Colorado's Eminent Domain Laws and Property Rights

The following responses are intended to provide general information about eminent domain laws in the featured state. Such information does not constitute legal advice. Anyone interested in learning more about eminent domain law and the impact it may have on a given set of facts should consult with an OCA attorney or another attorney experienced in handling eminent domain cases.

• Who Can Exercise Eminent Domain Powers?

  Colorado’s eminent domain statutes delegate the power to condemn property for certain purposes to a variety of governmental bodies and agencies and even some privately-owned entities. One of the most active condemning entities in Colorado is the Department of Transportation, but many cities and towns, counties, school districts, water and sanitation districts, special districts, urban renewal authorities, regulated utilities, and other entities also condemn property. For a comprehensive list of entities with the power of eminent domain, refer to C.R.S. § 38-1-202.
  
  Colorado’s Constitution also contains specific provisions concerning the exercise of the eminent power by home rule cities; private parties for certain limited purposes, such as private ways of necessity to construct roads to landlocked property; easements to convey water and a few others.
  
  Under Colorado law, there must be a statute or constitutional provision that delegates the power of eminent domain to the condemning entity, either expressly or by necessary implication. If there is doubt regarding whether an entity has the power to condemn, the power will not be recognized.
  

• What Are the Legal Pre-Requisites for Exercising the Power?

  Colorado statutes set out the general process and procedure for exercising eminent domain powers, at C.R.S. § 38-1-101 and the following sections. There you will find laws requiring the government to take certain steps before it can condemn property, such as negotiating with the property owner. A condemnation action starts with the filing of a petition, although you will likely receive notice of the government’s plan for your property well in advance of that.
  
  Depending on the amount of money involved, a property owner may also be entitled to complete an appraisal at the government’s expense, pursuant to C.R.S. § 38-1-121, although whether to do so within the timelines of that statute depends upon strategic issues that may vary. Even if the owner does not submit an appraisal for reimbursement under the statute, he or she will likely still be entitled to reimbursement of such costs later, as part of a settlement or as part of reimbursement of costs at the end of a condemnation case.
  
  Colorado’s laws set out the process for the government to quickly obtain the right to use the property to begin construction of its project (called “immediate possession”) and for the property owner to receive just compensation for what is taken. In Colorado, many of the statutory laws regarding the power of eminent domain are also supplemented or expanded upon by case law, which is extensive.
  
  A property owner has the right to object to the petition and challenge the taking, as will be discussed in more detail below.
  

• What Limitations or Defenses Exist?

  A condemning authority in Colorado must follow the correct process and have a proper public purpose for taking land from a private property owner. If the condemning entity does not properly follow that process and comply with all other legal requirements, a property owner may challenge the taking.
  
  Potential defenses to a taking include challenging: (i) the condemnor’s legal authority to take the property; (ii) the public purpose of the taking; (iii) the necessity of acquiring the specific property to be taken if bad faith or fraud can be shown; or (iv) the condemning authority’s failure to follow the correct process, such as negotiating in good faith. Depending upon the facts and eminent statutes involved, additional defenses may be available as well.

• What Constitutes a Public Purpose?

  Like the U.S. Constitution, Colorado’s Constitution requires that private property be taken for a “public use.” Colorado courts apply a broad and flexible definition of the term “public use” that encompasses public benefit and advantage. Common public uses include roads, electrical transmission lines, public buildings, or other projects for the public good.
  
  Like many other states, Colorado reformed its eminent domain law both prior to and following the U.S. Supreme Court’s Kelo decision. As a result, “public use” does not include the taking of private property to transfer to a private entity for economic development or tax revenue enhancement. The reforms also shifted the burden from the landowner to the condemning body to prove that it is condemning property for a proper public use or purpose.

• How is Just Compensation Determined?

  The U.S. and Colorado Constitutions both require that an owner be paid just compensation if their property is taken for a public project or other proper purpose. In Colorado, just compensation should put the landowner in the same economic position as though the taking had not happened. Colorado law generally measures just compensation by what the landowner lost, not by what the condemning entity gained.
  
