Real Estate Section Newsletter
A publication of the Real Estate Law Section of the Colorado Bar Association
Surprise Premises Liability Result
injuries and is now a permanent quadriplegic.
James G. Benjamin
303-290-6600 No Common Law Defense of Open and Vigil sued the Franklins.
firstname.lastname@example.org Obvious Danger
The Franklins won a summary judg-
The Colorado Supreme Court issued its ment at the trial court on the basis that they
opinion in Vigil v. Franklin on November 30, owed no duty of care to Vigil because diving into
Duke Eggleston 2004. It ruled that the common law open and the pool was an open and obvious danger. The
970-759-5380 obvious danger doctrine did not survive the en- Court of Appeals affirmed.
actment of Colorado’s premises liability statute,
Section 13-21-115 C.R.S. The Supreme Court reversed, stating L
that the plain language of the premises liability
email@example.com James R. Vigil, 36-years old and mildly statute manifests the intent of the General As-
retarded, worked for the Arkansas Valley Com- sembly to abrogate the common law of land-
munity Center for Handicapped and Retarded owner duties, and thus also the common law
303-985-0308 Persons (“Center”) from which he received job defenses to the existence of such duties.
Ann.firstname.lastname@example.org training skills and work experience. The Frank-
lins contracted with the Center for weed removal Watch SB05-057, which would clarify
and other manual labor. Vigil performed labor that the common law doctrine of open and obvi-
303-892-7417 for the Center at the Franklins’ property. While ous danger continues to apply in assessing
Barbara.email@example.com there, he dove into the Franklins’ four-foot-deep, landowner liability in actions brought under the
above-ground pool, sustained severe spinal premises liability statute.
Inside this issue:
Sellers: Watch Those Fence Lines
Surprise Premises 1 and Deed Warranties After closing, neighbor Morris brings
Liability Result suit against Bill to quiet title by adverse posses-
sion to the strip between the fence and Bill's
Arthur, an absentee owner, owns
(formerly Arthur's) property line. Bill brings Ar-
Practice Pointer 1 farmland on which an old fence sits inside the
thur in on the lawsuit on claim of breach of deed
described boundary. The fence has been there
warranty. Bill also sues the title company under
Odd Laws 2 over 18 years. Arthur's neighbor, Morris, claims
his policy, claiming an ambiguity in the excep-
to have farmed to the fence on Arthur's
tion. The title company, based on the indem-
2005 Legislative 2 nity, makes a subrogation claim against Arthur if
Updates it loses its defense of the title claim.
Arthur sells to Bill. Bill gets a survey
Title Insurance for 3 before closing; the fence is shown inside the
Arthur probably loses both the subro-
Water Rights boundary. A copy of the survey is provided to
gation claim by the title company and Bill’s case
the title company and the title policy excepts on
in chief on the covenant of deed warranty.
The Colorado 3 Schedule B-2 "matters of [the described] sur-
Lawyer Needs You vey." Arthur gives Bill a general warranty deed,
Moral of the story for the seller: Ask
excepting only “easements, covenants, restric-
for the buyer's survey when representing the
Mark Your 3 tions, reservations and rights of way of record, if
seller. Be sure the general warranty deed also
Calendar any.” Arthur either does not spot the fence
excepts matters shown on the survey, or that
shown on the buyer's survey, or perhaps never
Web Wise 4 the general exception includes boundary line
sees Bill’s survey. Arthur does not have actual
variances, whether or not of record. Modify the
knowledge about the encroachment, but argua-
title company indemnity to except out all ad-
bly could have ascertained it by reviewing the
verse boundary items or matters known to title
survey, for instance. Arthur signs a title indem-
company as well.
nity to the title company at closing.
Page 2 Real Estate Section Newsletter
2005 Legislative Updates
Keep an eye on the 2005 Colorado Legislative Session. Among the many bills introduced which relate to real estate issues, the
following are particularly interesting. Things move fast during Colorado’s short legislative seasons, so be aware that the status
and contents of bills may have shifted without warning. If you are interested in reviewing the progress of any of the following
bills or any others introduced this session, go the Colorado General Assembly Home Page, http://www.leg.state.co.us The
page is user friendly and updated with great frequency.
1. SB 05-100 Increased Protection of Homeowners
Status as of 2/28/05: Passed 3rd reading in the Senate.
This Bill, as amended, would (a) forbid new restrictions by homeowners associations that limit xeriscape or require primarily turf
grass landscaping; (b) direct associations not to prohibit the display of American flags and political signs; and (c) forbid associa-
tions from prohibiting the parking of emergency vehicles on the development’s streets if they are required by the unit owner’s
employment and do not block streets or access. The legislation also encourages associations to adopt mediation and arbitra-
tion for dispute resolution, requires associations to supply contact information to all owners annually, and creates additional
rules on association record keeping, managing agent agreements, meeting requirements, proxies, accounting and conflicts of
2. HB05-1032 Land Set Aside for Governmental Purposes
Status as of 2/28/05: Passed 3rd reading in the House.
