Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
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COMMERCIAL INVESTMENT REAL ESTATE 18 September | October 2017 Peace 2.0 I n a recent transaction for a lender financing the acquisi- tion and operation of a commercial real estate property, an unusual exception to title appeared, which is called a Party Wall Agreement. A review of the title insurance and property survey indicated that the acquisition property shares a wall with the immediately adjacent property. Party walls often are seen and taken for granted. Picture row houses and commercial structures sharing walls. Which owner or owners can claim those walls? Although party walls may be quite common, Party Wall Agreements are unusual. Often owners do not consider the party wall until a problem occurs. When an issue with a shared wall arises, the result sud- denly becomes complicated, without an agreement outlining the responsibilities and obligations of the two owners. Clarifying Responsibilities A Party Wall Agreement provides clarification about the owner- ship and maintenance obligations for the shared wall. The focus is to prevent and avoid disputes before a problem with a party wall, which affects the adjacent owners. In addition to shared walls, party walls also include those attached and adjacent to the property, walls belonging to a single building structure, dividing walls between adjoining units, and those standing on the land of two or more owners. Traditional party wall principle dictates that each owner possesses as much of a party wall as is located on their land. Essentially, each owner acquires title to one-half of the wall, and each owner also secures an easement for the support of the party wall. A Party Wall Agreement between adjacent owners is a use- ful, effective tool in understanding the agreements and restric- tions relating to the common wall. These agreements define which party bears the obligation for the cost of maintaining the common wall, as well as the repercussions if the wall is not maintained. Typically, a Party Wall Aagreement requires the owners to maintain their portion of the wall consistently and harmoniously. Stephen Swintek/Getty Images Preserve the harmony between owners sharing a party wall. by Barbara Anne Spignardo LEGAL B R I E FS