Tell me what could go wrong and how to cover my assets
 

My neighbor approached me about selling a house and 1 acre lot that I own. It is adjacent to my main property and house, I'm keeping it mostly because I don't want neighbors near that area of my property.

He wants to buy it just so he can build a pole barn for storage.

I suggested that he build on that property and 'rent' a little bit of land from me. He loved the idea.

What sort of agreement could you guys see working here? I have no problem with another structure on that site, I'm mostly worried about liability and increase in property taxes.

Also how do we plan for the end of the deal? And how do we work out ownership of the new structure?

Typically in a "commercial" arrangement you would give a long term land lease for a specific amount(s) and at the end the structures ownership would transfer over to you. Personally, I wouldn't do this. The saying "good fences make goof neighbors" is true for a reason. Why invite him in on your turf?

Maybe "goof" should be goofy(!), obviously I meant "good".

It could be a win win, you keep the buffer, neighbor gets to have pole barn.
The commercial agreement mentioned could work. Just add their first right to renegotiate at end of lease term.

Try to design the layout so he access from his place to keep his use/ traffic impact to a minimum to your place.

Could cover some annual cost for the place.
Need to figure the additional tax and insurance costs into his lease cost.

Cheers Richard

The building would not affect in any way my use of the land or level of privacy. We're talking nearly 1000' away from my main house and plenty of trees in between.

I think it could be mutually beneficial and I don't see him flaking out or becoming a jerk.

It's pretty tough to describe but this property is actually a part of a new subdivision and has its own driveway, no need for him to ever enter my main property.

If you rent property for income, is that considered a commercial property?
Might be a zoning issue?
would this be considered subdividing?

Just be careful, people can turn on ya. Just because they pay money for something, they feel they have the right to btich. Hate to sound so negative, but be careful out there and get reqady for some headaches. Me, I would rent it without issue but I am used to the head aches.

I own a hangar at the local airport that is on a land lease. Very common practice.

The lease needs to have the exact dimensions spelled out- Can be just the building envelope itself, or with a bit of room around the outside and a driveway if necessary. My preference would be that the front of his pole bar is on the property line, and he leases just the footprint of the barn. If the barn is 40 x 60 feet, he is leasing a 40 x 60 foot patch of ground. This prevents him from storing junk outside the barn.

[worst case]
If adding an additional permanent structure it will first need planning/zoning approval by the city/county.

Building inspections for all workmanship (foundation/framing/final) will have to be approved.

Your neighbor might agree to building costs and "taking care of it all" for terms of a long-term lease, but his builder might screw up royally and take out power for the whole block in the middle of winter. Everyone's pipes freeze and burst.

At the end of the day...the blame is on YOU.

Since valuation changed, property taxes would be un-capped and assessed to current values.
(This may be at the high end of the scale.)

If Title for that extra house and land and now barn is not separate, and is co-joined with your own property, then total property taxation would have to be re-assessed by the city/county.
That might be a significant unhappy surprise a year from now.
That tax increase may even be greater than your buddy-deal income from any lease.
And it will be permanent until separation of the two properties with legal challenge.

House and property in question are completely separate from my main house and property. Different tax ID, parcel ID, etc.

They are called Kielbasa Parties..where lots of Vodka is consumed, dancing to the Polka's goes on all night and day and the women get there fill of Polish Kielbasa.