Private Roads and the Price of Homes

Ever think how private roads can impact marketability? Have private roads become a potential red flag in marketing or refinancing a home? According to a local attorney, we have 408 private roads in Westport which share common access and are not maintained by the town.

The need for "Private Road Maintenance Agreements" may be due to the challenging mortgage market and stricter guidelines with Fannie Mae (FNMA). Since many loans are sold to the secondary market (FNMA), many lenders are now requiring written “Private Road Maintenance Agreements” to be recorded on land records. These are formal agreements which outline how road maintenance, repairs, and responsibilities are to be shared among the owners.

Typical maintenance agreements may require monthly, quarterly or yearly payments to a homeowner’s association by all of the residents on the road. We have heard many different scenarios of how maintenance and repairs are handled on private roads, including many informal arrangements.

The attorney that we spoke with estimates that of the 408 private roads in Westport, as many as 98 percent do not have written agreements. We have no way of confirming that number, but it still may be a significant. So, it begs the question of whether private roads are becoming a potential red flag in marketing a home. And, are buyers and sellers aware that this could impact financing?

According to the attorney, there are several ways to divide up the responsibility and expenses, including formulas based upon assessments, frontage, distance of the road to the houses or equal division of payments. He also emphasized that these agreements may be less problematic if completed up front, prior to selling. It would involve getting residents together to decide upon the details of the agreement, having it notarized and recorded on the land records at town hall.  

I think this was the key part to our discussion, whether refinancing or selling your home, it’s best to proactive to avoid this potential marketability problem or a delay in a closing.  If you are not sure if one exists, check your deed, title report to see if a recorded document exists on your private road. And, certainly contact an attorney for additional information or options on “Private Road Maintenance Agreements”.