Friday, Oct. 21 2011 10:25AM
Lake of the Ozarks debacle offers contract lesson
By Scott Devouton, guest columnist
Print
E-Mail
AIM
ReprintIn real estate, paperwork is important. A recent article in The Kansas City Star about Lake of the Ozarks property brought the lesson to light.
Thousands of lake house and condo property owners were recently told to tear down about 4,000 “non-conforming structures,” including homes, gazebos, docks and entire condo buildings. All these structures are built on the lake, below a buffer zone required by Ameren Missouri. Ameren operates the Osage Hydroelectric Project and is required to keep the buffer zone as a condition to its federal license to sell electricity.
If upheld in its current form, the order will cost people a lot of money. Affected property owners have loudly voiced their opinion. Ameren is fighting the agency ruling, to this point with no success. Lawyers are surely scrambling on all sides. As it stands, every property owner within the area will have to take down any structure on their property that lies at or below 670 feet below sea level.
How did this happen? The scrambling lawyers will have different opinions about that, but one question will be whether the affected owners had notice of the buffer zone when they bought the property. Notice could come in lots of forms, but is usually on the public record at the local recorder of deeds office. Every time someone transfers a right in property, it should be recorded. If it is, whatever rights are granted or reserved will be spelled out in a deed or related document.
The Recorder of Deeds for Camden County told The Star that “corners were cut (when the Lake was developed), banks weren’t asking for surveys, nobody asked about setbacks. A lot of stuff got built where it shouldn’t have, and nobody noticed.”
If you’re a property owner, that is generally not a good thing to hear.
Even if the affected property owners ultimately get to keep what they’ve built over the years, if the buffer zone was recorded before they bought their property, the burden will be on them to fight it. They’ll have to expend funds for legal counsel, title reports, accountants and possibly filing fees, and will have to endure some degree of emotional distress.
This is not a political issue anyone will want to tackle, especially with election season approaching. I expect the property owners will keep what they’ve built in the buffer zone, possibly in some negotiated different fashion, but they will have to continue to endure the stressful process of litigation.
For you, the lesson is to seriously look at contracts, title reports, deeds and other paperwork affecting your title. Your bank and title insurance provider will look at them, but you need to as well. These will all be part of the large stack of closing documents. Get them with enough time to read and understand everything. The lake story appears to be riddled with people and companies that didn’t read or catch important language in their real estate paperwork. What you may see as simple boilerplate can have a heavy impact. Sloppy transactions can breed a whole host of issues in real estate. This just happens to be the latest example.
Based in Lee’s Summit, attorney Scott Devouton provides basic estate planning and small business services, and authors the blog, “Attorney Client,” at www.devouton.com.
