THE BASICS OF WATER RIGHT CONVEYANCING
(Fundamentals; Types of Water Rights; Deeds and Descriptions; Related Interests)
Raymond L. Petros, Jr.
Petros & White, LLC
Denver, Colorado
CBA-CLE Program, “Water Conveyancing,” April 7, 2006
___________________________________________________________
“Notoriously Sloppy” is an unfortunate description often used when discussing water
right conveyancing. Awareness of the basics can help to avoid misunderstandings and establish
ownership. Precision is important in purchase contracts, deeds, loan documents, wills,
easements and covenants.
A. “Top Ten” Fundamentals
1.
Know the Deal.
a.
Water rights need to be identified so that both grantor and grantee can agree on
what rights are to be conveyed in a transaction.
b.
See, e.g., Thomas v. Great Western Sugar Co., 773 P.2d 582 (Colo. App. 1988).
[Purchase contract for an abandoned sugar factory, which provided that the price
included all water rights “attached, allocable or appurtenant” to the property, did not
include C-BT units: the units had been used recently on other property; they were defined
by the NCWCD rules and regulations as “in gross,” the Seller did not intend to convey
these units; and the price was disproportionate to value of C-BT units.]
2.
Water Rights Generally are Conveyed as Real Property Interests.
a.
§38-30-102, C.R.S. (2005). “Water rights conveyed as real estate. In the
conveyance of water rights in all cases, except where the ownership of stock in ditch
companies or other companies constitute the ownership of a water right, the same
formalities shall be observed and complied with as in the conveyance of real estate.”
b.
Water rights can be conveyed and the quality of the title may be warranted much
like real property. Navajo Development Co., Inc. v. Sanderson, 655 P.2d 1374 (Colo.
1982).
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3.
Water Rights are Severable from the Land.
a.
Water may be bought and sold without regard to the real property over which it
flows. Navajo Development, supra. at 1377.
b.
A water right is a real property interest separate and apart from the land on which
it is used and may be conveyed or reserved separately from the land. Nielson v.
Newmyer, 123 Colo. 189, 192-3, 228 P.2d 456, 458 (1951).
4.
Water Right Decrees Do Not Establish Ownership.
a.
An adjudication of a priority for a water right confirms the pre-existence of a
water right but does not grant or establish ownership of the water right in the claimant or
applicant. See, Humphrey v. Southwestern Development Co., 734 P.2d 637 (Colo.
1987); and Cresson Consolidated Gold Mining and Milling Co. v. Whitten, 139 Colo.
273, 338 P.2d 278 (1959).
5.
Title Insurance for Land Generally Excludes Water Rights.
a.
Standard land title insurance policies issued in real estate transactions do not
insure against defects in title to associated water rights. The value of the water rights,
however, might be included unwittingly in the amount of title insurance coverage, if
based on the purchase price of the property.
b.
Water right title insurance has recently become available through Stewart Water
Information, LLC.
6.
Water Rights Might be Conveyed under the Appurtenance Clause of a Land Deed.
a.
If a deed is silent as to water rights, water rights nevertheless may be conveyed as
an appurtenance, depending upon the intent of the parties (primarily the grantor) as
determined from all the circumstances. Such circumstances may include the presumption
that arises from whether the right is necessary to the beneficial use and enjoyment of the
land. Kinoshita v. North Denver Bank, 31 Colo. App. 227, 501 P.2d 1337 (1972), aff’d,
181 Colo. 183, 508 P.2d 1264 (1973); Colorado v. Lionello, 157 Colo. 161, 401 P.2d 593
(1965); Bessemer Irrigating Ditch Co. v. Woolley, 32 Colo. 437, 76 P. 1053 (1904);
Arnett v. Linhart, 21 Colo. 188, 40 P. 355 (1895).
b.
Lengthy usage on the land, plus mention of the water right in all subsequent
conveyances, is enough to confirm that early silent deed implicitly passed the water right
under the appurtenancy clause. Means v. Pratt, 138 Colo. 214, 331 P.2d 805 (1958).
c.
The fact that the land would be worth a small fraction of its value without the
water right is indicative of intent to pass a water right. Hastings & Heyden Realty Co. v.
Gest, 70 Colo. 278, 201 P. 37 (1921).
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d.
A sheriff’s deed following a foreclosure, without specific mention of water rights,
does not pass title to water rights; however, if the intention of the parties was to include
the water rights, then the judgment, sheriff’s sale and deed should be set aside. Travelers
Insurance Co. v. Janitell Farms, Inc., 44 Colo. App. 34, 609 P.2d 1116 (1980).
e.
If an unambiguous will does not address the subject of whether water rights are
transferred with the land, a devise of water rights may be implied by a court after
examining all the surrounding facts and circumstances and evaluating whether the water
rights are necessary for the beneficial use of the land. Such a rule, however, does not
permit a court to violate the general rules of will construction by admitting extrinsic
evidence of a testator’s intent regarding the water rights when the will is unambiguous.
In re Estate of Tony Palaizzi Jr., 854 P.2d 1256 (Colo. 1993).
f.
Where a deed is silent, no presumption arises as to intent of parties in regard to
transfer of tributary water rights. Bayou Land Co. v. Talley, 924 P.2d 136 (Colo. 1996).
