Water rights

How BC law treats it

Under the Water Sustainability Act, SBC 2014, c 15, the property in and right to use water in BC is vested in the provincial government. Owning land beside a stream or over an aquifer does not give a right to divert water for business use. A person needs a licence or a short term use approval to divert and use stream water or, since the Act came into force in 2016, groundwater for non-domestic purposes such as irrigation, industry or commercial supply. Household domestic use of groundwater is exempt. Licences follow a first in time, first in right system: an older licence has priority over a newer one when water is scarce. Each licence specifies the source, the permitted quantity, the purpose and the land or works it serves. Licences are generally appurtenant to the land, which means they pass to a new owner when the land is transferred. Splitting a licence, moving it to other land, or changing its purpose requires approval from the province. Licences can be cancelled for non-use or for failing to pay rentals, so a buyer should confirm the licence is in good standing. The Water Protection Act, RSBC 1996, c 484 separately prohibits bulk removal of BC water out of the province.

What it means for your business

For farms, wineries, resorts, bottlers and industrial sites, a valid water licence can be essential to the business. A buyer who assumes the property comes with enough water may find the licence lapsed, covers only part of the land, or has a low priority. Due diligence should include a search of the provincial water licence records, a check that rentals are paid, and purchase agreement representations that the licences are valid and will pass with the land. Example: A buyer of an Okanagan vineyard confirms through due diligence that two irrigation licences are appurtenant to the land, in good standing, and have early priority dates. The purchase agreement includes the seller's warranty that the licences pass on closing.

Risks and common mistakes

Assuming owning waterfront land gives a right to divert water for business use. Using groundwater for irrigation or industry without applying for a licence. Buying rural or agricultural land without searching the water licences tied to it. Assuming a licence can be sold separately from the land without approval. Letting a licence go unused or unpaid until it is cancelled.