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Archive for the ‘Real Estate Law’ Category

KTLaw Sponsors National Ag Week Festivities

It is National Ag Week – March 17 – 24, 2013!
If You Eat, Drink or Wear Clothing…Thank a Rancher or Farmer!

Klauzer & Tremaine is a proud sponsor of National Ag Week in Routt County, Colorado, and is a proud supporter of Community Agriculture Alliance.

National Ag Week is a special time to come together to recognize and celebrate the importance of agriculture. Agriculture provides almost everything we eat, use and wear on a daily basis. National and local efforts work to educate millions of consumers and ask “Where would you be without agriculture?”

Community Agriculture Alliance is coordinating several events and activities focused on education on the value of agriculture and how “ag matters” in Routt County. Our goal is to connect all of us with local agriculture.

Since 1999 Community Agriculture Alliance has been dedicated to local agriculture. CAA provides connections for agriculture and diverse community interests, building common ground in support of agriculture. We bring leadership in education and the promotion of agriculture (food, fiber, products and services). We believe that agriculture matters and our mission is “to preserve the agricultural heritage of the Yampa River Valley by initiating, supporting and encouraging actions programs and policies that mutually benefit and connect agricultural producers and consumers”.

CAA 2013 National Ag Week Activities:

March 3-13 – Ag Matters Bandanas and Posters to Sponsors

March 3-30 – Ag Matters Radio Spots

March 17-24 – Ag Week Restaurant Promotion

March 19 – Ag Matters insert in Steamboat Today

March 20 – Ag Week Breakfast

Join us in celebrating agriculture in the Yampa Valley.

Legitimate Tax Reform or Another Attack on Agriculture?

Several months ago while attending a Land Stewardship Class, sponsored by the Community Agriculture Alliance, I was surprised to learn from our County Assessor that some of the rules for the taxing of agricultural lands had recently been changed.  The legislature had passed House Bill 11-1146 and the Governor had signed it for the ostensible purpose of curbing an abuse of the constitutional tax benefits that apply to agricultural land in Colorado.

The change seems to have occurred because from the perspective of the front-range legislators, people who own nice houses in mountain resort areas were getting an undeserved tax benefit if they leased their land to a cattle rancher or a hay farmer.  In this type of circumstance, the property owner (with an agricultural tax classification) would pay a low rate on a low valuation, as prescribed by the Colorado Constitution.  The owner of a nice house on 40 acres of land that was grazed by a neighbor’s cattle might pay a tax of a few hundred dollars per year, rather than a tax of a few thousand dollars per year (without the agricultural activity).

The new law does not impact vacant agricultural land.  However, where there is a residence, the law requires that the residential area – up to two acres — of an agricultural property shall not be included in the definition of “agricultural land” unless the improvement is integral to an agricultural operation conducted on such land.   If the residential area is not “integral,” then the area must be taxed at the residential rate, but at a value that in most cases will be significantly higher.  The taxes for this property will go up.

The statute goes on to define what it means by the phrase “integral to an agricultural operation.” To try to phrase this in plain English, someone who lives in the house has to be running the agricultural operation on the land, or someone living in the house must be a close relative of the person who is running the agricultural operation.

In Routt County and neighboring counties, there has frequently been a mutually supportive relationship between local agriculture operators and the second-home owners who have purchased some acreage.  Sometimes it is simply a grazing lease for the open land, other times it can be a caretaker relationship, or a more complex relationship where one property owner shares responsibilities with another.  The bottom line has been one that has kept lands in active agricultural use, and the agricultural tax classification has been part of the incentive that has helped this cooperation work.

So, what will the net impact be here in Routt County?  Will this new  law discourage people from having sheep and cattle graze across their property.  Will we lose additional acreage from ranchland?  While we may strongly suspect this negative impact to available productive agricultural land, there is no way that we will know for at least several years – as the County Assessor pores over the recent agricultural property survey results, makes initial determinations, notifies the property owners, and the property owners decide how they will respond to the situation.

For now, what we do know is that under the new law the County Assessor must make an initial determination of which agricultural properties should be subjected to some change by the first of May.  Then, the owners who receive notice of classification and/or valuation changes will have an opportunity to protest before June first – initially to the County Assessor, and then possibly to the Board of County Commissioners, sitting at the Board of Equalization.  When property owners see their tax bills in January or February of 2013, they will know what the real impact of this legislation is on them and their property.

The County Assessor and the County Commissioners have provided some basic fact background concerning this law on the County’s web site.   The upper right corner of the Routt County home page identifies House Bill 11-1146, and will connect you to the statute and related background.

(Rich Tremaine is an attorney in Steamboat Springs and a member of the Community Agriculture Alliance’s advisory board.  A copy of this column and further information on this topic can be found at his law firm’s blog “ktlawsteamboat.wordpress.com”)

Originally published in the Steamboat Today on January 13, 2013 and can be found here.