7.
Boilerplate Water Right Language Creates Presumption of Conveyance of “Appurtenant”
Water Rights.
a.
General water right language in a deed conveys appurtenant water rights, but
often creates ambiguity as to which rights are “appurtenant.”
b.
8.
Without specific description, record ownership is unclear.
Explicit Listing of Water Rights Might Exclude Other Water Rights Erroneously.
a.
A specific designation of certain water rights can override a presumptive intent to
convey any other water rights. Wanamaker Ditch Co. v. Crane, 132 Colo. 366, 288 P.2d
339 (1955). Expresso unius est exclusivo alterius. Where a deed clearly describes the
water right to be conveyed, there is no room for the doctrine of implied grant. Davis v.
Randall, 44 Colo. 488, 99 P. 322 (1908). See also, Thomas v. Great Western, supra.
b.
Where only a part of a right is described, such specific designation destroys any
presumption of intent to convey the remainder. Nielson v. Newmyer, supra.
9.
A Water Right Can be Lost in Part or in Whole by Abandonment.
a.
In contrast to land, a water right can be lost in whole or in part by an owner’s
intent to abandon the right. Unexplained nonuse for an unreasonable period of time may
prove an intent to abandon. Santa Fe Trail Ranches Prop. Owners Ass’n v. Simpson, 990
P.2d 46 (Colo. 1999). § 37-92-402, C.R.S. (2005).
b.
A chain of deeds may be evidence to rebut abandonment, but it is often not
enough to rebut a presumption of intent to abandon from lengthy nonuse. See, e.g.,
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Haystack Ranch, LLC v. Fazzio, 997 P.2d 548 (Colo. 2000); Knapp v. Colorado River
Water Conservation Dist., 131 Colo. 42, 279 P.2d 420 (1955).
10.
Deeds to Overlying Land Presumptively Convey Unpermitted and Unadjudicated
Nontributary Groundwater.
a.
Groundwater which is not tributary or hydrologically connected to a surface
stream system is not subject to the Colorado constitutional doctrine of prior
appropriation, but it is a public resource allocated by statute. State of Colorado v.
Southwestern Colo. Water Conservancy District, 671 P.2d 1294 (Colo. 1983). Since
1973, nontributary groundwater is allocated based on the ownership of the overlying land
to the landowner or to someone with the landowner’s consent or by sale to that party.
§ 37-90-137(4), C.R.S. (2005).
b.
The owner of the land does not own the nontributary groundwater but has an
“inchoate right” to obtain a decree quantifying a right to the groundwater or to obtain a
well permit from the State Engineer.
c.
Consent of the landowner to a municipal water provider’s use of the groundwater
may be deemed to exist impliedly, pursuant to statute and by the municipality’s adoption
of an implied consent ordinance or district resolution. §§ 37-90-137(4)(b)(II) and 37-90137(8), C.R.S. (2005).
d.
Colorado statutes recognize a special class of nontributary and not-nontributary
groundwater in four aquifers within the area known as the Denver Basin along the Front
Range, from Greeley to Colorado Springs, and from the foothills to Limon. § 37-90137(9), C.R.S. (2005). These aquifers are known as the Dawson, Denver, Arapahoe, and
Laramie-Fox Hills aquifers, and in some places, these aquifers are divided into upper and
lower aquifers. “Not-nontributary” groundwater is Denver Basin groundwater, the
withdrawal of which will, within 100 years, deplete a natural stream at an annual rate
greater than 0.1% of the annual rate of withdrawal. §37-90-103(10.7), C.R.S. (2005).
e.
For nontributary rights which existed prior to 1973, “pre-SB 213 Rights,”
groundwater below a calculated circle of appropriation on overlying land around the well
is considered to be appropriated by that well and unavailable for appropriation (since
1973) by other overlying landowners within the circle.
f.
In cases involving the conveyance of the inchoate (i.e., unappropriated and
unadjudicated right) to develop nontributary and not-nontributary groundwater, the right
is incident to land ownership so that the right is presumed to pass with the land in a deed,
and encumbered by a deed of trust of the land, unless explicitly excepted or previously
granted by deed or operation of statute. Bayou Land Co. v. Talley, supra.; and Chatfield
E. Well Co. v. Chatfield E. Property Owner’s Ass’n, 956 P.2d 1260 (Colo. 1998). In
Chatfield, the Court determined that a deed reservation of “nontributary” groundwater did
not reserve “not-nontributary” water, even though that term was not in legislation at the
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time of the reservation and the grantor intended to reserve the groundwater in the
Arapahoe aquifer.
g.
“Better practice” is to memorialize intent to reserve groundwater by reservation of
water rights in a deed; otherwise, the deed must be presumed to intend to transfer such
right with the land. Bayou Land Co. v. Talley, supra.
h.
Decrees determining nontributary groundwater rights usually contain locations of
proposed wells, but other wells may be added on the overlying land as required to
withdraw the decreed amount of water. In the absence of explicit language, such
proposed wellsites might give rise to a claim of implied wellsites when the groundwater
rights are severed from the ownership of the land.
B. Types of Water Rights
1.