Authorizes a governmental entity holding title to land located within a planned unit development set aside for a governmental
purpose to release the land from any limitations imposed on its use and sell all or any portion of the land, with approval of the
municipality in which the land is located and after a public hearing. Further use of the land shall otherwise be consistent with
the efficient development and preservation of the planned unit development. (cont’d. on page 4)
O D D L AW S
Recording Statutes and CIOA of Pagosa Springs, Colorado. Such homes were not ex-
pressly prohibited by the covenants. The PLPOA sued to
In the last issue of the Newsletter, we discussed C.R.S. have the home removed, based on (unrecorded) rules and
§ 38-35-108, which states that references (of record) to regulations that required all homes to be built to the Uni-
unrecorded documents “shall not be notice to any other form Building Code (UBC). In its opinion, the court did not
person whatsoever unless the instrument mentioned or specifically address or discuss C.R.S. § 38-35-108, but
referred to in the recital is of record in the county where held that the Caywoods were “on constructive notice that
the real property is situated. Unless the same is so re- his or her property is subject to unrecorded restrictions
corded, no person other than the parties to the instrument and regulations by virtue of the recording of the Declara-
shall be required to make any inquiry or investigation con- tion . . ..”). Id. at 702.
cerning such recitation or reference".
This may or not be “an exception to the rule,” but it is
It is unclear how one reconciles this statute with the difficult to reconcile the recording statute with CCIOA,
standard practice of homeowners associations adopting Pagosa Lakes, and the standard of practice in the indus-
rules and regulations, which are generally not recorded. try.
Moreover, CCIOA expressly permits an association to
"adopt and amend bylaws and rules and regulations." Divorce Severs Joint Tenancy
Section 38-33.3-302(1)(a), and CCIOA’s definition section
does not require that the rules and regulations be re- Section 15-11-804 C.R.S. automatically severs any
corded. Section 38-33.3-103(27) (“’Rules and regulations’ property interest held by the former spouses as joint ten-
means any instruments, however denominated, which are ants and transforms it into a tenancy in common upon
adopted by the association for the regulation and manage- divorce. This automatic severance may be overridden by
ment of the common interest community, including any (a) the express terms of the governing instrument, (b)
amendment to those instruments”). court order, (c) agreement before or after the marriage,
divorce or annulment, or (d) by documents executed after
At least one case has upheld the enforcement of unre- the divorce, such as wills, powers of attorney or benefici-
corded rules and regulations, PAGOSA LAKES PROP- ary designations. Should a lis pendens be filed against
ERTY OWNERS ASSOCIATION, INC. v. CAYWOOD, the jointly held property of spouses upon the commence-
973 P.2d 698 (Colo.App. 1998), under difficult facts. The ment of a divorce?
Caywoods built a HUD-code manufactured home outside
Winter 2005 Page 3
Title Insurance for Water Rights – Used Properly, You
Won’t Get Hosed
Stewart Title Guaranty Company is underwriting title insurance for water rights in Colorado through its affiliate, Stewart
Water Information, LLC. We do not know whether any other title companies have yet ventured into the field. Stewart’s
policies, which follow an ALTA–type format, insure the ownership of water rights, but take exception to all physical aspects
of the water. Research necessary to produce a water title commitment is necessarily more detailed and far-ranging than in
a run-of-the-mill land transaction, as water records are not confined to the county clerk’s office. Rates for water title insur-
ance coverage are filed with the State Division of Insurance, but a research fee may also be imposed for producing the
title commitment. For buyers and lenders who are seeking comfort concerning ownership of the decreed source of water
being conveyed or encumbered, this coverage is something to consider. The coverage may be especially appealing to
lenders attempting to collateralize a deal which includes water rights.
However, it is important to know what you are buying. Title insurance for water rights offers assurance that title to a de-
creed water right is vested in a particular manner. However, it does not, and does not pretend to, offer any information as
to the value or quality of the water right being insured. The form of policy reviewed contained the following printed excep-
tion to coverage:
Loss or damage arising from (a) a future action to adjudicate water rights as provided for in Colorado Revised
Statutes §§37-92-101, et seq., as amended; (b) terms and conditions of the decree; (c) any reservations of rights
by the United States of America, any rights created by federal claims, and any prior rights held by another state,
territory, sovereign, tribe, nation or country obtained by appropriation, treaty, compact, legislation, or otherwise;
(d) local, state or federal laws or regulations; (e) future administrative action by the State Engineer/Division of
Water Rights; (f) lack of right of access to transport from the point of diversion and/or well bores and drilling of
wells; and (g) any physical aspect of the water including but not limited to: availability, existence, utility, recover-
ability, source, quality, condition, potability, chemistry or other characteristics of water, if any, lying on, under or
over the land or lands that may be produced or used there from.
