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What happens when ocean front property becomes ocean bottom?
November 11, 2012 3:12 PM   Subscribe

How does a storm like Sandy or Katrina affect title to real estate? What happens when your property is suddenly, actually, under water?

Say someone owned a quarter acre of property adjacent to a beach, with a modest little house on it, and then a big storm comes. If the house is destroyed, I assume that homeowner's insurance would pay some compensation for that. But what if the coastline is now changed so that all or a significant part of the real estate is now under water (long term)? and the part that is still above water is now in the tidal zone, so it can no longer be privately owned or built upon?

A chunk of land that was habitable and valuable one day may now be uninhabitable or just, gone. Who bears that loss? Does any form of insurance provide any compensation for that, or is it just an uninsurable risk that comes with owning waterfront property? And what if it happens slowly, as a result of sea level rise, instead of from a sudden storm?

These questions used to be mostly weird law school hypotheticals, but they are becoming real and quite common. How is the system dealing with them? Does anyone have any personal experience with this, or know of any articles on the subject?
posted by Corvid to Law & Government (9 answers total) 1 user marked this as a favorite
 
It is possible to buy insurance for property which might stop existing in the future; I know this is done on the California coast in regions prone to massive landslides. (The person I know who'd bought this insurance was pretty stupidly rich, though, as evidenced by their wanting to live on a land plot somewhat likely to slide into the ocean; I have no idea what sort of cost we're talking about.)
posted by nat at 3:33 PM on November 11, 2012


Who bears that loss? Does any form of insurance provide any compensation for that, or is it just an uninsurable risk that comes with owning waterfront property? And what if it happens slowly, as a result of sea level rise, instead of from a sudden storm?

My family owns a dune-line, Atlantic-facing house on Fire Island. As you can see, Fire Island is the barrier for Long Island and is extremely vulnerable to storms. The house is uninsurable. Every year we board it up and say goodbye, knowing full well this could be the last time we see it.

The island was hit hard by Sandy, and absolutely nobody expected the house to still be there. Amazingly, it is, though previously it was on 15-foot stilts and has had 12 feet of sand dumped under it. There are no longer any dunes, so with three feet of flood clearance and no storm barrier, I'm sure it will go one winter sooner rather than later.

Additionally, the coastline is encroaching; we used to have loads of beach and now have maybe 30 feet. When that happens, what we'll own is water we can't use. That's just the risk you run with this kind of property. At that point what you do is apply for a property tax abatement, cry, and get over yourself because you bought it knowing this day would come.
posted by DarlingBri at 4:08 PM on November 11, 2012 [3 favorites]


Here's one specific case on Plum Island, a sandy barrier island near the Massachusetts-New Hampshire border: Price drop on Plum Island home. Now, part of the "price drop" there was because the actual house was not habitable, but the owner of that house is quoted as saying "Just a matter of time. They should enjoy it while they can." Because the property is actually going to be gone.

This article says "In some critically eroding areas, banks, fearing loss of property, have balked at extending thirty-year mortgages to threatened coastal property." Areas like Fire Island, Plum Island, outer Cape Cod - they're not going to last forever.

Basically, if it's gone, it's gone.
posted by mskyle at 4:11 PM on November 11, 2012


I'm not sure this concept is entirely new. Plenty of people own lots that are partially or entirely underwater, either because the water level changed or because it failed to do so! If I recall correctly, there are plenty of alloted areas near creeks, swamps, and bays in New York City that were expected to be filled in by a developer, or by the owner, but they never were. But still, somebody owned them for speculative purposes.
posted by zvs at 4:28 PM on November 11, 2012


If it's Katrina, a lot of times you lose your house because your family built it five or six generations ago and there was never any deed and so you can't prove that you ever owned it. Not an uncommon story down here by any stretch.
posted by Scientist at 6:33 PM on November 11, 2012


I am not sure the insurance industry has yet to develop standards for these situations.

However, in a broader property rights sense, yes, this is totally a topic, and not just in an abstract law school way. There has been a fair amount of discussion and litigation about zoning and environmental protection for properties that, say, used to have beach or yard, and now have marsh or intertidal zones, or straight-up water. There's no consensus and a lot of how it shakes out depends on your particular state's regulations. For example, you might be interested in the long-running controversy about the Texas Open Beaches Act, which provides public access to beaches via rolling easements based on a (now radically shifting) high tide line.
posted by epanalepsis at 8:47 AM on November 12, 2012 [1 favorite]


> there are plenty of alloted areas near creeks, swamps, and bays in New York City that were expected to be filled in by a developer, or by the owner, but they never were. But still, somebody owned them for speculative purposes.

San Francisco also. People still pay property tax on "streets" that were surveyed and named, hoping the moratorium on fill will be repealed.
posted by morganw at 4:40 PM on November 13, 2012


If it's Katrina, a lot of times you lose your house because your family built it five or six generations ago and there was never any deed and so you can't prove that you ever owned it. Not an uncommon story down here by any stretch.

Wouldn't they be able to use property tax records to prove ownership? Or were those all washed away too? If so, wouldn't it then be the city's burden of proof to show you /didnt/ own it?

Also, I wonder if you would then be able to bar access to the water that covered your little piece of once-shore...
posted by corb at 8:48 AM on November 23, 2012


corb: the need to prove ownership would arise if one wanted to rebuild a damaged house, or to sell the property and move on. Rebuilding usually means borrowing a big chunk of money, and no bank would give a construction mortgage to build on land that you couldn't prove you actually own by showing a deed. Nor would any insurance company issue homeowner's insurance on that house, and you can't get the mortgage to build without proving that you have the insurance policy. Without good proof of ownership, it's all too risky for the people with the money in their pockets. You might well be able to prove ownership by showing that you (and no one else) had been paying property taxes on the land for years, but that would require a lawsuit (an action to "quiet title"), a burdensome and expensive process.

Likewise, you will have great difficulty selling property if you are unable to prove that you OWN it. (This is as it should be.) So, without a deed, the best you could do is sell a very discounted version of your murky ownership by "quit claim" deed.

And no, in most jurisdictions you would not be able to bar access to the shore. Any land that is underneath public waters, or that is under any tidal influence, is considered either publicly owned, or open to access by the public. It's a much more complicated issue than that, but that's the basic principle.

So it looks like this story has a lot of unhappy endings, and a lot of very significant uninsured losses.
posted by Corvid at 2:08 PM on November 24, 2012


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