Neighbor is responsible for additional costs to construction of our house; how to convince them to pay?

Question

Situation

My girlfriend and I are in the process of building a house to start a family. We have hired a contractor that will arrange everything from start to finish to deliver a habitable house.

The lot we are building our house on is meant for two semi-detached homes. Our neighbors finished building their home recently. During preparations for our house, our contractor discovered that the foundation placed underneath the common wall on our neighbors' lot is actually too wide and about 20 cm is placed on our lot (probably by mistake); it now blocks construction of foundations for our home.

That small part of our neighbors' foundation cannot be reused because each house needs to rest on its own foundation to allow both of them to move independently. Using this part of the foundation as part of the foundation for our house is simply not possible and cannot be presented as an answer.

Our contractor has proposed two solutions:

1. Remove any of part of the foundation that is on our lot.
2. Move our home 20 cm and fill the gap with additional insulation.

The first solution will most likely damage the house of our neighbors and potentially lead to an unstable common wall. The second solution has no risk for any damage but reduces the valuable space on our lot by a small amount (though, certainly not negligible) and adds an additional cost to the construction of our home due to the additional insulation and exterior materials that are required.

We met our neighbors once before the incident and both parties clearly expressed the intent to have a friendly relationship for many years to come. Once our contractor explained the problem with the foundation, we contacted our neighbors and requested another meeting to discuss the solutions.

Problem

The first solution could be enforced through court because we did not give permission to install the foundation of our neighbors' house on our property. However, letting the court resolve this issue will most likely take a few months to a few years. The relationship with our neighbors will be ruined (because their house will most likely be damaged) and we do not want to risk an unstable common wall.

We favor the second solution but obviously do not want to pay the additional cost to make it all happen. All in all, we would already voluntarily sacrifice valuable space on our lot to fix our neighbors' mistake.

We already briefly explained the situation and solutions to our neighbors over the phone but they immediately made it clear that they also have no intent of paying any additional cost because they simply do not have the funds to pay for it at this time.

Question

The additional cost is estimated to be 2400 euros. We could pay for it ourselves but obviously prefer spending it elsewhere. We also feel that paying this from our own pocket would hurt the relationship with our neighbors from our side for the coming years.

We are meeting our neighbors tomorrow.

• What is the best course of action to get our neighbors to pay for the additional cost of moving our house as a result of their faulty foundations? During tomorrow's discussion, what arguments could we use that have the highest likelihood of persuading our neighbors to pay?
• What general advice should we keep in mind when discussing this topic with our neighbors? Are there any big "do's and dont's" for situations like this?

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Update

First of all, thanks for all comments and answers, they have most certainly be helpful to us!

We have met our neighbors and discussed the issue. We explained the problem as it has been presented to us by our contractor and stated the solution: removing the encroaching foundation that is on our property. We also stated that enforcing this solution is completely within our right because we are the owners of the property and did not grant permission for any such construction. Then we continued that the aforementioned solution entails a high risk of permanent damage to the house of our neighbors and that we were willing to accept a workaround that involved moving our house. We presented the cost estimation our contractor provided us and formally requested all costs be payed in full by our neighbors in case they chose this approach.

At the start of the conversation we emphasized that our aim is to find a solution that everybody is happy with and that others have forced us into resolving a difficult matter. Nobody at the table was to blame but everybody had the best interest in finding a solution that works well for all. Afterwards, we phrased our request quite formally just in case our neighbors would react badly to our proposed solutions.

Luckily for us, they reacted quite well and appreciated the fact we were so open and direct to them. They also emphasized they have our relationship as their primary interest because we will be living next door for many years to come. They have accepted our requests and will present it to the contractor responsible for the construction of their foundation.

In the meantime, our contractor already confirmed that their contractor has acknowledged the faulty foundations. It appears that they will resolve the issue themselves. Nevertheless, we have requested that all communication is also forwarded to our address so that we can keep up with how things are going.

For this outcome, I want to thank both answers that were posted before we had the meeting. One showed that a friendly tone is of utmost importance in discussions like this. The other also highlighted the fact that we should not tolerate grave mistakes and exercise our rights appropriately.

Answer 1

This is based on my experience in the U.S. (which is quite limited even so) but the approach may be of use for a meeting coming so soon.

The major issue is that their house is intruding on your property, which they cannot do without your permission (regardless of what any previous owner of the lot may or may not have arranged). They are breaking the law, even if they are doing so in all innocence, and you don't need to tolerate that. Their choices are largely limited to:

1. They lose some multiple of 20cm of their foundation (damaging their house, as you've noted)
2. They pay you rent for the ongoing use of that strip of your property (an awkward arrangement)
3. You sell that strip of your property to them (at any arbitrary price, not necessarily the cost of relocating your house) and have the lots re-surveyed accordingly, solving the issue permanently.
4. The property lines stay as they are, your neighbors continue to use ~20cm of your property, you relocate your home to accommodate the issue, and someone pays the cost of doing so.

Practical Advice: Split the Cost

It's unlikely that your neighbors did any of this intentionally (if they did it at all! It could easily have been a mistake by a contractor or surveyor, with your neighbors never knowing about it until now). So it would be a good idea to avoid blaming them at all. The issue is that you now have a problem to deal with, and you are no more guilty of anything than your neighbors.

Your leverage here comes from the fact that you are legally in control. It's your property that their house is encroaching on, and so you can utilize legal machinery to get your way whether your neighbors agree or not. I would not recommend this framing if you value your future relationship.

