Shoreline and water boundary due diligence for Michigan IRA property

A property that meets the water carries a boundary no surveyor can always see from the street. The land ends somewhere between the grass and the open water, at a line called the ordinary high water mark. For a Michigan parcel on Lake Michigan or one of the inland lakes, knowing exactly where that line is changes what the IRA actually owns, what a deed and title commitment can and cannot promise, and what work can be done on the shoreline before anyone buys the property.

This is one of the most missed questions in a West Michigan purchase. The listing may say lake frontage, the contract may say the parcel runs to the shore, and the seller may be certain about where the water begins. None of that settles where the land actually ends, whether the lake bed or any submerged portion is state or private property, whether a wetland sits between the house and the water, or whether a dock or shore structure is permitted. A self-directed IRA that is buying this kind of property needs its own water-boundary review before an offer is written.

See where the deed actually ends at the water

The line that matters is the ordinary high water mark, the point on the shore that the water regularly reaches and leaves visible signs of. Michigan Compiled Laws and EGLE's Water Resources Division treat that mark as the practical edge of the land. For a Great Lake, the bed of the lake up to that mark is generally treated as state-owned submerged land held in trust for the public, which is why Part 325 of the Natural Resources and Environmental Protection Act, 1994 PA 451, governs Great Lakes submerged lands. A deed that says the property runs to the lake shore does not, by itself, convey the open water or the submerged bed out beyond that mark.

The distinction is easy to overlook and expensive to get wrong. A buyer who assumes the parcel includes a deep, usable shoreline may find the dry, owned land stops higher up the bank than expected. A buyer who assumes they can place a structure out over the water may be asking the state for permission to use land it still owns. The question is not whether there is water, but exactly where the owner's interest stops and the state's begins.

Decide whether the water is navigable and what that means you own

Navigability is a legal question, not a map label. It matters most on inland lakes and streams, where it can determine whether the submerged lands below the water line belong to the state or to the adjoining landowner. A water body that is navigable in fact is generally treated as state-owned for this purpose, while a small or non-navigable pond can leave the bed in private ownership up to the water's edge. The line between those outcomes is fact specific, so it is the kind of question a Michigan attorney and a licensed land surveyor should answer for the exact parcel, not a general answer.

Ask which classification the local records support and whether it has been settled for this parcel. If the answer is uncertain, the due diligence should say so plainly, because it drives who owns the water the buyer is paying to reach.

Put the water boundary on the survey and check it against the title

A title commitment and a legal description tell you what the grantor claims to convey. They do not, on their own, measure where the ordinary high water mark actually sits on the ground. EGLE points to a licensed land surveyor to identify the ordinary high water mark on both inland lakes and the Great Lakes, using field evidence rather than a recollection of the water level on one quiet day.

Order the surveyor to locate the water boundary in the field and tie it to the parcel. Record where the mark is relative to the house, the dock, any shore protection, and the proposed improvements. If the survey shows the usable shoreline is higher or lower than the seller described, that fact belongs in the file before the buyer accepts the price.

Check the wetlands and protected areas between the land and the water

Between the owned land and the water there is often a wetland, a dune, or a high-risk erosion area. Each is a separate interest with its own rules, and each can sit partly inside the parcel and partly in the public domain. EGLE's Water Resources Division administers the parts of the Natural Resources and Environmental Protection Act that cover these areas, including Part 31 for water resources protection and floodplain, Part 301 for inland lakes and streams, Part 323 for shorelands, and Part 353 for sand dunes.

A wetland can be a source of value or a source of cost, and the answer is property specific. A professional wetland delineation, done to a recognized standard, is the way to know where one starts and stops and what it limits. The result should be read together with the survey, the title commitment, and the permit questions that follow.

Know which permit a dock or shore project needs

Construction where the land meets the water is where state and federal rules overlap. EGLE and the U.S. Army Corps of Engineers, Detroit Office, share the review through a Joint Permit Application. EGLE describes the joint process as covering construction on or affecting wetlands, floodplains, inland lakes and streams, Great Lakes bottomlands, critical dunes, environmental areas, and high-risk erosion areas. The Corps separately has authority under section 10 of the Rivers and Harbors Act and section 404 of the Clean Water Act over work in the waters of the United States.

The applicant submits the joint application through MiEnviro, EGLE's online permitting system. The practical consequence for a buyer is that a dock, a new seawall, riprap, a boardwalk, or a bioengineered bank is not a contractor decision. It is a permit decision, and the process, the fees, and the timing depend on the size and location of the work and the water body involved. A project at or below the ordinary high water mark on an inland lake requires a permit, and EGLE generally steers owners toward natural, bioengineered shoreline treatments before hardening the bank.

Review the shoreline structures that already exist

A property may already have a dock, a seawall, riprap, or a filled-out shoreline, and each tells a story about what was permitted and what may have been changed later. The buyer needs to know which improvements have a permit on file, which were built to an older standard, and which may have been altered without review. An existing structure that is sound can be inherited; one that was installed without authorization or that is failing can become the account's problem the day it closes.

