WATER RIGHTS TRANSFER AGREEMENT
This Water Rights Transfer Agreement (the “Agreement”) dated as of August 26, 2025 (the “Date of Agreement”), is entered into by and between TIVOLI INVESTMENTS, LLC, a California limited liability company (“Owner”), and the CITY OF LANCASTER, a municipal corporation and charter city (“Buyer”). Owner and Buyer are individually referred to herein as a “Party” and collectively referred to herein as “Parties.”
RECITALS
This Agreement is made with respect to the following facts:
A. As a matter of history, after years of litigation related to the groundwater rights in the Antelope Valley areas of Los Angeles and Kern Counties of the State of California, on December 23, 2015, the Los Angeles County Superior Court, Case No. 1-05-CV-049053, entered an Order and Statement of Decision, whereby it approved and adopted a Judgment and Physical Solution (hereinafter “Judgment”) as a mechanism to manage the groundwater rights in said Antelope Valley of California.
B. Thereafter, on March 16, 2021, the California Court of Appeals entered into an Opinion affirming the aforementioned Judgment. These cases related to the adjudication of groundwater rights and are commonly known as the “Antelope Valley Groundwater Cases”.
C. Pursuant to the aforementioned Judgment, Owner is the owner and has the right to extract, use and/or transfer of no less than ONE THOUSAND THREE HUNDRED THIRTY TWO (1,332) acre-foot of permanent or perpetual water rights as set forth in the Judgment. The Judgement, as well as Owner’s rights thereunder, is administered by the Antelope Valley Watermaster (“Watermaster”).
D. Owner is a “Party” to the Antelope Valley Groundwater Adjudication, as that term is defined in Section 3.5.27 of the Judgment. By virtue of the foregoing, Owner possesses: (i) standing to enter into this Agreement; (ii) the legal right to extract and produce water pursuant to the Judgment; and (iii) the legal right to transfer water rights pursuant to the Judgment and applicable laws.
E. Buyer is a public entity and an adjudicated party, as that term is defined in Section
3.5.27 of the Judgment and Physical Solution and is not required to intervene in the Judgment to acquire the water rights that are the subject of this Agreement.
F. Buyer desires to acquire FIVE HUNDRED (500) permanent acre foot of water rights (the “Water Rights”) from Owner.
G. Owner desires to transfer the Water Rights to Buyer, pursuant to the terms of this Agreement.
H. As a public agency, Buyer holds the power of eminent domain pursuant to Government Code section 40404, among other statutes. If Owner did not voluntarily agree to the
sale of the Water Rights as defined and conveyed herein, Buyer’s staff would have recommended and Buyer’s City Council would have considered acquiring the same by eminent domain.
I. Under this Agreement, Owner will grant, assign, convey, sell and otherwise transfer to Buyer, and Buyer will accept from Owner, all of Owner’s right, title, and interest in and to the Water Rights, subject to the conditions, covenants, provisions and terms of this Agreement.
AGREEMENT
IN CONSIDERATION of the foregoing recitals and the mutual promises set forth herein, Owner and Buyer agree as follows:
1. Water Rights Transfer. Owner hereby grants, assigns, conveys, sells and otherwise transfers to Buyer, and Buyer hereby purchases from Owner, the Water Rights.
2. Consideration to Owner. In consideration of the foregoing, Buyer shall pay or remit to Seller the sum of FIVE MILLION DOLLARS ($5,000,000.00) (the “Total Consideration”). The Total Consideration shall be paid by Buyer within thirty (30) days of the Transfer Date (as defined in Section 3 of this Agreement) to Owner by wire transfer of funds to the following account:
