A Business-First Approach To The Practice Of Law

Can you renegotiate a party wall agreement?

On Behalf of | May 1, 2023 | Real Estate |

As you probably know, many commercial spaces have party walls. Because these walls effectively straddle property lines, they often have at least two separate owners. For example, your company might own your side of the party wall, while the business next door owns its side.

When you purchased your commercial property, you probably reviewed the existing party wall agreement as part of your pre-closing due diligence. While this agreement likely binds you as a property owner, you also may have an opportunity to renegotiate its terms.

Do you have a consensus from other owners?

Often, any party to a party wall agreement can refuse modifications. Therefore, it may be beneficial to talk to other party wall owners and try to build a consensus. After all, if the agreement is not working for you, it also might not be working for your neighbors.

What does the party wall agreement say?

According to Harvard Law School, it is often necessary to renegotiate contracts when they are imperfect. If your existing party wall agreement seems overly restrictive, you might be able to modify the agreement. Your first step, though, should be to read the contract to see if it says anything about modifications. Often, party wall agreements provide a framework for revisions and updates.

Can you mediate disagreements?

If you cannot modify your party wall agreement, your company might have to exist within its framework. This is where the agreement’s mediation provision can be helpful. If your agreement has an alternate dispute resolution clause, you might be able to use it to make your party wall agreement workable.

Ultimately, though, unless doing so becomes impractical, it probably makes sense to try to negotiate a new party wall agreement that better meets your business’s needs.

Founding Partners Damaso W. Saavedra and Allyson D. Goodwin