Shared driveways in Berks County are more common than you think. There are things to consider when trying to sell a home located on one. Here are a few.
Rural Berks County is a land of rolling hillside and farms. Intertwined amongst these features are the homes in which many live. On occasion, the setting and topography does not allow for applicable road frontage to build houses. The solution to the lack of road frontage has often been to have a driveway off the main road leading to homesites known as flag lots.
In years past there was little in the way of restriction when planning flag lot communities. There could be 2 or 20 homes off a shared driveway. The main driveway is often the property of the owner of the first home bordering the main road. This homeowner grants a recorded easement to the owners of the flag lots, so they have unfettered egress to their site. We now have stricter developing laws governing these types of communities. Today it is rare to see a community like this with more than three lots attached.
The concept of flag lots helped keep the cost of development to a minimum. While this was a good thing up front, it created a need for all the neighbors using the shared driveway to agree on tings like maintenance costs. In many cases, this was achieved with a handshake.
There are many reasons that shared driveways exist in Berks County today. The more important part is to understand how they affect a homeowner's ability to sell their home for fair value.
It is more difficult to sell a home if a buyer cannot obtain a mortgage. A qualified buyer may not be able to purchase a home that is serviced by a shared driveway. This year many of our governing lending institutions such as Fannie Mae, Freddie Mac, FHA, VA and USDA changed the qualifying criteria relating to properties in this class. Some require an adequate maintenance agreement be recorded or signed by all parties that share the driveway. Some require that an adequate wear coat or weather surface is in place (paved road). Please visit my website at JeffreyHogueRealtor.com/ berks-county-real-estate-blog/selling-homes-with-shared-driveways/ for a more complete list of the conditions.
As we all have been made aware, the governmental lending institutions change their mind from time to time. The rules and regulations that govern the financing of a home on a private or shared driveways could change anytime. If you own a home on a shared driveway and do not have a maintenance agreement it may be time to consider putting one in place. This way even of the lending conditions change you will be protected. A handshake maintenance agreement works between friends, but a lender is a whole different ball game. You may also want to check to make sure the easement is recorded properly. The easement check can be easily accomplished by contacting the title company where you settled the home sale. Remember, it is better to work on these types of things before you have a buyer.
Worrying is not a good thing for your buyer to be doing when they are considering purchasing your home. A maintenance agreement and easement information can go a long way in creating a sense of confidence, clarity, and disclosure. Keeping and having good records about the shared drive is a plus for any buyer considering the home. Believe me, the issue will come up.
Some of the Berks County areas most beautiful homes lie at the end of shared driveways. They are treasures to behold. The best advice I can offer is if you are planning on selling your home, and it is on a shared driveway is to contact your real estate agent. Same if you are considering purchasing one of these gems. A little helpful planning with the assistance of your Realtor® can go a long way!
Knowledge is Power!
Jeffrey C. Hogue
Private Road/Shared Driveways Agreements – Comparison Chart
Effective February 2015
FHA ~ Private roads or streets are acceptable to FHA, provided each property has vehicular or pedestrian access. If the property is not provided with an all-weather surface, the absence of such must be noted on the appraisal. An all-weather surface is a road surface over which emergency and typical passenger vehicles for the area can pass in all types of weather. Private streets must be protected by permanent recorded easement (non-exclusive and non-revocable easement without trespass from the property to a public street) or the streets must be owned and maintained by a homeowners association (HOA). Shared driveways must also meet these requirements. The recorded easement must be reviewed and approved by the Direct Endorsement Underwriter and documented in the Lender's file at the time the loan is submitted for mortgage insurance. Evidence of a road maintenance agreement is not required.
(Reference: FHA Handbook 4150.2, 3-6.A.7)
VA ~ Each property must be provided with a safe and adequate pedestrian or vehicular access from a public or private street. Private streets must be:
Protected by a permanent easement, and
Maintained by a homeowners association or joint maintenance agreement
All streets must have an all-weather surface. Also for VA: This item is listed on every Notice of Value and must be checked if applicable to the subject property to inform the Veteran of requirements: (Reference: VA 12.05, ACCESS TO PROPERTY (7/1/2000)
USDA ~ PRIVATE ROAD/COMMON-USE DRIVEWAY. Evidence that use of the private road or common-use driveway is protected by a recorded permanent easement or recorded right-of-way from the property to a public road, and that a provision exists for its continued maintenance. USDA RD does not require a private road maintenance agreement rule. “Private streets must have a permanently recorded easement or be owned and maintained by a Home Owners Association (HOA).”
(Reference: USDA Handbook-3555 Chapter 12, 12.7) Copyright © MortgageCurrentcy.com All Rights Reserved.
Fannie Mae ~ If the property is located on a community-owned or privately owned and maintained street, an adequate legally enforceable agreement or covenant for maintenance of the street is required. The agreement should include the following and be recording in the land records of the appropriate jurisdiction:
Who is responsible for payment of repairs, including each party’s representative share of the expense
What are the default remedies in the event a party fails to comply with their payment obligations
How long the agreement will be in effect (should be perpetual and binding on future owners)
If the State has statutory provisions that already define the responsibility of property owners, then no
separate agreement is required.
(Resource: Fannie b4-1.3-04 Site Section of Appraisal Report)
Freddie Mac ~ Freddie Mac does not require a separate maintenance agreement. However, the property must have “legally” appropriate ingress and egress (meaning that if it’s a private street/road, there is a recorded easement describing the road and where it’s located).
Must be maintained in a manner that generally meets community standards
Comparable sales should have street maintenance similar to the subject property
If not similar, adjustments must be made with an explanation of the differences
Appraiser must also comment on the “marketability” of the property