Facts: An owner defaults on a mortgage secured by a trust deed lien on a parcel of real estate which captured diverted floodwaters for storage in an aquifer beneath the parcel. A notice of default (NOD) is recorded initiating foreclosure. The property owner files a petition in bankruptcy listing “stored water” as personal property. A notice of trustee’s sale (NOTS) is recorded making no reference to any water rights. The property is sold at the trustee’s sale. The foreclosed-out prior owner seeks to extract and sell the water.
Claim: The prior owner claims the water rights are personal property since the NOTS did not include water rights.
Counterclaim: The new owner claims the water rights are real property conveyed with the sale of the parcel of real estate since water rights are appurtenant and run with the land and are never owned by an individual other than the owner of the parcel.
Holding: A California appeals court holds the water rights were conveyed to the new owner in the sale since water rights are appurtenant and run with the ownership of the parcel conveyed. [Sandton Agriculture Investments III, LLC v. 4-S Ranch Partners, LLC (2025) 330 CA3rd 738]
Sandton Agriculture Investments III, LLC v. 4-S Ranch Partners, LLC
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