Well sharing agreements are more common than you might expect! These types of agreements allow neighbors to share a well along with the costs for electricity and maintenance. However, there are several pitfalls that can be a big headache for landowners!
Basically, these kinds of agreements are a combination of easements and covenants. Easements allow owners land, called the dominant estate, to use adjacent property, called the servient estate. Another kind of easement, called an easement in gross, do not have a dominant estate, like utility easements. The easement components of these kinds of agreements typically allow access to the well, maintenance, and repairs.
On the other hand, the covenant portions of these agreements contain the contractual terms. These contractual requirements pass with the sale of the land to new owners. For example, the agreement typically require the landowners to share electrical and maintenance costs. Also, parties must typically share water production if water is not available to meet the demand. In addition, terms can include dispute resolution terms, limitations on adding new parties, limit water uses, or describe the process to withdraw.
In contrast, sometimes the terms of the agreement are not in writing. Selling adjacent property served by a common well or subdividing property and providing well water using a pipeline can create an unwritten wells sharing agreement. If a dispute arises, parties might file a lawsuit to establish the agreement as an implied easement or as irrevocable license. Since parties must establish the terms of an unwritten easement by costly litigation, parties sharing a well should consider drafting a written agreement instead of “handshake deals.” We discussed these kinds of agreements in a free webinar available here.
First, these agreements typically share electricity and other expenses equally. Conflicts often arise when one party allegedly uses more water than the others, but each party pays the same amount. To avoid this issue, terms can allocate costs to each party based on their use. This approach might require installation of water meters to measure water use to each property and renegotiation of the terms of the agreement.
Second, the costs for maintenance of the well often become a point of controversy. Many wells operated using a well sharing agreement were drilled many years ago and have fallen into disrepair. The costs to reconstruct a failing well or drill new well can be significant. Further, wells constructed in the past often do not meet modern well construction standards. We discussed well construction issues in a free webinar available here. When the agreement does not clearly determine cost allocations, parties often disagree about who should pay for the repairs.
Third, the agreements often omit terms related to legal requirements under the Water Code. Oregon law requires a water use right for any domestic use that exceeds 15,000 gallons per day under ORS 540.545(1)(d). In addition, irrigation from a single exempt group domestic well cannot exceeds ½ acre under ORS 540.545(1)(b), meaning the parties to the well sharing agreement must share the available ½ acre for irrigation. Each party is not allowed their own ½ acre of outdoor irrigation under Oregon law. However, landowners can drill their own wells to provide additional irrigation if needed. Unfortunately, these agreements often omit the explicit allocation of outdoor irrigation to the parties.
Of course, the best way to prevent a dispute is to develop a fair and complete well sharing agreement that avoids the problems identified above. However, if you are already participating in an agreement and would like to modify its terms, the parties may renegotiate a new agreement. A written agreement can also supersede an unwritten well sharing agreement by explicitly outlining its terms. Plus, a written document that is recorded with the county notifies future buyers of the property.
We routinely review and draft these kinds of agreements, so if you have specific questions, please contact us! We provide an extensive overview on how we can assist you with your agreements and other water items in Nevada or Oregon. We recently created a series of free webinars covering a variety of water-related topics published as a Water Right Video Handbook available here. Make sure to stay tuned to Schroeder Law Offices’ Water Blog for more news that may affect you!