If you are the owner of a waterfront property in Bermuda, you will be able to attest to the numerous benefits of owning real estate in such prime location.

Apart from the glorious views and immediate access to the ocean, a major benefit of owning such a property is the ability to enjoy your own private dock or jetty. However, such a benefit may have an unexpected hidden cost.

Under the current law, all land below the high tide watermark belongs to the Queen, through her representatives in Bermuda, the Government. This means that all structures erected on the seabed, or the `Queen's Bottom' such as docks or jetties should have been built with the approval of the Government. Therefore, if there was a dock or a jetty on your property when it was purchased, this should be reflected in the title deeds to the property by the inclusion of a conveyance or lease from Government to the property owner of the area of the Queen's Bottom that the dock or jetty has been erected on.

If you own a waterfront property and have built a dock or a jetty without first receiving the necessary approval, it will be classed as an illegal foreshore encroachment. However it is not too late to acquire the necessary consent and one can make an application to the Department of Works & Engineering in order to regularise this encroachment. Government may agree to grant a lease for 21 years (more commonly in relation to wooden structures like a jetty), or they may agree to sell the freehold of the Queen's Bottom (more commonly in relation to concrete or stone structures like a dock) on which the encroachment is erected. Unfortunately, such regulation may only be granted at a considerable financial cost!

The relevant legislation in this regard is the `Sale Of Reclaimed Lands Act 1951'. It permits the Minister of Works & Engineering, subject to the approval of Cabinet, to sell at a fair market price any land that has been reclaimed from the foreshores of Bermuda or from the Queen's Bottom. First, Government calculates the fair market price by ascertaining the square footage of the dock (usually by way of a survey plan) and multiplies this figure by $27.55 (which is Government's estimation of the value of waterfront land based on a price of $1.2 million an acre). Once this figure is obtained Government will then obtain the Annual Rental Value of the property (which can be ascertained by reviewing the following web-page: http://www.landvaluation.bm). This figure is then divided by two.

Finally, Government adds the figures arrived at in the two calculations set out above, and the total is the amount payable in order to purchase the dock. (Note: In relation to the calculation of the premium payable for a lease of the Queen's Bottom, you go through exactly the same calculation as above but multiply the final figure by 0.7 which will give you the price payable.) Until recently, Government policy permitted a 50 per cent reduction in the total price payable under the above formula if the property owner could prove that the dock was in existence prior to 1974. However, Government recently revised this policy and now this reduction has been abolished.

It still is possible however to prove adverse title to the encroached land. To prove this the property owner must be able to prove to the satisfaction of the Government that the dock or jetty has been in place for a period in excess of 60 years. Therefore, if a property owner can prove through the use of photographs, affidavits or plans that the dock or jetty was built prior to 1942, they will have acquired an adverse title to that part of the Queen's Bottom that the dock or jetty is built on and will not have to pay anything to Government.

If you are thinking of purchasing a waterfront property that includes a dock or a jetty both you and your lawyer will want to ensure that ownership to the dock is regulated and that the appropriate conveyance or lease from government is included with the title deeds to the property. If ownership has not been regulated you will want to ensure that the seller of the property will seek the appropriate approval from Government prior to the completion of the sale or alternatively will allow enough funds to be "held back" from the amount paid over on completion to pay for all costs associated with the application.

Conversely, the seller will need to be aware that the net proceeds of sale that they are expecting could be reduced by the not insignificant amount needed to regularise the encroachment.

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Attorney Declan McKervey is a member of the Property Department at Appleby Spurling & Kempe. You can write to him with your questions at dmckerveyask.bm. Copies of Mr. McKervey's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.