Colorado Water Rights: What Buyers and Sellers Need to Know

Colorado water rights are a separate property interest from the land. They are allocated under the prior appropriation system, and they don’t automatically come with a house or acreage. The state’s own purchase contract warns that a transfer of the surface estate may not include water rights, so in a sale they move only when a deed, stock certificate or other legal document says so. Wells are handled separately: each one has its own permit with its own allowed uses.

If the listing says city water or a water district, most of this is background for you. Your main water document is the source-of-potable-water acknowledgment in section 10.8 of the Colorado contract. The contract itself points out that some water providers rely on nonrenewable groundwater. The rest of this guide is for listings that mention a well, a ditch, water shares or “water rights included.”

Key takeaways

• Land and water are separate in Colorado. Water rights transfer by deed, stock certificate or other legal document, and only when someone writes them in.
• There is no ownership registry for water rights, so buyers have to check county deeds and ditch company records themselves.
• Not all “domestic” wells allow the same uses. The permit decides.
• The well permit table and buyer checklist below show what to ask for, and when.

How water rights work in Colorado

Colorado uses the Prior Appropriation System, usually shortened to “first in time, first in right.” The first person to take water and put it to beneficial use holds the first right on that stream system. Once a court decree confirms the priority, that right is senior and must be satisfied before anyone else’s.

The Division of Water Resources (DWR) gives a worked example that makes this easy to see. Three users share a stream with decreed rights of 2 cfs (cubic feet per second), 2 cfs and 1 cfs, in priority order.

Water in the stream	Priority 1 (2 cfs, senior)	Priority 2 (2 cfs)	Priority 3 (1 cfs)
5 cfs	2 cfs	2 cfs	1 cfs
3 cfs	2 cfs	1 cfs	Nothing

The junior right goes dry first. This happens on real rivers: some priorities date to the 1850s, and most stream systems have been over-appropriated since the late 1800s. On a decreed right, the priority date matters as much as the amount.

New rights and disputes go to court. Colorado has seven water courts, one in each of its seven major stream basins. They are District Courts that hear only water matters, and water right applications are filed there.

Groundwater is part of the same system. Colorado law recognizes the connection between surface water and groundwater. In most drainages, you can’t get a groundwater right or a well permit without an augmentation plan that replaces the water your well takes out of the system. With few exceptions, only small residential and livestock wells that meet strict exempt criteria can be drilled without protecting senior rights. In plain terms, a new well either qualifies for that small exemption or has to replace the water it uses.

Do water rights come with a house in Colorado?

Only if the paperwork says so. Water rights are usually conveyed through deed, stock certificate or other legal documents. Colorado statute requires the same formalities as conveying real estate, except where stock in a ditch or other company is itself the water right. If the listing remarks say “water rights included,” treat that as the start of your questions.

This part surprises acreage buyers: a creek or ditch crossing your land does not give you a right to use it. DWR says a property owner is not entitled to use the ditch or stream on their property without a water right. Other people may have a right to the water flowing through, and also a right to access and maintain water infrastructure on your land.

Finding out what a property has takes some work. There is no ownership registry for water rights in Colorado, and the State Engineer’s office doesn’t keep ownership information. DWR’s advice is to research deeds at the county clerk’s office and ask the ditch or reservoir company about stock or share ownership. Records are often incomplete, and you may need a water law attorney to trace the chain of title. Do this research alongside your title review, which our guide to Colorado title insurance covers.

Colorado courts have held that when a deed is silent on water rights, the parties’ intent is determined from all the circumstances. They have also held that water rights may be bought and sold separately from the land the water flows over. Don’t leave it to a court to work out what everyone meant. Write it down.

This guide is general information, not legal advice. Decreed surface rights, augmentation plans and gaps in the chain of title are a job for an attorney, so bring in a Colorado water law attorney for those. If you’re shopping for raw acreage, our guide to buying land covers the rest of the homework.

Wells: permits, allowed uses and the change-of-owner form

Start with the permit file. It shows allowable uses, the original application and available construction and pump records, and you can find it with DWR’s Well Permit Search and Map Viewer. Read the allowed uses closely, because not all “domestic” wells allow the same uses. Some properties may not qualify for a well permit at all, and some that do may be limited to in-house use only.

The state’s Seller’s Property Disclosure describes the common residential well types this way:

Common Colorado residential well permit types

Well type	Where it applies	Typical allowed uses
Exempt well, household use only	Outside a designated basin, typically less than 35 acres	Household use only inside a single-family dwelling; no outdoor uses
Exempt well, domestic use	Outside a designated basin, typically 35+ acres	Indoor household use in up to 3 dwellings on the parcel, outdoor watering of personal livestock, irrigation of up to 1 acre
Small capacity well	Inside a designated basin	Domestic use, up to 3 dwellings, livestock, limited irrigation, no more than 1 acre-foot per year

If you’re picturing horses or a big vegetable garden on a household-use-only permit, look at the top row again.

There’s also a form to file after closing. For residential sales that transfer a small capacity well or a domestic exempt well for ordinary household purposes, the buyer must complete a change in owner name form. The contract repeats this duty in section 2.7.3. A closing service provider must submit the form within 60 days after closing. If there’s no closing service, the buyer files it within 60 days. If the well was never registered, the buyer files a registration of existing well form within 63 days after closing.

Be clear on what that form does and doesn’t do. DWR says it is for contact purposes only and does not convey real property. Title companies often file it during a real estate transaction. Otherwise the owner, an attorney or an agent files it. Allow several weeks for processing.

Ditch and water company shares

Sometimes the water right is a share of stock in a ditch or water company. That’s the exception written into the conveyance statute. Shares transfer by assignment of the stock certificate, and the company issues a new certificate to the buyer. The vesting deed should mention the stock too. Call the company early, since they know the share count and they issue the new certificate.

