Boat docks, like other properties along Missouri’s lakes, are valuable and jealously guarded by those claiming ownership or rights of use.
The law of boat docks is a muddle, perhaps due to the historic lack of clarity as to whether a boat dock is real property (land and the things attached permanently to it) or personal property (anything but real property), which is generally portable.
The Missouri legislature attempted to resolve that issue for the purposes of appraisal and mortgage lending with the enactment of HB 842, sponsored by Rep. Dennis Wood, whose legislative district encompasses Table Rock Lake.
Signed by Gov. Nixon on July 7, 2009 and effective August 28, 2009, this new law defines “boat dock” as “a structure for loading and unloading boats and connecting real property to water, public or private.” In addition, “a boat dock is real property and has riparian rights,” provided:
(a) The lender includes the boat dock as a fixture both in the lender’s deed of trust and a uniform commercial code fixture filing under section 400.9-502, RSMo;
(b) The boat dock is attached to the real property by steel cable, bar, or chain that is permanently imbedded in concrete or rock, and otherwise securely attached to the dock; and
(c) The owner of the dock has riparian rights by means of real estate rights bordering the body of water, including such rights by license, grant, or other means allowing access to the body of water, which access may be seasonal because the water may be reduced for electric power production or flood control;
According to some reports, HB 842 was a cooperative effort, with input from the Missouri Board of Realtors and the Missouri Bankers Association. There were several economic reasons for the bill:
- If boat docks were clearly defined as real property, their value could be included in real estate appraisals, which means that a borrower would be required to make a smaller down payment for a loan secured by a deed of trust on lake property with a dock than if the dock were excluded from the appraisal.
- A deed of trust on the lake property would clearly include the boat dock, if the deed of trust included the boat dock and the lender filed a financing statement to show its claim of a lien.
HB 842 modified section 339.503, the section of Chapter 339 of the Revised Statutes of Missouri (RSMo), which includes definitions of terms for statutes affecting real estate appraisers. By its language, the definitions contained in section 339.503 are only applicable to sections 339.500 through 339.549, which is officially known as the Missouri Certified and Licensed Real Estate Appraisers Act.
Will there be unintended consequences? I hope not. But the limitations of the definition of boat dock to real estate appraisal and mortgage lending may be overlooked, when lawyers and judges are trying to figure out how to resolve a dispute.
Here are some of my concerns:
- The definition of boat dock as a facility for loading and unloading boats is ambiguous. Boat docks are places where boats are moored and fueled and where people get on and off boats. “Loading and unloading boats” seems to have to do with cargo or with launching of boats from land to water and putting them back on trailers.
- If the idea of HB 842 was to allow lenders to make loans for the construction of boat docks, then it may work. But individual owners of lake homes generally buy and sell boat slips, not docks, and HB 842 doesn’t address the multiple-owner nature of community boat docks.
- The definition of a boat dock as real property has implications for recording of deeds and the assessment of real estate taxes. Must a boat dock be shown on a recorded plat in order that a deed for it can be recorded, as with lots? Do county assessors have to give each dock and separately-owned part of it a separate parcel number? Must a title insurance policy include the value of the dock (or slip in a community dock)?
- Is a boat slip real estate? After all, a boat slip is not a structure, but a hole in the structure, sometimes under a roof, and sometimes containing a lift attached to the dock? How is a boat slip described in a deed of trust?
- If there is no loan, is the boat dock real property? The first required element (a) of there being a loan is especially troublesome. If the loan is paid off, does the boat dock cease to be real property. If the loan includes a boat slip in a community dock, does the real property definition apply only to portions of the boat dock which have loans secured by deeds of trust that described the boat dock, but not to the rest of the dock?
- The second element (b), requires a boat dock, to be real property, “to be attached to the real property by a steel cable, bar or chain that is permanently embedded in concrete or rock….” On a Corps of Engineers lake, the anchor point is most likely to be on federal property. If the permanent attachment to land is what makes the dock real estate, traditional property law would state that the dock then belongs to the federal government, whose land the dock is permanently attached to.
- Riparian rights are not the same on every lake. On lakes managed by the Corps of Engineers, the shoreline and the lake bottom are owned by the federal government. The owners of lots abutting the federal ownership boundary around a lake (called the “take line”) do not have riparian rights, because owners of these lots generally do not abut the water. HB 842 would seem to give real estate appraisers the right to place a value on riparian rights that may not exist except in the statute book, which makes for bad lending practices.
Most of the docks on Table Rock are community docks. My view is that the owners of boat slips have a right to be on the dock and to park their boats in slips, along with the obligation to contribute to the maintenance of the dock, all according to the terms of the Corps of Engineers’ regulations and policies. Even though slips and docks are bought and sold every day, I have never found any clear legal authority for any proposition other than that a community dock on Table Rock is owned by the federal government, with each slip owner actually owning an exclusive license to use the slip and the duty to maintain the dock, but no ownership right unless the Corps of Engineers orders removal of the dock. Nothing about HB 842 changes my opinion.
For docks on Lake of the Ozarks, Taneycomo and other non-federal lakes in Missouri, HB 842 may be helpful and practical. I’m interested in hearing the views of lawyers and real estate appraisers who work on other lakes in Missouri.
The problems with HB 842 will have to be worked out over time. As a member of the Missouri Bar’s legislative review committee for property law, I missed this bill as it went through the legislature and regret that I did not voice my concerns to the Missouri Bar’s legislative counsel.