Understanding Water Rights When Buying in Colorado

If you are buying property in Colorado — especially rural property — you need to understand water rights. This is not optional background knowledge. It is fundamental to understanding what you are buying.

Colorado operates under the Prior Appropriation Doctrine, which means water rights are separate from land ownership and are governed by the principle of 'first in time, first in right.' The person or entity that first put water to beneficial use has the senior right — and in times of shortage, senior rights are satisfied before junior rights.

What this means practically: if you buy a property with a junior water right and there is a drought, your right may be curtailed entirely while senior rights holders upstream continue to use water. This is not a hypothetical — it happens regularly in Colorado.

Surface water vs. groundwater. Surface water (streams, rivers, ponds) is subject to the Prior Appropriation system and requires a water right to use. Groundwater is more complex — some groundwater is tributary to surface streams and subject to the same system, while other groundwater is designated as non-tributary and can be used under different rules.

Wells. Most rural properties in Colorado rely on wells for domestic water. A well permit from the Colorado Division of Water Resources is required. The permit specifies what the water can be used for (household, livestock, irrigation) and how much can be pumped. Always ask for the well permit and the well log, which shows the depth, casing, and historical flow rate.

Water rights that convey with a property. When you buy a property, you need to know exactly which water rights are included in the sale. This should be spelled out in the contract. Some sellers retain water rights — especially irrigation rights — when selling land. Do not assume water rights convey automatically.

Ditch rights and irrigation. Many agricultural properties in Colorado have ditch rights — shares in an irrigation ditch company that entitle the owner to a certain amount of water for irrigation. These shares have real value and should be included in the sale unless explicitly excluded.

Get a water rights attorney involved. Water law in Colorado is genuinely complex, and the stakes are high. For any rural property purchase, I strongly recommend having a water rights attorney review the water rights situation before you close. The cost is modest compared to the risk of buying a property with inadequate or encumbered water.