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ROUTT COUNTY ASSESSOR TO IMPLEMENT NEW PROPERTY TAX RULES FOR AGRICULTURAL LANDS

In 2011, the Colorado Legislature amended the real estate tax laws in an effort to curtail what it perceives to be an abuse of agricultural tax benefits. The concept appears to be that if someone has a house on their property, but is not pursuing an agricultural activity, then that house is really “residential” even though the rest of the acreage may be in an agricultural use. The residential area should then be categorized as “residential” and taxed based on the residential value, rather than on the lower agricultural value.

Specifically, the Legislature approved House Bill 11-1146, amending the definition of “Agricultural land” to exclude up to “two acres … of land on which a residential improvement is located unless the improvement is integral to an agricultural operation conducted on such land.” This new law will now be implemented by the County Assessors around the State of Colorado.

After a recent public presentation – the County Assessor providing a report and update to the Routt County Commissioners, the County has posted some basic information about the new law, and the law itself, on the County’s web site:  http://www.co.routt.co.us/commissioners/Assessor/House%20Bill%2011-1146_CountyWebPage.pdf

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CLASS OUTLINE: LAND STEWARDSHIP 202


1.         INTRODUCTION TO RURAL LAW

a.          Know the facts about what you own/have purchased (real estate rights; boundaries; easements; access; claims of others; fence lines; water rights).

b.          Avoid unnecessary confrontations; reach a reasoned agreement, if possible; particularly on neighbor-neighbor disputes.

c.          If litigation is necessary, get fully prepared to go to trial, but make formal efforts to settle, before, during or after hearing/trial.

2.         LEGAL ENTITIES IN COLORADO.

a.          Agriculture as a high-liability activity.  Large animals, heavy equipment, water bodies, fences.

b.          Corporations, LLC, Partnership.  General recommendations that I make to clients.

3.         PERSONAL PLANNING.

a.          Ranch Maintenance and Management (written contracts)

b.          Protecting access rights, boundaries, water rights.

– Number one, know what rights you have.

– Number two, know how you can lose your rights. e.g. adverse possession is generally a period of 18 years; water rights must be used, or can be construed as having been abandoned.

c.          Estate Planning.

– In context of farm or ranch that you want to pass along to children or family, there are a number of steps that can be taken to protect this ability.  For example, family partnerships, lifetime transfers, conservation easements, family businesses, etc.  These efforts can be critical to preserving this property for heirs, especially in periods of escalating land values.

d.          Ownership.  Review of plats, boundaries, title commitments.

– If you have no survey, consider having one done.  If there are known boundary issues, contact neighbor and resolve.  If there are items on title commitment that are of concern, make inquiry and resolve.  Important for dealing with neighbors, for dealing with government, for dealing with sale of all or part, for dealing with owners of mineral interests, etc.

e.          Protecting agriculture tax status.

Know the definitions and the rules.  Then, be careful to comply.  Discuss County efforts 10-12 years ago; litigation; attitude since the litigation.  (Colorado Revised Statutes, Sec. 39-1-102, “Agricultural land”, “Farm” and “Ranch” defined; recent amendments (House Bill 11-11-46).

f.           Protecting rights of use (building, activities).

– As County becomes more urban, county’s planners come up with changes to zoning resolution that may impact use of private property.  For example, limits on ridge-line development were a major issue for a couple of years.  Secondary units and the related rules continue to be an issue.  Land preservation subdivisions and the related rules may impact owner directly or indirectly.

g.          Conservation Easements.

– Describe and explain how they come into being.  Describe the basic steps to be taken, and the basic options.  Describe the short-term and long-terms impacts.  Discuss/provide information on where to get more details.

– Discuss that fact information is critical to establishing a conservation easement.  Here, not only are boundary lines critical, but also knowledge about water rights and mineral rights.

– Practical:  Those conservation groups which are active in this region tend to be cooperative and mutually supportive.  However, all have their standard form easement, which, as expected, tends to be very restrictive.  The fact is that where there is any level of “gift” involved, the organization will negotiate terms.

h.          Mineral Rights.

– In Colorado, mineral rights are severable from the surface rights of real estate.  In some cases, this has occurred.  For example, on my ranch property, my company owns the surface rights; the State of Colorado owns the mineral rights.

– On some properties, a past owner may have retained the mineral rights, or may have retained a one-half interest in the mineral rights.  A later owner may have retained the other half.  However, mineral rights are not cleanly traceable in the land records.  So, a title company may note that certain mineral interests were reserved, or conveyed, by a previous owner, but the title company will not insure that you are receiving mineral rights, as part of a title commitment.

