FACT SHEET 13

August 1998

INVOLUNTARY 

ACQUISITIONS 

 AND THE RRA

Reclamation Reform Act of 1982 (RRA) 

Page 1 of 6

This Fact Sheet explains the special acreage limitation provisions for land acquired involuntarily, 

as set forth in the RRA and section 426.14 of the Acreage Limitation Rules and Regulations 

(43 CFR part 426). The specific provisions that apply to individual instances of involuntarily acquired

land depend on the acreage limitation status of the land in the previous owner's landholding AND

the acreage limitation status of the land in your landholding. If you are not sure of the former acreage

limitation status of the land you have acquired involuntarily, contact the district in which the land 

is located.

 If the involuntarily acquired land was previously held by you as excess land AND you 

are not a financial institution (i.e., a commercial bank or trust company, a private bank, 

an agency or branch of a foreign bank in the United States, a thrift institution, an insurance

company, a loan or finance company, or the Farm Credit System), FIRST see section V 

of this Fact Sheet.

A flowchart is included on the last page of this Fact Sheet which should assist you in finding the

appropriate section of this Fact Sheet to review.

WHAT IS CONSIDERED TO BE AN INVOLUNTARY ACQUISITION?

If you have acquired land through any of the following actions, you have what is defined by the RRA 

as an INVOLUNTARY ACQUISITION:

! FORECLOSURE or similar involuntary process of law

! CONVEYANCE IN SATISFACTION OF A DEBT (for example, a mortgage, real estate

contract, or deed of trust)

! INHERITANCE

! DEVISE (a testamentary disposition of land, transfer as a result of a will or testament)

If you have acquired land by a process not listed above and you believe it was an involuntary

acquisition, contact your local Bureau of Reclamation (Reclamation) office for a review of 

your situation.
FACT SHEET 13

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SECTION I: WHAT IF NONEXCESS LAND IS

INVOLUNTARILY ACQUIRED?

If you involuntarily acquire land that was nonexcess in the previous owner's landholding, you may

choose to designate the land as either nonexcess (provided you have not already completed your

ownership entitlement) or excess (even if your total landholding is not large enough to complete your

nonexcess ownership entitlement).

A. Designated as Nonexcess

If you are the direct landowner of the involuntarily acquired land and you designate such land as

nonexcess in your landholding, the following apply:

1. As with all nonexcess land, such land is eligible to receive Reclamation irrigation water.

2. If you and the former owner(s) both have the same acreage limitation status (that is, 

you are both subject to the discretionary provisions or both subject to prior law), the water rate

applicable to the newly acquired land will be the same as if the land had not been acquired through 

an involuntary acquisition.

3. If you are a landholder subject to prior law and the land you acquired involuntarily is 

located in a district subject to the discretionary provisions, you automatically become subject to the

discretionary provisions. The discretionary provisions' water rate will be applied to water delivered to

your entire landholding, including any land that was not involuntarily acquired.

4. If you are a prior law recipient and you involuntarily acquire land from a landowner who 

has made an irrevocable election in a prior law district, you will remain subject to prior law and the

newly acquired land will also be considered to have prior law status, with the prior law water rate 

being applied.

5. If you are subject to the discretionary provisions and the land you acquired involuntarily is

subject to prior law, the newly acquired land will also become subject to the discretionary provisions,

with the water rate associated with those provisions being applied.

In each of these cases, if you lease the land to another party, the full-cost rate may apply based on 

the acreage limitation status and westwide landholding of the lessee. You may sell the involuntarily

acquired land at any time at its fair market value. If the land is subject to a 10-year deed covenant

requiring Secretarial price approval for the land to retain its eligibility, you may request the deed

covenant be removed before resale.

B. Designated as Excess

If you are the direct landowner of the involuntarily acquired land and you designate such land as 

excess in your landholding, the following apply:
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Page 3 of 6

1. The involuntarily acquired land is eligible to receive Reclamation irrigation water for 5 years

from the date it was acquired (date of previous landholderís death in cases of inheritance). During 

this 5-year period, the water rate that applied to the former owner will also apply to you for the

involuntarily acquired land. However, if you lease the land to another party, the full-cost rate may 

apply based on the acreage limitation status and westwide landholding of the lessee. 