Appropriative Rights/Interests in Real Property.
a.
These usufructuary water rights involve “appropriations” of water, namely,
diversion and beneficial use of water in priority. They include direct flow rights, storage
rights, exchange rights, substitution rights, augmentation plans, temporary substitute
supply plans, minimum streamflow rights for environmental purposes, recreational
instream flow rights (“RICDs”), and tributary groundwater rights. The rights can be
“absolute,” or “conditional” (i.e., not yet perfected by use).
b.
These rights are conveyed by deeds or leases, encumbered by deeds of trust, and
perfected by recording in the same manner as real estate. §38-30-102, C.R.S. (2005).
See Navajo Development Co., supra. at 1378.
c.
Water rights used on land (including mutual ditch company shares) are not taxed
separately but their value is added to the real estate for tax purposes. Severed water
rights might be taxed separately but this is not common. Colo. Const. art. X, §3(1)(d);
§§39-3-104, 39-5-105 (1.1), C.R.S. (2005); Shaw v. Bond, 64 Colo. 366, 171 P. 1142
(Colo. 1918). See also, Beaty v. Bd. of County Comm’rs, 101 Colo. 346, 73 P.2d 982
(1937).
2.
Mutual Ditch and Mutual Reservoir Companies/Hybrid of Real Property and Personal
Property.
a.
A mutual ditch company is a nonprofit organization that is formed to provide
common ownership and delivery of water in a ditch, reservoir, or other facility. See §§742-101, et seq. C.R.S. (2005).
b.
In Jacobucci v. District Court, 189 Colo. 330, 541 P.2d 667 (1975), the Colorado
Supreme Court held that the owners of stock within a mutual ditch company are the
equitable owners of the water rights even though held in the name of the company, and
each shareholder owns the right to delivery of water in proportion to their stock
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ownership. See generally, J. Kahn, Ownership of Mutual Ditch Company Assets, 20
Colo. Law No. 10, p. 2081 (1991). The shareholders may change the use of their pro rata
share of the water rights outside the ditch, provided the remaining users are not injured.
Wadsworth Ditch Co. v. Brown, 39 Colo. 57, 88 P. 1060 (1907).
c.
§ 38-30-102, C.R.S. (2005) would appear to exclude the assignment of shares
from the formalities associated with the conveyance of real estate, so that possession,
assignment and reissuance of the stock certificate would perfect a conveyance of this
personal property. Nevertheless, common practice is to convey stock by deed as well as
by assignment, possession and reissuance as an interest in personal property.
d.
Articles of Incorporation and Bylaws might require approval of transfers, or rights
of first refusal, or other restrictions. Ft. Lyon Canal Co. v. Catlin Canal Co., 642 P.2d
501 (1982).
e.
Mutual lateral ditch companies are formed to operate lateral ditches, off a main
ditch of another entity. The lateral company might not own any water rights but might
serve only to carry the water derived from the water rights of its shareholders.
3.
Carrier Ditch Rights.
a.
A carrier ditch company owns the legal title to a decreed appropriation of water
and facilities. Carrier ditches carry water for sale to consumers who have contracted with
the company. Charges for water delivered by carrier ditches may be fixed by the board
of county commissioners. The carrier ditch company is entitled to a reasonable return on
its investment over and above costs. Nelson v. Lake Canal Co. of Colo., 644 P.2d 55, 5758 (Colo. App. 1981).
b.
Courts have recognized that carrier ditch companies are quasi-public entities with
some fiduciary duties to their contracted consumers in setting rates and in permitting
other consumers to exercise their constitutionally protected rights to continue to put water
to a beneficial use on an annual basis. The terms of the contract defines most of the
conditions of purchase and delivery of water. City of Westminster v. City of Broomfield,
769 P.2d 490 (Colo. 1989).
c.
Rights to receive water from a carrier ditch company are sometimes represented
by shares and certificates. They often contain place of use restrictions and can be
forfeited by nonpayment of charges.
4.
Allotments.
a.
Water Conservancy District or other districts may allocate water from large
projects by allotment contracts to water users.
b.
Typically, the contractual terms and regulations of the district limit the uses,
places of use, and transferability of the water. For example, the Northern Colorado
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Water Conservancy District requires approval of its Board for transfers of C-BT units,
which process should be taken into account in setting deadlines under the purchase
contract. Common practice is to convey such units by deed or deed of trust, subject to
board approval.
5.
Water Supply Contracts.
a.
Water supply contracts may have fixed or perpetual terms. Cherokee Water Dist.
v. Colorado Springs, 184 Colo. 161, 519 P.2d 339 (1974); City of Colorado Springs v.
Colorado City, 42 Colo. 75, 94 P. 316 (1908); see also, City and County of Denver v.
Consolidated Ditches Co., 807 P.2d 23 (Colo. 1991).
b.
These supply contracts may require the provider’s approval of an assignment,
change of use, or change in place of use. See East Ridge of Fort Collins, LLC v. The
Larimer and Weld Irrigation Company, 109 P.3d 969 (2005).
6.
Lease of Water Rights.
a.
A lease of specific water rights is the right to obtain the water yield from the
exercise of these rights. Leases should be documented, recorded or perfected consistent
with the type of underlying water right.
