When government surveyors first surveyed Wisconsin in the 1840s and 1850s, they only meandered and surveyed lakes that were larger than 40 acres and lakes that lay across section lines. All other lakes within the sections were not surveyed and the beds of these lakes were included in parcel acreage. Over the years, the sections were divided and subdivided and lakes that lay on the new property lines generally were surveyed so that acreage figures were for actual land and did not include lakebeds.

Unfortunately, not all Wisconsin lakes have been surveyed and some property owners not only “own,” but also pay taxes on a parcel that includes all or part of a lake. This is a problem because Wisconsin lakes are public resources owned in common by all Wisconsin citizens under the Public Trust Doctrine. The Wisconsin Supreme Court has ruled that the state owns title to lakebeds, and that the ordinary high water mark (OHWM) establishes the boundary between public lakebed and private land. The lakefront property owner only owns the land above the OHWM — where the regular action of water against the bank leaves a distinct mark.

Regrettably, some of these owners have sold their parcels and the real estate brokers, county taxing authorities, parties and others involved in the transaction apparently have missed the fact that the acreage includes a lake. In one reported case, the property sold was represented to be 16 acres, notwithstanding that 12 of those acres were lakebed.

While REALTORS^® are not surveyors, they often may — if they obtain a map and walk the property — be able to discern that something does not add up. Brokers working with properties abutting lakes should be very careful to fulfill the duties they owe to their clients and customers by taking the following steps:

Qualify acreage representations! attribute the source!

A Wisconsin licensee can be found liable to a buyer for inaccurate statements made by the broker which appear to the buyer to have been made from the broker’s own personal knowledge. Wisconsin law provides that a buyer should be entitled to rely on the factual statements made by a professional. Accordingly, when a broker receives data from the seller, the county treasurer’s office, or another third party and restates the information in the MLS, data sheets or other advertising as if it were fact, the broker may be responsible for the accuracy of the information. Accordingly, licensees are urged to specifically attribute data used in advertisements, such as acreage, square footage, and assessed values, to its source.

Duty to inspect

Both listing and cooperating brokers have the duty to inspect the property, per Wis. Admin. Code § RL 24.07(1). “A licensee, when engaging in real estate practice which involves real estate improved with a structure, shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts. A licensee, when engaging in real estate practice which involves vacant land, shall, if the vacant land is accessible, conduct a reasonably competent and diligent inspection of the vacant land to detect observable material adverse facts.”

Material adverse facts

A material adverse fact is defined in Wis. Stat § 452.01(1e) & (5g). If an agent, as a competent licensee, notices what appears to be a discrepancy regarding a property description or acreage, this may be an adverse fact, particularly when it may have a significant adverse effect on the value of the property. It would likely be material because buyers want to know exactly how many acres of land they are purchasing and have been known to rescind contracts and file lawsuits if the property they purchased contains less acreage than they originally contemplated.

Because REALTORS^® are not trained as surveyors or assessors, they should refrain from making any definitive conclusions regarding acreage or a legal description. Instead, they should treat their observations as information suggesting the possibility of material adverse facts.

Disclosure of information suggesting material adverse facts

Wis. Admin. Code § RL 24.07(3) provides, “A licensee, when engaging in real estate practice, who becomes aware of information suggesting the possibility of material adverse facts to the transaction, shall be practicing competently if the licensee discloses to the parties the information suggesting the possibility of material adverse facts to the transaction in writing and in a timely fashion, recommends the parties obtain expert assistance to inspect or investigate for possible material adverse facts to the transaction, and, if directed by the parties, drafts appropriate inspection or investigation contingencies. … A licensee is not required to retain third party inspectors or investigators to perform investigations of information suggesting the possibility of a material adverse fact to the transaction.”

Qualified independent inspection report

Having a survey is the definitive way to resolve such questions. In addition, Wis. Stat. § 452.23(2)(b) provides that no licensee disclosure is required if a written report that discloses the information has been prepared by a qualified third party, such as a surveyor, and provided to the parties.

Skills and training

Wis. Admin. Code § RL 24.03(2)(d) establishes an agent’s inspection standard of performance, “Licensees are not required to have the technical knowledge, skills or training possessed by competent third-party inspectors and investigators of real estate and related areas.” A licensee is not trained to survey property or correct the records at the county assessor’s office. What the brokers in this type of situation need to do is spot the issue, disclose it and urge the retention of experts.

OHWM disparities

Including lakebeds in property descriptions is not the only way issues regarding lakefront property acreage and ownership may arise. The OHWM isn’t typically identified on surveys and may be difficult to see on some sites. As a result, some property owners have recently discovered that when the OHWM is identified, land they thought was theirs is actually public lakebed. If the OHWM is not where the owner thought it had been, setbacks and other zoning dimensions may be impacted. Some structures may now be considered nonconforming and some other county zoning restrictions may now apply property owners who find a substantial acreage change and believe they have been unfairly taxed may discuss the situation with their local assessor.

In all of these lakebed and OHWM scenarios, property owners should consider the following actions:

• Survey the property.
• Make sure the OHWM is properly identified. 
• Compare the survey with the legal description on deeds and at the county assessor’s office, and discuss discrepancies with the assessor.
• Consult with the local zoning office and check local ordinances.