Shares of Water Stock in Utah: Personal Property or Real Estate?

Abstract

Utah deserts supply the state with exquisite beauty and are a definitive part of Utah’s identity. However, a consequence of this arid beauty is aridity itself. Because Utah is one of the driest states in the nation, water is an important resource. Accordingly, Utah legislators have enacted statutes that ensure that those who own water will use it beneficially and that ownership of water can be transferred easily from one owner to another. Water ownership is categorized as either ownership of a water right or a share of water stock. This Note focuses on the need for a resolution in Utah law regarding the transfer of shares of water stock. Under Utah statutes, shares of water stock transfer as securities according to the principles of Utah’s Uniform Commercial Code. However, Utah courts have ignored these statutes and have applied judicially made rules in an ad hoc manner to determine whether the shares of stock in question should transfer as securities or as real property. This Note advocates that Utah courts should acquiesce to the Utah Legislature and hold that shares of water stock are transferred per the Utah Uniform Commercial Code.