7.
“Undivided Interests.”
a.
Water rights, ditches, and other water structures can be owned and operated
jointly, either as tenants in common with undivided interests, or as owners with separate,
divided interests. Care should be exercised when conveying these interests to specify the
nature of the interest. See e.g., Denver v. Just, 175 Colo. 260, 487 P.2d 367 (1971).
b.
Owners of undivided interests in water rights or facilities can use their pro rata
share of yield or capacity, together with the share of the remaining owners if not needed
by them. Absent contract, such owners can transfer their water rights out of the common
ditch (in effect “partition”), if no injury occurs to the remaining owners, and they are
protected from of increased seepage, evaporation, or carriage leases. Hallett v.
Carpenter, 37 Colo. 30, 86 P. 317 (1906).
c.
Where there has been a joint appropriation of a water right, but no tenancy in
common of the right, each separate right can be transferred out of a common ditch. City
of Telluride v. Davis, 33 Colo. 356, 80 P. 1051 (1905) [water in ditch divided in equal
halves to the users].
d.
As between owners of separate water rights diverted through the same ditch, the
co-tenants of the ditch could remove their water rights from the ditch, without
compensation for ditch loss or an obligation to continue rotation of the diversions, absent
contractual provisions. Brighton Ditch Company v. City of Englewood, 124 Colo. 366,
237 P.2d 116 (1951).
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e.
A deed conveying water rights by “shares” to several parties was construed by the
Colorado Supreme Court to convey separate ownership interests, not interests as tenants
in common; the result was that some shares were deemed abandoned despite usage of the
excess water by the other owners. Denver v. Just, supra. The Court reasoned that the
nonuse by a share owner resulted in an abandonment of that part of the water right to the
stream, and that the abandonment likely occurred before the running of the prescriptive
use period for purposes of supporting the claims by the other owners.
8.
Designated Basin Ground Water. A Designated Basin is an area which has been
designated by the Colorado Ground Water Commission as an area where the ground water would
not normally be available to and required for the fulfillment of decreed surface water rights, or
ground water in areas not adjacent to a continuously flowing natural stream where ground water
withdrawals have constituted the principal water usage for at lest fifteen (15) years prior to the
creation of the designated basin. § 37-90-103 (6)(a), C.R.S. (2005). These designated basins are
located on the eastern plains of Colorado.
a.
The Colorado Ground Water Commission, rather than the Water Courts,
determines and administers the designated basin water rights pursuant to the Colorado
Ground Water Management Act, §§ 37-90-101, et seq., C.R.S. (2005). The State
Engineer assists the Ground Water Commission in the management and administration of
the water within the designated basins.
b.
Within the designated basins, there may be created a local ground water
management district which is empowered to regulate and administer water rights within
the designated basin. § 37-90-118, et seq., C.R.S. (2005). Regulations may restrict use of
water outside its boundaries.
c.
A water right within a designated basin is created by having the following
documents on file with the State Engineer:
i.
A Well Permit issued by the State Engineer.
ii.
A Well Completion and Pump Installation Report or a Map and Statement
for Water Well Filing filed within one year of the date the well permit was issued.
iii.
A Statement of Beneficial Use of Ground Water filed by the expiration
date of the well permit if the well permit was issued before May 31, 1985, or
within three years after the date the well permit was issued if the well permit was
issued after May 31, 1985.
iv.
In addition to the foregoing documents, there should also be a final permit
issued by the Ground Water Commission. § 37-90-108, C.R.S. (2005). Final
permits take the place of water court decrees.
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v.
There may be water court decrees for water rights that predate formation
of the designated basin.
d.
Designated basin ground water rights may be changed so long as the change of
the water right will not result in material injury to vested water rights. § 37-90-111(1)(g),
C.R.S. (2005).
e.
The appropriation of designated ground water and changes of designated ground
water are governed by the Designated Basin Rules, 2 CCR 410-1. The Ground Water
Commission is required to administer designated basin ground water rights on the basis of
a “modified” prior appropriation doctrine to account for reasonable development of the
finite resource while providing some protection to prior appropriators.
f.
The allocation of water within the designated basin is based on different factors
for each designated basin. Most basins are considered “over appropriated” and no new
water rights may be obtained in the basins.
C. Conveyancing Instruments
1.
Types of Deeds. Deeds of Water Rights that are real property interests can be made by:
a.
General Warranty Deed. Grantor covenants that at the time of the deed Grantor
has title and authority to convey the property free and clear of all encumbrances, except
for stated exceptions, and warrants possession of the property in Grantee, and will defend
title to Grantee and Grantee’s heirs and assigns against all persons lawfully claiming the
same. See § 38-30-113, C.R.S. (2005).
b.
Special Warranty Deed. Grantor covenants to warrant and defend title to Grantee
and Grantee’s heirs, and assigns against all persons claiming to hold title by, through or
under the Grantor. See § 38-30-115, C.R.S. (2005).
c.
Bargain and Sale Deed. Grantor makes no covenants of warranty but the deed
will pass after-acquired title of the Grantor.
d.
Quitclaim Deed. Grantor makes no warranties of title and the deed only conveys
whatever interest the Grantor has at the time of the deed. See § 38-30-116, C.R.S.
