If you are really interested in the pond and want SMB, you will most likely need to drain it and start over to get rid of the LMB. Does it really have LMB? Can you afford to re-do the pond for the SMB idea?
You say the other house has property that borders the pond. Does that mean they own right to the waters edge? If they do, I would check the laws to see if they have rights to the water. In my area, they would.
I think it is a great looking pond and worth consideration. What pond isn't there a to-do-list? It's a lifelong journey(work
).