Since this is otherwise going to be a big issue for one of you, you could split the difference and have it be a more minor issue for each of you. If you agreed to sell that strip of your property for 1200 Euros you acknowledge that this isn't your fault, nor your neighbors, solve the problem, and avoid using threats or absorbing the whole cost yourself.

Your neighbors have indicated to you that they can't afford to pay right now. If that's the only reason they've offered for not paying, then there is little point in demanding that they pay for everything upfront. You might suggest an installment plan, or some sort of delayed payment, or something similar to address their stated inability to pay immediately. Getting an agreement like this in writing is a good idea.

But the basic approach is that they pay for the use of that land, one way or another, and you allow the timing of the payment to suit your neighbor's needs. This applies whether you are splitting the cost at all or are imposing all of the costs on your neighbors.

If you are dead-set on having your neighbors pay the full cost:

I would lay out the simple facts: it's your property, and the problem is now costing you money. You can get lawyers involved, damage their home, or both, and your neighbors will probably not have any chance of winning as long as their house is partially on your property. If I were insistent on not paying, this implicit threat would probably be the only thing that could motivate me to do so. You'd get 2400 Euros, but also an unlimited amount of unpredictable acrimony from me for as long as we were neighbors.

Answer 2

You have a choice here. The legalities of the matter seem pretty clearly in your favour, so you could adopt an entirely legal approach and just let your lawyers sort it out without having to say a word to your neighbours. While some would argue that isn't an interpersonal solution, in my opinion any option which could potentially improve a human relationship or minimise damage to one is an interpersonal solution. There might actually be less bad feeling from your neighbours if the bad news that they either have to pay up, or smash up came from a lawyer in matter-of-fact terms and not from you. If you go over to their house and say the wrong thing (and there's no guarantee that any approach we give you here will be well-received by your neighbour) then it could potentially become a whole lot more personal and a whole lot worse.

Although you say that the legal approach could take years, a well-worded legal letter from a lawyer could present the two options to them and they would almost certainly agree to the one that does not mean they have to smash up their home. I know they have already said that money is an issue, but they must surely realise that if they refuse both options and this goes through the courts they would only end up paying whichever option you enforced plus your legal costs because this case is in your favour prima facie. Going "legal" does not necessarily mean years of waiting and court, it could get sorted quickly via lawyers. Consider it as an option.

As you say that you would be happy with the second option of moving your house slightly but at a financial cost to you and losing some usable land, have you considered the fact that you could take this option and then pursue them legally? You can build your house anywhere you like on your own land, so moving it has no bearing on your neighbours. But you can prove with land registration documents that they have built on land you own, so you could build, take the hit, then pursue them later, perhaps for the value of the land that you have lost to their mistake.

Personally, I think this really needs sorting legally. Because if you don't deal with it legally now, you will have real difficulties if you ever come to sell your house. I say this because if you go with option 1 and get them to move, then your house and land will be exactly as stated in all land registration documents. But if you go with any variation of option 2, any potential future buyer's lawyer or realtor (whoever handles the legal aspect of purchasing in your country) may pick up on the fact that your neighbour's house is built on the land they are buying from you. If you couldn't sort it quickly under those circumstances then your sale would probably fall through. If you allow your neighbours house to sit on your land then you still need to go down the legal avenue of getting the land re-partitioned and re-registered. I appreciate there may be other options to you, such as them paying you ground rent, but in my view these are complications that could also prevent a future sale. Some buyers don't want complex situations, they just want to buy a house and live in it.

If you do still want to speak to them personally, and I can think of just as many good reasons why you should take this approach, you should still be absolutely clear on your legal position before you do so. This is not so you can go in with a legal approach first, but so you can fall back on it if he doesn't receive you as well as you hope.

You could perhaps say:

This is really awkward, but as you know we have come to build our house and your house has apparently been built on part of our land. We really want to come to an agreement that suits us both. But the only two options that are available to us do carry a cost. I hope you agree that it isn't fair for us to pay for a mistake made by your builders?

See what they say. They ought to agree in principle.

If you want to pursue your second option and you agree with my point on the legal issues surrounding the land, you could perhaps go on to say:

We feel that the fairest option to you would be not to insist that your house be altered, but move our building slightly. However, there is still the issue of your property being on our land, so sooner or later we are going to have to resolve this legally because if we ever came to sell our property there would be a discrepancy that could prevent a sale.

Then ask:

I'm willing to hear any suggestion you have on how we can resolve this financially?

Be careful not to hurriedly accept any solution they suggest without thinking it over, and perhaps getting legal advice on it. You could say:

Thanks for your suggestion, I'll have a think about it and get back to you.

If they don't give you a solution that you are happy with then just say:

I hope you understand, I'm just trying to build a family home for myself, same as you. I think it is best if we just get this sorted out through legal channels.

Just finally, on the matter of them not having the funds to pay - if they have just bought a property then either they paid for it outright, or they have taken out a mortgage or loan. If they had the cash, they are minted, so don't take their word for it they have no money. If on the other hand they have a mortgage or loan, they could extend that loan to cover the costs to you. Although this is an assumption on my part, mortgages are usually based on the saleable value of a property. As you and your neighbour are building your own properties on land I would say that any mortgage your neighbour has will have room for extension, because they took it out before they built, and now the property is built it will be worth more.