Bulletin: SLS2013017

Date:
December 18, 2013
To:
All Issuing Offices
RE:
UNDERWRITING - Insuring Dockominiums

Dear Associates: 

A Dockominium (Boataminium or similarly denominated facility) is created when a marina or any developer attempts to sell individual boat slips to individual owners, giving the owners condominium-style rights in the boat slips if allowed by applicable law. The legal foundation for a dockominum are the riparian rights held by upland owners.

Several issues should be considered when insuring a dockominium:

First, you should not issue coverage on a dockominium if it is prohibited by state law. For instance, a Wisconsin case prohibited a dockominium as being in violation of the public trust doctrine. In ABKA Limited Partnership et al. v. Wisconsin Department of Natural Resources, 247 Wis. 2d 793, 635 N.W.2d 168 (2001) the court held that the attempt to offer a small class of boat owners the exclusive and permanent right to own and occupy a portion of public trust waters and allowing the exclusive use by individuals deprived the public in general of rights to use the public waters. Hence, the dockominium was found to have violated the public trust doctrine. When insuring a dockominium, a policy exception should be taken as follows:

Exception:

Navigable servitude of the US Government and State of _________or any political subdivision thereof and rights of the public to the use of any navigable waters covering any land included in the description of the insured premises.

Typically, the waters on which the dockominium is created is subject to the sovereign’s right to regulate waterways. Therefore, the dockominium will be granted and will exist by virtue of a license or permit from a government agency or agencies. The licensing entity may be the U.S. Army Corps of Engineers, a state agency, or a state environmental agency or coastal management agency. Exception should be taken as follows:

Exception:

The terms and conditions of all permits and licenses issued by federal, state, and local governments, their respective agencies, and quasi-governmental or private agencies having jurisdiction over the Project, including the US Army Corps of Engineers, the state of  ________and the City of ________.

Additionally, the documents creating the dockominium regime should be reviewed for compliance with the state condominium statutes. Often, the state statutes will require the existence of a building and have no provision for creating a condominium on an open area over water. In that case, an arrangement may be made for the owner of the dockominium to take title to a “locker”, a storage space, located on the upland. The boat slip will be a limited common area attached to the locker.

Company Policy requires approval from a Stewart Underwriter before issuing on Dockominiums.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
SLS2008019 Insuring Dockominiums
Related Bulletins:
None
Underwriting Manual:
4.34 Dockominiums
Exceptions Manual:
Dockominiums
Forms:
None