2. The acreage limitation provisions applicable to you and your land are not affected when

involuntarily acquired land is designated excess in your landholding. For example, if you are subject 

to prior law and the former owner was subject to the discretionary provisions, you will not become

subject to the discretionary provisions by virtue of your involuntary acquisition. As another example, 

if you are subject to the discretionary provisions and the former owner was subject to prior law, the

newly acquired land will remain subject to prior law with the prior law water rate applied during the

5-year period following acquisition.

3. You may want to redesignate some or all of your involuntarily acquired land from excess 

to nonexcess any time during the 5-year period following acquisition, or after that period has expired. 

However, you must receive Reclamationís approval for the redesignation as specified in section

426.14(f). If the rate paid for delivered Reclamation irrigation water was less while the land was

designated as excess than it would have been had the land been designated as nonexcess when 

it was involuntarily acquired, the difference in rates must be remitted to Reclamation.

4. If you fail to sell or otherwise dispose of the land within the 5-year period, the land will

become ineligible to receive Reclamation irrigation water until it is sold to an eligible buyer, unless 

the land has been redesignated as nonexcess as set forth in the immediately preceding paragraph.

The land may be sold at any time at its fair market value, but it may not be placed under recordable

contract. If the land is subject to a 10-year deed covenant requiring Secretarial price approval, the

covenant may be removed prior to resale.

SECTION II: WHAT IF INELIGIBLE EXCESS LAND IS

INVOLUNTARILY ACQUIRED?

If the involuntarily acquired land was ineligible to receive Reclamation irrigation water in the previous

owner's landholding, it will remain ineligible in your landholding unless the following two conditions 

are met:

1. You have not completed your ownership entitlement and you designate the land as

nonexcess in your landholding; AND

2. The deed conveying the involuntarily acquired land to you includes a 10-year covenant

requiring Secretarial price approval. The 10-year period will commence when the land becomes

eligible to receive Reclamation irrigation water.
FACT SHEET 13

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If these two conditions are met, the possible effects on the acreage limitation status and water rates

described in section I.A. of this Fact Sheet will apply in this situation. If either of these two conditions 

is not met, the involuntarily acquired land will remain ineligible to receive Reclamation irrigation water

until it is sold to an eligible buyer at an approved price, and the 10-year covenant requiring

Secretarial price approval is placed in the deed to the land upon sale. 

SECTION III: WHAT IF EXCESS LAND UNDER RECORDABLE CONTRACT

IS INVOLUNTARILY ACQUIRED?

If you involuntarily acquire excess land that is under recordable contract, you may designate it as

nonexcess in your landholding (to the extent possible) and remove that nonexcess land from the

recordable contract. The possible effects on the acreage limitation status and water rates described 

in section I.A. of this Fact Sheet will apply in this situation. Such land may be sold at its fair market

value and the deed need not include the covenant requiring sales price approval. 

If the involuntarily acquired land is under recordable contract and is designated excess in your

landholding, you may continue to receive Reclamation irrigation water under the terms of the

recordable contract. However, you must agree to assume the recordable contract and its terms,

including the requirement for sale after a specified period of time at an approved price, by executing 

an assumption agreement provided by Reclamation. If you assume the recordable contract, the

involuntarily acquired land will be eligible to receive Reclamation irrigation water for 5 years from the

date it was involuntarily acquired or the remainder of the contract period, whichever is longer. 

During this period, the water rate that applied to the former owner will also apply to you. However, 

if you lease the land to another party, the full-cost rate may apply based on the acreage limitation

status and westwide landholding of the lessee. The sale of the land will be under the terms and

conditions specified in the recordable contract, including sales price approval.

If the land is designated excess and you do not assume the recordable contract, the land will 

become ineligible to receive Reclamation irrigation water until sold to an eligible buyer at an

approved price, and the 10-year covenant requiring Secretarial price approval is placed in the 

deed to the land upon sale.

SECTION IV: WHAT IF MORTGAGED LAND IS 

INVOLUNTARILY ACQUIRED BY THE LENDER?

