Party Wall Agreements Are Essential To Townhome Real Estate Projects
When undergoing a construction project – whether it be greenfield construction, brownfield construction, or infill development – creating, implementing, and utilizing a party wall agreement as a contractually-obligated legal document is critical to ensure that all future multi-unit tenants and owners are protected under local or state law. Party-wall agreements are associated with any adjoined or shared structure between tenants or owners on a set of properties and may include:
- Shared Walls
- Shared Fences
- Shared Driveways
- Shared Garden Walls
Party walls are called such since, oftentimes, condos and apartments are composed of multi-units where tenants share a wall. The shared property requires legal protections so that all parties sharing the wall (or other structure) are comfortable, for instance, when it comes to soundproofing and privacy.
Legally speaking, some building codes require party walls to be built with specific insulation materials to contain potential fires and protect property damage. Other legislations require such walls to be soundproof.
What Is A Party Wall?
Despite the name, a party wall can include any structure shared between tenants or owners living on adjacent properties and is mostly associated with the shared walls of multi-unit condos, townhomes, and apartments.
What Is A Party Wall Agreement?
If there is an issue with a shared structure (a “party wall”) – whether it be structural or aesthetic – a party wall agreement acts as a legal document that protects the owners who share the structure and ensures a solution already in place for any issue. The solution will automatically be implemented that is in the best interest of every party involved.
While uncommon, an executed legal document uses traditional home-ownership principles and rules to protect two major aspects:
- Ownership: Disputes between owners who share a structure on their land need to be settled via a legal precedent or agreement.
- Maintenance: How the shared structure should be maintained, fixed, or upgraded as necessary – including who is responsible and the percentage of costs incurred if one owner damages it – is included in the agreement.
Why Should You Have A Party Wall Agreement In Place
Ultimately, a party wall agreement acts as a preemptive solution to issues that may come up surrounding a structure that is shared between multiple tenants on a property. As noted above, this protects owners, ensures routine upgrades and maintenance, and legally provides solutions to issues that affect multiple parties. Such a document is set in place to ensure all parties’ comfort who share the common “party wall.”
Avoid Potential Litigation
Suppose a legal issue arises surrounding damage to a shared fence. In that case, litigation could quickly be resolved if a legal document already existed that provides a straightforward solution to the issue (depending on who is at fault). When such protections are not in place until an issue has already arisen, costly litigations, fines, and the like can occur, all of which can be avoided.
Ensure Owners/Renters Maintain Their Party Wall
One of the more critical reasons for using a party wall agreement is to ensure that the property value is maintained by legally stipulating that owners/renters maintain their part of the “wall” located on their property. This stipulation essentially protects the structure itself and ensures that it will be maintained for future occupants.
Provide Potential Buyers/Renters With Peace Of Mind
A set of leg document outlining the rules protecting owners from potential (future) problems stipulates who is responsible for maintaining the shared structure and who is responsible, financially, for damage or neglect provides peace of mind is provided to owners, renters, future renters (by way inheritance of the legal document’s stipulations) and investors. Lastly, if an owner wants to refinance their home or obtain a loan, lenders and investors will undoubtedly look for a party wall agreement if any shared structures are included, to protect their investment.
What Should Your Party Wall Agreement Include?
A party wall agreement should consist of several fundamental parts, including:
- Names and address of all pertinent parties (owners, renters, or those with responsibilities for paying for or maintaining the shared structure)
- Signatures of all parties
- The date of the agreement’s execution, including day, month, and year
- Detailed drawings of the shared structure
- A description of the condition of the shared structure (with photos)
- Detailed, legally-binding stipulations associated with who is responsible for which parts of the structure, what work can be done (first requiring a Party Wall surveyor), the consequences of damage or default on not fixing damaged parts, and when the structure should be maintained (and by whom).
Further, when one party wants to do work on the party wall, an agreement included in the overarching legal document should be stipulated as a “notice” on what can be done, and usually includes:
- Line of Junction: A dispute or notice to alter the shared structure’s line of junction (the “invisible” line that divides lands of adjoining owners)
- Party Structure: A notice to alter the party wall/shared structure, cosmetically or structurally
- Adjacent Excavation: A notice to excavate close to the adjoining owner’s land
Be Sure To Create A Party Wall Agreement As Part Of Your Real Estate Development Project
Creating and using a party wall agreement is a critical part of protecting your real-estate project, investment, and properties. A party wall agreement is also an important part of ensuring that all owners and parties sharing common structures within a multi-unit structure are protected, that the property will be maintained, and that legal battles can be avoided if any issues arise surrounding the shared structure. Ultimately, a party wall agreement is a legal document of protection that provides solutions to potential future problems and makes life easier for all parties sharing structures on a multi-unit property.