Considerations for purchasers and closing attorneys when purchasing waterfront property on the Tennessee River System. What the purchaser needs to know regarding permits for boat houses, boat slips and docks.
TVA Regulations Impact Waterfront Lots with Permits
Purchasing or closing a waterfront lot on the Tennessee River System? Tennessee Valley Authority, ("TVA"), regulations may impact the rights and responsibilities of the closing parties, particularly in the case of boat slips, swim docks and shoreline management. TVA approval must be obtained for any construction activities that affect navigation, flood control or public lands along the shoreline of TVA lakes and the Tennessee River or its tributaries. 16 U.S.C. 831, 26a (2013).
The New Purchaser Must Transfer Ownership to the TVA Permit Within 60 Days of the Closing
When purchasing a waterfront lot with an existing permit for erosion control, a boat house, swim dock, or other structure, the new purchaser must transfer ownership of the permit through TVA within 60 days of the transfer of title. 18 CFR Section 1304.10 (2013). The application for transfer of ownership is the same application for modifications to existing structures and may be found at http://www.tva.com/river/26apermits/index.htm. TVA's online instructions are fairly easy to follow, but to transfer ownership only, the applicant would designate "transfer of ownership of an existing boat slip" under the "purpose" section. The fee to transfer ownership only is $250.00. The new owner must also submit an "Applicant Disclosure Form" found on TVA's website. It is important to note that if the new property owner intends to make modifications to the structure they can accomplish both the transfer and the modification approval in one application. New owners seeking to transfer the permit and make modifications need only file the application for modification. The fee for the application to modify is $500.00; thus, filing for the modification along with the transfer application could potentially save $250.00 versus filing the two separate applications. The application to modify requires a drawing as well as the "Applicant Disclosure Form." TVA's model drawings of all allowable projects are found on its website listed above.
What Happens if the New Owner Fails to File a Transfer Application?
The next obvious question is "what happens if the new owner does not file a transfer application?" If the new property owner does not transfer the permit for the structure the property owner loses any "grandfathering" of past approvals for any variances from the present regulations. Subsequent owners are not required to make any modifications to existing structures as long as the permit is passed within the 60 day period and the structure is in good repair. Id. and 18 CFR Section 1304.211 (2013). TVA views any application filed after the 60 day time period, such as for repairs, modifications, or improvements, as an application for a new structure subject to the current regulatory regime. Thus, failure to properly transfer the permit could force the property owner to remove the old structure and start over from scratch with a structure that is compliant with the latest requirements. Lastly, failure to comply with the TVA regulations on transfer of permits gives TVA the authority to remove any structure, prevent future permits, and sell any marketable property contained in the structure to pay for the destruction, such as that nice new ski boat! 18 CFR Section 1304.406 (2013).
Before Executing the Real Estate Contract, Contact TVA
During my research for this article and previous research stemming from closing transactions, TVA was readily available for phone consultation. Yes, a real live domestic person actually answers. TVA's main number is 1-800-882-5263. Any questions involving applications for permits can be answered by the Land and Shoreline Division. TVA suggests that land purchasers exercise simple due diligence by calling TVA prior to executing the contract. TVA will gladly assist in informing the potential purchaser of what is available for permit at the prospective property site, thereby preventing the possibility of any misrepresentations or misunderstandings regarding the potential future use of the property.
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