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This page is intended for buyers seriously considering purchasing waterfront property at Smith Mountain Lake. There are a number of waterfront issues unique to Smith Mountain Lake that buyers need to be aware of. This page does not touch on issues that are common to most property purchases, such as home inspections and title insurance.
Background:
Smith Mountain Lake is a hydroelectric project operated by Appalchian Power under the authority of the Federal Energy Regulatory Commission (FERC). Appalachian Power, a unit of American Electric Power, is commonly referred to as “AEP.”
The water level at Smith Mountain Lake at “full pond” is
795 feet above sea level. AEP either owns the land or
has a flowage easement over the land below the 800′
level. Many property owners actually own the land below
the 800′ level, including the land under the lake. This
is legally significant and very important in some
instances. However, for this discussion, the distinction
is immaterial. AEP is the controlling authority below
the 800′ level.
AEP regulates the below the 800′ level through the AEP
Shoreline Management Plan (SMP). According to the SMP
website,
“the shoreline management plan is a comprehensive plan intended to manage the multiple resources and uses of the lakes’ shorelines so that they are consistent with AEP’s Federal Energy Regulatory Commission (FERC) license requirements and project purposes.”
The SMP can be viewed online by
clicking here.
The SMP, which is about 60 pages long plus attachments, was first implemented in 2003 and regulates three main items below the 800′ level:
- boat docks, piers, landing and other similar structures,
- structures for erosion control, and
- landscape planting and the removal of vegetation.
The remaining part of this discussion concentrates on boat docks for single-family waterfront homes.
The SMP categorizes the shoreline into one of six classifications, depending on the use each shoreline section. The six shoreline classifications are: high-density commerical, high-density multi-use, public use, low-density use, impact minimization, and conservation/environmental. More than 75% of SML’s shoreline is classified as “low-density.”
Within the low-density use classification, there are a number of sub-classifications, such as low-density single family residential, low-density multi-use, low-density commercial, and low-density public use. Given the shoreline for a particular single family property is classified as low-density use, the pertinent sub-classification is low-density single family residential. Refer to pages 25-28 of the SMP for the low-density single family residential regulations.
Prior to building a dock, the property owner needs to submit a written application to AEP for a “dock permit.” The is essentially a blue print for the proposed dock and contains information such as location of the dock relative to the shoreline, location relative to other docks, location relative to the property lines or the extension of the property lines, number of slips, number of pilings, total square footage, area under roof square footage, enclosed area square footage, and the length of the adjoining waterfront lot. AEP usually conducts a site inspection and if the application complies with the SMP, a “dock permit” is issued. Technically, the dock permit is called an “occupancy & use” permit. This permit is issued to the property owner. Upon sale of the property, any applicable “occupany & use” permits (there could be more than one), should be transferred to the new owner. This requires the seller, the buyer, and AEP to execute a dock assignment form. This is ususally done at closing by the seller and buyer and at a later time by AEP. More about this in the following section. The dock permits are recorded in the county courthouse, just like property deeds.
Waterfront Issues:
With this background, there are a number of issues and questions a buyer needs to address when purchasing waterfront property at Smith Mountain Lake.
Issue 1:
Does the property currently have a dock? If
“no”, read below. If “yes”, go to Issue 2.
If the answer is “no”, the next question is: Can a dock
can be built under the SMP regulations?
The answer to this question is not necessarily straight
forward and depends greatly on the specifics of each
situation. It is best to consult with a knowledgeable
real estate agent, refer to the SMP documents, or speak
with AEP directly.
If a property doesn’t currently have dock and the ability to have a dock is important to the buyer, it’s common for a real estate contract to have a contingency where the sale is subject to obtaining an acceptable AEP dock permit.
Issue 2: Is the existing dock “on file” with AEP? And, are there any applicable AEP dock permits pertaining to the dock?
Prior to the implementation of the SMP, dock permits were not required. Because many existing docks are not be in compliance with SMP regulations, the SMP contains a grandfathering mechanism. This mechanism permitted property owners to register their docks with AEP by submitting written documentation detailing the location, size and other attributes of docks. The submission deadline was August 31, 2005. If a dock registered with AEP is destroyed, it can be rebuilt as documented and need not comply with the SMP. If an unregistered dock is destroyed, the new dock requires a dock permit and must meet the SMP regulations. In some cases, this could mean a dock could not be rebuilt, negatively impacting the value of the property.
If there are any
dock permits applicable to the existing dock, then these
permits need to be assigned to the new owner at closing.
Assignment requires signatures from the seller, the
buyer, and AEP. As soon as a contract is signed, if not
done proactively by the seller before hand, AEP should
be requested to perform a site visit for the purpose of
determining whether or not AEP will assign any existing
dock permit(s) to the buy at closing. AEP’s assignment
policy of dock permits can be found by
clicking here.
The AEP site visit is critical. If the dock as it exists
is inconsistent with any issued permit, then AEP may
very well decline to assign the dock permit to the
buyer. Typical examples of why AEP will not assign a
dock permit include the expansion of dock or the
addition of a personal watercraft (PWC) lift without an
AEP permit after the SMP went into effect. Such
discrepancies will probably need to be resolved before
closing. It is not uncommon for a real estate closing to
be delayed or fall through because of dock issues. If
there are no discrepancies, then AEP will issue a letter
expressing an opinion that AEP will assign the
applicable dock permits assuming no modifications are
made in the interim.
Assume that any structural modifications or expansions need an AEP permit. When in doubt, contact AEP.
In summary, a buyer should request two items from the seller or their real estate agent:
- AEP dock
documentation: Copies of AEP dock documenation, if
it exists. This includes a copy of the original
submission and a copy of AEP’s acknowledgement.
Unlike dock permits, the dock registration documents
are not recorded in the county courthouse. If the
seller doesn’t have the registration documents, then
AEP will have a copy, if they exist.
- Applicable dock permits: Copies of dock permits, if any. If such permits exist, they should be recorded in the county courthouse where the property is located.
Flood Plain
and Flood Insurance:
Depending on the location of the property, the flood
plain at Smith Mountain Lake is either 803.0′ or 802.2′
level. For planning and budgeting purposes, assume the
mortgage holder will require flood insurance if any part
of the property’s home is below the 803′ level. Some
mortage companies require flood insurance unless
documentation is provided showing that the home is above
the flood plain. This may require a survey showing the
location of the home and the flood plain elevation
contour.
Septic System Issues:
The vast majority of the properties around Smith Mountain Lake are serviced by septic systems. Public sewers are just beginning to be built.
If the case of a waterfront lot, determine whether or not the property can support a septic system and, if so, what size.
Ask the seller to provide a copy of the septic permits, if there are any. If the seller doesn’t have them, then a copy can be obtained from in the Virginia Department of Health in the county where the property is located. If no septic permits exist, then the property should be tested to see if it can support a septic system. This is called a “perc” (percolation) test and can be done by a Virginia certified soil scientist.
As private wells are quite common, sometimes it can be challenge to place a house, well, and septic system on a waterfront lot that is less than an acre and meet all the required offset distances.
It’s not a good thing to buy a lot for a few hundred thousand dollars only to find out that the lot won’t support a septic system and there is no easement for a septic system to an adjoining property. It has happened.
References:
