What is a Road Maintenance Agreement?

What is a Road Maintenance Agreement?

 

In recent months, we’ve noticed a lot of requests for Road Maintenance Agreements (also referred to as Private Road Maintenance Agreements – in this article we might call it an “RMA”) here at docprepper.com. We were curious to know why the uptick, so we consulted with Shari Nestor at Professional Escrow Resources (our Arizona Court Certified Legal Document Preparer #81407,) and she helped shed some light on the subject:

Well, you the Road Maintenance Agreement is often a lender requirement. When you’re creating an RMA for the first time and trying to get all of your neighbors on the same page, it can be an incredible hassle! However, if access to your property is through a private road and don’t have a Road Maintenance Agreement in place, it’s almost always a good idea!”

When we take a closer look at this abstruse document, they demystify quite quickly.

Who and what do Road Maintenance Agreements apply to?

In short, a Road Maintenance Agreement applies to a private road. So what is a private road, exactly? Here’s the Free Legal Dictionary definition:
A private road is often established because an individual needs to gain access to land; such a road can cross another person’s property. A private road can be used by the general public and is open to all who wish to use it, but it primarily benefits those at whose request it was established. Unlike highways that are cared for by the public at large, private roads are maintained at the expense of the private individuals who requested the road.
The last sentence of the definition points out what the Road Maintenance Agreement must address and who must agree to the terms, i.e.: Private Road Maintenance and the private individuals who benefit from it.

Keep in mind that once the agreement is established, it runs in perpetuity with the land. So, the responsibilities that are agreed to become the responsibilities of all future owners. That’s why these things show up on a Preliminary Title Report, and sellers are required to disclose whether or not an agreement is in place by laws such as A.R.S. §33-422. If you’re buying property with a Private Road Maintenance Agreement attached to it, you have the right to know. You’re going to be responsible for complying with it as the new owner!

Why are Private Road Maintenance Agreements desired?

There is sound rationale for having an RMA in place, and it manifests itself in many forms. The root of it all is access to the property.
Reasonable access to the property must be available at all times. If the road is not maintained, it becomes impassable. The lack of access can affect the value of the home. Court battles might arise, with costs to everyone involved.

When are Road Maintenance Agreements required?

Increasingly often, to be sure!  FHA loans have requested them for some time, and as more and more lenders mimic HUD guidelines their prevalence continues to grow. Here are Fannie Mae’s current requirements in a nutshell:

If the property is located on a community-owned or privately owned and maintained street, Fannie Mae will now an adequate, legally enforceable agreement or covenant for maintenance of the street. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:

  1. Responsibility for payment of repairs, including each party’s representative share.  
  2. Default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations and
  3. The effective term of the agreement or covenant which in most cases should be perpetual and binding on any future owners.   

There are, of course, exceptions and workarounds to these requirements. For example, if there is a statutory provision that defines the responsibilities for property owners to maintain their private roads Fannie Mae will doesn’t require a separate agreement. However, that doesn’t mean that all lenders will follow suit. And, it certainly doesn’t hurt to have an agreement that addresses the maintenance issues the way you want them to be addressed!

Okay, so how do put a Private Road Maintenance Agreement in place?

Although it can be quite complicated, here’s the breakdown of what needs to be done:

  1. Define each homeowner’s responsibility for the road maintenance.
  2. Define each homeowner’s responsibility for the road repairs.
  3. Define a remedy in case of default, or failure to comply.
  4. Define the effective term of the agreement (binding, and in perpetuity.)
  5. Have all owners sign the agreement.
  6. Attach legal descriptions for each property.
  7. Record the document with the appropriate county.

This is admittedly a simplified breakdown of what to do, but all the elements are there. Of course, docprepper.com would be happy to assist you in preparing and recording your Road Maintenance Agreement. You can always contact me directly via phone (855 DOC-EASY) or email with any additional questions, or to get started with your agreement. Also, I’ll monitor the comments section below and be happy to answer any questions there! Thanks!

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