Many high-end buyers are looking to add Colorado ranch and rural land to their real estate portfolios. Some buyers are interested in continuing the legacy of ranching or farming, others want a secluded family getaway with ripe wildlife and recreational opportunities, some may wish to preserve their properties through conservation easements, and yet others may wish to seek to develop remote property. Acquiring or preserving these one-of-a-kind properties can be an incredible opportunity, but they also present unique challenges that buyers need to keep in mind when deciding whether ranch or rural land ownership is for them.

If you are a first-time buyer of ranch or rural land, consider spending time in the area where you are looking to buy property and getting to know your potential neighbors. Ever since statehood, ranchers, farmers, and rural landowners have been an integral part of Colorado’s history and economic success, preserving the legacy of the great Western Frontier. Whether you are looking to purchase property on the eastern plains, along the front-range or deeper in the mountains, you will be living alongside families with deep roots in the local community and the land from which they derive their livelihood. Access to these remote locations can also pose a challenge during the winter when snow blankets the area. Many ranches and rural properties are also adjacent to public land. Your “neighbor” may be the United States or the State of Colorado, thereby requiring you to interact with agents and representatives from the National Forest System (NFS), the Bureau of Land Management (BLM), or the Colorado State Land Board. In short, ranch and rural life are different from life in more populous areas—so make sure that life really is for you before buying into it.

When considering whether to purchase ranch or rural land, it is important to know and understand the different types of financing available to buyers. There are an array of alternate financing sources and options when purchasing ranch or rural land, with some lenders focusing solely on ranch and agricultural properties. Depending on the planned use of the property, buyers may wish to pursue agricultural loans, traditional financing, or alternative financing.

It is imperative that buyers identify and analyze applicable state and local land use and zoning laws which may impact their ability to operate, use and develop their property as they desire. Buyers are frequently surprised to learn that zoning in ranch and rural areas limits the development and use of the property. For example, ranch or rural land may be zoned “Forestry,” “Agricultural,” or “Rural Residential.” These zoning designations may limit the number of residences allowed, the size of a residence, the location of a residence or other buildings, or limit the number of animals allowed per unit or acre.

Buyers need to take the time to educate themselves about applicable environmental and natural resource laws that may affect their use, ownership and operation of a ranch or rural property.

For example, operations on or connected to ranch or rural land may be subject to the Clean Water Act (CWA), the National Environmental Policy Act (NEPA), and/or the Endangered Species Act (ESA). Federal laws have state counterparts as well that may need to be considered.

These laws govern everything from water quality to wetlands, dredging activities, soil erosion, reclamation, fish, and wildlife.

Depending on the intended use of the property, ranch and rural landowners may need to interface with several State and Federal agencies.

Ranch and rural land may be encumbered by a conservation easement which restricts development and/or use of private property. Several land trusts, including the Colorado Cattlemen’s Agricultural Land Trust, operate in Colorado. These organizations hold conservation easements on ranches and rural land (as well as their water rights) throughout Colorado to protect the state’s natural resources. Buyers may need to determine whether the property they are looking to acquire is encumbered by a conversation easement and may also wish to consider granting a conservation easement to a qualified entity to protect the property’s natural resources into the future.

In addition, there are several voluntary Federal and State conservation programs that encourage good stewardship and conservation practices in which ranch and rural landowners may choose to participate.

Water is at a premium in the Western United States and essential to owning any ranch or rural land. In Colorado, water rights are a unique body of law requiring expertise and familiarity with the various types of water rights. Water rights are severable from the land, and Colorado water law is based on historic appropriation of water, and application of water for beneficial use. This may be different than buyers have experienced elsewhere, and even though there may be a watercourse through the property, a landowner may not have any rights to use the water located on or flowing through the land to be purchased. Buyers need to carefully analyze and understand the water rights associated with any ranch or rural land in Colorado and determine whether additional water rights must be purchased for the buyer’s intended use of the property.

Mining has long been a part of Colorado’s history and economy, and more recently oil and gas operations have become a driving force in Colorado’s energy economy. Consequently, buyers of ranch and rural land need to analyze and understand the ownership of mineral rights on the desired property, including oil and gas rights. Mineral rights are severable from the land. As a result, land may be sold subject to a third-party’s mineral rights, including their right to enter and use a portion of the surface for exploration and development, and it is necessary to determine whether those rights may be superior to and/or interfere with the buyer’s intended use of the property.

Buyers need to ensure that they have both the physical and legal ability to access prospective ranch, rural, and remote land before purchasing the property. Access issues are especially common in the mountains. Conversely, there may be historically established access rights across a prospective property in favor of third parties, including adjoining landowners, or the public in general.

Buyers should investigate whether the land they would like to buy is subject to an existing agricultural or grazing lease, or if Federal or State permits tied to the base property require active grazing. Buyers interested in owning livestock should also investigate whether they will need additional property beyond their own to graze their animals. If so, they will want to consider negotiating an agricultural or grazing lease from a neighboring property or obtaining grazing rights or other agricultural rights from Federal or State agencies.

Buyers purchasing ranch land may also wish to purchase livestock living on the land from the previous owner or make other livestock arrangements or agreements.

Buyers interested in purchasing ranch or rural land for an agritourism business, need to familiarize themselves with Colorado’s Agricultural Recreational Act (Colo. Rev. Stat. §13-21-121), understand the risks associated with operating these types of businesses, and take steps to protect themselves from those risks. Likewise, if the buyer is interested in hosting or leasing to recreational and sporting outfitters (including hunting and fishing), care should be taken to analyze the risks, seek appropriate waivers and release agreements from the operators and participants, and ensure that there is adequate insurance

For more information about ranch and rural land ownership in Colorado, visit:

• https://www.epa.gov/agriculture/laws-and-regulations-apply-your-agricultural-operation-farm-activity
• https://csfs.colostate.edu/wp-content/uploads/2015/03/landowning_guide.pdf
• https://ag.colorado.gov/faqs-livestock

Our Real Estate Group has significant experience in assisting high-end buyers with ranch and rural land purchases. We help our clients navigate the due diligence process and the unique challenges presented by these types of real estate transactions. Our Real Estate Group also works closely with our Water and Conservation Group to address environmental, water, and conservation concerns.