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A decision from the California Court of Appeal addresses the age-old question of the ownership of water rights in connection with the purchase of land. In Sandton Agriculture Investments III, LLC v. 4-S Ranch Partners, LLC, the court held that floodwater that collects in an underground aquifer is not personal property.[1] Rather, the right to use that water is a real property right that runs with the land.

Under California law, water itself, in its natural state, cannot be owned by any private person. There is no personal property right in water on or beneath a parcel of land. Rather, the right to use the water is a real property interest that passes with the land when it is sold.

In Sandton, the appellant, 4-S Ranch Partners, LLC, owned 5,257 acres of land in Merced County overlying an aquifer. 4-S Ranch entered into a loan and pledged the land as collateral. It then defaulted on the loan. After multiple forbearance agreements, 4-S Ranch failed to cure the default. The lender initiated foreclosure, while 4-S Ranch filed for bankruptcy.

The land was publicly auctioned at a nonjudicial foreclosure sale, and the lender purchased the land. The lender transferred title to an affiliate (Sandton Agriculture Investments III, LLC), which filed a lawsuit against 4-S Ranch, seeking a declaratory judgment that 4-S Ranch had no water rights associated with the land. The trial court granted summary adjudication for Sandton, and subsequently, after the trial court granted judgment, 4-S Ranch appealed.

The main issue on appeal was ownership of the water in the aquifer beneath the land. The aquifer included floodwater that was allowed to seep into the aquifer pursuant to two easements granted to state and federal agencies for flood control purposes. Sandton maintained that the water was real property, because water rights are treated as appurtenant to the land and pass with title and possession of the land. 4-S Ranch argued that, by permitting the floodwater to be directed into the aquifer pursuant to the easements, it had taken possession and control of the water and converted it to personal property.

The court rejected 4-S Ranch’s personalty argument and reaffirmed the long-standing principle that water rights are real property that run with the land. Water that is on or under the land is not personal property. As the Sandton court explained, water does not become personal property unless and until it is severed from the land and confined in portable receptacles.

That severance must be complete. The Sandton court relied on an earlier decision by the California Supreme Court, Stanislaus Water Co. v. Bachman, which illustrated the concept using the example of water delivered via pipes to customers’ homes.[2] The court explained that, when water is delivered to houses via pipes, the water rights remain real property as long as the water is still in the pipes. The water does not become personal property until the customer removes the water from the pipes. Only then is there a complete severance of the water from the land.

In an attempt to overcome these long-standing principles, 4-S Ranch argued in the Sandton case that floodwater is not naturally occurring and, thus, is not subject to the general rule that water rights are real property. The court rejected that argument. It found that, while floods are not an ordinary occurrence, floodwater is still water in its natural state.

4-S Ranch also argued that by allowing government agencies to divert floodwater into the aquifer via easement, it had converted the water in the aquifer to personal property. To make that argument, 4-S Ranch relied on a California appellate court decision, Dannenbrink v. Burger.[3] In Dannenbrink, miners diverted water from a mountain stream into two ditches. A small portion of the water seeped through a dam on one of the ditches back into the mountain stream. Other landowners downstream had appropriated and continuously used the water that escaped from the dam for approximately 25 years. The miners eventually installed a new, watertight dam, depriving the downstream landowners of water.

The Dannenbrink court ruled that downstream landowners had acquired a prescriptive right to continue receiving water in an amount similar to that which leaked through the old dam and returned to the original stream. In its decision, the Dannenbrink court cited a case from England in the mid-1800s (Awkright v. Gell) that discussed water appropriated from a stream that contained runoff pumped from a mine. Dannenbrink summarized Awkright as finding that, where the water does not return to the original stream (as it did in Dannenbrink), the downstream appropriator “merely secures the corpus of the water thus escaping as personalty.”[4] 4-S Ranch attempted to hang its hat on that language to establish that the floodwater in the aquifer was personal property.

The Sandton court was not convinced. It found that the language quoted from Dannenbrink was mere dictum. Moreover, the Dannenbrink case did not address floodwater at all. It did not discuss the severance requirement. It did not address ownership of water. Dannenbrink was simply a case regarding when an appropriator acquires a prescriptive right to the continued availability of water. The Sandton court thus found Dannenbrink to be irrelevant.

4-S Ranch also relied on several cases that held that landowners are permitted to exercise control over floodwaters.[5] The court found, however, that none of the cases cited by 4-S Ranch held that exercising such control over floodwaters converts it to personal property.

In addition to rejecting 4-S Ranch’s interpretation of the case law, the Sandton court accepted a finding by the trial court that 4-S Ranch never exercised dominion or control over the floodwater at all. Rather, 4-S Ranch passively allowed the floodwater to reach the aquifer through natural processes. This did not rise to the level of exercising dominion or control.

Even if 4-S Ranch had exercised control over the water, however, it provided the court with no authority for its argument that merely exercising control over water is enough to turn it into personal property. While water may be appropriated for personal use through diversion or otherwise taking physical control of the water, the appropriator does not thereby “own” the water (i.e., it does not gain “‘title to the individual water molecules’”).[6]

Ultimately, the Sandton court rejected 4-S Ranch’s attempt to confer upon floodwater a special status that would allow it to be converted to personal property merely by the exercise of control over the water. The right to use an underground aquifer remains a real property interest that runs with the land, and the water is not converted to personal property unless and until it is completely severed from the land.

[1] Sandton Agriculture Investments III, LLC v. 4-S Ranch Partners, LLC (2025) 113 Cal. App. 5th 519, 30-31.

[2] Stanislaus Water Co. v. Bachman (1908) 152 Cal. 716, 725-26.

[3] Dannenbrink v. Burger (1913)23 Cal. App. 587.

[4] Id. at 596-97 (emphasis in original) (citing Awkright v. Gell, 5 Mees. & W. 226).

[5] Specifically, 4-S Ranch cited Gallatin v. Corning Irr. Co. (1912) 163 Cal. 405; Mogle v. Moore (1940) 16 Cal.2d 1; and City of Santa Maria v. Adam (2012), 211 Cal. App. 4th 266. See Sandton, 113 Cal. App. 5th 519 at 28-30.

[6] Sandton, 113 Cal. App. 5th 519, at 30-31 (quoting City of Santa Maria, 211 Cal. App. 4th at 302).

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