Derryberry & Associates LLP Client Trust Account Wire Instructions
3. Antelope Valley Watermaster Application and Approval Required.
Owner shall execute and deliver to Buyer all documents which may be required by the Antelope Valley Watermaster (“Watermaster”) to reflect the transfer to Buyer of the Water Rights which are the subject of this Agreement. All such documents shall be in such form and substance as shall be reasonably satisfactory to Owner, Buyer, and the Watermaster. Without limitation, Owner shall execute, acknowledge and deliver to Buyer a copy of the Watermaster’s Transfer Request Form (“Watermaster Form”), attached as Exhibit A. Upon receipt, Buyer shall execute, acknowledge and deliver the Watermaster Form to the Watermaster. The Parties shall file the Watermaster Form to be heard before the Watermaster at the earliest practicable date. The Watermaster Form shall provide that, subject to the Watermaster’s approval, the Water Rights transfer to Buyer shall be effective as of January 1, 2026 (“Transfer Date”). To accomplish this, the Parties shall promptly provide such documents and information to the staff of the Watermaster as they may reasonably request from the Parties in connection herewith. If the Watermaster fails to take any action which is necessary for the transfer contemplated by this Agreement to become effective on the Transfer Date, then the Parties shall negotiate in good faith to determine whether to extend or change the Transfer Date; provided, however, that each Party shall retain sole and absolute discretion to decide whether to agree to such an extension or modification. Notwithstanding anything to the contrary herein, neither Party shall be required to execute any document or take any action that will result in any liability or expense (other than nominal expenses such as telephone charges and overnight delivery charges). Owner shall be responsible for any fees associated with the submission of the Watermaster Form as set forth herein. Notwithstanding any provision of this Agreement, the Transfer Date and Buyer’s obligation to pay the Total Consideration shall be contingent upon and subject to the Watermaster’s approval.
4. Authority.
a. Each Party has the right, power, and authority to enter into this Agreement and to perform its obligations hereunder, and the person(s) executing this Agreement on behalf of each Party have the right, power, and authority to do so.
b. To each Party’s actual knowledge, other than the approval of the Watermaster, no consent from any third party (including any third party governmental agency or authority) is required in connection with the transfer of Water Rights to the Buyer pursuant to this Agreement. c. To each Party’s actual knowledge, each Party is not now, or at any time relevant for the implementation of this Agreement, in violation of any law, ordinance, rule, regulation, or administrative or judicial order affecting each Party’s right to transfer Water Rights or take any action under this Agreement.
5. Warranties.
a. Each Party warrants to the other party that it has the right, power and authority to enter into this Agreement and to perform its duties, obligations and responsibilities hereunder and that the person executing this Agreement on its behalf has the right, power and authority to do so. b. Owner has no knowledge of any outstanding dispute, litigation, arbitration, judgment, or other action against or involving Owner that would in any manner affect the consummation of this transaction or constitute any cloud upon Owner’s title to the Water Rights.
Owner has no knowledge of any pending litigation, proceedings, or investigations, or any threats of litigation, proceedings, or investigations, which might result in any cloud upon the title to the Water Rights, or any other material change in the value of the Water Rights, other than those consolidated appeals challenging the Judgment that are still pending as of the Effective Date. c. Owner now has, and as of the Effective Date will have, good and merchantable, fee simple title to the Water Rights. The Water Rights are in good standing with the Watermaster, the County of Los Angeles, the State of California, and all other government agencies with jurisdiction or authority over the Water Rights. The Water Rights have not been forfeited or abandoned, and are not subject to lien, receivership, nor any other encumbrance whatsoever.
6. Conditions Precedent. The obligation of Buyer to close this transaction and to make payment pursuant to Section 2 herein is subject to the fulfillment of each of the following conditions, which Owner and Buyer shall utilize their best efforts and highest possible diligence to achieve:
a. The Watermaster shall verify that Owner is the owner of the Water Rights. In furtherance of the foregoing, Owner shall provide to the Watermaster any and all documents that it requires to confirm that Owner is the owner of the Water Rights, and that Owner possesses sole legal right and standing to convey the Water Rights; and b. The Watermaster shall communicate its approval of this transaction, via execution
of the Transfer Request Form by a Watermaster Engineer and an authorized Board Member or Secretary of the Watermaster Board.
Upon fulfillment of the preceding conditions prior to the Transfer Date, this Agreement shall constitute a binding obligation of Buyer to remit the Total Consideration to Owner. Owner shall prepare and deliver to Buyer such documents as reasonably requested by Buyer to implement or memorialize this transaction.
