Don’t let the lack of an updated Road Maintenance Agreement kill your deal
If you have had the opportunity to drive around Leon County and Tallahassee you probably noticed road signs that are marked with either blue paint or green paint and wondered what the difference between them might be. It is a matter of Road Maintenance.
The city of Tallahassee and Leon County are responsible for all the roads with green signs while the blue signs mark a privately maintained road and they are not maintained by the City or County. This means that when the time comes for maintenance of the road, property owners whose properties are adjacent the road become responsible for the maintenance of the road.
Times have changed
For many years this seemed to be a minor issue with regard to buying and selling property on a private road because in most cases there was an underlying easement along the roadway which gave legal access to the property. But these days having legal access with a recorded easement is not sufficient with regard to the maintenance of the ingress and egress to the property by way of a private road.
This year on a couple occasions I have had the mild displeasure of having to contact property owners along private roads in order to create an official Road Maintenance Agreement to get the sale done. I am a real estate broker but often find myself running down property owners near and far in order to perfect these agreements.
As one can imagine, some property owners are not in the volunteering mode to pay for road maintenance, if they don’t have to, and they are reticent to sign agreements going forward that they will maintain their fair share of the road.
Fortunately in all the cases we had happy endings and were eventually able to get all of the adjacent property owners to agree that going into perpetuity, including future owners, that they would expressly pay for and be responsible for the maintenance of the road.
Homeowner’s Associations not immune to scrutiny
In the case where there is a homeowners association today more than ever lenders are looking at that organization with a reservation because those organizations can go belly up and are disbanded and even though there are easements giving rights-of-way to property owners along a roadway, unless all of the property owners that remain on the property agree to maintain the road using an official Road Maintenance Agreement this will present problems for lending underwriters who are not going to loan money to buyers subject to potential access and maintenance issues and therefore the sales of properties can be stopped in their tracks by the absence of that official Road Maintenance Agreement.
It would be wise to make a determination whether or not a property has a set of covenants and restrictions, or a homeowners association which has been recorded and is ongoing and buyers should investigate all aspects of the road maintenance and the agreements that come with the property their purchasing or must be conveyed to other parties before they sell the property or are able to purchase it or borrow money.
Subdivisions and developments that have been planned and developed with city services already have provisions for road maintenance and therefore they are not a concern for a buyer. If the road sign is green then it is maintained by the Government; there is little to be concerned about with regard to the road, storm water, paving, maintenance, litter or any of the other liabilities associated with a road system.
A Close call–but a closed sale.
I recently sold a quadruplex located in the City of Tallahassee limits but on a road that was not maintained by the City of Tallahassee. This was a purchase wherein the buyer was using a typical VA purchase program. The underwriter reviewed the existing covenants and restrictions and made a determination that the loose band of sellers 30 years ago back in the 80’s had not really actually formally agreed that they would be individually responsible for road maintenance of Shallow Brook Lane which is right next to Hilaman golf course, off Blairstone Road in Tallahassee.
And even though there was an active homeowners association consisting of these property owners the underwriter wanted updated affirmative statements with regard to the maintenance of the road going forward. In all there were nine different property owners in a half dozen locations and we had to reach out to all them to get unanimous approval from each of them before we would have a new agreement codified and able to be recorded.
This was an essential element to the transaction without which a sale could not close because it could not be financed because the access to the property cannot be guaranteed by a government entity or the adjacent property owners. So be careful out there if you are looking at property on a private road and let that be the first due diligence that gets done before lots of energy gets spent on the many other aspects of the real estate transaction and possibly delayed for an indefinite period of time until that issue can be worked through.
Property owners who are on private roads are wise to get together with their neighbors and come up with a road maintenance agreement long before they actually need one in order to sell their property or borrow money against it or need maintenance. Property owners who live on private roads at least have some resources to go to so that their private road is passable for emergency vehicles and general day-to-day operation. Leon County has road maintenance services available to private road owners for a fee. They have big tractors and equipment and understand how to maintain the road with a proper grade and the best aggregate mixes to use.
Some sales can still happen if they are all cash and where title insurance, appraisers and lenders are not involved but again for the cash purchaser they would surely still want to know that if the road washed out, were blocked by storm damage from trees, or a sinkhole developed in the middle of it, who would be responsible for putting the road back together and it is best to have always have that understood up front.
Do your research on private roads first
If you are considering purchasing a property which is on a private road it would be advisable for you to discover whether or not there is an official road maintenance agreement recorded in the county that you are looking to purchase. This usually requires a title search which can reveal whether or not easements were properly recorded for the roadway in question. This is something that buyers as well as sellers should try to make a determination of before they put their property on the market and set into motion all sorts of other things like getting mortgages, surveys, and the entire transaction process only to then discover that they have to go find people in a unknown location to sign documents to perfect the title so that there is an agreement in place and in force.
What you need..
The Road Maintenance Agreement should be a separate document altogether and in the form an underwriter is willing to accept. What they are willing to accept is a formally title document called: Road Maintenance Agreement. It can be prepared by good real estate attorney for those persons looking to organize their neighbors with a formal agreement.
FINALLY TALLAHASSEE HOUSING MARKET MAKING BIG STRIDES
This blog is designed to deliver periodic reports on various sectors of the real estate market in Tallahassee and Leon County, Florida. I will be posting analysis of property types, areas, subdivisions, home styles, sale prices and trends and examining aspects of our market using data derived from the Tallahassee Board of Realtors Multiple Listing Services, Leon County Records, Florida Association of Realtors and generally reporting all sorts of great information. Sign up to receive notifications and be the first in the know in Tallahassee Real Estate. You can opt out anytime. Feel free to register here to ask a question, or leave a comment. And please share as much as you can using my social posts and channels.
LEON COUNTY SALES UP 12% OVER 2014
Here is a graph showing sales of single family homes, townhomes and condominiums from 2007 through 2015. As you can see the market has come back in many ways and has eclipsed 2007 sales velocity and with continued low interest rates I expect 2016 will be a great year and possibly outpace 2005, our best year in decades here in Tallahassee. This year Realtors sold 12% more Tallahassee-Leon County homes, townhomes and condos combined than last year.
GET IN WHILE THE PRICES ARE STILL ATTRACTIVE
There are plenty of fantastic buys in the market in every price range. For sellers that have been waiting for values come back, by all accounts 2016 should be an exciting year with another bump of solid, hard earned equity. With more than 350,000 people moving to Florida in 2015, I expect a modest increase in demand in 2016 for all that we have to offer in Florida’s Capital city.