What is a Road Maintenance Agreement?
A road maintenance agreement is a legally binding contract entered into by property owners who share responsibility for the construction and upkeep of a roadway that provides access to their respective properties. Its primary purpose is to alleviate the financial and administrative burden of maintaining such shared roadways. Typically, these agreements designate a specific property owner, a road maintenance association, or a maintenance district as the maintenance manager. This entity is then tasked with overseeing regular maintenance operations such as grading, gravel replenishment, ditch cleaning, and other tasks aimed at keeping the road in a safe, drivable condition.
The cost of these maintenance efforts is usually divided among the owners who benefit from the road, with the specifics determined by the terms of the agreement. The frequency and extent of maintenance activities are tailored to the particular level of use the road receives , as higher traffic roads necessitate more intensive upkeep.
Having a road maintenance agreement in place is crucial for property owners who rely on shared roadways for access to their real estate. Such agreements help streamline decision-making and funding for maintenance tasks that benefit all parties. They also provide a clear framework for resolving any disputes that may arise, and create a legally enforceable obligation on the part of all owners to participate in and contribute to long-term roadway maintenance needs. When considering the purchase of a property with shared access or frontages, it is also important to check with the appropriate land use office to determine whether the applicable street standards have been met and whether there are any enforcement issues or formal action items related to the private roadway and the properties accessing that roadway.
Key Elements of a Road Maintenance Agreement
A road maintenance agreement is a legally binding document between a private individual or entity and the local government that details the responsibilities for maintaining a private or non-public road. These agreements are essential in North Carolina, often tasked with maintaining miles of private roads. A well-drafted road maintenance agreement will include the following:
Maintenance responsibilities: The agreement should clearly define the scope of maintenance required. This may involve pothole repairs, snow removal, weed control, street lighting, or any other assortment of activities. It’s essential to detail why these activities are important to ensure the longevity of the road.
Cost sharing: The agreement should also specify how costs for maintenance are to be determined, shared, and allocated to specific property owners.
Dispute resolution: Disputes are inevitable, even with a carefully written agreement. A good road maintenance agreement will have a dispute resolution process in place, most often through mutual agreement and potentially binding arbitration.
Advantages of Implementing a Road Maintenance Agreement
Particularly in subdivisions or planned communities, having a road maintenance agreement in place can provide a significant benefit to property owners. A road maintenance agreement can provide legal protection for the roads and other infrastructure associated with a property. Having an official document governing the use and repair of roads can also increase predictability on future costs, particularly if a large repair is needed. For example, take a mile-long road that needs resurfacing every 20 years. If 100 parcels are along this road, the cost of resurfacing can be divided evenly among the owners (assuming equivalent cost of other road repair assumptions). So, for every 20 years, each owner sets aside $7,500 for the resurfacing, knowing that when the assessment comes due 20 years from now, it will be a modest $7,500 each. But without a written document, an owner may try to avoid paying their proportionate share, or the owner’s share may increase if there are multiple road assessments at once on the property. Or the owner may believe a higher number is affordable at $15,000 per unit, so the owner purchases the property, only to find out the planned assessment is $30,000 per unit because no owner set aside any funds when the road agreement was drafted. Such is the case with planned assessments every 20 years.
Having a road maintenance agreement also helps prevent conflicts between property owners on who should pay for repairs. Should the road be able to have a scheduled maintenance plan, or should the road be left as a driveable private way requiring little to no maintenance? What color should the road signs be? What maintenance level is needed for grading under certain weather conditions? Who should bear liability for injuries on the road? The answers to such questions can make or break harmony between neighbors. A road maintenance agreement provides a framework for how to resolve these types of questions.
Legal Considerations and Enforcement
Road maintenance agreements between property owners and developers are generally enforceable against the developer or homeowner association, if applicable. Some courts have held that a road maintenance agreement benefits the lots or properties in a subdivision, even if the agreement does not explicitly state this, thus providing a right of action to the landowners even if a later owner of the roads refuses to maintain them. (See, e.g., Gorring v. Town of Luray, 199 Va. 266 (1957)). An important part of any road maintenance agreement is to clearly express the scope of the developer or homeowner association’s responsibilities.