– Historically, not a lot of issues/disputes in Routt County.  However, with the energy development activities, there have been serious issues between rural property owners and energy development interests – particularly in New Mexico and in Wyoming.  In Colorado, these issues have started to arise in Garfield, Rio Blanco and Moffat Counties.  We are now seeing these in Routt County.

4.         DISPUTES.

a.          Fences and Gates.  The basic law; the typical dispute.  (Colorado Revised Statutes, Sec. 35-46-101, et seq.)

b.          Covenants and Easements.  Restrictions that are “recorded.”

– Back to your title commitment.  Typical provisions/restrictions will relate to access, to road maintenance, to utilities, and to water rights; some relate to permitted structures, require architectural review.

c.          Water Rights.  Discuss fact that water rights are established, ultimately, by Court Decree.  Property owner can make use of the water first; then file for rights.  Alternatively, owner can file first, and then develop the water rights that were established.  Discuss Colorado Supreme Court case; ramifications.

d.          Dispute resolution.  Court or alternative dispute resolution (ADR).

5.         ADDITIONAL INFORMATION SOURCES.

a.          A Guide to Rural Living & Small Scale Agriculture, Routt County

b.          “ktlaw.com” publications page

c.          “cobar.org” (Colorado Bar Association)

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Jessica Ryan’s Presentation Highlighted at Northwest Colorado Oil and Gas Symposium

Attorney Jessica Ryan of Klauzer & Tremaine speaks about oil and gas contract negotiation to the 150 people who attended the Northwest Colorado Oil and Gas Symposium.

An article about the event published by the Steamboat Pilot & Today can be found here.

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Exhibit for the Northwest Colorado Oil and Gas Symposium

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Protecting Yourself When You Build or Remodel


Although the economy has not fully recovered from the recession and money is tight, now may be a good time to start that remodel or to build your new home. Local contractors are looking for work and building supplies and materials have dropped in price since the mortgage meltdown. If you are about to embark on a building project, this article will give you a few tips to help protect yourself in the event your construction project does not turn out as planned.

Construction litigation can be very complex and therefore very costly. This article cannot address every aspect or problem that could arise during a construction project. Even a small residential project, whether just a remodel or a new home, can have numerous components to it that must be tracked and verified. The paperwork involved in a construction project can be copious and complex. If you end up being in a position where you have no choice but to file suit, such a suit could be very expensive. It is always better to take whatever steps you can to protect yourself to avoid litigation, if at all possible.

Not every project will require that you hire an architect or a general contractor. If you plan to hire a general contractor, keep in mind that Colorado does not require a general contractor to be licensed so virtually anyone can give themselves that title. Be sure to get references and don’t be shy about contacting those references. Ask direct questions of those previous clients. Did the contractor get the job done promptly and within the time frames agreed upon? Did the contractor finish the job within budget? How was the quality of the work? How big was the punch list at the end of the project? Since many contractors feel most comfortable using the same subcontractors such as plumbers or electricians, ask about the subcontractors that were on the job because you are likely to see them working on your project.

Even if your project is small and you are not using an architect or a general contractor, be sure that everything is in writing! Start with an initial written contract that describes the project in detail. There are numerous types of construction contracts, be sure to read the contract so you know what it entails. Don’t be shy about asking questions and contact an attorney if your questions are not getting answered. The more complex the project, the more complex the contract should be. If your general contractor will be submitting periodic payment requests, be sure those requests are in writing, details the work done and the hours spent and describes and lists the material used.

Keep records! No matter the size of the project, there will be a tremendous amount of paperwork associated with it. Keep the paperwork and organize it in a logical fashion in case you need it later. If it is a big project, you should have several folders for the various portions of the job. Remember, if something goes wrong, you will have to justify and document your position. That means you will have to have invoices and receipts and be able to find them. If you end up having to file a lawsuit due to a problem with the work, you are likely going to be hiring an attorney. That means the attorney will want all of the records you kept. If you have them well organized, it will take the attorney less time to organize the material and assess your case and therefore save you money.

Take photographs! The digital cameras of today make it simple and easy to document every step of the work. Start taking pictures beginning with the excavation all the way through to the finished product. You don’t have to print them out until you need them in the future. Photographs are very helpful in the event you must pursue a lawsuit. They may disclose construction defects that you were not even aware of at the time the picture was taken. Sometimes a photograph can be the strongest evidence you have in a construction lawsuit. Take them and save them with the hope that you never use them.

Problems arise even with the smallest construction projects. Think ahead, maintain your records and document everything with paper and photographs. Contact an attorney sooner rather than later so that he or she can protect your interests. Not only will this practice give you the best protection in the future, but if your contractors know that you are paying attention to the project, they will do the same.

Originally published in The Steamboat Local

 

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