A party wall agreement in British Columbia (BC) is a legal instrument used to divide a property when traditional subdivision (stratification) is not possible or practical. It essentially allows two parties to effectively own separate buildings on adjacent lots by transferring property interests.
Here's a breakdown:
-
Purpose: To legally separate ownership of buildings that share a wall or are very close to each other on adjacent properties, particularly when stratification (condominium conversion) is not feasible.
-
Mechanism: Under a party wall agreement, each property owner transfers their half-interest in the neighboring lot to the other owner. This effectively grants each owner full ownership of their respective lot and building.
-
Why use it instead of Stratification? Stratification (creating a condominium) involves a more complex legal process. A party wall agreement can be a simpler alternative in specific situations. Stratification may not be possible due to zoning restrictions, building code requirements, or other legal limitations.
-
Legal Implications: The party wall agreement is a binding legal document that outlines the rights and responsibilities of each property owner regarding the shared wall and adjacent properties. This includes maintenance, repairs, and future alterations. It is crucial to consult with a real estate lawyer to draft and review a party wall agreement.
-
Key Considerations:
- Maintenance and Repair: The agreement specifies how the shared wall is maintained and repaired, including cost sharing.
- Alterations and Additions: It addresses how alterations or additions to either property will be handled, particularly if they affect the shared wall.
- Insurance: It outlines insurance responsibilities for each property.
- Dispute Resolution: The agreement should include a mechanism for resolving disputes between the property owners.
- Mortgage Implications: Lenders will review the party wall agreement carefully to ensure it adequately protects their interests.
In essence, a party wall agreement in BC provides a legal framework for shared property ownership when a standard subdivision is not an option, enabling separate ownership and defining responsibilities regarding shared structures.
