Private road maintenance agreements

[neckdweller]

Our home is one of about a dozen that shares a private road in Moultonborough. We are plowed by the town but are responsible for the cost of all maintenance - trees, grading the road, etc.

We have never had a formal agreement in place. Instead we have met as a group, figured out what we had in the bank, estimated the maintenance and then set an amount we all pay equally.

It has come to my attention that recently our neighbor was given a hard time by a lender when they went to refinance because there was no official agreement in place which seems to be something that will continue going forward due to either tigher scrutiny or regulations.

I'm taking on the task of getting this agreement in place. Does anyone have a similar small group of houses that has done something similar? I'd love to either be pointed in the right direction to get this written up or quite honestly I'd be happy to take the wording you currently have in place if anyone is OK with that.

[DickR]

Gee, does that bank really imagine that a dozen property owners would somehow let their road become impassable, especially if it's waterfront property involved? Have they gone "regulation nuts?" Maybe your neighbor should tell the bank that they should be realistic if they want the continued business. There are other banks. Maybe the bank official is from away, and has no understanding of how rural life works. Jerk his chain a bit.

Our road is shared by several dozen property owners, and there is no document in place for road maintenance. One of the owners collects the money and arranges for maintenance each year. No problems at all, really.

[Lakegeezer]

Our road in Moultonborough works the same as DickR described. One guy collects the money from each of us and several in the neighborhood take care of maintenance. There would be resistance if someone wanted a formal agreement just to satisfy a bank. Sounds like it is time to look for another bank.

[neckdweller]

Originally Posted by DickR

Gee, does that bank really imagine that a dozen property owners would somehow let their road become impassable, especially if it's waterfront property involved? Have they gone "regulation nuts?" Maybe your neighbor should tell the bank that they should be realistic if they want the continued business. There are other banks. Maybe the bank official is from away, and has no understanding of how rural life works. Jerk his chain a bit.

Our road is shared by several dozen property owners, and there is no document in place for road maintenance. One of the owners collects the money and arranges for maintenance each year. No problems at all, really.

It's not really a specific bank - this is being driven by Fannie Mae and from what I understand it really boils down to whether or not the appraiser recognizes that it's a private road. If they are not on the ball they may not realize it thus they don't check the box requiring a maintenance agreement.

[Sue Doe-Nym]

There are many private groups/associations around that have formal documents in place. They are not necessary but some people feel they help avoid liability concerns. Be warned though that these formalized arrangements can get complicated and take you down paths you don't want to travel.

As previously mentioned, it is often easier to use a local bank that uses common sense and understands local practices. Banks get nervous because they are afraid that non-payment of an association fee can be liened and interfere with their mortage position. Some lenders are too inflexible and don't want to understand how private roads are maintained.

[ApS]

Originally Posted by neckdweller

"...It has come to my attention that recently our neighbor was given a hard time by a lender when they went to refinance because there was no official agreement in place which seems to be something that will continue going forward due to either tighter scrutiny or regulations..."

Is the bank from out-of-state?



An alternative would be for the neighborhood to buy a thin strip of your neighbor's property that abuts the subject road.

That action would remove him from his responsibility of maintaining the road, plus he can't be legally blocked from using his driveway.

Although he would no longer be legally obligated to share in the maintenance of the roadway, he could continue negotiations with the bank.

[Rusty]

Don't private roads have to meet certain dimensional requirements before the town would plow them. Also I would think it would depend on how many houses share the private road.

I guess there could be an ordinance that would change that somewhat.

Maybe the Town of Moultonborough could help you with explaining to the bank that you meet certain requirements that allows the town to plow your road.

Just a thought.

[Sue Doe-Nym]

Private roads must be trimmed and in good enough shape for emergency vehicles to get by. There are no dimensional restrictions or requirements on existing roads for obvious reasons.

Please reread my first post. The mortgage company/bank is only interested in their security position. They don't care about any town requirements.

The idea of a town ordinance to change requirements would cause a huge mess and is not necessary. There is already a policy in place.