(2005).
2.
Meaning of Title Warranties. There is a reluctance to convey water rights by a general
warranty deed because of sloppy conveyancing in the chain of title and because of uncertainty as
to what warranties of title mean in the context of water rights (e.g., effects of nonuse, relative
priorities, effect of injury by other water rights). Some of these uncertainties have been allayed
by the Court’s decision in Navajo Development, supra. The court held that it was not a breach
of title warranty under a Warranty Deed for a Grantor to refuse to defend the water right against
a claim for reserved water rights by the U.S. Government which could pre-date the priority of the
water right and reduce its value. The Court reasoned:
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“[T]o view a water right as a fixed, tangible amount of water is to
misunderstand the doctrine of appropriation. . . . Any warranties
of title or other covenants attached to the conveyance of a water
right must be in harmony with these underlying realities of the
nature of a water right in Colorado.
****
Navajo’s argument, therefore that the federal reserve water rights
impair its priority by potentially diminishing the amount of water
available under the conveyed water rights causing a breach of the
covenants of seizin and freedom from encumbrances is erroneous.
. . . Navajo’s priority is not affected at all. Federal reserve rights
neither defeat Navajo’s title to water rights nor breach the
covenants of quiet enjoyment and warranty of seizin.
****
The covenants only guarantee that Water Right No. 310 is a vested
priority of use not subject to defeat by persons seeking the same
priority. No one can covenant that the amount of water available
under a water right will maintain the same flow year in and year
out and will not be diminished. . . . A covenant of title does not
extend [to] the amount of water available for appropriation. . . .”
Id. at 1378-1380.
3.
Practice Pointers.
a.
Consider using the statutory approved short-form deeds.
b.
Consider using a “Deed and Assignment” for mutual ditch company shares. See
Attachment B, as an example.
c.
Consider the use of a specific covenant in the deed which states that the Grantor
has not intended to abandon the water
d.
Consider the use of explicit limits on warranties, such as Grantor makes no
warranties or representations as to the effect on the water right resulting from its
historical use or any nonuse, as to its relative priority to other water rights, as to
injury by other water rights, or as to its suitability for Grantee’s use.
e.
Sample water right descriptions are attached hereto as Attachment A.
f.
Consider recording water decrees in the county real property records for crossreferencing in deeds, and to preserve the memory of the decrees. Recording of
decrees was recommended by the Court in Davis v. Hurt, 81 Colo. 10, 253 P. 394
(1927).
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4.
Change of Ownership Notices.
a.
Upon the sale or transfer of a conditional water right, a notice of transfer must be
filed with the Water Court. See Uniform Local Rules for all State Water Court
Divisions, Rule 9.
b.
A Change of Ownership statement should be filed for well permits in the State
Engineer’s office.
c.
A Motion for Substitution of Parties should be filed in the water court in pending
cases or in cases with decrees with retained jurisdiction.
5.
Water Rights in Conservation Easements. Colorado’s conservation easement statute
expressly allows the inclusion of water rights in a land conservation easement. §38-30.5-102,
C.R.S. (2005). The statute does not allow the creation of an easement solely on water rights;
rather, only those water rights can be included that are used on the land or water area subject to a
conservation easement. Water rights and their use should be explicitly included and described in
the conservation instrument. Attachment C is a copy of model language recommended by the
Colorado Water Trust for including water rights in conservation easements.
D. Checklist of Other Property Related to Water Rights
1.
Water in Storage. After diversion, water becomes the personal property of the
appropriator. See Brighton Ditch Co, supra. Care should be taken to reach agreement on the
disposition of this water between the time of the purchase contract and closing.
2.
Structures.
Ditches, lateral ditches, tail ditches, headgates, measuring devices, wells,
pumps, pipelines, utilities, reservoirs, ponds, livestock tanks, irrigation sprinklers and pipes,
improved springs, infiltration galleries. . . .
3.
Easements/ROWS’s in Fee. Necessary for structures, access, utilities, operation and
maintenance, replacement, recharge. . . .
a.
Relocation of a ditch requires consent of the ditch owner, or a declaratory
judgment that the relocation will not impair the ditch or increase its costs. Roaring Fork
Club, L.P. v. St. Jude’s Co., 36 P.3d 1229 (Colo. 2001).
b.
Water right owners may employ natural underground formations below the
properties of others for the placement and carriage of appropriated water and for artificial
recharge. See Bd. of County Comm’rs v. Park County Sportsmen’s Ranch, LLP, 45 P.3d
693 (Colo. 2002).
4.
Dry-Up Covenants and other Land Restrictions. Often, to transfer an irrigation right off a
piece of property, that property must no longer be irrigated with the remaining water rights. A
water change decree might also require revegetation. Care should be taken to implement the
terms of a water decree with enforceable covenants running with the land and enforceable by the
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water right owner. The rights and obligations of these covenants and restrictions also need to be
conveyed to successor parties.
5.
Documents. Prior deeds; abstracts of title on the land (a good reference tool for title
opinions); prior water right title opinions or title policies; engineering reports; diversion records;
files. . . . In Santa Fe Trout Ranches v. Simpson, 990 P.2d 46, 51 (Colo. 1999), the Court, when
finding abandonment of certain water rights, noted that no explanation was given why the former
owner’s diversion records were not obtained by the subsequent owner.
