurtenant to land:
(i)
a decree entered by a court;
(ii)
a certificate issued under Section
73-3-17
;
(iii)
a diligence claim for surface or underground water filed

pursuant to

Section
73-5-13
;
(iv)
a water user's claim executed for general determination of water rights
proceedings conducte
d
pursuant to

Title 73, Chapter 4, Determination of Water
Rights
, or pursuant to Section
73-3-16
;
(v)
an approval for an application to appropriate water issued under Section
73-3-10
;
(vi)
an approval for an application to permanently change the place of use of water
issued under Section
73-3-10
; or
(vii)
an approval for an application to exchange water issued under Section
73-3-20
.
(c)
For purposes of land conveyances only, the land to which a water right is appurtenant
is the authorized place of use of water as described in the:
(i)
decree;
(ii)
certificate;
(iii)
diligence claim;
(iv)
water user's claim;
(v)
approved application to appropriate water;
(vi)
approved application to permanently change the place of use of water; or
(vii)
approved exchange application.
(d)
If a grantor conveys part of the water right in a land conveyance
document
pursuant
to
Subsection
(1)(b)
, the portion of the water right not conveyed is presumed to be
reserved by the grantor.
(e)
If the land conveyed constitutes only a portion of the authorized place of use for the
water right, the amount of the appurtenant water right that passes to the grantee shall
be proportionate to the conveyed portion of the authorized place of use.
(6)
Beginning July 1, 2011, a deed conveying fee simple title to land may include a water
rights addendum as provided in Section
57-3-109
.
Section 4.
Effective Date.
This bill takes effect on
May 6, 2026
.
2-25-26 2:00 PM