rights" or "adverse possession."

This is by necessity or implication. Did some research. The paradigmatic example is where you have a single owner who was using a certain portion of his property for access to another portion of his property (via a road, for example), and then sold a portion of his property to someone else (you) but continued to allow them to use the road over the remainder of his property to access their property, then finally sold the portion of the property over which the road passed. Even if the owner never formally recorded an easement, an easement can be put in place because by selling the ground that needed access and then allowing access, the owner essentially impliedly promised that an easement would always exist-- since no one would have bought it if there had been no access, and because he allowed the road to pass over his remaining ground.

Your situation is not exactly the same but is similar. I would argue that when he sold the ground to the water district there was already an unrecorded easement by implication or necessity that had been granted to you to run your sewer line under what later became their ground, because he sold your ground with a sewer line that existed on what was at the time his own property, and over which he had the right to grant you an easement, and did. Since your easement existed already, when they took ownership they took it subject to that easement. The fact that it was not recorded does not necessarily matter, except for notice purposes.