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#450710 - 02/22/16 03:10 AM Re: Non-Maintained Roads Lending Problems [Re: Dodger52]
MannySmith Offline
Junior Member

Registered: 02/21/16
Posts: 1
Loc: US
[quote=Dodger52][quote=DueDiligence]Okay! We're expecting snow and we have at least 3 orders we're expecting to be delivered in the next 4-7 days. We'll take some pics of the UPS "fruit" in the trees.

Know what I think is frustrating on this thread? NO mortgage lending forum members have chimed in. [/quote]

Its probably because most have not dealt with this problem, but it could be all my fight talk. The road problem is just one example of the things that come up with rural properties. If there is a better way to address these things, or if there is something we can do up front to avoid the issue all together I would like to learn about it. [/quote]

Me too, trying to sell rural properties is a whole other ballgame and there's so much hassle that comes with them.

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#463582 - 02/16/19 02:39 PM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 374
Loc: New Hampshire
Originally Posted By: DueDiligence
Beginning to see an alarming trend (for a rural area). Lenders refusing to lend on properties that are on roads that are not maintained by the city or oounty but maintained privately with the voluntary cooperation of neighbors. Where no road maintenance agreement bewtween the parties is filed with the county, some lenders are balking at underwriting.

I didn't want to start a new thread, but I need some advice on this.

A property tax problem I am working has 40+ residential owners on a road that should be maintained by the Town but isn't. There is a separate legal action concerning the responsibility for the road.

In times past, I had consistently found what the OP observed. Lately, though, I am hearing anecdotally that lenders are OK with not having either municipal maintenance or a signed Road Maintenance Agreement.

Before hearing that, I figured from experience that there would be a diminution in value; after I talked with a few local brokers who handled land, now I am not so sure.

Does anybody here know, without guessing or supposing, that lenders will or will not balk at lending in these situations? If you know, I will need you to point me to an authoritative source for use in negotiations.

Thanks for your help.

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#463583 - 02/17/19 07:22 AM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2367
Loc: Outer Banks
We have recently gotten loans with just the buyer signing a road maintenance agreement. However, none of them involved 40 owners.

The definitive source will be the lenders who lend in the area.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#463619 - 02/20/19 06:43 PM Re: Non-Maintained Roads Lending Problems [Re: Bigtoe]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 374
Loc: New Hampshire
Thanks, Bigtoe -- So the response from lenders isn't a uniform 'yes' or 'no'....that might explain why the brokers I talked with weren't really definite. They thought by common sense that there should be a diminution of value, but thought I would have a hard time proving it. I'll check with lenders locally and post up what I find.

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#463621 - 02/21/19 07:06 AM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2367
Loc: Outer Banks
In our situations, the roads were paved but private. I don't know if that matters.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#463876 - 03/24/19 03:46 PM Re: Non-Maintained Roads Lending Problems [Re: Bigtoe]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 374
Loc: New Hampshire
As an update on this, I found a local broker who had recent experience selling land on both kinds of roads. He got me a few sales, and I was able to mine a couple out of public access MLS data. The difference was noticeable: in that market area, there was about a 30% diminution of value for lots on non-maintained roads.

Those findings would vary by market and by lender requirements, I am sure, but I was glad to see a common sense thought confirmed by data. We filed property tax appeals on a bunch of affected properties and it will take a few months to see how it all ends up.

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#463881 - 03/25/19 05:28 AM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2367
Loc: Outer Banks
Where those roads paved?
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#463908 - 03/26/19 08:47 AM Re: Non-Maintained Roads Lending Problems [Re: Bigtoe]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 374
Loc: New Hampshire
From memory, it was a mixed bag: some dirt roads were town-maintained(Class V in NH), some paved roads were private (Class VI in NH). And vice versa. All that seemed to affect the prices was the responsibility for maintenance.

But my look at it was cursory due to the deadline, so I don't know if any of the Class VI roads had maintenance agreements. I will let you know as I get more info.

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#463918 - 03/27/19 05:47 AM Re: Non-Maintained Roads Lending Problems [Re: DueDiligence]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2367
Loc: Outer Banks
We have unpaved roads that are maintained and those properties have a lower value as a result of the road condition.

We have paved roads that are not maintained and those properties do not show a price reduction.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#463919 - 03/27/19 05:58 AM Re: Non-Maintained Roads Lending Problems [Re: Bigtoe]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 374
Loc: New Hampshire
So many issues that touch real estate practice and valuation differ by jurisdiction. What a strange business.

My first look at these properties showed a diminution in value only between the maintenance categories. But, that was in southeast NH in this market. Next year, depending on what lenders require or what the state legislature may require, that could change. Or, if the market fully tanks, maybe the difference is greater.

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