Is it safe (for both parties) to build on someone else’s property.I’m sorry, I am from the Caribbean so I chose a state to fill out the form.

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Is it safe (for both parties) to build on someone else’s property.I’m sorry, I am from the Caribbean so I chose a state to fill out the form.

I am a property owner and my boyfriend/father of my son suggested we build a four bedroom apartment for rent. I told him that I don’t have any money to start building anything, so he said that he will take care of everything. Are there any risks involved (for both of us) if someone uses their money to build on your property? What might happen if things don’t work out with us in the future? Is there any way that we can make arrangements that will be fair to both of us?

Asked on July 6, 2009 under Real Estate Law, Wyoming

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

The risks are that you could be liable if anyone is injured on your property; you could be responsible for any legal violations (e.g. of any building codes); you could have serious trouble in the future if the two of you split up and fight over assets or control; you could end up on the hook for costs, if outside vendors or contractors have reason to believe you'd be liable; you could have tax consequences; etc.--anytime two people jointly do something, there are risks and liability.

That doesn't mean you can't or shouldn't do it--just you need to set it up the right way. Think about all the different situations--what happens if you go your separate ways? How do you split any profits? Who has the final say over what can or can't be built, or who the tenants are? How are costs allocated (construction, loans, taxes, utilities, etc.)? Go down the line, think of all the issues, and draw up a contract that sets out rights and responsibilities and how to end the relationship if necessary (e.g. with a buy out clause). You might also consider setting up a corporation or limited liablility company to do the construction, with your boyfriend getting an ownership interest for contributing money, you getting one for contributing the use of your land. And make sure you have adequate insurance.

All of this is fairly straightforward, and a good local lawyer with real estate experienece can help you do this. Just really take the time to think in advance about all the possible situations, including you and your boyfriend splitting up, so you can plan for the contingencies.


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