Face,
About 4 years ago while we were still searching feverishly for the right property to develop, I came across an exciting 50 Ac parcel with 4 long, deep draws that came together and continued on as one larger draw. This larger draw ran off the parcel, continuing on to become a creek. I was really pumped. Then we realized that to get any reasonable water depth, we would have to back up some water into a draw, far enough to go back onto the neighbor's property. Our realtor came highly recommended from a close friend. She was pretty sharp. She told the story of a recent lawsuit in Illinois of a very similar situation that resulted in the ruling that I noted above. She waved us off the parcel for pond development for this reason. We reluctantly passed.
No, I never looked into it much further because I trusted her input. It also made sense that this situation could, indeed, be contested. I don't need the headache.
Maybe Ewest can cast some opinion on this one...?
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(edit; she also noted that the ruling said that the neighboring parcel can use any part of the adjoining waters, but cannot use any portion of the surrounding dry land that was not his.)