August 20, 2018

Colorado Court of Appeals: Co-Owners of Ranch Validly Contracted to Allow Restrictions on Property Rights

The Colorado Court of Appeals issued its opinion in Reishus v. Bullmasters, LLC on Thursday, May 19, 2016.

Tenancy in Common—Declaratory Judgment—Covenant—Runs with the Land.

Adams Ranch is a property owned by tenants in common. Plaintiffs are some of the owners who are the appointed managers of the ranch; they brought a declaratory judgment action after defendants (other owners) objected to an amendment to an ownership agreement restricting hunting rights at the ranch.

The parties stipulated to the following relevant facts. In 1983, the owner of Adams Ranch conveyed it to 11 individuals as tenants in common. Only two of the original grantees still have ownership interests and are among the plaintiffs. The original ownership agreement stated it could be “amended or deleted by a simple majority of the individual owners at any time.” In 2007, more than a majority of the then co-owners signed an “Amended and Restated Adams Ranch Ownership Agreement” (2007 Amended Agreement). The 2007 Amended Agreement superseded the original ownership agreement and expressly states that it runs with the land and is binding on all owners, their legal representatives, heirs, successors, and assigns. It can be amended “at any time by written and recorded instrument signed by the then record Owners of at least 7/12ths of the Ownership Interests.”

In 2011, an amendment limiting hunting days per fraction of ownership was adopted by 7/12ths of the ownership interests. Defendants disputed the validity of the hunting limitation, asserting that it improperly restricted their possessory and use rights as tenants in common, which cannot be restricted without their consent. The district court held that the hunting restriction was validly adopted and binding on all owners.

On appeal, defendants first argued that one group of co-owners in a tenancy in common cannot limit the possessory rights of other co-owners without their unanimous consent. The Court of Appeals agreed with defendants that each tenant in a tenancy in common is entitled to equal use and possession of the property. However, it also found that tenants in common can contract otherwise and that there is no necessity of unanimous consent where co-owners contract such entitlement in the ownership agreements. The Court concluded that the co-owners of the ranch validly contracted to allow restrictions on their possessory rights and to allow those restrictions if approved by 7/12ths of the ownership interests.

Defendants also argued that the 2007 Amended Agreement was not a real covenant binding on the parties and their successors in interest. The Court disagreed, noting the explicit language in the 2007 Amended Agreement stating that it bound successors and ran with the land.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

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