Purchasing a home can be an exciting time, until you find out your real estate agent has not been telling you the truth. At least, that is what happened in Denver last month.
Four Denver residents sued their realtor after discovering he "misrepresented [their] homeowners' rights" to the lake behind their homes. According to a Denver news station, the residents claim that the realtor did not alert them that they needed a "water storage right" to use the lake for recreational purposes, such as boating or fishing. Without the proper water rights, the city might drain the lake.
The residents claim that the realtor was aware of the unlawful use of the lake. According to the lawsuit, the realtor also is a resident on the lake and was serving on the homeowners' association board when a water company determined that the homeowners did not have proper water storage rights. However, the residents claim he never alerted them to this information when they were buying their homes. Tragically, one of the residents paid more than $700,000 for his lakefront view.
Water rights in Colorado can be complex. Colorado instituted water rights in the late 1800s when water was in short supply. While the public has the right to natural water sources, residents on lakefronts need storage rights for man-made lakes. If a lake was filled by a natural source, such as a nearby stream, the residents generally would not need to acquire storage rights.
Unfortunately, water storage rights in Colorado can be an additional $75,000 per property. Without proper storage rights, water can only legally reside in a man-made lake for up to three days. These Denver residents might now face the option of paying a large sum of money or living without a lake.
If you are considering buying a property in Colorado, consult with an experienced real estate attorney to determine if you need to acquire water rights. Lakes are one of the most beautiful aspects of Colorado; make sure you can use yours when you purchase a lakefront home.