What is a Private Road Maintenance Agreement
A Private Road Maintenance Agreement ("PRMA") is an agreement between the owners of property served by the private road that sets out the responsibility for the maintenance of that road. A PRMA is required by FNMA and FHLMC for a loan secured by mortgaged real estate identified on a survey prior to November 10 , 2014. While the PRMA must be recorded in the counties where the subject property is located, it does not need to be submitted to guarantee parties, meaning that a PRMA can be provided at closing for review. Generally, a PRMA would not be requested by an owner financing a property.
FNMA Private Road Maintenance Guidelines
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a leading government-sponsored mortgage finance company. FNMA has established guidelines for private road maintenance agreements in its Underwriting Guidelines. It is important to note that these guidelines, including revisions, must be consulted as they are updated and/or amended from time to time.
One of the more recent revisions to the guidelines requires all private road maintenance agreements to provide for the creation of a lien against any member for unpaid assessments, fees or dues. This new requirement is in addition to the existing requirement that all private road maintenance agreements provide "equal rights of access for all owners for the use of the road for ingress and egress to and from each property." The new requirement goes far beyond the original intent and appears to conflict with provisions stating that the association may not be organized as a profit making entity, as liens are usually associated with a business aspect.
It is recommended that a residential common interest community consisting of privately maintained roads contact the FNMA Case Manager to confirm their requirements or request that FNMA accept their existing agreements.
Private Road Maintenance Agreement: Key Provisions
Unlike state and common law road maintenance and easement cases, there are a few items that FNMA would like to see in an approved Private Road Maintenance Agreement as it relates to "roads" that are subject to FNMA requirements.
While these agreements vary from community to community, it is my experience that most of these agreements contain the following elements:
a.The costs of maintaining the private road will be shared by the owners of the lots that front such private road, whether or not any such owner uses the private road to access their property;
b.In the event of a default in the performance of the obligations of the owner of a lot that encumbers the private road in question, the owner of such lot shall be obligated to pay to the other lot owners, on an equal sharing basis, the expenditures made by the other lot owners in maintaining the private road, including attorneys’ fees and costs;
c.The obligations of all owners of lots encumbering the private road shall be joint and several;
d.The private road shall not give access to any lot not subject to the Act; and
e.In the event that the agreement is recorded and the lots are conveyed subsequent to the recording of such an agreement, the private road easement will automatically extend to such subsequent deeds of conveyance.
When a Maintenance Agreement May Affect Mortgage Qualification
The FNMA Deed Restriction and Agreement are the basis for determining if a project (a given subdivision) is eligible under FNMA rules. FNMA requires that everything, including roads, be in good condition, structurally sound, and safe for use. If the condition of the road system results in any increase in the risk of damage or injury, FNMA expects the property owner to assume the liability. Allowing a potential increase in the risk of injury or damage, irrespective of individual liability, makes the property ineligible for an FNMA mortgage. Hence, the need for the warranty and liability assumption.
Where a project requires maintenance and/or repair of any private road such that it is ineligible for financing, the project is not eligible as a whole for single family lending. The warranty and liability assumption must be divulged to the lender who is underwriting for FNMA eligibility.
FNMA would also likely determine that the road was not a portion of the property and that the project was subject to the same ineligibility because it increased the risk of damage or injury. Accordingly, there is not FNMA eligibility within the project as a whole.
How to Write a Private Road Maintenance Agreement
最优做法：起草协议
An FNMA private road maintenance agreement must be in recordable form, as it is subject to the recording laws of the states involved. It must contain a legal description of the property over which the private road traverses. Many lenders prefer a surveyor’s drawing with metes and bounds description. The FNMA Survey Requirements for ALTA i.e. minimum standard detail requirements for a class A, B , or C land title survey by the American Land Title Association and the National Society of Professional Surveyors are the de facto standard for surveys.
The agreement needs to identify the parties by name and include their street addresses. Two or more subdivisions may be privy to the use of an FNMA private road without the non-privy owner/developer. In such a case, it may be best to have the agreement between the developer and the non-privy subdivisions, and/or the developer and the homeowners associations. In the end, the private road maintenance agreement should act as the deed restriction for maintenance as well as any requisite easements necessary to create and/or finance a private road.
Pitfalls and Solutions in Private Road Maintenance
Without a doubt the most common situation I see regarding why the agreement is ineffective is when there are disputes over the roads or the common property among owners. They do not agree that they are responsible for the road maintenance any longer or believe that the road maintenance and/or services provided are not up to standard. This results in one group, or sometimes an individual, not wanting to pay for the potential large expense of maintaining the road and potentially holding that expense up even though they have agreed contractually to pay that expense.
When there are multiple owners you can end up with a situation where you are attempting to enforce an agreement that requires everyone to pay for road maintenance but some owners refuse to pay or say the amount being charged is incorrect. This is also an issue that I encounter on a somewhat regular basis. Even though the answers are likely already spelled out in your agreement, I have seen owners who refuse to pay because they think they are being overcharged but do not go through the process set out in the agreement to contest the amount charged. The owners just make a unilateral decision regarding what they will or will not pay. Even if the owners pay what they believe is legally due, they just decide unilaterally that they are not going to pay the rest. That is what is legally termed a partial payment. The majority of road agreements that I currently review or have working knowledge of allow the collection of attorneys’ fees and costs for collection of the unpaid amounts, despite the fact that collection is almost always more costly than the amount unpaid. When there are multiple owners and one or more refuse to pay for delivery of water, maintenance, or other common charges, the amount of expenses incurred in attempting to protect and enforce the rights regarding the common property typically exceeds the unpaid amount.
What steps can be taken? First, here are the steps I recommend when an owner refuses to pay their share for maintenance of a road or common property. The goal here is to get the money from the other owners based on what the contract provides while avoiding obtaining a judgment against the individual owner due to the cost of that litigation, which will almost always cost considerably more than the half owned by the person refusing to pay. If the arrears amount is less than $15,000 this is fairly straightforward. However, if the arrears are higher you may have to threaten to foreclose on the road, for judicial or strict foreclosure, or to seek the help of the District Attorney to require payment of the unpaid road maintenance.
Enforcement of Private Road Maintenance Agreements is not always a simple process. If you are involved in that litigation as an owner or are an attorney that represents these owners, be proactive in choosing the proper entity that can best enforce your rights. Be aware that the litigation system will likely act very differently based on whether the owner is a corporation, LLC, partnership, or a person, or whether someone holds a deed restriction or easement on the road.
Financial and Legal Issues in Private Road Maintenance
From a legal perspective, the FNMA guidelines require that homeowners grant a utility easement to the HOA. The utilities are usually electric, gas, water and any other utility the HOA deems necessary. This means that the easement must be in place before any of the utility companies can install their utilities.
In terms of financial considerations, if the road is not a state-maintained road , the homeowner should seek a loan from a bank or other financial institution to obtain the funds necessary to repair and upgrade the road. Fannie Mae now requires that a private maintenance agreement be recorded at the same time as the deed of trust so that all future lenders are on notice. If financing is not possible, and Fannie Mae financing is secured, the lender will reserve a 10% contingency reserve. If there is no additional reserve to repay the private maintenance agreement liens, the lien rights are lost, which would give Fannie Mae a first priority lien.