When considering Colorado ranches for sale, it’s critical to understand the purchase of a farm or ranch involves issues that are not typically confronted by the buyer of a residential, commercial or just about any other type of property. Particularly in the West, there are many complex issues and particularities of western water real property laws and local customs that need to be considered.
The purpose of this series is not to provide an exhaustive list of all issues, but to highlight some of the most significant issues and serve as a guide to areas in which a higher level of due diligence should be performed. We will cover the most critical Colorado ranches for sale issues in this article and two that will follow.
Location and Access
As with any property, a physical due diligence should be conducted by properly trained personnel. Particular concerns involve the location of the ranch and advantages or disadvantages of abutting public lands. The Interior West is a tangled web of overlapping jurisdictions and is divided up by a number of federal agencies that own millions of acres of public lands. The overlapping authority of municipal, county, state and federal agencies places each piece of land, and its resources under the jurisdiction of up to a dozen agencies, each with its own regulatory authority.
There are many issues involving access to the property and rights of others to access the ranch. For instance, other property owners may have access to maintain and operate irrigation ditches that cross a particular ranch, or the right to drive their cattle through a portion of the ranch at particular times of the year. Some of these easements may not be recorded or show up on a title commitment and therefore it is very important to conduct a physical inspection of the property to see if these conditions exist. In addition, certain conditions such as wetlands, ditches, and ponds may limit the use and involve other local, state, and federal agencies such as the Army Corps of Engineers.
Leases and Permits
Many Colorado ranches for sale are encumbered by leases to a third party for grazing, farming, oil, gas, mining, or for recreational activities. Some of these leases can provide additional sources of revenue to the buyer and need to be reviewed to determine if they will interfere with the buyer’s intended use. For instance, some properties along rivers may be leased to fishing clubs or land leased out to other ranchers for grazing cattle or cutting hay. Of particular concern are the issues dealing with termination and the duration of the existing lease and conditions imposed on both parties in maintaining the lease.
Of substantial importance are state and federal permits which may allow grazing, timber or recreational uses on public lands to graze their livestock on and these permits may add some underlying value to the property owner. Any buyer should investigate the status of these permits and determine their assignability, duration, months of use and the conditions imposed on the landowner in maintaining the permits such as limitations on the number of animals. In recent years, these permits have come under greater scrutiny by the public land agencies and the continued availability and use to ranch owners of such land is no longer a given. In most situations various forms will need to be filed with the respective agencies and fees paid in order to transfer or acquire such permits or leases.
Colorado ranches for sale and the critical issues buyers and sellers should not overlook is an expertise of the Mirr Ranch Group. In the next two articles we will cover water, mineral rights, fences, mineral rights and personal property issues. For more information on location and access, or leases and permits issues please feel free to contact the Mirr Ranch Group at (303) 623-4545.