Water use rights can’t be sold

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A lake property owner cannot sell the right to use a pier or boatslip.

The Wisconsin Court of Appeals held on July 3 that the right to “use” a pier is a riparian right, and thus subject to the ban in sec. 30.133 on its “conveyance.”

Jiran & Sadeck, LLC, owned two adjacent lots -– one abutting Lake Wisconsin, and the other not. The non-riparian lot was used as a restaurant, and the riparian property was intended for condominiums.

In 2002, Jiran & Sadeck executed a document that granted to the restaurant property the right to use some of the condominium’s piers, boat slips and docks.

The restaurant property was later sold to Fish Tale Properties, LLC, and the riparian property is now the Anchor Point Condominiums.

In 2007, the condominium owner’s association brought suit to prevent Fish Tale from using the piers and boat slips.

Columbia County Circuit Court Judge Alan J. White granted summary judgment in favor of Fish Tale, but the Court of Appeals reversed in a decision by Judge Charles P. Dykman.

Section 30.133(1) provides: “no owner of riparian land that abuts a navigable water may convey, by easement or by a similar conveyance, any riparian right in the land to another person, except for the right to cross the land in order to have access to the navigable water. This right to cross the land may not include the right to place any structure or material in the navigable water.”

At issue was whether the right to use piers and boat slips is a riparian right subject to the ban on conveyance.

In AKBA Ltd. Partnership. v. DNR, 2002 WI 106, 255 Wis. 2d 486, 648 N.W.2d 854, the Wisconsin Supreme Court held that riparian owners enjoy specific property rights based on owning land abutting water, “includ[ing] the right to use the shoreline and have access to the waters, the right to reasonable use of the waters for domestic, agricultural and recreational purposes, and the RIGHT TO CONSTRUCT A PIER or similar structure in aid of navigation (emphasis added).”

Thus, Fish Tale argued to the Court of Appeals that only the right to construct a pier, not the right to use one, constitutes a riparian right.

However, the court disagreed: “We fail to see how placement of a pier could be deemed a riparian right and thus subject to statutory regulation, … and yet the uses to which the owner puts the pier could be akin to any other use of private property and thus exempt from riparian regulation.”

Because the right to place a pier necessarily includes the right to use it, the court concluded that both pier placement and use are riparian rights subject to the statute.

The court also concluded its decision was consistent with the Supreme Court opinion in ABKA.

In ABKA, the court held that the sale of a boat slip, in conjunction with a “phantom unit” on condominium property was prohibited by the statute.

The court explained, “[I]t is the fact that the riparian right is transferred apart from riparian land, not the technical type of transfer, that is dispositive.”

Attorney Kenneth B. Axe of Lathrop & Clark, LLC, in Madison, who represented the restaurant, said no decision has been made whether to appeal.

However, he criticized the decision as a matter of policy. Unlike the decision whether to construct a pier, “use does not involve any change to the lake. Why should it matter to Wisconsin whose boat is in a pier?”

Axe distinguished ABKA, in which a decision in favor of the developer would mean more boatslips, while in this case, permission was granted for a set number of slips, and the only question was, who has access to them, not how many.

Analysis

Arguably, the opinion in this case could be read so broadly as to prohibit a riparian landowner from renting out his lakefront property to a non-riparian owner.

Suppose the riparian owner signs a lease granting use of the property (including its pier), and an action for breach of contract ensues. One of the parties argues that the lease is unenforceable, because it includes an unlawful conveyance of riparian rights.

Under the language of the statute, a good case could be made that the lease is void.

At issue would be whether the lease is a “conveyance” of a riparian right.

The statute does not define “conveyance”; however, other statutes do.

Section 77.21, for example, governing real estate transfer taxes, does not include leases within the definition.

However, in Smiljanic v. Niedemeyer, 2007 WI App 182, 304 Wis.2d 197, 737 N.W.2d 436, 440, fn.3, a case involving the conveyance of a lake easement, the Court of Appeals invoked sec. 706.01(4), which governs the legal requirements for a conveyance of real property.

Included in the cross-references to that statute is sec. 243.04, which governs fraudulent conveyances. That statute includes within the definition of “conveyance,” any interest in land, including leases.

Looking to Smiljanic and sec. 243.04, it would thus seem that a routine short-term lease of lakefront property for vacation purposes is prohibited by the statute.

However, language in the court’s opinion in the case at bar militates against such a conclusion.

The court wrote that, “it is the fact that the riparian right is transferred apart from riparian land, not the technical type of transfer,” that determines whether a conveyance violates the statute.

No support for this conclusion can be found in the statute as written, but it is certainly a sensible interpretation of it, and should bind lower courts addressing the statute.

Attorney Raymond R. Roder, of Reinhart Boerner Van Deuren, SC, in Madison, who represented the condominium association, also does not believe that the decision would bar a routine rental of lake property.

Roder noted that the DNR has interpreted “conveyance” to leases only when they exceed two years.

However, the DNR’s interpretation may not be relevant. No published opinion addresses the deference that should be given this interpretation.

In an unpublished opinion, Nanna v. Helen B. Daly Trust, 295 Wis.2d 721 N.W.2d 158 (Table) 2006 WL 1900067 (Wis.App., July 12, 2006), the Court of Appeals held that the DNR’s interpretation of sec. 30.133 is a question of law, and is entitled to no deference.

Axe also, noted, the DNR’s distinction is arbitrary, in that parties can merely enter leases for two years, with rights of renewal.

Similarly, there is no difference in terms of the impact on the lake, whether a riparian owner grants rights for one two-year term, or 24 one-month terms.

Nevertheless, given the Court of Appeals’ emphasis on keeping the riparian rights connected to the land, circuit courts should be bound by the language that a lease is not a conveyance under the statute, provided the lease is for both the land and the riparian rights together.

Should the Wisconsin Supreme Court ever address the issue, however, a case can be made that such rentals are unlawful, even if that conclusion may be far afield from what the legislature intended when it passed the statute.