Land that is involuntarily acquired by lenders will be treated in the same manner as described in 

the preceding sections, except in those cases where (1) the lender involuntarily acquired land that

changed from nonexcess status to excess status after the mortgage was recorded, AND (2) the 

lender designates the land as excess. In such cases, the land will be eligible to receive Reclamation

irrigation water in the lenderís ownership for 5 years or until transferred to an eligible buyer,

whichever occurs first. In addition, the land may be sold at its fair market value, with no requirement

for a deed covenant to be applied. During the 5-year period, the water rate will be the same as for the

former owner, unless the land becomes subject to full-cost pricing through leasing. If the lender

designates such land as nonexcess rather than excess, it will be treated as discussed in section I.A. 

of this Fact Sheet.
FACT SHEET 13

Page 5 of 6

SECTION V: WHAT IF LAND BEING INVOLUNTARILY ACQUIRED WAS

PREVIOUSLY HELD AS EXCESS IN YOUR LANDHOLDING?

If you involuntarily reacquire nonexempt land (either through direct or indirect ownership) (a) that is

otherwise eligible to receive Reclamation irrigation water, (b) that was formerly excess and disposed 

of by you (or an entity in which you had an interest), AND (c) you do not qualify as a financial

institution, such land is ineligible to receive Reclamation irrigation water regardless of whether you

designated it as excess or nonexcess in your landholding UNLESS:

1. You became or contracted to become a direct or indirect owner of the reacquired land 

prior to December 18, 1996; 

2. You pay the full-cost rate for any Reclamation irrigation water delivered to the reacquired

land. If you are a part owner of a legal entity that becomes the direct owner of the land in question, 

the full-cost rate will be applicable to the proportional share of land receiving Reclamation irrigation

water that reflects your interest in the legal entity that involuntarily acquired the land; OR

3. The deed covenant associated with the sale of the excess land has expired.

If you meet any of the preceding conditions AND the involuntarily acquired land is designated excess

in your landholding, the land will be eligible to receive Reclamation irrigation water for a period of 

5 years at the rate paid by the former owner, unless the land is eligible to receive Reclamation

irrigation water due to meeting condition number 2 and the full-cost rate must be paid, or the land

becomes subject to full-cost pricing through leasing. If the land is subject to a 10-year deed covenant

requiring Secretarial price approval, the covenant will not be removed, unless the land is eligible to

receive Reclamation irrigation water due to meeting condition number 1.

If you meet any of the preceding conditions AND the involuntarily acquired land is designated

nonexcess in your landholding, the land will be treated as discussed in section I.A. of this Fact 

Sheet. However, if you had previously sold the land in question at a price approved by Reclamation, 

the full-cost rate must be applied if the land is eligible to receive Reclamation irrigation water due to

meeting condition number 2, or the land becomes subject to full-cost pricing through leasing.

 Nonexempt land means either irrigation land or irrigable land that is subject to the acreage

limitation provisions.

If you have any questions concerning involuntary acquisitions, recordable contracts, or deed

covenants, contact your district or local Reclamation office.
FACT SHEET 13

Mission of the Bureau of Reclamation: To manage, develop, and protect water and related resources in an environmentally and economically

sound manner in the interest of the American public.

The Department of the Interior has established a 24-hour toll-free telephone number (1-800-424-5081) for anyone wishing to report suspected

violations of the Reclamation Reform Act of 1982 (RRA). Anyone reporting suspected violations will be protected under Federal privacy laws.

Distributed by the Bureau of Reclamation, United States Department of the Interior.

Page 6 of 6

Was the land eligible to receive

Reclamation irrigation water in the

previous landownerís landholding?

The land remains ineligible to

receive Reclamation irrigation

water until the provisions of

section 426.14(b) of the rules

are met. See section II of this

Fact Sheet.





 Is the landholder a financial institution as defined

in section 426.14(a) of the revised Acreage

Limitation Rules and Regulations (rules)? 



The eligible land may

be designated excess

and receive

Reclamation irrigation

water for 5 years as

provided for in

section 426.14(e)(2)

of the rules. See

section I.B. of this

Fact Sheet.

Did the landholder acquire the land before 

December 18, 1996?



 Did the landholder ever hold the land as ineligible

excess land or under recordable contract?





Has the deed covenant associated with the sale 

of the land from excess expired? 



The land probably may receive Reclamation

irrigation water only if the full-cost rate is remitted for

such deliveries. See section V of this Fact Sheet.

ELIGIBILITY OF INVOLUNTARILY ACQUIRED NONEXEMPT LAND TO RECEIVE

RECLAMATION IRRIGATION WATER IF IT IS DESIGNATED EXCESS 

BY THE INVOLUNTARILY ACQUIRING PARTY