Learmond Fahey and husband Sidney, who are both in their 80s, have lived in the Netherby St, Balaclava, house for 23 years and this is the first time the issue has been raised.
Mrs Fahey was alarmed to learn she would have to pay $80 a year after it was found part of their property was on the road reserve.
What has upset Mrs Fahey more is an "initial administration fee" of $56.25 for the privilege of paying the charge.
"We got the first letter in the post, and when we opened it we nearly died," Mrs Fahey said.
The couple and one neighbour recently received the letters, which said an inspection had shown part of the garage on each property encroached on the road reserve, a small dead-end street.
The letter said the issue was a "historical encroachment", but when the council became aware of those, it required people to obtain encroachment licences.
It said the structures "may remain on the road at the council's pleasure".
The couple were given until December 1 to pay both fees, but were yet to do so.
"We would be paying that [fee] each year over and above our rates.
"At our age, we don't need this stress and worry. We pay our rates and we haven't done anything wrong."
Asked how the issue arose, council policy engineer Pieter Besuijen said it began with a complaint about an overflowing mud tank.
The problem was traced to a house next door to the Faheys, where a recently built garage had an unsealed driveway, and council staff decided gravel from the driveway was blocking the mud tank.
It was then discovered the garage was on the road, as was the Faheys', and both were required to pay.
"We can't really overlook that," Mr Besuijen said.
"I'm sorry, but those are the council rules."
Mr Besuijen said council staff did not spend time actively looking for such encroachments, but action was taken when they were picked up.
"We could if we wanted to, but we don't sit here and try to find people on road reserves."
The rules were "pretty straight-forward" and covered all properties that encroached on roads.
If one person was required to pay a fee, it would be unfair if others did not.
Council asset supervisor Michael Tannock, who has been dealing with the issue, said he felt for the couple.
Encroachments were not always picked up when consent was given for building, as it was the homeowner's responsibility to work out where the boundary was.
The council would not have any reason to question whether the homeowner built on to the road, and would not hire surveyors to check.
Neighbour Kirsty Knarston said she had put the matter in the hands of her lawyer, who was dealing with the council.
She had only been in the house for two months, had checked the permits for her garage, and believed it was not on the road reserve.
