20 Dec Private Roads – what you should know
Private Roads – what you should know.
When my husband i first moved here in 2001, we were surprised to see so many private roads. On the street sign it would say something like Main Street “private”. To us that meant one home and the street was private to that home owner. So we could not drive down that street as it would be trespassing. However, we got confused when we would see a neighborhood of homes and a like signage. We were scared to drive down the road!
In an earlier post I talk about condo lots. Many homes with in an association built on a condo lot will have a private road, but not all of them.
In Kent county we have many private roads and some of the higher end homes are built on a dirt access road which is private. This baffles my relocation clients a lot. They do not understand why a 500,000 plus home has a dirt road access. They will think twice about purchasing a home located on a dirt road as they worry about what damage this may do to their car, will it make them have to wash their cars more often, how is the dirt road maintained and what happens when it snows or rains a lot? All very good questions. Each private road will have their own answers, but you need to make sure to ask the questions.
In this artcle the definition of a private road is well explained and legal risks are also explored “In Michigan, a private road is “a privately owned and maintained road, allowing access to more than one residence or place of business, which is normally open to the public and upon which persons other than the owners located thereon may also travel” Find full article here http://www.mjeal-online.org/private-road-maintenance-agreements-facilitating-neighborly-relations/
Private roads can cause a lending issue – as your lender may want to see the private road maintenance agreement – many times this is addressed in the by-laws of an association. But what if the private road has several homes located on them and there is no association? Your lender may request that this will be required prior to close. What we call “a condition of the loan”.
I showed a home not too long ago – 4 homes on a private road. The home was listed FSBO so I was able to direct my questions directly to the homeowner – when asked how the road was maintained and how the 4 homeowners divided up the maintenance cost IE: snow removal, he replied they just all get together and decide what needs to be done. I had asked then who did they use for snow removal last year, the home owner replied – we had a light winter last year so we decided not to have it plowed to save money! EEK!!! This information was enough for us not to pursue the home. Without an agreement in place you can risk other home owners voting not to put the money into what needs to be done.
A great reference article on how this impacts a loan is this article about VA loans and private roads and the appraisal – however this may also hold true for other loans as well.
“The appraiser will typically be looking for two big things”:
- A legally recorded easement regarding right-of-way from property to public roadway
- A private road agreement that provides for continued maintenance and is signed by everyone who lives on the road
Read more here
If you are now wondering about your own private road that you live on – or want to get ready to sell your home and live on a private road this is a document you should have ready for the home buyer. Thornapple Township offers a great sample of what a private road maintenance agreement would look like. You can find this here http://www.thornapple-twp.org/Portals/22/2010-26%20Private%20Road%20Maintenance%20Agreement.pdf
However – I highly recommend seeking an attorney to put this together then have it legally filled. As there is more issues than the maintenance that needs to be discussed – IE: Did you know the road should be insured?
I am not a lawyer but I do know a few good ones that can help with this. As always contact me with your Real Estate questions.