Private Road Or Driveway Maintenance Agreements

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149
https://activerain.com/droplet/54mZ

FHA has made several changes in recent years which have caused FHA Mortgages to not be the go-to Loan Product they use to be.  As a result of this Fannie Mae Mortgages are a much more desirable choice these days.  One of the issue which has become more common with the emphasis on Fannie Mae Mortgages over FHA, is the need for Private Road Or Driveway Maintenance Agreements on properties with private roads or shared driveways.

FHA Mortgages on properties with a private road or shard driveway, are not as much of a concern as it is with Conventional Mortgages.  The reason is FHA does not have a requirement for properties on a private road or shared driveway to have a Private Road Or Driveway Maintenance Agreement, but Fannie Mae does.  FHA only requires there be a Permanent Easement Agreement in place.

A few years ago I wrote a blog about a mortgage I was doing on a property which was on a Private Road with 7 other houses, and there was no  maintenance agreement in place. The Borrower was doing a Fannie Mae Mortgage and putting 20% down.  Since Fannie Mae guidelines require a "Maintenance Road Agreement" for private roads, a "Maintenance Road Agreement" needed to be drawn up, and all the homeowners on the road agree to sign it.  All the neighbors on the road agreed to sign the "Maintenance Road Agreement" except one.  After many attempt to convince this homeowner it was in his best interest to have a "Maintenance Road Agreement" in place the deal fell apart.

A similar situation also accrued to one of my Loan Originators.  The property was on a road/driveway shared by three other houses, and one of the property owners would not sign the the private road/driveway agreement, as a result the loan did not Close.

If these loans had been FHA Mortgages the loans could have been approved and Closed.  But if the Borrowers had changed from Fannie Mae Conventional Mortgages to FHA Mortgages, the Borrowers would of had to pay Mortgage Insurance (MIP) which would have been on the loan for at least 11 years, and added a significant amount to their monthly payment. 

If a Private Road Or Driveway Maintenance Agreement is required such as in the case of Fannie Mae Mortgages, the Private Road Or Driveway Maintenance Agreement must be recorded on the land records for the municipality that the property is located in, and must contain the following:

  • Each homeowners responsibility for the road or driveway and monetary share of repairs and maintenance.
  • A remedy in case of default, or failure to comply by one of the homeowners
  • The effective term of the agreement.  In most agreements the term is perpetual and binding on all future owners.

NOTE:  If the property is in a State that has statutory provisions which state what the responsibilities of each property owner is responsible for in maintaining and repairing the private road/street, a separate maintenance road agreement is NOT required.

Connecticut has many rural areas as do many other States, so it is important for both Listing and Selling Agents to be familiar with the guidelines, and be proactive in addressing this issue before the property even goes under contract.  By doing so they can get a head start on obtaining a Private Road Or Driveway Maintenance Agreement if one does not exist.

 

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Debbie Reynolds 03/26/2016 12:41 AM
  2. Gabe Sanders 03/28/2016 04:00 PM
Topic:
Mortgage / Finance
Location:
Connecticut
Groups:
Realtors®
Mortgages
1st Time Buyers
Real Estate Rookie
Tags:
mortgage guidelines

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Rainmaker
4,797,927
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi George.  I ran into this issue a couple of years ago and it was a real chore getting it resolved.

Mar 25, 2016 09:42 PM #20
Rainer
546,545
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing!!!

The reason is FHA does not have a requirement for properties on a private road or shared driveway to have a Private Road Or Driveway Maintenance Agreement, but Fannie Mae does.  FHA only requires there be a Permanent Easement Agreement in place.

Mar 25, 2016 10:09 PM #21
Rainmaker
572,444
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Good Morning George,

My current listing has a recorded maintenance agreement. When they bought the property, there was no maintenance agreement for the shared driveway. But because of the requirement, we do have that in place now. 

The shared driveway would be an easier issue to resolve. But with private roads, the possibility of encountering stubborn and uncooperating homeowner could pose a problem just like the situation you mentioned.

