Forums / Property Investing / Help Needed! / Fencing Dispute when developing property

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  • Profile photo of MarkBMarkB
    Participant
    @markb10
    Join Date: 2018
    Post Count: 6

    I’m not going to give away what side I own as I want unbiased opinions.

    Family A and Family B decide to buy a property together and subdivide it into two blocks. Both families want the right side, as the demand is high, it was agreed, it will go into a draw. Whoever gets the right-side block, gives the other family $2,500. From the draw an agreement was drafted by the conveyancer stating the rightful owners of each side.

    Currently there is a house on the property that will be demolished in the coming months. Demolition and subdivision costs was agreed to be shared by both parties.

    There are existing fences on the perimeters, one side fence is newish, there is no need for replacement. The other side fence is old and needs to be replaced. There wasn’t any discussion or agreement about the costs to replace the existing fences on either side.

    The house plans of both families are designed to be built on the boundary with their respective neighbours. The houses are not joined in the middle. From experience it is customary to do fences post-construction due to the possibility of damage during house-building, not knowing the ground level and how much fencing is required due to building on boundary.

    Family A thinks the only shared costs should be the middle fence, all other fences are responsibility of the property owner. Family B believes all costs to fix/replace the existing fences no matter what side they are on should be shared between the two families.
    Who is correct?

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,016

    No one is correct because there is no correct answer. It is up to negotiation until subdivision occurs and then it is that owner’s responsibility – with the neighbours as fencing is generally shared.

    But if I was family A I wouldn’t want to pay to fix a fence that I won’t get to be owner of.

    Hope you got advice about stamp duty too btw.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of MarkBMarkB
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    @markb10
    Join Date: 2018
    Post Count: 6

    So if you were Family B, would you expect or assume Family A is automatically liable to pay half of your fence?

    • This reply was modified 2 months, 2 weeks ago by Profile photo of MarkB MarkB.
    Profile photo of TerrywTerryw
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    @terryw
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    So if you were Family B, would you expect or assume Family A is automatically liable to pay half of your fence?

    No, because it is not on their part of the land.

    Was the land partitioned at purchase or has it been?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of MarkBMarkB
    Participant
    @markb10
    Join Date: 2018
    Post Count: 6

    So if you were Family B, would you expect or assume Family A is automatically liable to pay half of your fence?

    No, because it is not on their part of the land.
    Was the land partitioned at purchase or has it been?

    An agreement was drafted by the conveyancer stating who owns which side of the property based on the agreement made from the draw. We are in the process of getting the subdivision finalised.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
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    Gee, this is probably out of the conveyancers depth. Why didn’t you use a lawyer? Did you discuss the CGT and stamp duty, and GST aspects of transferring title?

    If it is a valid partitioning of the land then you will each beneficially own the separate portions of the block and therefore family B should be paying for the fencing on their ‘lot’.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of MarkBMarkB
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    @markb10
    Join Date: 2018
    Post Count: 6

    Gee, this is probably out of the conveyancers depth. Why didn’t you use a lawyer? Did you discuss the CGT and stamp duty, and GST aspects of transferring title?

    If it is a valid partitioning of the land then you will each beneficially own the separate portions of the block and therefore family B should be paying for the fencing on their ‘lot’.

    Didn’t think it was necessary at the time. We had a clear understanding of how it should work and the other family had theirs and unfortunately here we are.

    Yes we have all the CGT and GST aspects sorted thanks for asking

    Profile photo of MarkBMarkB
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    @markb10
    Join Date: 2018
    Post Count: 6

    Does anyone else have an opinion or advice on my post?

    Profile photo of Ethan TimorEthan Timor
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    @ethantimor
    Join Date: 2016
    Post Count: 269

    Agree with Terry that there is no “correct” answer.

    I can get the logic of family A but why does family B believe both parties should pay for all fences?

    Did you guys happen to establish some dispute resolution mechanism? If not, is there a third party both families trust and can agree that her/his decision (after hearing both parties) will be accepted as final, ideally with no hard feelings?

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
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    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of MarkBMarkB
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    @markb10
    Join Date: 2018
    Post Count: 6

    Agree with Terry that there is no “correct” answer.
    I can get the logic of family A but why does family B believe both parties should pay for all fences?
    Did you guys happen to establish some dispute resolution mechanism? If not, is there a third party both families trust and can agree that her/his decision (after hearing both parties) will be accepted as final, ideally with no hard feelings?

    Family B believed that “sharing all fence costs” was correct and commonly used by property developers and had assumed family A was on the same page from day one. After the disagreement they also spoke with a developer who said they were correct and family A were wrong in thinking otherwise.

    Family A have had experience with developing property on their own in the past. They know people that have done this before with friends and family using their method. They were never under the impression that fencing was shared. They believed it was common sense that all issues found on either side is the responsibility of the owner of that side.

    Just an update. Family B stated that they would never had chosen the side they chose if they knew they had to pay for their own fences. Family A then offered to contact the conveyancer and change over the titles and they will pay for ALL fences on their side but Family B refused. Family B have now backed down unwillingly and have agreed to do it Family A’s way

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 269

    Patchy start… 😬😬 hope it will all be smooth sailing from here 🙏👍😎

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of vyaw2003vyaw2003
    Participant
    @vyaw2003
    Join Date: 2006
    Post Count: 176

    your outside fences are your own problem, split that bill with the owners on each outside fence.
    Is Family A going to pay for half of Family B’s Tv when it also breaks? lol

    • This reply was modified 1 month, 3 weeks ago by Profile photo of vyaw2003 vyaw2003.
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