6.
Governmental Approvals and Permits. Well permits; SEO and other reservoir design
approvals and inspection reports; U.S. Army Corps of Engineer 404 permits for diversion and
discharge structures; land use approvals, including “HB 1041” county permits for domestic water
systems and municipal and industrial projects. . . .
References
1. ACQUIRING, USING AND PROTECTING WATER IN COLORADO, by Trout, Witwer &
Freeman, P.C.; Bradford Publishing Co. (2004), ISBN: 1-889726-98-0.
2. VRANESH’S COLORADO WATER LAW, updated by James N. Corbridge, Teresa A. Rice,
Stuart B. Corbridge; University Press of Colorado (2001).
3. WATER RIGHTS HANDBOOK FOR COLORADO CONSERVATION
PROFESSIONALS, prepared for the Colorado Water Trust, by Peter D. Nichols, Michael
Browning, Kenneth R, Wright, Patricia K. Floyd, and Mark Weston; Bradford Publishing Co.
(2005), ISBN: 1-932779-32-9.
4. “Transactions with Water Entities: Everybody Beware,” a written presentation given by
Timothy R. Buchanan at the Lorman Education Services program, “Water Rights Sales and
Transfers in Colorado,” March 3, 2006, Denver, CO.
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Examples -- Water Right Descriptions
Example 1 (Quit Claim Deed -- Introductory Language):
Any and all water rights (adjudicated or unadjudicated), wells, well permits, ditches,
ponds, reservoirs, water in storage, springs (developed and undeveloped), equipment,
discharge conduits, and associated easements and rights-of-way appurtenant to the
Property (as described on Exhibit __) and any and all “nontributary” and “not
nontributary” ground water rights underlying the Property (these terms are currently
defined in §§ 37-90-103(10.5) and 37-90-103(10.7), C.R.S. (2005), respectively) which
attach to ownership of overlying land pursuant to the law and §37-90-137(4), C.R.S.
(2005) including all Denver Basin Aquifers (including Dawson, Upper Dawson, Lower
Dawson, Denver, Arapahoe, Upper Arapahoe, Lower Arapahoe, and Laramie-Fox Hills
formations). Such interests (collectively, the “Water Rights”) include, but are not limited
to:
Example 2 (Quit Claim Deed -- Undecreed Denver Basin Groundwater):
Any and all unappropriated “nontributary” and “not nontributary” ground water rights
(these terms are currently defined in §§ 37-90-103(10.5) and 37-90-103(10.7), C.R.S.
(2005), respectively) appurtenant to the Property (as described in Exhibit___) including
those rights which attach to ownership of overlying land pursuant to the law and §37-90137(4), C.R.S. (2005) including all Denver Basin Aquifers (including Dawson, Upper
Dawson, Lower Dawson, Denver, Arapahoe, Upper Arapahoe, Lower Arapahoe, and
Laramie-Fox Hills formations), but not including the following rights and interests,
which are reserved (or excepted):
Example 3 (Quit Claim Deed -- Generic and Specific (I) All Inclusive):
All water, water rights, ditches, ditch rights, springs, spring rights, storage rights,
reservoirs, reservoir rights, wells, well permits, stock certificates, contract rights, water
allotments, and other rights in and to the use of water, whether or not adjudicated, which
are appurtenant to or used on or in connection with the Property described in Exhibit A,
attached hereto and incorporated herein by this reference, including but not limited to the
following:
[insert description of water rights]
Together with all associated structures for the diversion, conveyance, measurement,
storage, or use of said water rights, and all easements, rights of way, licenses, permits,
contract rights, and governmental approvals therefor or pertaining thereto (collectively,
the “Subject Water Rights”).
Petros A-1
Example 4 (Generic and Specific [2] -- All Inclusive Introduction)
All water, water rights, ditches, ditch rights, springs, spring rights, wells, well rights,
storage rights, reservoirs, reservoir rights, appropriative rights of exchange, plans for
augmentation, substitute supply plans, rights to water represented by shares of stock in
mutual ditch or reservoir companies, water allotment contracts, water supply agreements
and leases, water taps, rights in tributary, nontributary, and not nontributary ground
water, and other rights in and to the use of water, whether or not adjudicated, which now
or at any time are or have been underlying, appurtenant to, or used on or in connection
with the real property described in Exhibit A, attached hereto and incorporated herein by
this reference, together with any and all rights, claims and entitlements associated with
the historic beneficial use of said water rights, and all ditches, reservoirs, embankments,
flumes, headgates, measuring devices, wells, pumps, motors, pipelines, utilities and other
structures and devices used for or associated with the diversion, conveyance,
measurement, storage or use of the foregoing water and water rights, and all easements,
rights of way, licenses, use permits, well permits, and contract rights therefore or
pertaining thereto, including but not limited to those described on Exhibit B, attached
hereto and incorporated herein by this reference.