7. Time of the Essence. Time is of the essence as to each and every provision of this Agreement. However, if any of the Conditions Precedent are not satisfied on or before December 31, 2025, then this Agreement shall be null and void, and of no further force or effect, with the Parties having no further duties, liabilities, obligations or responsibilities to each other under this Agreement and the transaction contemplated thereunder.
8. Right to Cure. Neither Party shall be considered in default of this Agreement unless it has failed to perform under the Agreement for a period of ten (10) business days after receipt of written notice of default from the Party not in default. The notice of default shall specify in detail the nature of the alleged default and the manner in which the default may be cured. Upon the default by any Party under this Agreement, the Party not in default shall have all rights and remedies provided by law including, but not limited to, the right to seek damages or specific performance.
9. Notices. All communications and notices required by this Agreement, and all demands (collectively “Notices”) of any kind shall be made in writing and personally served or sent by registered or certified mail, postage prepaid to the following:
Owner: Tivoli Investments, LLC
PO Box 8010
Lancaster, CA 93539
[email protected]
With Copy to: R. Steven Derryberry, Esq.
Derryberry & Associates LLP
41240 11th Street West, Suite A
Palmdale, CA 93551
[email protected]
Buyer: City of Lancaster
_________________
_________________
_________________
Any Notice personally served shall be effective upon service. Any Notice sent by mail, and properly addressed, shall be effective upon date of receipt, or refusal as indicated on the return receipt. Either Party may change its address for Notices by Notice to the other given in a manner provided in this subparagraph. Any Party receiving any Notice under this Agreement may receive
and accept service thereof via email, so long as said Party provides a separate reply email confirming receipt of any such Notice to the Party giving such Notice.
10. General Contract Terms.
a. Recitals. The Parties hereby stipulate and agree for all purposes that the recitals set forth above are and shall remain binding upon the Parties and conclusive with respect to the subject matter thereof. The Parties hereby forever waive their right to challenge, oppose, or audit documentation relating to the facts set forth in the recitals. b. Fully Negotiated Agreement. This Agreement has been fully negotiated by the Parties hereto, and as such, neither Party shall be deemed to be the drafter of this Agreement for purposes of interpretation or enforcement.
c. Entire Agreement. This Agreement (after full execution) memorializes and constitutes the complete and final integration and entire agreement between the Parties with respect to the subject matter hereof, and supersedes and replaces all prior and contemporaneous negotiations, proposed agreements, and agreements, whether written or unwritten, whether express or implied. The Parties declare and represent that no representation, warranty, covenant, understanding, agreement, restriction, condition, promise, inducement, or agreement not herein expressed has been imposed or made by the other Party or by any other person or entity. This Agreement may be amended and modified only by an agreement in writing agreed to and signed by all Parties to this Agreement. Any purported amendment or modification of this Agreement not memorialized in a writing signed by all Parties to this Agreement shall be null and void. All covenants, warranties, and representations set forth herein shall survive this Agreement. d. Further Documents. The Parties hereby agree and promise to promptly execute such further documents and perform such further acts as may be reasonably necessary or appropriate to fully implement the provisions and intent of this Agreement. e. Severability. If any provision, clause, or term of this Agreement held to be unenforceable, illegal, invalid, or incorrect by a court of competent jurisdiction, such provision, clause, or term shall be deemed to be severed and deleted, and neither such provision, clause, or term, nor its severance and deletion, shall affect the validity or interpretation of the remaining provisions and terms of this Agreement.
f. Time of Essence. There are no grace periods for the payments or actions set forth herein. It is herein expressly acknowledged, understood and agreed, by and between the Parties hereto that time is of the essence with respect to all payments and executory acts set forth herein. g. Successors and Assigns. This Agreement shall be binding upon and shall inure to the respective heirs, successors, and assigns of the Parties hereto. However, nothing contained in this paragraph shall be construed or interpreted to permit the transfer, conveyance, or encumbrance of the Parties' respective rights hereunder, unless specifically authorized under this Agreement or permitted by law.
