October 16, 2018

Colorado Court of Appeals: Restrictive Covenant Is Not Compensable Property Interest in Eminent Domain Case

The Colorado Court of Appeals issued its opinion in Town of Monument v. State of Colorado on Thursday, October 4, 2018.

Real Property—Eminent Domain—Restrictive Covenant—Compensable Property Interest.

The Town of Monument (the Town) bought a parcel of real property in a residential subdivision. The Town intended to construct a municipal water storage tank on the lot, but a restrictive covenant prohibiting such structures applied to all lots in the subdivision. The Town filed this case, seeking to use its power of eminent domain to have the court declare its property free of the restrictive covenant. Some lot owners in the subdivision intervened in the case and argued that because the restrictive covenant benefits all property in the subdivision, the Town cannot eliminate the restrictive covenant on its lot without paying every property owner in the subdivision an amount compensating each of them for the loss in value to their respective properties. The district court agreed with the landowners, and the parties stipulated to a dismissal of the case with prejudice.

On appeal, the Town argued that the district court erred in finding that the restrictive covenant was a compensable property interest to the surrounding landowners. The court of appeals determined that under Smith v. Clifton Sanitation District, 300 P.2d 548 (Colo. 1956), a restrictive covenant banning certain uses of property is not a compensable property interest in an eminent domain case.

The judgment was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.

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