[phoenix]

we have about 25 homes so have a formal set of by laws with a small board of three but very difficult to get people to take part. regarding road issues the new highway head Scott has been concerned with plows losing mirrors etc due to branches too close to the road so have been asking ( not sure requiring but he contacted us to tell us his issues) to improve so we had a guy come in to trim all trees/ branches/ schrubs which makes road safer( we can actually see around corners now) also and looks better. Downside with association is it is a organization that must file. Center Harbor has talked about not plowing private roads but so far no news like this in Moultonboro. And yes when anyone either re finances or buys their bank reviews and requires a lot of info.

[Rusty]

Originally Posted by Sue Doe-Nym

Private roads must be trimmed and in good enough shape for emergency vehicles to get by. There are no dimensional restrictions or requirements on existing roads for obvious reasons.

Please reread my first post. The mortgage company/bank is only interested in their security position. They don't care about any town requirements.

The idea of a town ordinance to change requirements would cause a huge mess and is not necessary. There is already a policy in place.

I was only talking about towns plowing private roads. I don't know if the original poster falls within these policies but he/she did say that the town plowed their private road.

I looked it up for Moultonborough and this what it says about plowing private roads:

"New private subdivision roads with more than three (3) lots will be provided snow removal and sanding services as provided in the Town Budget. The road must meet minimum specifications as outlined in the Moultonborough Subdivision Regulations. The Board of Selectmen will accept an application for
this service provided at least one (1) habitable structure has been completed and is serviced by the road in question.

This is the what the "statement of Policy says:

RECOMMENDED MINIMUMS FOR PRIVATE ROADS
After inspecting private roads and upon input from the Fire Department, Road Agent and
Police Department regarding of the need to accommodate emergency and other vehicles, it is
recommended owners of private roads consider the following minimums for private roads to
insure use by emergency and highway vehicles and equipment in a safe and expedient manner:
1. Width of traveled way: sixteen (16) feet, minimum;
2. Road shoulders: five (5) feet, minimum;
3. Minimum overhead clearance (branches, limbs, wires): thirteen feet, six
inches (13’ 6”);
4. Provide turnaround area at dead end roads to accommodate vehicle that is thirtyfive
(35) feet in length, or greater;
5. Grade roads to eliminate crown over six (6) inches;
6. Provide street name signs to direct emergency vehicles;
7. Provide adequate culverts where required (culverts at least twelve inch in
diameter, minimum); culverts kept clear of obstructions;
8. Check all grades and changes in grades to insure that a thirty-five (35) foot long
or greater vehicle can safely negotiate the roadway; and,
9. Check all sharp turns, curves and blind areas to insure a thirty-five (35) foot long
or greater vehicle can safely negotiate the roadway.
It is our strong recommendation that these minimums be established and maintained
because personnel and equipment safety, as well as emergency response times, are significantly
impacted by road conditions. Additional guidance is available by consulting NFPA1, Uniform
Fire Code, Chapter 18, which standard we incorporate in this policy by reference.

http://www.moultonborough.org/Pages/...ivateroads.pdf

http://www.moultonborough.org/Pages/...ommendmins.pdf

[P-3 Guy]

Originally Posted by neckdweller

Our home is one of about a dozen that shares a private road in Moultonborough. We are plowed by the town but are responsible for the cost of all maintenance - trees, grading the road, etc.

We have never had a formal agreement in place. Instead we have met as a group, figured out what we had in the bank, estimated the maintenance and then set an amount we all pay equally.

It has come to my attention that recently our neighbor was given a hard time by a lender when they went to refinance because there was no official agreement in place which seems to be something that will continue going forward due to either tigher scrutiny or regulations.

I'm taking on the task of getting this agreement in place. Does anyone have a similar small group of houses that has done something similar? I'd love to either be pointed in the right direction to get this written up or quite honestly I'd be happy to take the wording you currently have in place if anyone is OK with that.

I own property on a private road with four other property owners. You're very lucky that M'boro will plow for you; we have to hire and pay for winter plowing/sanding and all other maintenance. We have a written road agreement that has been recorded, but there is no formal "association." There have been several sales or refinancings over the past few years, and in most cases the lender did ask about a written road agreement, so I would not consider that unusual. Our agreement is very simple. It starts with the names of the property owners and references the lots as described in the registry of deeds, and ends with notarized signatures. In between is this language:

"The owners of the five lots shall contribute one-fifth (1/5) of all costs of maintenance and repair of the Road as shown on the Plan.

