Buying into a duplex is one way to afford a home without breaking the bank.
But like any bargain, there are strings attached.
Duplex owners must compromise on repairs, maintenance and aesthetic issues with their co-owners.
And while both sides typically agree on the proper course of action, a harmonious relationship isn’t guaranteed.
Debra Guy, a Denver Realtor who owns parts of two duplex properties in Denver’s Sloan’s Lake neighborhood, knows both sides of the story. Guy bought a duplex five years ago and struck up a fast, easy rapport with her co-owner.
They split utility bills down the middle and also pitched in equally for an annual sewer-line cleaning.
“Our relations were great,” Guy says. “I ended up putting in a fence to separate my backyard from hers. We talked about it beforehand so (the backyard areas) matched a little bit.”
Denver duplexes often sit on lots that once featured single-family homes, meaning the building has one sewer line and one water line for two owners. Should either line falter, the two parties must decide how to fix it and how to split the check.
Those decisions are typically spelled out by a party-wall agreement, a document which outlines each owner’s responsibilities regarding the structure.
It’s like a homeowner association for a party of two.
Duplex agreements break down how the two sides share expenses for things such as insurance, structural issues and routine maintenance, says James M. Mulligan, director of the Denver law firm Fairfield and Woods.
“The content can differ, but they’re all addressing the same issues,” he said.
Potential duplex buyers can view the existing party-wall agreement before making a purchase. They can amend it as well, but doing so may require the approval of not just the other duplex owner but also the property insurance company and respective lenders.
Should one duplex owner break the rules, the other owner is technically protected, Mulligan says.
The aggrieved party can put a lien on the fellow duplex owner’s property to collect funds.
“There are teeth in the document,” he says, but adds most party-wall agreements encourage mediation before such actions are taken.
But Sue Fox, real estate attorney in Denver, says duplex owners can get a false sense of security with these agreements.
“You can have the best legal documents in the world, and if you’ve got a jerk on the other side you’ll have problems,” Fox says.
Currently, Guy lives in another duplex in the same neighborhood, but the sailing is not so smooth.
Her duplex neighbor is renting out the unit next to hers, and Guy says she’s having issues with the tenant paying bills on time.
The legal framework holding up duplex buildings varies from county to county, Fox says.
Another complication comes if the duplex in question is legally zoned as a condominium site. If that’s the case, then the owners must abide by a homeowner’s association, even if the property has only two owners.
Yet not all duplexes are created equal, warns Barb Perry, a broker with Cherry Creek-based Perry & Co. Realtors. Some duplexes, particularly in mountainous parts of the state as well as in Cherry Creek, are unequally proportioned.
“An owner built something for their own specifications and put a small unit on the side,” Perry says. That can make splitting utility bills a bit more complex.
Having sold hundreds of duplexes, Perry reports that she hasn’t had any significant problems with buyers clashing with existing duplex dwellers.
Greg Steele, a Realtor with Preferred Brokers, says clients considering a duplex worry about the legal framework with the duplex neighbor.
Other than that, “It’s not any different than a townhome,” Steele says. “That’s why you have to make sure the party-wall agreement is specific.”
Steele advises clients to meet with the duplex neighbor and see if a solid relationship could be in the cards.
If that’s the case, pore over the party-wall agreement before writing any checks.
“The last thing you want is any title issues down the road,” he says.
Mulligan says people may feel comforted if they have a positive first encounter with a potential duplex co-owner. But buyers should stay on guard until a genuine bond forms.
“You’re still strangers until you get to know each other,” Mulligan says. “You’re still at risk.”
