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Newsletters
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Title: |
Can Water Rights Be Insured? |
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Author: |
Ron Childs |
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Date: |
05/23/2007 |
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Can Water Rights Be Insured? Can a title insurance policy provide affirmative coverage to an owner of a Colorado appropriated water right? NO! Water rights are generally excluded from title policies. Even when affirmative protection is available in some form of “guarantee”, the standard exceptions are often so broad as to render the coverage almost meaningless including exceptions for:
A future water court action
Use of water historically, actually, type of use, location of use and diversion
Terms and conditions of said decree
Adverse and prescriptive claims
Any reservation of rights by the US or any prior rights
Future administrative action by the State
Lack of right of access to transport from the point of diversion
Any consequence of the insured not having the right, title or interest in the historic place of use as set out in the decree
Lack of priority to be diverted at all times
Lack of physical ability or existence of water
And the reasons for these exceptions are very complex. Since the public owns all water in Colorado as declared in Colorado’s Constitution, a water right is an “appropriated right” to use the water the people of Colorado own. This appropriation is accomplished through a water court decree and grants to applicants an appropriation of water by one of Colorado’s seven water courts. [There is an exception to the water court’s jurisdiction that being water within“designated basins” (8 basins in Eastern Colorado) where the State Engineer’s Office controls permits and appropriations.]
In real estate, a chain of title has an ‘origin or root’ typically being a Patent from the Federal Government or a Patent from the State of Colorado or a conveyance by “Congressional Proclamation” as in the case of “charter railroads” such as a “Union Pacific Railroad”. In real estate, a marketable, insurable chain of title can be determined and is self–evident by a search and examination of the public records and is free from “reasonable doubt”.That is not the case with water as there is plenty of room for reasonable doubt. The “original adjudication” will identify the right appropriated, beneficial use, quantification, and assignment of priority within a stream system or within a ground water aquifer. The nature and status of a water right is only superficially available from the State records identifying this decreed status and its potential use history.
Water rights are a use-based form of real property whose continued existence and value depends upon the nature and extent of actual historical use. Water rights should be conveyed like real property; however, water rights are hardly ever evidenced in the recorded real estate chain of title in a county clerk and recorder’s office. Water descriptions may be ambiguous or simply implied or referred to as an appurtenance to the land. Remember in Colorado, a water chain of title may be totally separate from a real property chain of title. The Prior Appropriation Doctrine implemented by Colorado’s early miners claimed a title to water as they claimed a title to their “placer or lode” claims. In addition, a water right decree will not reflect the current owner of the appropriated right; but rather, simply recognizing the pre-existence of a water right. |
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