It is further agreed that before any major alterations or improvements are undertaken with respect to the Road, the majority of the owners of the five lots must give prior written consent. Major alterations or improvements are defined to mean any expense over and above the cost of maintaining the Road in a condition which permits reasonable ingress and egress to and from said lots for residential purposes.

This agreement shall run with each of the above described lots and shall be binding on the successors and assigns of the parties hereto."

[secondcurve]

Originally Posted by neckdweller

It's not really a specific bank - this is being driven by Fannie Mae and from what I understand it really boils down to whether or not the appraiser recognizes that it's a private road. If they are not on the ball they may not realize it thus they don't check the box requiring a maintenance agreement.

Correct. This new regulation has been put in place by the government. I live in an association that has been established and functioning for 50-years without incident. Now lenders are asking what happens if the roads in the development don't get plowed when considering loan applications. It doesn't matter that the roads have never been a problem, there are year round residences in the development and there is lots of expensive real estate. Nope. This is a new regulation brought about by Dodd Frank and the like and it is here to protect you. Its unintended consequence is folks are having difficulty getting financing.

I can't wait for Obama Care. I'm pretty certain that after folks are subjected to its wrath the GOP will be well positioned for the 2014 mid-term elections.

[wifi]

I permanently live on such a road, deed mentions neighbors have to contribute to common maintenance, but nothing is formal. One neighbor collects and arranges. There where a couple of years, when my minimal income went to pay the mortgage and feed the family and no one kicked up a fuss, I make up for that now.

Anyway, I went for a new mortgage a few months ago, and it was never brought up. I think a lot depends on the bank, their legal department, the appraiser (a LOT depends on what they push on) and how innocent you look

[Belmont Resident]

I drive around parts of the lake all winter and see many homes that are left unplowed because they do not get used at all during the off season. I've often wondered if that would become a problem if something happens and emergency vehicles cannot get any closer then the road. Some of these homes are set pretty far back off the roads.
Could the insurance company refuse payment for the homeowner not keeping the area open in case of a fire?
From an emergency access prospective it makes total sense for the bank to want to have proof that the road will be passable to all forms of emergency vehicles.

[LIforrelaxin]

Back in this thread the original poster mentions that the home buyer is trying to get a Fannie Mae approved loan. That is the beginning and the end of the problem.

1st why is the buyer working on Fannie Mae approved loan to begin with...

With Fannie Mae involved, many aspects will be examined and really what they are doing is trying to make sure that the property also meets HUD approval, and various other governmental guidelines....Which insures saleability....

Going the route of a private bank loan, especially a local private bank loan is the way to go in these instances. As local banks understand the area. The down side to this is that they usually require a larger down payment...

Anytime you work with a non-local bank, you run the risk of them wanting to make sure the load meets the criteria for Fannie Mae or Freddy Mac, so that the loan can be bought and sold with out issues.

[LIforrelaxin]

Originally Posted by neckdweller

I'm taking on the task of getting this agreement in place. Does anyone have a similar small group of houses that has done something similar? I'd love to either be pointed in the right direction to get this written up or quite honestly I'd be happy to take the wording you currently have in place if anyone is OK with that.

Good luck with this. For the Association to have any teeth and legitimacy for the bank. You are going to need all the homeowners to by into it. And it is going to have to be worked into the deeds of all the properties. It is a real pain in the ass.

Hence why there are so many places where the road maintenance is done unofficially. That is Unless the person responsible for developing the area and subdividing it had the forethought for the association.

As other have said I think the person trying to get a loan needs to look at working with another bank......

Island properties face the same types of Challenges when people go for loans.

[WakeboardMom]

Originally Posted by neckdweller

Our home is one of about a dozen that shares a private road in Moultonborough. We are plowed by the town but are responsible for the cost of all maintenance - trees, grading the road, etc.