 

Mar 25, 2016 10:23 PM #22
Rainmaker
1,808,542
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

So interesting George & I have experienced this issue...have a question on a right of way driveway...does that fall into this agreement George Souto ?  Happy Easter!

Mar 25, 2016 10:26 PM #23
Rainmaker
2,504,592
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

My neighbors and I have a small access road we all use that is owned by the city. Trying to get them to come out for anything is worse that the point of your posting.

Mar 25, 2016 11:26 PM #24
Rainmaker
4,206,902
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, can imagine this would be more prevalent in other areas.  Great information, and have only run into shared driveways a few times.

Mar 26, 2016 12:01 AM #25
Rainmaker
2,029,573
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

George - all kinds of issues have to be resolved with private roads.  You made a convincing case on how it should  be understood so that people can understand the terms.

Mar 26, 2016 01:23 AM #26
Rainmaker
2,843,600
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

George, As my Mom used to say … “there I always one in every crowd.” She was referring, of course, to “A-holes”.  That one neighbor has some serious karmic debt to pay for not signing.  Happy Easter – go light on those chocolate Bordeaux eggs. 

Mar 26, 2016 01:24 AM #27
Rainmaker
2,843,600
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

HAPPY BIRTHDAY George Souto 

Mar 26, 2016 01:26 AM #28
Rainmaker
3,277,388
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi George, a little bird told me it was your birthday! So I'm back to wish you a very happy birthday... hope it's your best one yet and here's to many returns of the day!

Mar 26, 2016 03:05 AM #29
Ambassador
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

Lots of shared wells and driveways in my market and for the most part over the last 24 years very few have not already had agreements in place.  But the task of getting a few of them done has been complicated.  Since most of sales are second homes it's always a conventional loan. You just made me recall a very complicated one.  Maybe I'll write a post about that.

Mar 26, 2016 04:00 AM #30
Rainmaker
2,099,634
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

HAPPY BIRTHDAY GEORGE! MARCH 25TH is my sister's birthday too! I hope everything you're dreaming for comes true.

You're such a good guy. You are always providing content of value and I always learn a lot from you. If more lenders were like you, the rapport between buyers and Realtors would improve 150% or more! You're someone I can always count on and learn from too.

Thank you George!

Mar 26, 2016 12:18 PM #31
Rainer
277,562
Stu Dye
Mortgage Network, Inc. NMLS #2668 - Portland, ME
Senior Loan Officer

RMAs, or the lack thereof, can be a big problem here in Maine...   (A lot of 'Rural' up here.)  Thanks for the reminder and Happy Easter!

Mar 26, 2016 11:55 PM #32
Rainmaker
3,873,718
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good afternoon George Souto ,

So glad I caught this in Patricia Kennedy post this Easter Sunday on her favorite posts for the week. Great information to know!!

Mar 27, 2016 03:58 AM #33
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey, George!  I included this post in today's Last Week's Favorites.  Enjoy the rest of your weekend!

Mar 27, 2016 04:41 AM #34
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Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

This is great info that I honestly can say l didn't know George Souto 

Mar 27, 2016 10:29 AM #35
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

George Souto well, sometimes FHA requires less ......lol!

Wondering if FHA is available for 20% down buyers (though why should buyer even think of FHA while putting down 20%)

Mar 27, 2016 03:06 PM #36
Ambassador
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

This is one of those things I have become very familiar with regarding FHA and VA loans.

Mar 28, 2016 02:50 AM #37
Rainmaker
3,318,586
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

It is unfortunate when one person can ruin a transaction...and indeed part of 

a whole lifestyle for everyone !

Mar 28, 2016 10:19 PM #38
Rainmaker
1,431,531
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good to know about this issue.  Do not see this situation around here a lot, but it happens on occasion.  Now I know in advance there is an issue.

Apr 07, 2016 10:19 AM #39
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