Example 5 (Introduction for Specified Water Rights -- Short Version)
The following water rights, together with all structures and equipment used for or
associated with the diversion, conveyance, measurement, storage, or use of the water or
water rights, and all water, easements, rights of way, licenses, permits, contract rights and
governmental approvals pertaining thereto:
Example 6 (Specific Surface Water Right -- Old Decree)
An undivided interest equal to __ (__) c.f.s. out of the ____ (__) c.f.s. of the
_______ Ditch, decreed on ______________, by the District Court, ______ County,
Colorado, in Case No. __, as Priority No. __, Water District No. __, with an
appropriation date of __________, for irrigation, from _____ River at a decreed location
in the ____ ¼, Sec. ___, T___, R___, _________________ County, State of Colorado;
together with an undivided _____ (__) interest in the ______ Ditch and associated
structures, rights of way therefor, and rights of access to and from the _________ Ditch
for operation and maintenance.
Example 7 (Specific Ditch Right -- Post 1969 Decree)
All rights and priorities in the ________ Ditch, decreed on _____________, by
the District Court, Water Division ___, State of Colorado in Case No. ______, for ___
c.f.s., for uses, from ____________ River, with an appropriation date of ________, and
with a decreed headgate location at ___________, in the ___ 1/4 , Sec. ___, T___, R___,
_____________County, State of Colorado.
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Example 8 (Wells -- Generic and Specific)
All water wells and appurtenant pumps, equipment, and wellhouses, and all water
monitoring and measurement wells and associated equipment, located on the land
described in Exhibit C attached to this Special Warrant Deed, together with all water
rights, well permits, easements, rights of way, and access and utility rights for such wells,
including, but not limited to the following:
a.
_________Well, Permit No. ________, located in the ___ ¼ ___ ¼ of Sec.
____, T___, R___, ___ P.M., together with the rights to tributary groundwater decreed on
[date]
, as Well No. ___ in Case No. ____________, District Court,
Water Division No. __, Colorado, with an appropriation date of
[date]
, for
irrigation use, in the amount of 1100 g.p.m.
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SPECIAL WARRANTY DEED AND ASSIGNMENT
[Sample Form: Mutual Ditch Company Shares Conveyance]
FOR TEN DOLLARS and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, _____________ (“Grantor”), hereby sells,
grants, transfers, and assigns to _______________ (“Grantee”), whose address is
______________, ______ (#) shares of stock (the “Subject Shares”) in the ___________ Ditch
Company (“Company”), which are represented by Certificate No. ____, (copy attached as
Exhibit A) together with all associated water rights, rights for the use of water, and other rights
represented by the Subject Shares and warrants title to the same against all persons claiming
under Grantor. Grantor does hereby irrevocably constitute and appoint the Secretary of the
Company to transfer said Subject Shares upon the books of the Association with full power of
substitution in the premises.
Said shares were formerly used on the parcel of land described on Exhibit B [possibly
reference here or include dry-up covenant, if necessary].
EXECUTED as of this ___ day of ___________, 2006.
GRANTOR
__________________________________
STATE OF COLORADO
COUNTY OF _________
)
) ss.
)
The foregoing Special Warranty Deed and Assignment was acknowledged before me this
___ day of _____________, 2006, by _______________.
WITNESS my hand and official seal.
My commission expires:
___________________________________
Notary Public
___________________
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MODEL LANGUAGE REGARDING WATER RIGHTS
FOR LAND CONSERVATION EASEMENTS
THAT INCLUDE HISTORIC IRRIGATION WATER RIGHTS
[Source: Water Rights Handbook for Colorado Conservation Professionals, prepared for
the Colorado Water Trust, at pp 70-80; written by Peter D. Nichols, Michael F.
Browning, Kenneth R. Wright, Patricia K. Floyd, and Mark S. Weston.]
Section ___. Water Rights.
A) Water Rights Included. The parties agree that it is appropriate to include certain
water rights beneficially used on the Property [or whatever term is used to define
the land that is subject to the conservation easement] in this Conservation
Easement Deed [or whatever term is used for the easement document] (the “Water
Rights”). The “Water Rights” consist of all of the Grantor’s right, title
and interests in and to the water and water rights described on Exhibit __, [NOTE:
ALTERNATIVE LANGUAGE FOR USE IN SUCH EXHIBIT ARE
ATTACHED AND SHOULD BE ATTACHED AS AN EXHIBIT TO THE
CONSERVATION EASEMENT DEED] together with all associated canals, ditches,
laterals, headgates, springs, wells, ponds, reservoirs, water shares and stock certificates,
water allotments, contracts, units, permits, easements and rights-of-way, and irrigation
equipment.
B) Permitted Water Uses. The parties agree that the Water Rights are hereby
dedicated and restricted exclusively for conservation purposes, including, but not
limited to, the Conservation Values of the Property, agricultural, wildlife habitat,
horticultural, wetlands, recreational, forest or other uses consistent with the
protection of open land, environmental quality or life-sustaining ecological
diversity (the “Permitted Water Uses”). The Permitted Water Uses include, but
are not limited to, the continuation of the recent historical use, and the Grantor
shall have the paramount right to use and enjoy the Water Rights on the Property
consistent with recent historical practices. Grantor shall have the right to
maintain, repair, and if necessary, reconstruct or replace any existing structures or
equipment associated with the Water Rights (such as ditches, wells, irrigation equipment,
and reservoirs), unless the Conservation Values of the Property would be irreversibly
damaged thereby, as determined by the Grantee in its sole judgment.