We have never had a formal agreement in place. Instead we have met as a group, figured out what we had in the bank, estimated the maintenance and then set an amount we all pay equally.

It has come to my attention that recently our neighbor was given a hard time by a lender when they went to refinance because there was no official agreement in place which seems to be something that will continue going forward due to either tigher scrutiny or regulations.

I'm taking on the task of getting this agreement in place. Does anyone have a similar small group of houses that has done something similar? I'd love to either be pointed in the right direction to get this written up or quite honestly I'd be happy to take the wording you currently have in place if anyone is OK with that.

We have a similar situation. Generally someone on our road agrees to act as "road agent," and collect money for grading, etc. It's not an easy job, as everyone on the road has different expectations. Folks at the end of the road are obviously looking to have a better-maintained road than those at the beginning. Those with small children have a vested interest in keeping the road bumpy in order to make drivers proceed slowly. Those who live year-round care more than summer residents about the condition of the road.

How would an agreement work? Would you have everyone sign it and it would be a binding contract? Who would be the body that oversees this contract being enforced? (Do you live on my road....lol...?)

Good luck with that task. Please keep us apprised of your progress. I'm guessing that those of us in similar situations would appreciate that.

(And, fwiw, we recently obtained a mortgage with a local bank, and I can't recall that issue being mentioned.)

[P-3 Guy]

Originally Posted by LIforrelaxin

And it is going to have to be worked into the deeds of all the properties.

No, it will just need to reference the other properties so that a competent title search will find the agreement. Only one document needs to be created and recorded.

[Loony Singer]

Went through a very painful experience with CitiBank re "private road maintenance agreement." There are 7 houses on our dirt road, and our next door neighbor just asks each property ower to cough up around $100 every few years to cover grading. A couple of years ago, CitiBank was prepared to reject our rather substantial refi because there was no PRMA in place. I couldn't believe it...they were prepared to reject a good-sized piece of business for the sake of an expenditure that amounted to such a paltry sum!

I spoke to three different lawyers around the Lake, and they had only a vague familiarity with the idea of a PRMA, except in the case of an actual association. One of them said that, apart from that, he had only drafted a single one in his 30 years in the business.

But in any case, here's what I had to do to get the OK from this bank.

First, I had Scott in the highway department send me an official-looking letter stating that the town does indeed plow the road in the winter. Was that enough for CitiBank? Nope.

Next, I got my very nice next-door neighbor to write a letter stating that he served as "road agent," for our little lane, and describing the approximate cost of re-grading and the process he went through to get everyone to contribute their share (he just asked, and everyone always paid up). Did that satisfy CitiBank? No, it did not.

Finally, I asked the town planner (forgotten his name...think he's gone now) to send me another official-looking letter stating that neither the Town of Moultonboro nor the State of NH required such a thing as a "private road maintenance agreement." That finally got us the green light from CitiBank. Gaaaah!

For this and many other reasons, dealing with CitiBank was a nightmare...I would never use them again.

If, as an earlier post suggested, this kind of hassle can be avoided by putting together a simple document of a few paragraphs, it might benefit everyone on the street who might want to sell or refinance their property in the future.

[neckdweller]

Originally Posted by Loony Singer

If, as an earlier post suggested, this kind of hassle can be avoided by putting together a simple document of a few paragraphs, it might benefit everyone on the street who might want to sell or refinance their property in the future.

I think this is probably the route we will end up taking. It will document what has been going on for the last 30 or 40 years and I plan to make it as simplistic as possible.

For some of the other responders, I recognize and appreciate the "use a local bank" answer but that really doesn't work here since it's not really my choice. I can't mandate who a neighbor uses to refinance and if someone is looking to sell and they get a deal screwed up by a lack of an agreement it's just a giant annoyance.

[secondcurve]

Originally Posted by Loony Singer

Went through a very painful experience with CitiBank re "private road maintenance agreement." There are 7 houses on our dirt road, and our next door neighbor just asks each property ower to cough up around $100 every few years to cover grading. A couple of years ago, CitiBank was prepared to reject our rather substantial refi because there was no PRMA in place. I couldn't believe it...they were prepared to reject a good-sized piece of business for the sake of an expenditure that amounted to such a paltry sum!

