Traverse City Waterfront Homes - Key Terms to Understand When Searching for Waterfront Property

If you're thinking about buying waterfront property, here are some terms that you need to know. They relate to all types of property ownership, but they become especially important with waterfront property. Number 1, adverse possession or prescriptive easements. With adverse possession, it allows another to make a claim of ownership against your property. Now, they must have been using it for 15 years, and there's a whole lot of other conditions that they have to meet in order to make a claim of adverse possession. But you're going to really want to understand what those details are. I've shot a whole separate video on that. Check it out. I'll leave a link in the comments. The most important thing to remember is if someone's using your property and you're a little uncomfortable with it, consult an attorney right away. You're going to want to know about adverse possession and prescriptive easements. Backlot. This refers to property that lacks direct waterfront but is situated near or within walking distance of the waterfront. Buildability: the property's potential for construction replacement or an additional dwelling, subject to the physical characteristics, the zoning, and legal considerations. If you're considering buying a waterfront property, you're going to want to know, is it buildable? Is the lot buildable? Cloud on title: Recorded issues that might affect the property's value, such as liens or false claims. They can create a cloud on the title. Deeded access, often a misleading term. This suggests nearby legally existing water access shared with others, with other property owners, but it rarely appears in the property deed or chain of title. You're going to want to know about that deeded access. Deed restrictions. These are rules or regulations recorded with the county that limit the property usage, activities, or other matters. These sometimes are called covenants or restrictive covenants. Usually they are permanent and run with the land, which means these restrictions are tied to the land itself rather than the owner. You're going to want to know about deed restrictions if you're buying waterfront property. What do I need to know? You have to know it. Easement. So an easement is the right to use another's property for a specific limited purpose, such as utilities or access. Easements come into play huge in waterfront properties. Littoral. A property with lake frontage. Although this term is rarely used nowadays, riparian is more often used, even though riparian really deals with rivers or stream or creek frontage. It's really now become the umbrella term for waterfront property of any kind, is what's now called riparian. The ordinary high water mark— this is also known as the normal high water mark. In theory, each lake has an average water level on a lakeshore over several years. Experts can disagree on how to specify the ordinary high water mark. This definition was very important. The ordinary high water mark was very important in the Beachwalker case, which that is the case that determined that the public has a right to walk the beach on the shores of our Great Lakes. Think Lake Michigan or the bays within Lake Michigan like Northport Bay, Omina Bay, Grand Traverse Bay, Sutton's Bay. Now it's important to know that those rules are different when it comes to inland lakes like Lake Leona, Lime Lake, Long Lake, Little Traverse Lake, Glenn Lake, etc. Totally different set of rules than on the Great Lakes. A perc test, a percolation test, is what was previously used to determine a septic system suitability for a piece of property. The name was derived from how the test was conducted, basically dig a hole and pour water into it and see how long the water takes to percolate or to dissipate into the soil. Okay. Technology has advanced way beyond this now, and percolation tests are not used, although a perc test has just become synonymous with the determination made by the county about the suitability of the site for a septic field, or sometimes called a drain field. So if you're buying a waterfront property, you're going to want to know, has it had a perc test or an evaluation for a septic field? Okay. Pop-up or uncapping of taxes. Okay. Property tax assessment assessments are adjusted after the sale and they can pop up because as a result of Proposal A, which was passed in 1994, it fundamentally changed how schools are funded in the state of Michigan. As a part of that, how they sold that to the public was that, hey, we're going to cap your property taxes so your taxes can only increase by the rate of inflation. Or 5% per year, whichever is lower. So it put a cap on these accelerating property tax assessments. However, when the property is sold, then it becomes uncapped and you realize this increase in your property value tax assessment. So you're going to be paying more and you could likely see if you're thinking about buying waterfront, you can likely see a really high increase increase in property taxes over the previous owner. Because property— waterfront property is so sought after, we've seen 20-30% increases. Makes it a great investment, but you're also going to have to pay taxes on at the point of sale that will become uncapped. Make sure if you're planning to buy waterfront property that you're thinking about the property tax implications once the taxes become uncapped. Repairium. So as I mentioned earlier, as opposed to littoral, which