1.10.5. Water Rights. In appraising properties in which water rights contribute to the overall value of the property, the appraiser must recognize that water rights are established under state law. Appraisers should research sales in the same district or drainage basin and take into account water-rights seniority, past demand, drought, past depletion type of use, historic place of use, conversion, and statutory limitations on transferring place of use. There may be many other market factors that should be considered, such as costs of hydrologic and engineering studies as well as legal fees that must be addressed. The appraiser should consult with the client agency and agency counsel to ensure that the characteristics of the water rights that contribute value to the larger parcel are properly accounted for.