The Court of Appeal confirmed that the rights to floodwater captured and stored in an aquifer beneath property were not personal property but rather appurtenant to the land and were transferred with the property during a foreclosure sale. Sandton Agriculture Investments III, LLC v. 4-S Ranch Partners LLC, 109 Cal.App.5th 766 (2025).
In August 2017, Sandton Agriculture Investments acquired ranch property through foreclosure after 4-S Ranch Partners defaulted on repayment of a loan. The primary legal issue was whether approximately 500,000 acre-feet of captured floodwater stored in an aquifer beneath the ranch should be classified as personal property or as part of the real property. 4-S argued that the captured floodwater was personal property and did not become part of the real property by virtue of its storage in the aquifer. Sandton contended that the right to extract groundwater is a real property interest and that the captured floodwater was not severed from the real property, thus remaining part of the real property.
The court examined whether captured floodwater could be classified as personal property. It concluded that once the water seeped into the ground, it became percolating groundwater, losing any personal property classification. The court reasoned that allowing the water to seep into the ground meant 4-S no longer maintained control over it, as the water joined the aquifer and could not be distinguished from other groundwater. The court upheld the principle that water must be severed from the land to be classified as personal property. Since the water in question was not severed, it remained part of the real property. Accordingly, the water rights were appurtenant to the land and transferred to Sandton during the foreclosure sale.
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