EGLE notes that shore protection structures such as seawalls and steeply sloped riprap can have negative effects on the shoreline and on nearby properties, and it recommends natural, bioengineered treatments where they will protect against erosion. That guidance matters in two directions. It can make an existing hard wall harder to renew, and it can shape what the account is allowed to build going forward. Both questions deserve a current, parcel-specific answer from the permitting office.

Confirm access and any shared or deeded water rights

Frontage is not always access. A property may look out over the water and still reach it only through a neighbor's yard, a private deeded easement, an association-controlled beach, or a permissive path that the current owner has always used. The buyer should confirm, in writing, exactly how the IRA will reach the water and whether that right is recorded, limited, or shared.

Keep the interests separate. A water view is not a water right. A recorded access easement is not a riparian interest. Association access is subject to the association's rules and may change. The cleanest answer is a deeded, recorded interest that the title work can confirm; when the access is permissive or shared, the file should say so and the buyer should price that uncertainty into the decision.

Keep the water-edge work inside the IRA's process

Every one of these questions has an account-side version. The IRA owns the property, so the survey, the delineation, the permit application, and any shore work belong to the account, not to the individual. The account, through its custodian, is the applicant and the owner on the permit. The individual does not sign the application in a personal name, pay for the dock from a personal account, or do the construction with personal labor. IRS Pub 590 notes that an IRA may invest in certain property and points to the prohibited-transaction rules that limit how that property may be used, and those rules are what keep a personal dock, a personal weekend, or a personal repair job from becoming a problem for the whole account.

The custodian should confirm how the account names itself on the permit, who is authorized to sign, and how the payment for each project leaves the account. No permit, survey, or improvement is IRS approval of the property or the strategy, and none of that paperwork removes the individual's personal-use restriction.

Price the unresolved water questions before the deadline

The cost of getting the water boundary right is front loaded, and it is mostly small relative to the property. A boundary survey, a wetland delineation, a permit application, and a basic shore assessment are line items that can be added to the budget before the offer is signed. What should not be done is to leave those questions open and then assume the property is worth the full price because the seller said the shoreline is good.

Budget for the condition the account is actually accepting. If the usable shoreline is higher than advertised, if a wetland limits where work can happen, or if an existing dock needs a new permit to remain, the price should reflect that reality. None of the value, view, or rent the property might bring is guaranteed, and none of it should be counted against a known cost.

This article is educational, not legal, tax, financial, insurance, engineering, surveying, environmental, retirement-plan, or investment advice. No property, shoreline interest, structure, or strategy is approved or endorsed by the IRS. Have your own self-directed IRA custodian, CPA, Michigan attorney, licensed land surveyor, wetland or environmental professional, EGLE, the U.S. Army Corps of Engineers, and other qualified advisors review the account, the parcel, the water boundary, the records, and any proposed work before taking action.

Put the shoreline review on the offer calendar

• Order a licensed land surveyor to locate the ordinary high water mark on the exact parcel and tie it to the deed
• Resolve whether the water body is navigable and who owns the submerged lands, with the attorney and the local records
• Commission a wetland or environmental delineation for the area between the owned land and the water
• Pull the title commitment and legal description and check them against the surveyed boundary
• Confirm in writing how the IRA will access the water and whether that access is recorded, shared, or permissive
• Determine which permit any dock, seawall, riprap, or shore project needs and who the account names on the application
• Review existing shoreline structures for permits, condition, and renewal questions with the permitting office

Leave closing with a water-boundary file

Keep the survey with the water boundary, the wetland delineation, the title commitment and legal description, the access documents, the permit applications and any determinations, the records for existing structures, the custodian instructions, and the closing paperwork together. Note who answered each question, when, and on what record. If the purchase accepts an unresolved water boundary, a wetland, or a structure that needs a permit, write down what is open, who is answering it, and how the account will fund the work.

Primary sources for the state and federal framework in this review are EGLE's Inland Lake Shoreline Protection and EGLE/USACE Joint Permit Application pages, the parts of the Natural Resources and Environmental Protection Act, 1994 PA 451, administered by EGLE's Water Resources Division, including Parts 31, 301, 323, 325, and 353, the authority of the U.S. Army Corps of Engineers under section 10 of the Rivers and Harbors Act and section 404 of the Clean Water Act, IRS Pub 590 and the prohibited-transaction rules, and HUD's Fair Housing Act overview. Those sources set the general framework. The answer for one parcel, one water body, and one account comes from the current field work, the local records, and the buyer's own qualified professionals.

Rennie can help identify West Michigan water-edge property and coordinate the survey access, permitting offices, and offer deadlines that belong in a shoreline purchase. Water-boundary conclusions, permit questions, tax treatment, and retirement-account decisions stay with the buyer's own surveyor, attorney, custodian, CPA, and other advisors.