How Do Colorado Water Rights Affect Local Real Estate?

Colorado's history involves a few big gold rushes, but those days are long gone. Today, the real gold is water. It's the most sought-after resource in Colorado. If you're moving to Colorado Springs from out-of-state, this article will guide you through some of our water issues.

Water rights allow homeowners the right to use a portion of the water supply from the public water system. The rules built around these rights are complicated, especially when building a new home on acreage. Homes on land can be significantly affected by these laws.

We've heard of consumers experiencing losses in the tens of thousands of dollars due to a lack of information. My goal is to help people understand the issues and offer money-saving resources. Here are the topics that I will be covering:

Topics Covered in This Guide

Now it’s time to take a deep dive into the topic of Colorado water rights and their impacts on homebuyers. I am a Realtor in Colorado Springs. I have sold many homes on acreage over the years. This has allowed me to spend an immense amount of time learning about this topic.

Most of the info that I've gathered results from countless phone conversations with people who work full-time on water issues. Much of this information is not available online or is extremely difficult to find. I hope you find it useful.

Interesting Facts About Colorado Water

While Colorado is known for its stunning mountain ranges, 40% of the land is in a high plains desert.

Unless you have experience living in this type of environment, it may not seem significant. If you're relocating to Colorado from a warm climate near sea level, Colorado will seem like a different country.

The dry air affects many aspects of life here. For example, a wet towel after a shower in Colorado is dry within a few hours. In Texas, it would still be damp the next day.

The lower elevation and humidity help secure groundwater stability in many states. Water evaporates much faster in Colorado due to the arid climate.

In addition to water evaporation, we also have less rainfall. The average annual precipitation in Colorado is 17 inches, which is much lower than the United States average of 32.21".

Most people don't know that certain areas in Colorado have limited water usage. If you're expecting to raise livestock or grow crops, you'll need to be aware of this. To find the water limitations on a property, you'll have to research the specific plot of land you're interested in.

It's important to know that water usage limitations can change at any time. The state engineer's office will divert water whenever needed.

Colorado water rights are governed by the Prior Appropriation System. This basically means that the first people to claim the water have the first right to it. New areas have to submit to the existing senior water rights holder.

As our state grows at an alarming rate, water becomes more valuable. It's becoming more difficult for people to obtain a water permit for new construction. This issue is driving the cost of water up for residential use.

Where is the Water in Colorado Going?

About 80% of the water in Colorado is allocated for Agricultural use.

Some of the water is sold to other states, ranging from Wyoming to California. It's hard to believe, but those States have more water issues than we do.

According to Colorado State University, about 55 percent of the residential water is used for landscaping. Over time, Colorado residents are likely to see more water restrictions for outdoor use along the front range.

Snowmelt accounts for 70% to 90% of the water in Colorado. Most of this snow is in the mountains, which means that most of the water is in the mountains.

The water location is a problem as over 70% of Colorado's population lives on the front range. 

Colorado division engineers have to continuously create systems to divert water from the mountains to the front range. They gather water from a stream or aquifer and move it to areas that need it.

Aspen Journalism recently released an article on new plans to route water from Homestead Creek to Aurora and Colorado Springs. These types of projects are a regular occurrence here.

The Colorado Division of Water has plans to create more basins and reservoirs to collect and hold water. Once these proposals have been approved in the water court, they may extend our water usage during years of abundant precipitation.

How Do Colorado Water Issues Affect Real Estate Purchases?

Imagine moving to a neighborhood, and your first water bill is $50. Then, two months later, you get a notice that the water price has gone up, and it's now $200 per month. Stories like this often happen on Colorado's front range.

Home Owners Associations (HOA's) often have water conservation plans. If there is an HOA for the property you're interested in, ask them to review their current policy.

HOA's can be an excellent resource for determining water issues within neighborhoods.

It's good to know if the region you're relocating to is currently in a drought. If the water district decides to incorporate a water-saving action plan, it could affect your monthly water bill.

Water conservation can also impact golf courses, recreation areas, lakes, and parks. If you're moving to a location for any of these amenities, be sure to research their water health.

If you're moving from a state with abundant water options, these scenarios are likely not on your mind. Think through these details while you're researching your move to Colorado.

Domestic Well VS Household Well

Domestic wells allow usage for animals and irrigation. Household wells do not. Let's break this down.

Domestic wells may allow you to irrigate a portion of your land and water domestic animals like horses, donkeys, and even goats. However, "domestic" does not cover all uses of a well.

It is essential to review the permit carefully.

Look for keywords or phrases to verify usage. I always recommend contacting the Division of Water with any questions.

