UP THE CREEK
June 1, 2006
It’s once again time for our periodic stern reminder of the facts of membership in USCDWUA. These lectures usually come after a worse-than-normal run of lost stock certificates and difficult stock transfers, and that is indeed the case this time. It seems that each year teaches us some new ways by which the simple task of transferring water stock can be made to resemble dental surgery. This letter is to assure you that it doesn’t have to be that way.
Much misunderstanding exists about the structure of USCDWUA. We are not a water district. We are not a municipality. We are a private non-profit association formed for the purpose of providing domestic water in unincorporated rural areas. A water tap on our system requires membership in the Association. Such membership confers rights and responsibilities on the member. You as a member have the right to vote for directors to represent you in the operation of the system. You have the right to approve budgets and have a say in major decisions. You have the responsibility to be aware of your stock certificate - where it is, and whose names are on it.
Each water tap owned is represented by a stock certificate. This certificate is the proof of tap ownership. It is like the title to a car, or the deed to property - in other words, an important document that you need to keep track of. When you sell your property with the tap, the tap needs to be transferred to the new owner, just like the property. You might think that the tap legally goes with the property automatically. Most of the time that is true, as our bylaws prohibit the moving of a water tap from the property for which it was issued, except in cases of hardship which are individually decided by the Board of Directors. But, regardless of the legal attachment of the tap to the property, you must still transfer the stock. This means surrendering your stock certificate to us, assigning it in writing to the new owner, paying up your account, and paying a transfer fee. The new owner makes application for membership, and a new stock certificate is issued. Your old certificate is retired. This is all easy, quick, and cheap unless one of the following applies:
1. You lost your stock certificate. In that case you need to purchase a “lost document bond,” which indemnifies the Association in case the certificate later turns up in the hands of someone with trouble on their mind.
2. You own the stock with another person who is no longer part of your life. That person, even though they may have moved to the other end of the earth, must assign the stock to the new owner also. If that person is deceased, you might be the legal owner of their interest (as in the case of a spouse), or you might not. Their estate might have an interest. Any question of divided ownership will need to be resolved before we can transfer the stock.
3. A lending institution has a collateral assignment against the stock. We will need a written release from the lender. In some cases, a Release of Deed of Trust will be accepted, if it clearly applies to the same loan as the collateral assignment.
4. All of the above at the same time. Yes, it’s happened.
The consequences of not providing us with enough information to transfer the stock are annoying. For one thing, you will continue to receive the bill, even after you have sold and moved out of your house, until the transfer can be made. In extreme cases, when it appears that no progress is being made toward transfer, we will discontinue water service. The new owner then begins mentioning misrepresentation, fraud, and lawyers. Lets avoid that. Please call our office for advice if you anticipate selling. You can also find transfer requirements posted on our website at the address www.uscdwua.com by following the link at the top of the home page to “Forms and Documents” then to “Basic Requirements for a Transfer.”