meant on lakes, riparian refers to property along flowing rivers, creeks, streams. However, now riparian really is the umbrella term for all waterfront and has also kind of encompassed what was traditionally called littoral in the past. So riparian rights, waterfront property rights, regardless if it's a lake or stream, etc. Okay, runs with the land. This means typically, as I mentioned, when deed restrictions, if it runs with the land, it means it stays there regardless of all future owners. Septic system. A septic system is a private sewage treatment system and includes a tank, piping, stone or sand drain field, and other related components to treating sewage onsite. Setbacks. These are minimum distances for structures or systems that must be set back from roads or your neighbor's property line. Property setback requirements are usually articulated in local zoning ordinances. These setbacks are becoming more and more critical as it relates to septic systems, and especially in Leon County, part of the point-of-sale inspection that the county does is to make sure that the septic— existing septic system is within the setback's requirements. If it encroaches, if it's, if it's inside of the setback, you may have to replace the field. So you want to make sure the septic system is contained within the setback requirements. If it isn't, again, that can trigger an order at the point of sale for a new septic system to be installed to make sure that it is outside, it remains within what the local zoning ordinance has determined is required for a setback. So whole nother issue is what is— how do they evaluate, say, the county, how do they evaluate a septic system? Well, they're looking at how many bedrooms, whether you have a garbage disposal, dishwasher, etc. So a much larger field is needed for, let's say, a 5-bedroom house with a garbage disposal than with a 2-bedroom. So that's just something to know and consider. Special assessments or a special assessment district. These are set up by local government for a certain area. These are a tax-like levy for specific improvements or services usually appearing on the property tax bill. These special assessments provide funding for improvements or services. These things can include the following: waterfront weed treatments, sidewalk installations, road improvements, street lighting, etc. It's important to note that these special assessments are usually not tax deductible on your state and federal taxes. And they're called special assessments because they are designed for a specific purpose that once accomplished and paid for, then it disappears from your property tax bill. Now, here's an important thing to understand whether you're looking to buy or sell is how is the special assessment, an existing special assessment, treated within the purchase agreement or the buy-sell agreement. I'm listening and taking notes. The old purchase agreement that all the realtors in the area used required the seller to pay it off at closing. That can be a very significant expense, especially when we consider the Village of Northport, where it was a new sewer assessment. If the seller had to pay it off all at closing, that could eat into their profits quite a bit. The new purchase agreement treats it differently. You may want to check out the video that I shot on the entire, uh, all the things that are new with our new purchase agreement used by all the realtors in the area. I'll leave that link in the comments. Okay, Statute of Frauds. This mandates that written signed agreements for real estate transactions must be there in order for them to be valid. According to the Statute of Frauds, an agreement to buy or sell real estate is is not valid unless it's in writing and signed by both the buyer and the seller. The statute of frauds also applies to leases that are over 1 year in length. To the water's edge. This is a phrase in legal descriptions implying lakefront property, including bottomlands, because the riparian or littoral landowner of an inland lake owns the bottomlands that extend out into the center of the lake. This is not true of waterfront property owners on Great Lake. But it's important that you really understand this if you own property on an inland lake. What does that mean? Waterview or lakeview property— these are properties with a view of the waterfront but not necessarily direct access. This may only include what real estate agents call a seasonal view, or it might just be a sliver of a view, or it may be a panoramic, spectacular view. It's important for you to to really see what that is. I call it getting your boots on the ground and see. Only you, as a potential buyer of water view property, can really determine whether you like that view or not. It's very difficult to make that determination with just photographs or with drone footage. That can be deceiving because the drone can go higher, right? So really encourage, if you're looking at water view property, make sure you see it for yourself in person. As you navigate the waters of Northern Michigan waterfront real estate, familiarizing yourself with these terms will empower you to make informed decisions and to confidently engage in property transactions. Remember, understanding the language of the land ensures a smoother journey toward your waterfront property dreams. I hope this— you found this video, uh, useful. Appreciate if you'd leave me a comment or Oh, as always, subscribe to my channel. Thanks so much. I'm Sander Scott, your full-service realtor.