Daily Development for Wednesday, September 5, 2007
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

WATERS AND WATER RIGHTS; RIPARIAN GRANTS:   A riparian right and a riparian grant are not identical because a riparian right is a license or privilege to access or make reasonable use of water whereas a riparian grant is no different from any other conveyance of land that creates a separate tract of land, separate and apart from the upland tract that shares its boundary. 

Panetta v. Equity One Inc., 190 N.J. 307, 920 A.2d 638 (2007); May 1, 2007.

The New Jersey Supreme Court was faced with the question of "whether a conveyance of real property that makes no mention of an abutting riparian grant can be construed under [a particular New Jersey statute] to include that grant as an appurtenance." 

Several generations of a family owned property which consisted of both an upland lot designated as a particular tax lot and a riparian grant separately designated as another tax lot.  The riparian grant was created in 1928 and was properly recorded.  A time came when the property was owned by a mother and her son.  They then deeded the property to themselves and to the son's wife.  "That deed specifically included and described the upland lot and the riparian grant as tract one and tract two, respectively."  A few years later, the son applied for a mortgage loan.  In connection with that loan, his mother and wife deeded their interests in the upland property to him and his wife.  "That deed did not mention the adjacent riparian grant, but only described the upland lot by reference to its tax lot and with a metes and bounds description."  The mortgage was granted using the description on the contemporaneous deed.  "Although the mortgage documents provided that all improvements, eas
ements, appurtenances, and fixtures were included, no mention of the riparian grant [lot] was contained therein."

When the borrower (son) defaulted on the loan, foreclosure followed.  A sheriff's deed issued and it contained the property description without any mention of the riparian grant lot.  The mortgagee was the successful bidder.  It then solicited no-reserve bids for the property and each of the bids, but one, were tendered not only for the property, but also for the riparian grant incorporated therein.  The mortgagee accepted one of the bids that expressly called for the riparian grant lot as part of the property to be sold.  The sole bidder who did not condition its bid on inclusion of the riparian grant lot sued the mortgagee for specific performance.

In the initial court proceedings before the lower court, it was ruled that the borrower had "intentionally excluded the riparian grant in securing the mortgage and that [the mortgagee] was unaware of the grant."  The lower court also "held that nothing requires that the riparian grant follow the upland property as a matter of law."  The lower court thus ordered specific performance in favor of the one bidder who had not, in its bid, required that the riparian grant lot be included.

The Appellate Division reversed the judgement for the specific performance, holding that the riparian grant was included in the conveyance that had been made by the mother and the son's wife to the son and his wife.  This resulted in a further appeal to the New Jersey Supreme Court. 

The Supreme Court held that "[a] riparian grant is a conveyance in fee simple of real property.  As such, without specific mention in the deed or other evidence that the parties intended its inclusion, a riparian grant will not pass as an appurtenant to another distinct parcel."  Reaching this holding, it opined that the "Appellate Division failed to distinguish between a riparian right and a riparian grant, which are not identical and not similarly governed by" New Jersey statute.  Here, the riparian grant lot was identified on the municipality's tax map "as distinct from the upland lot."  The Court rejected the Appellate's Division view that this distinction was inconsequential.  Instead, it found it to be a critical distinction. 

According to the Court, "[a] riparian right is a license or privilege to access or make reasonable use of water.  Riparian lands are lands lying along the banks of a stream or water body.  A riparian grant is the method by which the State conveys riparian lands to its citizens.  A riparian grant is not limited to an upland owner but may, after being offered by the State to the upland owner, be granted to persons who are unconnected to the upland property.  A riparian grant is no different from any other conveyance of land." 

The unsuccessful bidder argued "that deed language shows a riparian grant is not like other conveyances because, if separated from the uplands, it reverts to the State."  The Court disagreed, stating that the unsuccessful bidder misapprehended "the import of the language."  Instead, according to the Court, "[s]uch clauses are placed in deeds in the event that the initial claim of upland ownership turns out to be false.  The requirement of upland ownership only inheres in the initial transaction with the State.  A riparian grant is the conveyance of real property divided by from the uplands by a fixed boundary, no different from any other conveyance of land."

In addition, the Court held that "[t]he law governing mortgages leads to the same conclusion.  Generally, if property is not expressly included in the instrument's description, it will not be covered by the mortgage.  Here the mortgage did not reference the riparian grant either expressly or obliquely." 

Consequently, the bidder "who bid on the uplands and did not attempt to include the riparian grant, was the only responsive bidder at the without-reserve auction."  Consequently, that bidder was held to have an enforceable contract with the foreclosing mortgagee and was entitled to specific performance.

Editors Comment: The Driparian grant is clearly a creature of New Jersey statute, but may also be present in other states.  The right in question appears to be an access right, and not a right to take water from the water source.  It is unclear to the editor why a riparian owner would require such an access right and how that right could be implemented if sold separately from riparian lands.  Perhaps we will get some clarification from other DIRTers..

The Reporter for this item was Ira Meislik of the New Jersey Bar, with the editor editing, of course. 

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