Colorado Supreme Court Holds Private Residential Covenants Do Not Require “Just Compensation” under Takings Clause
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By Laurel Witt, CML associate counsel
Colorado Supreme Court Holds Private Residential Covenants Do Not Require “Just Compensation” under Takings Clause
By Laurel Witt, CML associate counsel
The Colorado Supreme Court ruled in favor of the Town of Monument earlier this month in Forest View Co. v. Town of Monument, Case No. 18SC793, a case in which CML participated as amicus. The Court held neighboring property owners are not entitled to "just compensation" under the Colorado Constitution when a municipality or other government entity uses land it acquires in a manner that is violative of a restrictive covenant. This case is important for municipalities because it narrows the amount of money a municipality needs to pay to condemn a piece of property subject to a restrictive covenant, such as a lot in a covenant-controlled subdivision.
In this case, the Town of Monument purchased a lot in a single-family residential neighborhood to install a water tank. This lot, along with every lot in the neighborhood, was subject to a private restrictive covenant limiting the lot to residential uses. Monument filed an eminent domain action to condemn-out the covenant restriction on the lot. The surrounding lot owners objected, claiming entitlement to just compensation. Based on a 1956 Colorado Supreme Court decision, the Court of Appeals held that Monument did not need to pay just compensation. The property owners appealed.
In the Colorado Supreme Court opinion, the Court held that the 1956 case was not limited to the facts of the case, but instead stood for the idea that government entities need not pay just compensation to all those in a private restrictive covenant. The Court also discussed policy considerations in upholding its prior precedent, namely that it would be more difficult and prohibitively expensive to acquire property for governmental use in covenant-controlled subdivisions. As this would infringe on the government’s right to eminent domain in a significant way, the Court reasoned the balance weighed against property owners.