Financing Hurdles

Recently a rural seller signed a purchase agreement that was contingent upon financing, thinking that it would be smooth sailing because the buyer appeared to be very qualified. What they did not realize was that the property must also qualify to fit the criteria of the lenders underwriter. They soon realized there would be rough waters ahead because of unseen issues with this quality home and property. At the request of the lender, the seller would have to complete several home repairs, including a minor roof repair and some peeling paint, but what proved to be the most difficult of all was the inflexible requirement to provide a road maintenance agreement that contained certain legal components. What made this task virtually impossible was that several of the residents on the lane they lived wanted nothing to do with a written road maintenance agreement that would bind them legally and financially. The neighbors even rejected substantial offerings of money to entice them to sign the agreement. That left the seller in a very difficult situation because the lender refused to be lenient and the deal flubbed, leaving the seller only one option. They would have to find a cash buyer.

Many properties rely on a shared private road or easement in order to physically access their property instead of a county or state maintained right-of-way, which means that they must provide their own maintenance. Most lenders will not finance a property that has easement access unless an acceptable road maintenance agreement is in place. Such legal documents can be simple, though most are great examples of over thinking. They usually describe the legal location of the easement road and bind the burdened property owners to contribute financially to the actual maintenance and upkeep of the road, including wintertime plowing and summertime grading. They may also list the legal remedy that contributing landowners have against a non-contributing neighbor.

If you don’t have some sort of written road maintenance agreement, it would be wise to contact a trusted attorney who can help craft that document prior to the time that you wish to sell your property. Waiting until the last minute to form a consensus with the neighbor may not be the best strategy! If you are one of those stubborn neighbors, you may want to rethink your reluctant tactics, since that shoe will be on your foot once you decide to sell!