Waterfront Property Owners Surprised They Suddenly Have To Pay For Submerged Land

In the 1950s, a South Florida company called North Palm Beach Properties, founded by John “Jack” Schwencke, dug a canal to drain some land and create waterfront lots. As years went by, homes, condos and marinas went up along the banks, and many of the property owners built docks to access the water.

Over the past year or two, those owners have been surprised to suddenly be told that North Palm Beach Properties still owns the submerged land in the canal, and that to keep using it, they will need to pay up.

“It’s extortion in my book," Nancy Knoth, the owner of Riverside Apartments, told the Palm Beach Post.

Schwenke died in 2012, according to the Post, and recently, his son, Kim Schwenke, who is now 70, has been leading a charge to sell off parcels that the company still owns.

The land in question lies along the Earman River, which is part of a 1.5-mile extension of the C-17 Canal from Prosperity Farms Road to the Intracoastal Waterway in North Palm Beach.

The 28 acres that North Palm Beach Properties claims to own are valued by the property appraiser at just $9,900. But the company's claims affect about 100 waterfront parcels. Individual homeowners have been asked to pay $40K apiece to buy out the adjacent underwater land.

Attorney Matthew J. McGuane, a partner with the law firm of LKLSG in Miami, told Bisnow that the conflict will center on "riparian rights," which are legal rights for anyone who owns property bounded by navigable rivers and streams. ("Littoral” rights apply to waterfront owners along oceans or lakes.)

Typically, McGuane said, a property buyer would find out during a title search whether the adjacent submerged water is owned by anyone.

But in this case, it wasn't until the 1990s that the Palm Beach County property appraiser began recognizing and taxing the underwater parcels in question. North Palm Beach Properties has paid the tax. Since 2006, the company has sold water access for about two dozen parcels — one person bought an easement for $5, while one condo association paid $500K for its adjacent underwater parcel.

If waterfront users do not pay up, North Palm Beach Properties could accuse them of trespassing — which it did to Riverside Apartments — and/or force them to knock down their docks. It could also sell the underwater land to a new owner.

In one instance so far, the owners of one apartment building ignored the offer to buy out the land, only to see a rival neighbor buy it and block their water access, resulting in a lawsuit.

An attorney for North Palm Beach Properties suggested that the Schwenke family is selling off its land now so that future generations do not have to deal with the matter, and that the company is doing canalside landowners a favor by offering the land to them first, at "bargain" prices, rather than putting it on the market. 

According to the Post, five lawsuits over the matter have so far ended with the waterfront property owners paying up or settling, rather than continuing a costly legal battle. Another group of homeowners is suing in a new case and hoping for a different result.