The USDA Home Loan Program in NC adopted the HUD Handbook for Property Evaluations in 2009. With that adoption of the FHA minimum Property standards – the USDA Appraisers no longer need to calculate the additional insulation requirements USDA Loans traditionally required. The USDA Loan Private Road Agreement now needs to meet the FHA standards, so this is a bit of a change.
USDA Loan Private Road Agreement in North Carolina
USDA Loans are for properties that are traditionally considered “out in the country.” As such, it is not uncommon to find a property that has Well and Septic Systems, and dirt roads leading to the home.
To qualify for a USDA Loan, the roads leading to the property must be deeded in such a way that the home owner can access the property without trespassing on any another person’s land. That is to say that if there’s a private road that runs across another person’s property – you must gain permanent access to your property. This is typically done with a Private Road agreement, giving you access from a public street all the way through to your property.
The streets must meet a minimum standard of having an all-weather service construction. The USDA Loan Private Road Agreement must state exactly how the road is going to be maintained, how the cost of maintenance is going to be calculated and how the decision that the road needs to be “upgraded” is going to be determined. Typically, this means that everybody who is accessing the road is charged an annual fee, which is held in escrow until the road needs to be resurfaced.
An Attorney should be able to help you establish this – it will work in a similar fashion to a Homeowner’s Association. When you go to sell your home, the new owners must agree to the USDA Loan Private Road Agreement and the private maintenance agreement, it’s not optional. For the Bank to be able to make you a USDA Loan with a Private Road Agreement, the agreement must contain the language that the agreement transfers to the next owner, kind of like an easement from the Utility Company on your property.
Driveways must be “contiguous to” and have direct access from a street, road, or driveway. They must be constructed of a hard-surfaced or all-weather surface, which would mean road base and gravel at a minimum. This means that a “dirt” driveway into the home from the Private street would not be acceptable for USDA Loans.
If you are looking for a home in the country – here in NC, we think the USDA Loan program is probably the best. WHY? Because USDA Loans have no down payment requirements, and they have the lowest monthly PMI rates we can offer (unless you are a Veteran).
Call Steve and Eleanor Thorne, 919 649 5058 and we will love helping you with a USDA Home Loan! We do dozens of these across NC every month. You can get the latest information about Mortgage Rates in NC, connect with us on Facebook or Google Plus! Have more questions about your particular situation and USDA Loans Private Road Agreement in NC? Leave us a comment below!
Hi Eleanor,
We live off a private dirt road which is a shared easement. We are the first house on this road, about 150 feet from the main paved road. We have contract on our house but the buyer is trying for a VA loan. Our realtor has just told us the pitfall of the dirt road situation. Is it possible to get just that stretch of road that leads to our driveway covered and professionally graded with gravel and that be enough? I don’t think we’ll be able to get the 6 other residents to chip in and sign an agreement to maintain it. We’re so close to the main road and the first house on this dirt road. What if the Buyer agrees to maintain that stretch of road?
Thanks.
We spoke with our Underwriters and with an Attorney before responding to this, because I wanted to be certain I was giving you the best advice. According to everyone we spoke with, you will need a private road maintenance agreement to cover the new buyer. There may actually be one in place – according to the Attorney, because there are so many home owners. You will find it as an attachment to your Title Insurance Policy, as a “rider” perhaps. Hope that helps!
eleanor, your answer does not completely help. We have same situation except we are trying to re-finance thru VA. There are 2 people living below us and 6 family homes above us but many other property owners who have not and will not build. As we understand it, unless you have a homeowner’s assoc. already in existence, there is not a road agreement here in rural NC. What does someone do if all will not sign? We heard that we can agree to maintain our portion from our property to the main road but what if the others above us want out in winter & we do not have road snow plowed?
Sharon -unfortunately, we would need to see the survey of the property to be able to answer your question. You are correct – all government loans are going to underwrite this the same way. There must have been a loop hole, however because you were able to initially finance the property. Please call us at 919 649 5058. (Having your Deed of Trust,or your TITLE INSURANCE policy might also help us)
My questions is similar to the others….we are trying to buy a house where there isn’t a road agreement, we can’t get the others 3 people to agree and my USDA loan expires in 3 weeks. What can I do if they won’t sign? I can’t go to the next step which is home inspection till we get this agreement. We have less than 5 steps left then close, can and will this cause me to lose buying this house? We have been working on this for over 2 months and now this has caused us to stall and I need a way to go around it….PLEASE HeLP!!!
Pamela there may be a form that your lender, and your attorney can draw up that says YOU will be responsible for the road… however I wouldn’t want to take on that responsibility??
Hello,
I’m currently under contract on a property that’s on a private road. It has an established road maintence agreement but no annual collection of fees. I have a USDA loan. Is it possible to make the current road maintence agreement work with the underwriters of my loan or do yearly dues have to be established? I’m in Asheville NC. Thanks for your help!
As long as it’s established it should be OK – there would need to be some reserves in the account? Not being able to see the agreement, it’s hard for me to make a blanket statement. You can call us, though at 919 649 5058
We are in the process of buying property from the owner of a large tract of land near Asheville. He has it subdivided into 9 parcels of varying sizes. 21, 10, 11, 12, 13, 12, 11, 12, and our 47 acre lot at the end of the road.
None of the lots have been sold. Since we are the first buyers the owner is discussing with us how to set up RMA. Of course we would love to have all parcels pay equally. His first idea was whoever owns the most property pays the most which to us had nothing to do with road usage, next he suggested the amount of dwellings which we thought would be a problem since it could be a changing number and who would keep track and enforce the change. We also know it could be according to the amount of road you use to get to your property. That would mean we would pay the most. Are there any other ways to decide the percentage each owner pays? What would you suggest?
Thank you so much
Lynn, honestly I suggest that you speak with a Real Estate Attorney in your area. They are use to setting these up, and can give you real life examples of expenses, etc. that are being charged back to owners. We’ve worked with the Lancaster Law Firm before and felt they were very professional. Here’s their site. Congratulations!
-E.
we live in a small HOA, mostly older single woman. We pay taxes to the town but they will not take responsibility for the maintenance of the road unless we tear up and repave the whole road at the cost of approximately $200,000.00. this little development was built in 1984-1987. Are there any options available to our little community? we are only 2 small blocks long