Transfers can carry fees. Section 15.7 of the contract covers water transfer fees for a water district or municipality, water stock, augmentation membership and small domestic water companies, and it states who pays. Find out which fees apply before you sign.

How water rights show up in the Colorado contract

The Colorado Real Estate Commission’s residential contract gives water its own section, 2.7 Water Rights/Well Rights:

• 2.7.1 Deeded Water Rights: legally described and conveyed by deed at closing.
• 2.7.2 Other Rights Relating to Water.
• 2.7.3 Well Rights: the seller supplies the required information, the buyer completes the change in ownership form, and there’s a field for the Well Permit #.
• 2.7.4 Water Stock.
• 2.7.5 Conveyance by the applicable legal instrument at closing.
• 2.7.6 Water Rights Review: the buyer may terminate if the examination of the water rights is unsatisfactory, on or before the Water Rights Examination Deadline (item 28 in the section 3.1 deadline table).

Our view: if the property gets any water beyond a city tap, fill this section in with legal descriptions, permit numbers and share counts, and set a real Water Rights Examination Deadline. Leaving 2.7 blank helps nobody.

Section 8.8.1, the Oil, Gas, Water and Mineral Disclosure, covers three points:

• The surface estate may be owned separately from the mineral estate.
• Transferring the surface estate may not include the mineral estate or water rights.
• Third parties may own or lease interests in water on or under the property.

Mineral rights are a separate topic for another day.

Section 10.8, Source of Potable Water, is where the buyer confirms whether they received the seller’s disclosure or a Source of Water Addendum.

Colorado water rights checklist for buyers

1. Get the well permit number and read the allowed uses. Compare them with your plans: livestock, outdoor watering, extra dwellings.
2. Pull the full permit file in DWR’s Well Permit Search and Map Viewer to see the application and any construction and pump records.
3. Research deeds at the county clerk’s office to see which rights were conveyed with the land.
4. Call the ditch or reservoir company to confirm the share count and ask how they issue a new certificate.
5. Ask whether anyone else holds rights to water crossing the property, or access to maintain infrastructure on it.
6. Test the well’s water quality and quantity. DWR points buyers to wellowner.org.
7. List every right in section 2.7 with legal descriptions, permit numbers and share counts. Set a Water Rights Examination Deadline that leaves time for this research.
8. Check section 15.7 to see who pays water transfer fees.
9. Confirm who will file the change-of-owner form after closing, and make sure it’s filed within 60 days.

What sellers should prepare

Buyers will ask about the water, so have answers ready before you list. Complete section H of the Seller’s Property Disclosure, which asks about:

• Water supply type: public, community, well, shared well, other or none.
• Whether the well permit and drilling records are provided.
• Any shared well agreement.
• Supplemental water purchased in the past 2 years.
• Cistern storage.

Our guide to the seller’s property disclosure walks through the rest of the form.

Gather the permit and drilling records, share certificates and any shared well agreement. Then list the rights in CBS1 section 2.7 so buyers aren’t guessing, along with the other prep covered in how to sell a house in Colorado. If you’re listing a place with a well or shares, Trelora offers full service for a 1% listing fee paid at closing.

Abandonment: why unused water rights can be lost

Water rights in Colorado can be lost if they aren’t used. Failing to put a right to beneficial use for 10 or more years when water was available creates a rebuttable presumption of abandonment. The division engineer files an abandonment list with the water court every 10 years. HB25-1014 revised the process. Generally, the next cycles end in 2030 for divisions 1 through 3 and in 2035 for divisions 4 through 7. If you’re buying a decreed right that hasn’t been used, ask why.

Can you collect rainwater in Colorado?

Yes, in small amounts. Single-family homes and multifamily buildings with 4 or fewer units can capture rooftop precipitation in up to two rain barrels with a combined capacity of 110 gallons without a DWR permit. The water can only be used outdoors, such as for lawn and garden irrigation, on the property where it was collected. It can never be used for drinking or indoor household use. Some homes served by a well can get a separate rooftop collection permit (form GWS-78).

FAQ

Do water rights automatically transfer with property in Colorado?

No. Water rights are usually conveyed by deed, stock certificate or other legal document, and the Colorado contract warns that transferring the surface estate may not include water rights. If you expect them to transfer, list them in section 2.7.

How do I find out what water rights a Colorado property has?

There’s no state ownership registry. DWR recommends researching deeds at the county clerk’s office and asking the ditch or reservoir company about shares. For a well, look up the permit in DWR’s Well Permit Search and Map Viewer. If the records have gaps, a water law attorney can trace the chain of title.

What is the difference between a water right and a well permit?

A water right is a priority to use water, confirmed by a court decree under prior appropriation. A well permit authorizes one specific well, and the permit file lists its allowable uses. With few exceptions, only small residential and livestock wells that meet strict exempt criteria can be drilled without protecting senior rights.

Who files the well change-of-ownership form when I buy a house with a well?

A closing service provider must submit the change in owner name form within 60 days after closing. If there’s no closing service, the buyer files it within 60 days. DWR notes that title companies often file it. The form is for contact purposes only and does not convey the property.

Can I use a creek or ditch that runs through my property?

Not without a water right. DWR says a property owner is not entitled to use the ditch or stream on their property without a water right. Other people may have rights to that water, and to access and maintain infrastructure on your land.

Is it legal to collect rainwater in Colorado?

Yes, within limits. Eligible homes can use up to two rain barrels totaling 110 gallons without a DWR permit, for outdoor use on the same property only. Rain barrel water can never be used for drinking or indoor household use.