C) Restrictions on Water Rights. The parties agree that the Grantor may not (i)
change the Water Rights to or use the Water Rights for municipal, industrial,
commercial or any other new uses, (ii) change the Water Rights for use other
than on the Property, (iii) sell or lease the Water Rights, or encumber them
separately from the Property or otherwise legally separate them from the Property,
or (iv) change the points of diversion, or the type or the place of use within or
without the Property, except after Grantor’s receipt of a written
determination by Grantee that such changes are not inconsistent with the
Permitted Uses and will not impair the Conservation Values of the Property.
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Grantor shall not construct, or permit others to construct, any new diversion,
storage or other water structures upon the Property, shall not develop any
conditional water rights for use on the Property, and shall not otherwise undertake
any new development of water resources for use on the Property without the prior
written approval of the Grantee.
D) Protection of Water Rights. In order to preserve and protect the Conservation
Values of the Property, the Grantor shall continue the recent historical use of the
Water Rights on the Property consistent with the Conservation Values and shall
not abandon or allow the abandonment of any of the Water Rights, by action or
inaction. Grantor shall annually report to the Grantee the nature and extent of use
of the Water Rights during the prior year, which report need not be in writing, but
shall include copies of any reports submitted to the State or Division Engineer or
the Water Commissioner. The Grantor shall provide the Grantee a copy of any
written notice received by Grantor from any state water official concerning the
use, or possible abandonment, of the Water Rights. If the Water Rights appear on the
decennial abandonment list or the Grantee determines that the Water Rights are otherwise
subject to a threat of abandonment, the Grantee shall give the Grantor written notice of
such threat of abandonment. If, and only if, Grantor fails to cure the threat of
abandonment within 90 days of receiving such notice from the Grantee, the Grantee shall,
in addition to any other remedies available to the Grantee under this Conservation
Easement Deed or law, have the right to, (i) enter upon the Property and undertake any
and all actions reasonably necessary to continue the historical use of the
Water Rights, (ii) seek removal of the Water Rights from the decennial
abandonment list, (iii) seek to change the Water Rights to another Permitted
Water Use, and/or (iv) sell or otherwise convey all or part of such Water Rights
to the Colorado Water Conservation Board or other entity for the specific
conservation purpose of protecting or enhancing instream flows and/or water
levels in streams, rivers, lakes and/or reservoirs to preserve or improve the natural
environment of such water body(s). Grantor agrees to cooperate in any manner
necessary to accomplish the Grantee’s election, and authorizes and appoints
Grantee as its agent and attorney-in-fact to file for and obtain any administrative
or judicial approvals required to effectuate Grantee’s election.
E) Optional provision for instream loans. Temporary Instream Flow Use of Water
Rights. The parties recognize that adverse environmental conditions, such as
drought, occur from time to time, and that such conditions may pose a greater
threat to the environmental quality and life-sustaining ecological diversity of
streams, rivers, lakes and reservoirs than to the Conservation Values of the
Property. Therefore, the parties agree that the Grantor may enter into legally enforceable
water leases, contracts, emergency water loans, or similar agreements
for conservation purposes to temporarily increase instream flows and/or water
levels in streams, rivers, lakes, and/or reservoirs to preserve the natural
environment of such water body(s), provided that (i) the Grantee has given its prior
written consent to such arrangements, and (ii) the Water Rights shall not be used for such
Petros C - 2
uses more than three out of every 10 years without a written determination by the Grantee
that such use would not jeopardize the long-term Conservation Values of the Property.
F) Recording encumbrance on stock certificates. If the Water Rights include any
shares in ditch or reservoir companies, the Grantor shall promptly submit the
related stock certificate(s) to the appropriate ditch and reservoir company for
inclusion of the following notation thereon: "These shares are subject to the terms
and restrictions set forth in the Conservation Easement Deed from _______ to
_________ recorded in the Real Property Records of ___________ County
Colorado on __________, 20__ at Reception No. __________________." A copy
of the re-issued stock certificate(s) shall be promptly provided by Grantor to
Grantee.
EXHIBIT __.
WATER RIGHTS
1. [When the water rights to be included in the conservation easement can be
described with specificity, include as much detail as possible, i.e., name of water
right, source of water, amount, court and case number, date(s) of appropriation
and date(s) of adjudication, well permit number(s), allotment contract(s), and/or
certificate number(s) for shares in ditch and reservoir companies.]
2. [When the water rights to be included in the conservation easement cannot be
described with specificity, but the intent of the parties is to include ALL of the
water rights.] The “Water Rights” consist of all of the Grantor’s right, title and
interests in any and all water and water rights of any kind or nature historically used
on the Property, together with all canals, ditches, laterals, headgates, springs, ponds,
reservoirs, water allotments, water shares and stock certificates, contracts, units,
permits, wells, easements and rights of way, and irrigation equipment associated
therewith. The Water Rights include surface water rights and groundwater rights
(tributary, nontributary, not nontributary, and designated) whether decreed or
undecreed.
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