I spoke to three different lawyers around the Lake, and they had only a vague familiarity with the idea of a PRMA, except in the case of an actual association. One of them said that, apart from that, he had only drafted a single one in his 30 years in the business.

But in any case, here's what I had to do to get the OK from this bank.

First, I had Scott in the highway department send me an official-looking letter stating that the town does indeed plow the road in the winter. Was that enough for CitiBank? Nope.

Next, I got my very nice next-door neighbor to write a letter stating that he served as "road agent," for our little lane, and describing the approximate cost of re-grading and the process he went through to get everyone to contribute their share (he just asked, and everyone always paid up). Did that satisfy CitiBank? No, it did not.

Finally, I asked the town planner (forgotten his name...think he's gone now) to send me another official-looking letter stating that neither the Town of Moultonboro nor the State of NH required such a thing as a "private road maintenance agreement." That finally got us the green light from CitiBank. Gaaaah!

For this and many other reasons, dealing with CitiBank was a nightmare...I would never use them again.

If, as an earlier post suggested, this kind of hassle can be avoided by putting together a simple document of a few paragraphs, it might benefit everyone on the street who might want to sell or refinance their property in the future.

It's not Citi Bank per se. Rather it is Citi Bank's desire to be able to sell the loan into the secondary market. To do this, it needs to make sure it meets numerous government regulations. Any bank would face the same problem aside from a local bank who as an earlier poster mentioned might be willing to hold the loan on its balance sheet. The problem with this is you will be required to only put more money down but also you will be looking at a higher interest rate.

[Sue Doe-Nym]

Originally Posted by neckdweller

I think this is probably the route we will end up taking. It will document what has been going on for the last 30 or 40 years and I plan to make it as simplistic as possible.

For some of the other responders, I recognize and appreciate the "use a local bank" answer but that really doesn't work here since it's not really my choice. I can't mandate who a neighbor uses to refinance and if someone is looking to sell and they get a deal screwed up by a lack of an agreement it's just a giant annoyance.

Why, if your neighbor doesn't want to consider using another lender, is it your responsibility to draw up an agreement? Shouldn't he be the one doing the agreement?

[P-3 Guy]

Originally Posted by Sue Doe-Nym

Why, if your neighbor doesn't want to consider using another lender, is it your responsibility to draw up an agreement? Shouldn't he be the one doing the agreement?

I don't think he ever said that he was "responsible" for doing this. Maybe neckdweller is a nice person and wants to do something to help his neighbors, both the one who is trying to refinance now and all the others who might face this issue in the future. I say, kudos to him.

[neckdweller]

Originally Posted by Sue Doe-Nym

Why, if your neighbor doesn't want to consider using another lender, is it your responsibility to draw up an agreement? Shouldn't he be the one doing the agreement?

Well the good news is that I believe my neighbor was able to pull together enough documentation/explanations/etc. to get the loan through but not without a large hassle.

It's not necessarily my responsibility but I am the de facto president of our little road (it was an everyone else except me took one step backward when they asked for someone to step forward type of deals). My motive, in keeping with my prestigious title , is to have this not be an issue for anyone going forward.

[Rusty]

Originally Posted by neckdweller

Well the good news is that I believe my neighbor was able to pull together enough documentation/explanations/etc. to get the loan through but not without a large hassle.

It's not necessarily my responsibility but I am the de facto president of our little road (it was an everyone else except me took one step backward when they asked for someone to step forward type of deals). My motive, in keeping with my prestigious title , is to have this not be an issue for anyone going forward.

You are a very nice person, we need more people like you in this world.

[ossipeeboater]

honestly as a lender i don;t want to ask for this info but we have to to sell the loan. sure your mom and pop banks never cared but they also are higher in rate for a portfolio loan than a loan that can go secondary market. When these situations come up it's a good time for the association to just put something in place as a property with all financing options open is easier to sell. Some investors with a legal easement and comments from the appraiser will let it go but for just a little cost it can be done pretty easily and it's not anything long and drawn out.