  Just compensation under Colorado law is usually determined based upon the property’s “fair market value” (called “reasonable market value” under Colorado’s jury instructions). The value of the property is determined as of a specific time referred to as the “date of value.” Depending on the circumstances, the date of value is typically the earlier of the date a condemnor takes immediate possession, the date of a valuation trial, or a date the parties stipulate to.
  
  An owner is not limited to the value of the property based only upon its present use, but instead is entitled to compensation based on the property’s most advantageous, or “highest and best” use.
  
  Both the condemning authority and the landowner usually obtain an appraisal to determine the reasonable market value of the property and then use the appraisals to either negotiate a settlement or present evidence in a valuation trial to support their position.
  
  Under Colorado statutory law, a landowner may choose whether to have the final determination of just compensation made by the judge, a jury, or a three-person commission.
  
  

• What About Recovering Damages to Remaining Property?

  Under Colorado law, just compensation includes the reduction in value to a landowner’s remaining property as a result of the taking.
  
  The standard formula for determining just compensation, including damages, under Colorado law is:
  
  Determine the overall value of the entire property.
  Determine the value of the property being taken as part of the entire property.
  Determine the value of the remaining property before the taking. Determine the value of the remaining property after the taking.
  The difference between items (3) and (4) will determine damages and/or specific benefits to the remainder.
  
  The landowner may experience other impacts because of the taking, but not all damages are recoverable under Colorado law. One example of such damages that may not be compensable are losses caused by minor changes to the property’s access. Generally, business losses are also not compensable. But even these limitations may depend on the circumstances and facts involved. For instance, damages may be available for changes in access if the trial court determines they result in a “substantial impairment of access,” as defined under Colorado case law. And an owner may be entitled to business losses if the business itself is being taken by the government.

• Is the Landowner Entitled to Recover Reasonable Attorney Fees? Expert Fees? Litigation Costs?

  The Colorado Constitution supports the recoverability of a landowner’s litigation costs against the condemning entity, regardless of the outcome of condemnation litigation. Common recoverable costs include: appraisal and other expert fees, filing fees, court reporter and transcript fees, deposition costs, exhibit preparation, copying costs, and similar expenses. The landowner’s costs must be “reasonably incurred” as a result of the condemnation. Landowners have the burden of proving the reasonableness and recoverability of their fees and costs.
  
  If the condemnor takes immediate possession of the property and the ultimate just compensation is ultimately higher than the deposit made to take possession, the property owner may also be entitled to interest on the difference between the amount of the deposit and the ultimate award.
  
  In at least two specific situations, landowners are also entitled to reimbursement of their reasonable attorneys’ fees. The first is where the court decides that the government is not authorized to condemn the property. The second is where the amount awarded by the court for just compensation meets two requirements: (1) it is more than $10,000; and (2) it is at least 30% more than the last written offer the government made for the property before filing the condemnation case. This second situation applies to most, but not all, types of condemning entities because some are exempted from the statute.
  
  The court decides how much of the landowner’s attorneys’ fees, costs and interest are to be awarded at the end of the condemnation case.

• Can the Government Take Possession of the Landowner's Property Before Final Compensation is Paid?

  A condemning authority may ask for the right to take early, physical possession of a landowner’s property before a final determination of just compensation so that it can start construction of its public project. This process is called “immediate possession.”
  
  Section 38-1-105(6)(a), C.R.S. generally governs requests for immediate possession. The statute requires the condemning authority to deposit money into the registry of the court to protect the owner’s right to receive full compensation. Unless the owner objects and seeks a greater deposit, this amount is usually the condemnor’s appraised value. If the court grants the condemning body the right to take early possession of the property, the owner may then petition the court to withdraw either a portion of or the entire deposited money. The parties then continue with litigation to determine the total just compensation that is owed for the taking and damaging of the owner’s property, either through settlement or a valuation trial before a commission, jury, or judge.