Frequently Asked Questions:

Water rights are simply the legal right to use water. The land you purchase or own, may or may not have water rights attached to it. In the west there are primarily three systems of water law: 1) Riparian, 2) Prior Appropriation, and 3) Hybrid. The system used in each state varies and as a result, so does the actual usage included in water rights. As a landowner it is important to understand what water rights, if any, transfer in ownership and what those rights include. For more information on water rights, please see the following links:

General Water Rights Information
BLM Water Laws

Wyoming Water Rights
Wyoming Water Law: A Summary Report
Wyoming State Engineers Office

Montana Water Law Information
Montana Water Rights Information
Montana Department of Natural Resources & Conservation

South Dakota Water Law Information
Summary of South Dakota Water Laws & Rules
SD Department of Environmental & Natural Resources

Colorado Water Rights
Colorado Division of Water Resources

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Unknown to many, land can be owned in what is referred to as split estates. In split estates, the right to surface ownership (the land) and the rights to the subsurface ownership (the minerals) are owned by separate parties. In this situation, subsurface owners are the dominant estates, meaning they have a right to extract their minerals regardless of the surface owner’s objections. The surface owners, however, must receive just compensation for any surface use or damages required by the subsurface owner in order to extract the minerals.

Mineral rights may or may not be included in the purchase of land. As a landowner it is important to understand the mineral rights included with the land you own or plan to purchase. If the land is owned in a split estate you must familiarize yourself with your rights and obligations as either the surface owner or the mineral rights owner. For more information please see the following links:

BLM: Split Estates
Information at Geology.com

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“Conservation easements are voluntary agreements that limit the amount and type of development that can occur on a property in order to preserve its productive capacity and open character. Landowners continue to retain title to the property and all other rights of property ownership.

Although all conservation easements preclude development that would destroy the land’s value for ranching, the terms of each agreement are individually tailored to meet the concerns of the landowner and the unique features of the property. Conservation easements can be donated or sold and can be granted during the owner’s lifetime or through a bequest. The easement may be placed on an entire property or a portion of the property. Conservation easements typically are assigned in perpetuity. This means the agreement runs with the title, regardless of ownership, ensuring the land will be maintained as ranchland and open space for future generations.” Wyoming Stock Growers Agricultural Land Trusts

Extensive comprehensive

For more information please see the following sites:

The Nature Conservancy
Montana Land Reliance
The Land Trust Alliance
The Sonoram Institute
The American Farmland Trust
The Conservation Fund
Rocky Mountain Elk Foundation
Jackson Hole Land Trusts
Colorado Cattlemen's Agricultural Land Trusts

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“In a typical transaction, the property owner is taxed on any gain realized from the sale. However, through a Section 1031 Exchange, the tax on the gain is deferred until some future date.

Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of "like-kind", while deferring the payment of federal income taxes and some state taxes on the transaction.

The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer's investment is still the same, only the form has changed (e.g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a "paper" gain.

The like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax (Federation of Exchange Accommodators).”


We have extensive experience with 1031 Exchanges and have helped many of our clients successfully utilize this tax deferred tool in their real estate transactions. Please contact us for more information.

Please see the following links for more information:

Tax Almanac: Internal Revenue Code Title 26 Section 1031
Internal Revenue Code: Title 26 Section 1031

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