An improver of land owned by another, who through a reasonable mistake of fact and in good faith erects a building entirely upon the land of the owner, with reasonable belief that such land was owned by the improver, is entitled to recover the value of the improvements from the landowner and to a lien upon such property which may be sold to enforce the payment of such lien, or, in the alternative, to purchase the land so improved upon payment to the landowner of the value of the land less the improvements and such landowner, even though free from any inequitable conduct in connection with the construction of the building upon his land, who, however, retains but refuses to pay for the improvements, must, within a reasonable time, either pay the improver the amount by which the value of his land has been improved or convey such land to the improver upon the payment by the improver to the landowner of the value of the land without the improvements.
The Somerville's brought the action for equitable relief against the property owners of land the neighbors mistakenly constructed a bottling plant. The property owners asserted entitlement to the bottling plant under the doctrine of annexation and refused to pay the neighbors the value of the improvements.
Can the court award compensation to an improver who builds on another's land in good faith?
On review of the circuit court decision in favor of the neighbors, the court held that the neighbors erected the building on the land due to a factual mistake by the surveyor, reasonably believing it was their property. The court further found that the property owners did not discover the error until the building was completed and were not guilty of fraud or inequitable conduct constituting an estoppel. In order to prevent unjust enrichment benefitting the property owners, the court affirmed the judgment directing the property owners to either sell the land to the neighbors for the fair market value of the unimproved lot, or compensate the neighbors in the amount of the fair market value of the bottling plant.