Title insurance for water rights is a new tool to consider in transactions where decreed water is being acquired, or included
in a financing. But care must be taken not to lose sight of its limitations. Water title insurance can give you assurance
that a water right is vested in a particular person, but it cannot tell you whether the water right is valuable or even usable.
For those purposes, you still need due diligence performed by an expert.
The Colorado Lawyer Needs You
The Colorado Lawyer features a series of Specialty Law Columns, including the Real Estate Law
Newsletter. Please share your expertise with your colleagues in the Real Estate Section. If you have
ideas for a Newsletter article, please contact our editors, Steve Sommers (303-223-1100; ssom-
firstname.lastname@example.org) or Pat Barney (970-879-2561; email@example.com).
MARK YOUR CALENDAR
Real Estate Symposium
July 28-30, 2005
Page 4 Real Estate Section Newsletter
The World Wide Web offers real estate lawyers a wealth of research tools, providing access directly from your desk to count-
less forms, statutes and regulations, articles and databases. Title companies, like other important players in the real estate
industry, have seized upon the Internet to promote their expertise and resources. Here are just a few examples of the valu-
able information you may find with a point and a click on title company Web pages.
Go to the “Resources” button on Stewart Title’s home page, and select “Virtual Underwriter” from the drop-down menu. You’ll
find a state-by-state library of forms of conveyance documents, title policies and endorsements; endorsement guidelines; ex-
ception guidelines, bulletins and special alerts; and summaries of business and real estate practices organized, again, state-
The First American Corporation maintains a reference section with archives of articles by Jack Murray, Vice President and
Special Counsel for First American Title Insurance Company. Go to the First American home page, click on the “References”
button from the menu at the top of the page, and you will find a gold mine of articles on topics ranging from limited liability
companies to bankruptcy issues in real estate transactions, to leases, to, of course, title insurance. The First American Refer-
ences page also offers a section captioned “Underwriting Library” in ten virtual volumes.
LandAmerica’s Web page includes a site map (found at the bottom of the home page) that, once opened with a click, reveals
helpful links to a variety of real property tools, including a State Resources section with forms and information compiled state-
by-state, a mortgage calculator, and information on UCC insurance, 1031 exchanges, and other topics relevant to both com-
mercial and residential transactions.
Do you have a favorite real estate Web site? Please let us share it in the Real Estate Section Newsletter. Send the Web page address to any
of the Newsletter editors: Duke Eggleston (firstname.lastname@example.org), Ann Kirwin (email@example.com), Barbara Mueller
(Barbara.Mueller@dgslaw.com), or Rebecca Fischer (firstname.lastname@example.org). Thank you!
Legislative Updates (cont’d. from page 2)
3. HB05-1264 Repeal of the Real Estate Recovery Fund
Status as of 2/28/05: Amended Version referred to House Appropriations Committee.
Repeals the real estate recovery fund (which has been “swept” into the general fund). Prohibits claims against the fund filed
later than 30 days after the effective date of the Act. Transfers any unencumbered balance of and revenues formerly deposited
in the fund to the division of real estate cash fund. Repeals the real estate recovery program once the final claim against the
fund has been paid.
4. HB05-1219 Oil & Gas Surface Damage Compensation
Status as of 2/28/05: House Committee on Agriculture, Livestock and Natural Resources, witness testimony only
Requires all oil and gas operators and surface owners to negotiate concerning compensation to be paid by the operator to the
surface owner for loss of value associated with reasonably anticipated damages to the surface resulting from proposed drilling
operations. Establishes a procedure for the parties to reach agreement, including use of appraisal and arbitration.
5. SB05-057 Open Obvious Danger Doctrine
Status as of 2/28/05: Passed 3rd Reading in Senate
Clarifies that the common law doctrine of open and obvious danger survived the enactment of the premises liability statute.
Specifies that the doctrine continues to apply in assessing landowner liability in actions brought under the premises liability stat-
ute. This bill is in response to Vigil v. Franklin, a November 30, 2004 decision in which the Supreme Court held that C.R.S.
§13-21-115, Colorado’s premises liability statute, evidenced the intent of the General Assembly to abolish common law land-
owner defenses in a case where the Court of Appeals had found that a homeowner had no duty to warn a 5’11” mildly retarded
man working for a company cleaning their property of the dangers of diving into a 4-foot above-ground pool.
6. SB05-063 Blighted Areas and Urban Renewal
Status as of 2/28/05: Senate Committee on Local Government laid over unamended
Removes economic liability from the definition of “blighted area” in connection with an alternative requirement that may be
shown to demonstrate that an area is blighted for purposes of urban renewal statutory provisions. Prohibits an area from being
designated as blighted where an owner within the area objects to the designation, a local government entity receiving taxes
from the area objects, or the area has been annexed within the past five years and is zoned agricultural.