h. Legal Advice. The Parties hereby acknowledge that they have been given ample
opportunity to review this Agreement with legal counsel of their own choice, and that the provisions hereof and their legal effect have been fully analyzed and explained by such counsel. The Parties further confirm that they fully understand the terms, conditions, and provisions of this Agreement, and believe them to be fair, just, and reasonable under the existing circumstances. The Parties further confirm that each is entering into this Agreement freely and voluntarily, and that their execution, of this Agreement is not the result of duress, undue influence, collusion, or improper or illegal agreement or agreements, and the Parties fully and completely intend to be bound and restricted by the terms of this Agreement.
i. Attorney’s Fees and Costs. In the event that it becomes necessary for any Party hereto to bring or defend any action, arbitration, appeal, or other legal proceeding to enforce or interpret the terms of this Agreement, the Prevailing Party in such proceeding shall be entitled to a judgment, award, and/or order against the non-Prevailing Party for all attorneys' fees and costs of suit incurred therein by the Prevailing Party.
j. Governing Law. This Agreement is made and entered into and shall in all respects be interpreted, enforced, and governed under the laws of the State of California. k. Jurisdiction and Venue. Subject matter jurisdiction and venue for any court action relating to this Agreement shall be in the State of California, Los Angeles County, North District (Lancaster Courthouse).
l. Gender and Number. As used herein, all masculine, feminine, and neuter terms, and all singular and plural terms, shall be interchangeable where the context so requires or implies. m. Paragraph Headings. The titles to the paragraphs of this Agreement are solely for the convenience of the reader and shall not be used to explain, modify, simplify, expand, limit, or aid in the interpretation or enforcement of this Agreement.
n. Authority. Any person executing this Agreement on behalf of a corporation, partnership, limited liability company, trust, estate, or other non-human entity hereby represents and certifies that they are fully, completely, and expressly authorized to execute this Agreement on behalf of such entity, and to bind such entity to the terms of this Agreement. o. Counterparts. This Agreement may be executed and delivered via electronic signatures, email, or other facsimile, and in counterparts, each of which shall be deemed an original against the Party whose signature appears thereon, and when all counterparts are held together as one, the sum of all counterparts will be considered the whole document. The exchange and delivery of original signatures, and the statement below that signatures should be notarized, shall be for additional authentication only, and is not a condition precedent to the formation of a binding agreement. p. Binding Agreement. By signing below, the Parties hereby warrant that they agree to, and are hereby bound, obligated, liable, and restricted by all of the terms, conditions, and recitals set forth in this Agreement.
q. Specific Enforcement. The rights granted to the Parties under this Agreement are of a special and unique kind and character, and if there is a breach by any Party of any material
provision of this Agreement, the other Party would not have any adequate remedy at law. It is expressly agreed that the rights of the Parties may be enforced by any action for specific performance and such other equitable remedies as provided under the laws of the State of California, including, without limitation, injunctive relief. Either Party’s use of any remedy specified herein for the enforcement of this Agreement is not exclusive and shall not deprive such Party of, or limit the application of, any other remedy provided at law or in equity. r. No Third-Party Beneficiary. This Agreement is made for the sole benefit of the Parties and their respective successors and assigns, and no other person or persons shall have any right of action hereon.
s. No Partnership or Joint Venture Created. Nothing in this Agreement shall be construed, deemed or interpreted to create the relationship of principal and agent, or of partnership, joint venture or any other association between the Parties, other than that of Transferor and Transferee.
t. Recording. Either Party shall, upon request of the other, execute, acknowledge and deliver to the other an original of this Agreement for recording purposes.
The Parties have executed this Agreement acknowledging on the date provided below.
OWNER:
TIVOLI INVESTMENTS, LLC
______________________________________
By: John A. Calandri
Its: Manager
BUYER:
CITY OF LANCASTER
______________________________________
By: Trolis Niebla
Its: City Manager
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF ____________________________ )
On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF ____________________________ )
On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC