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We are considering renting land to a neighbor. He has sheep

we are considering renting land...
we are considering renting land to a neighbor. He has sheep and wants to put a fence on our land. He says that the fence will cost him between 6-8,000. He wants us to either buy the fence, or he buy the fence, and then he wouldn't give us rent money until the fence is paid off....3+years...then we would own the fence. Either way he wants to have the first chance to buy, should we want to sell. I am Leary of being bound like that. We have 4 grown children...and grandchildren...right now, we don't forsee any of them interested in buying the place, but since we don't know the future, I hate to be bound to a new neighbor we don't know. What should we do?
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Answered in 18 minutes by:
7/5/2013
socrateaser
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 39,498
Experience: Attorney and Real Estate broker -- Retired
Verified
Hello,

Title 29 P.S. sec. 41 requires that neighbors share the cost of the boundary fences equally between them. See Fogle v. Malvern Courts, Inc., 701 A.2d 265 (1997). If this fence effectively operates as a boundary fence, then the neighbor and you and the neighbor are required to share the cost.

If the fence is constructed all on your land, then at the instant it is installed, it is your property, because a tenant who affixes property to the land permanently ceeds ownership of that property to the landowner, unless the property can be removed without causing damage to the land.

Given the law, you as the landowner have a a great deal of leverage. The neighbor obviously needs your land, but he is trying to get you to pay for a fence that you may not need. If you don't need the fence, then why would you pay for it by relieving the neighbor from the liability for rent?

Answer: you wouldn't. Moreover, if the tenant decides to by the property, then you won't own the fence -- which means that the tenant would have obtained the use of your land for no rental cost at all. So, if the tenant wants an option to purchase, then you may want to make that option contingent on the tenant paying all of the rent that you waived in exchange for the fence.

Otherwise, the answer is probably to reject the "fence for rent" deal, and simply tell the neighbor that if he wants to rent, then it will cost $X per month, and the fence is his problem -- not yours.

Hope this helps.
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Customer reply replied 4 years ago

SO, let me be sure. If the fence can be removed without damaging our property, the tenant is the owner of the fence.

That's correct. Example: Metal fence posts pounded into the dirt without concrete foundations, strung with barbed wire (and electrified, if necessary), is a de minimis invasion of your property. Pulling the fence stakes out at the end of the tenancy would leave small holes which could be quickly filled, or perhaps need no backfill at all.

Fence posts set in concrete is an entirely different matter. The holes are deep and the concrete is difficult to remove. This would not be a removable fence.

I'm not a sheep rancher (though I did own a small horse property once upon a time), so I have some experience with fencing. This must be quite a sizable amount of property to generate $6-$8,000 in fencing costs. I suppose a fair amount of labor is involved -- so I think that the neighbor may be trying to mitigate his costs in advance, if he ends up having to pay workers to remove the fence.

Your real concerning, in my opinion, revolves around whether or not you would instal the fence if there were no tenant. If you wouldn't, then I don't see why you would want to pay the neighbor to do so.

Hope this helps.
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Customer reply replied 4 years ago

is there a way I can save your answers to show my husband? Also, neighbor wanted the 'first chance to buy' should we sell. What does that involve? Would we be 'obligated' to sell to him? I was thinking of putting our property into a living trust....would an agreement with the neighbor to lease the land, and put a fence on it and have 'first chance to buy' impair our ability to put the land into a living trust?

Is there a way I can save your answers to show my husband?

After you rate my answer positively (a smiley face), the answer will be unlocked and you can do with it as you wish.

Also, neighbor wanted the 'first chance to buy' should we sell. What does that involve?

A: Right of first refusal would be a paragraph in the lease stating, something like, "As additional consideration for this lease, landlord agrees that tenant shall have the right of first refusal to purchase the leased property during the lease term, as long as tenant is not in breach of any material lease provision at the time of exercise of tenant's purchase right. Price and terms for tenant's purchase shall be at least as good as the highest and best offer made by a disinterested third party at the time of exercise of tenant's purchase right."

Would we be 'obligated' to sell to him?

A: Only if he meets or beats everyone else's offer (assumes you use language similar to that which I have provided above).

I was thinking of putting our property into a living trust....would an agreement with the neighbor to lease the land, and put a fence on it and have 'first chance to buy' impair our ability to put the land into a living trust?

A: No.

Hope this helps.
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Customer reply replied 4 years ago

thank you. one more question. should we decide to go with a living trust, could you help me with the paperwork, or do you folks just give advise, and then we still have to go to another lawyer to get the trust set up?

I'm flattered by your interest, however I cannot draft legal documents in this forum. I "justanswer" questions about the law. If you need a referral to a competent estate planning attorney, I can give you a reputable referral service to contact.

Hope this helps.
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Customer reply replied 4 years ago

ok....is there one in our area? 16833 say within 30-50 miles?

Click here and contact a relevant referral site. They will find someone as close as may be available. I can't provide direct referrals.

Hope this helps.
socrateaser
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 39,498
Experience: Attorney and Real Estate broker -- Retired
Verified
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socrateaser
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Category: Real Estate Law
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