Maureen and Graham Muir had always feared it could happen but were not quite prepared for the reality of the large fence cutting off around two-thirds of their lawn.
Mrs Muir had been enjoying a cup of tea at the bottom of the garden at the couple's home in Lady Road when three men arrived out of the blue and told her they were reclaiming the land, which belonged to a property next door.
Mr Muir, 51, said: "They told her to take her washing in as they were claiming the back garden. She was understandably very upset and was in tears.
"We couldn't believe they could take it away. We've been looking after the garden for nearly 20 years. Now the builder has put a fence up through our garden."
The couple, who run the Ardgowan guesthouse, bought the property 19 years ago but say they were unaware at the time that the garden did not belong to them.
When they discovered this ten years later, they say they were told not to worry, as the land, near the former St Margaret's School, had little value.
But now Ashford Property Development, which bought the land two years ago, has applied for permission to build a hotel with car parking spaces.
Mr Muir said: "As far as we knew the garden had always been part of the house. It was only when we thought of building an extension that we looked at the title deeds and found it actually belonged to the property next door.
"When it came up for sale, we offered to buy it but were refused. We thought it was the right thing to do, but I wish we hadn't said anything now."
The Muirs, who have four children, have now appealed to their solicitor for help. Nigel Griffiths, MP for Edinburgh South, has also taken up their case, writing to the city council arguing that Ashford Property Development did not have permission to erect the fence in a conservation area.
Mr Muir said they received the letter on Friday, August 4, and the men arrived on Monday, August 7, to put up the fence.
Ashford Property has applied for permission to transform the former St Margaret's School for Girls into a 115-bedroom hotel. The firm modified its plans after it was refused planning permission in March.
A spokesman said there was no dispute over the ownership of the land.
He said: "Ashford's property deeds clearly show the boundary limits and there has never been any evidence or suggestion from any party that these are not correct.
"Since taking ownership of the land, Ashford has extended considerable goodwill to Mr Muir, whose guesthouse clients have used the access from Lady Road as an overspill car park."
A city estate agent said that it was extremely important to check boundaries when buying a property.
He said the Muirs may have a right of access to the land, as they have been using it for more than ten years.