RKW Law Group Logo

10075 Red Run Boulevard
Suite 401
Owings Mills, MD 21117
(443) 379-4900

10 North Jefferson Street
Suite 200
Frederick, MD 21701
(240) 220-2415

Good Contracts Make Good Neighbors

March 24, 2023

Dave McRae

When you share a common boundary line with another property owner, there is a high likelihood that issues will arise from time to time that affect you both. Sometimes the parties discover that one neighbor’s fence, landscaping element, or other structure crosses over onto – or in more extreme cases, is constructed entirely on – the other neighbor’s property. Or perhaps there are trees and shrubs on one side of the property line, whose branches and/or roots extend over to the other side. There may be a driveway, access lane, walkway, or stairway situated on one property, or perhaps straddling or crossing both properties, that one or both owners may use (or wish to use) for pedestrian or vehicular access to a portion of their properties from a public street, alley, bike path, public waterway, or the like. There are some instances in which one neighbor would like to make arrangements to use a portion of the other neighbor’s property for, say, farming, storage, parking, or recreational purposes.

In an ideal situation, the neighboring owners are friendly and respectful, i.e., neighborly toward one another, and can discuss any issues like the ones mentioned above – or the many other types of issues that can arise affecting neighboring properties that are not mentioned above – and reach terms of agreement with one another, which they may want to acknowledge with a handshake or similar confirmation that “we have a deal”.

To be clear, it is commendable when neighbors can discuss their issues in such a direct and forthright manner and reach amicable terms of agreement.  But in many situations involving real property rights and interests, particularly where the parties intend those rights and interests to exist, endure, and be enforceable, carrying on to a (defined or undefined) future time, it is important to go beyond a mere handshake agreement and to memorialize the detailed terms and conditions of the arrangement in a written and signed, and in many cases recorded, legal agreement.

We realize that some people – perhaps your neighbor is one of them (and perhaps you are one of them yourself!) – prefer not to have to deal with written contracts and lawyers. They like to keep things simple and efficient; they know and trust their neighbor but not their neighbor’s lawyer; and they definitely would prefer not to have to incur legal bills if they can help it. But these viewpoints, however strongly they may be held by either or both parties, are outweighed by the important and compelling reasons for having a written agreement prepared by a capable, professionally qualified real estate attorney**, and, if applicable, such as with rights-of-way and other easements intended to run with the land, to have their agreement recorded in the county or city land records of the jurisdiction where the properties are located.

[** Ideally, both owners will be represented by their own attorney, so that each owner can receive its own independent legal counsel when the agreement is being negotiated and finalized. However, it is often the case – especially when the properties are residential and the homeowners would prefer to limit their legal expenses – that the owners elect to have just one attorney involved as the preparer of the agreement, who can either be the attorney for one party (with the other party acknowledging in the agreement that they declined the right to be represented by their own counsel) or an attorney that the owners engage jointly under an appropriate conflict waiver agreement.]

A good attorney-prepared written agreement between neighboring property owners:

·        Will be thorough. It will cover an array of topics that the neighbors may not have thought of in their informal discussions, such as (not a complete list):

-         Whether the agreement is a license (which is revocable by the licensor), a lease, an easement agreement that runs with the land, or some other type of agreement

-         Whether there is to be any payment of money from one owner to the other, and if so, the terms of such payment(s)

-         How long the agreement is intended to last. For example, if it is a right-of-way or other easement, is it intended to run with the land and be binding on successor owners of the properties into perpetuity? Or is there to be a defined date or any other event(s) or condition(s) upon the occurrence of which the agreement will be terminated?

-         Whether there are any issues relating to performing (and paying for) maintenance, repairs, and upkeep

-         Whether there are any issues related to insurance

-         Whether there are any tax issues

-         Whether either or both properties is encumbered by a mortgage (or any other interest in the land, such as a ground lease or a condominium regime), and whether the mortgagee’s (and/or ground lessor’s and/or condominium association’s) consent to the agreement is required

-         Whether there are any other legal concerns that need to be addressed, such as a legal requirement for the agreement to be inwriting and signed (a “Statute of Frauds” concern)

-         How amendments to the agreement, or any possible future assignment of the agreement, are to be handled

-         How any future disputes between the parties arising in connection with the agreement are to be handled

·        Will avoid future misunderstandings. This is a corollary to the above point. Having all of the terms and conditions of agreement carefully thought through and memorialized in writing will make it difficult or impossible for one neighbor to say at a later date (as they might do if there exists only a handshake agreement) that they don’t recall having ever discussed a particular term or condition, or that if it was ever discussed they certainly don’t recall ever agreeing to it. If that term or condition is stated in a written legal agreement that they signed, then there can be no argument about what either party “recalls” having discussed and agreed to.

·        Will be enduring. Over time, things happen. People get sick or die, or they sell or otherwise transfer their property, and suddenly there’s a new property owner who might say (if the original owners had only a handshake agreement) “Well I never agreed to this arrangement, and I am not going to agree to it now." Sometimes catastrophic events such as earthquakes, hurricanes, tornadoes, floods, fires, or droughts (among other possible events) occur that neither party ever contemplated, and change one or both parties’ expectations for their property. Sometimes there is a falling out between the neighbors, perhaps over issues having nothing to do with the arrangement they reached regarding their respective properties, but as a result they are no longer willing to continue or honor their handshake-only agreement. A properly prepared (and if applicable, recorded) written agreement provides assurance to both parties that their respective rights, interests, and obligations are of a durable nature, and will – to the extent that the parties state this in the agreement – survive any of the above eventualities (among other things that could occur in the future) and will be binding upon and enforceable against successors in interest.

·        Will put third parties on notice.  In the case of rights-of-way and other easement agreements running with the land (and some types of leases) that are recorded in the land records, all members of the public are deemed to have been given notice of the existence of, and the terms and conditions of, the easement (or lease). Thus, the owners of both properties will be insulated against possible adverse claims by any third party that such party had no actual knowledge of the existence of the easement (or lease) and that they suffered some kind of harm or detriment, economic or otherwise, as a result. Such third-party claimant could be (for example, among other possibilities): someone who subsequently purchases, mortgages, or leases one or both of the subject properties; someone who held or later acquired (or was prevented from acquiring) some type of interest in a different, but nearby, property, that is impacted by the existence of the easement or lease; or someone trying to assert that a private right-of-way should be declared to be a public right-of-way. A mere handshake agreement, or even a written but unrecorded agreement, would not offer any such third-parties-on-notice protections.

So to sum up, if you and any neighboring property owner need to workout an arrangement to resolve an issue that affects your properties and is of any substantial significance, whether in terms of duration, cost, accessibility, use and enjoyment, and/or safety or the environment, it is best to memorialize that arrangement in a written and signed (and if applicable, recorded), professionally prepared legal agreement, and not to rely on a mere handshake agreement.  

Consider the upfront cost of a good attorney-prepared agreement as an investment in protecting your rights and interests in your property, which will also hopefully spare you from finding yourself in disputes, and possibly lawsuits – even with people you may not know yet – in the future. Once the agreement has been signed by the parties, and recorded if it is meant to be recorded, that will be the perfect time for the parties to have a handshake to commemorate their having handled the matter in the best and smartest way.

If you or anyone you know may need an agreement with a neighboring property owner, or for any other assistance or counsel with a real property transaction, do not hesitate to call on the attorneys at RKW!

© 2024 RKW, LLC. All Rights Reserved.

Disclaimer | Privacy Policy

Sign up for our weekly newsletter