Most Domestic wells will not allow you to board horses on your property or water plants for profit. This activity may require a commercial well permit.

If a property is issued a household use-only permit, you will not be allowed to water any domestic animals. You will also not be able to water any lawn or landscaping. The well is for the house and everything inside.

These permits are generally issued to subdivisions that were created before June 1, 1972. An exemption can also create licenses to the subdivision laws by the local county planning authority.

Recently I had a showing on a beautiful property with some clients. It had a great lawn with elaborate landscaping. I knew that the yard would require a lot of water. Knowing this was a newer subdivision, I was surprised to see the agent list the property as having a domestic well.

After some research, I confirmed that it was an in-house well. Technically, owners should not be using that much water on their lawns.

My clients were grateful to receive this information. If they had purchased that property and continued watering like the previous owners, they might have received a penalty from the State Water Board. My clients may not have maintained the beautiful landscaping, which was one of the features they loved so much about that home.

Understanding Aquifers

Aquifers are underground lakes, rivers, and streams. They are created by rainwater and melting snow, which locals refer to as "Run-Off."

Some areas in Colorado have large healthy aquifers to collect water. Other sites may only have natural streams that can be difficult to find. Water from streams often leaves homeowners with low water pressure and limited usage.

Aquifers in Colorado are a big topic because of how they can affect homeowner's daily water usage. A healthy aquifer can produce as much as 15 gallons per minute. This amount is Colorado's limit for well water pressure in most areas.

It is essential to know how many gallons per minute your well is producing. You don't have to get a well to deliver 15 gallons-per-minute. Even seven gallons-per-minute would allow you to have adequate water usage.

This water pressure information is found on the original well permit. Keep in mind this can also fluctuate over the years. If the well was drilled in the 1980s when the water table was higher, it might not produce the same amount of water pressure today.

It may be wise to have the water pressure tested to determine the exact current amount.

Understanding Cisterns

A cistern is a large container that is filled slowly by the well. I have been to several homes that are running on water cistern systems.

These systems were created to address a deficiency in the gallons-per-minute rating. I have seen homes as low as 3 gallons per minute, which means the owner must set up a cistern system.

Having a system like this can leave you in a situation where you must manage your daily water use. You also have to maintain the holding water system and keep everything from freezing in the winter.

Managing a cistern is something that no one wants to have to deal with on a day-to-day basis.

Difficulties Obtaining Domestic Well Permits

Parcels of land less than 35 acres often have a difficult time attaining a domestic well permit.

For example, I had clients interested in purchasing a 10-acre piece of property for equestrian use. The Dawson aquifer was the well driller's first option, but the State made it extremely difficult to attain a domestic well permit.

The Denver aquifer was another option, but no one was interested in working with them after contacting several well drilling companies. They all said the same thing: the Denver aquifer might be 1000 feet deep. This is expensive for them to drill and costly for them to maintain the well-pump. Additionally, they need to carry the liability of a 1000ft deep well.

No one was willing to take the job.

My clients abandoned this project and purchased a home with an existing domestic well on it out of frustration. This scenario is becoming more common every year. It would be best if you researched which aquifer is accessible to the property you're interested in.

Make sure your Realtor is knowledgeable about water rights if you are looking for a home on acreage.

Understanding Well Permits

A well-permit allows the use of the water granted by the State.

This definition means that the State still owns the water and is allowing you to use it. You need to understand what type of well permit is provided for the home you're interested in. Does the current well usage meet your requirements/needs?

For example, horses are considered to be domestic animals, which requires a domestic well. On the Northeast side of Colorado Springs, the Dawson Aquifer may be the best option for this kind of well. However, they are no longer giving out domestic well permits on land less than 35 acres without maintaining a "Well Augmentation Plan."

These augmentation plans may consist of using a water engineer and water attorney to buy rights from someone upstream. This plan can be costly and difficult to attain. Riparian law may dictate the outcome.

A better option may be applying for a "Determination of Water." This plan could allow you more water usage but can take several months to receive. This process involves a group of people that can permit you to have a domestic well. The Determination of Fact is part of a court case, which results in a court decree.

Please consult a professional to learn more about this option. The Colorado Division of Water Resouces can offer great insight as well.

Final Thoughts

Colorado Water Right issues are complicated. Knowing the right professionals to help you navigate these issues is imperative.

My hope in writing this article is to open your eyes to the importance of these issues. People still move here and buy a home without doing any research. Their dreams can turn into nightmares later on.

Take your time and research the issues with a professional. Then, find the perfect place for you. You can relax and enjoy all of the excellent benefits of living in Colorado.