In addition to clarifying responsibilities, a "default" clause can also be included in road maintenance agreements. For example, such a clause could provide that the failure of the developer or homeowner association to maintain all or any portion of the roads for a certain number of consecutive months would constitute default, giving the landowners the right to undertake road maintenance on their own and then seek reimbursement from the developer or homeowner association for their share of road expenses.
Regardless of the type of roads in question, road maintenance agreements should always be supported by financial assurances to guarantee maintenance costs. These assurances, which should be put in an agreement separate from the road maintenance agreement itself, can include letter-of-credit performance bonds and/or guarantees of non-recourse debt obtained by the developer or homeowner association to complete construction of the roads and restore the roads after digging has been completed. (For properties governed by the Virginia Property Owners’ Association Act (the "POAA"), please note that certain types of financial assurances may be limited or prohibited under Section 55-510 of the POAA.)
Failing to eagerly and timely enforce the rights or obligations granted under a road maintenance agreement could lead to arguments that: (i) estoppel applies to the developer or homeowner association, barring the enforcement of its rights; (ii) there is an implied waiver of the right to enforce the agreement; or (iii) the developer or homeowner association is considered to have "unclean hands" in connection with the agreement, preventing that party from obtaining equitable relief.
Drafting a Road Maintenance Agreement
When it comes to the drafting of a road maintenance agreement, the same basic tenant applies as does with any contract: the key is clarity. Identify the parties, the scope of services, the fees for those services and how they are to be apportioned, the duration of the agreement and the process for buying into the agreement if it is later proposed that new property be added to the area. It is also helpful to include other provisions that might govern contingencies such as pre-existing roads, temporary easements, maintenance scheduling and standards , etc. Agreements like these can be invaluable for avoiding conflict between neighbors and could actually be critical for establishing "the course of dealing" in the case of a prescriptive easement dispute.
An additional consideration is whether to treat the amount of money to be paid as an assessment or as consideration. An "assessment" is imposed by a homeowners association and may attach to the property to secure payment if there is a tax-like default in paying the assessment. A "fee" is a charge for services (like garbage collection) that would generally be viewed as specific performance for a service that does not attach to the property (like a private road). The degree to which you need to treat this as an assessment will often depend on the use to which the servient estate is being put (e.g., rental property.) Because the rules governing assessments are more complicated than those governing fees, you should consider discussing this with your client before going down the assessment path.
A road maintenance agreement has probably not been the subject of careful review by either party and no one really knows how it’s going to play out until there is a dispute. As a result, a carefully drafted agreement can help avoid conflict. A bad agreement can end up creating conflict. As is often true in life, you reap what you sow.
Common Issues and Solutions
Even with a good road maintenance agreement in place, road associations often run the risk of encountering conflict. Common scenarios include:
(i) the party responsible for maintaining the roadway does not have the equipment or don’t do the work in the manner that is required.
(ii) the "newcomer" to the area doesn’t know they are supposed to perform work, and so they don’t.
(iii) a fairly small group does all the work, while the other party pays, but never seems to contribute their fair share and then says they shouldn’t have to pay anything.
(iv) one party wants to make improvements (for example, grading) sooner than the other requires, without the other parties approval.
The best solution to prevent disputes is to take a collaborative and problem-solving approach to the relationship. Under an agreement, the parties have a legal obligation to perform under the agreement – one party cannot simply refuse to do their job. If a party isn’t doing the work specified in the agreement, that is a civil breach of contract. Addressing the problems quickly and thoroughly and applying a "no surprises" meeting with the road association will alleviate many road disputes before they develop into a full-blown dispute.
Practical solutions include:
(i) including a dispute arrangement in the road maintenance agreement that reflects how conflicts should be resolved.
(ii) putting forward an agreement template in advance of registering title to the property.
(iii) holding regular meetings to identify issues or concerns early, and remediate them as needed.
(iv) ensuring that the road maintenance agreement is comprehensive – meaning it is as detailed as possible with respect to the tasks, expectations and circumstances around any variations from the norm (e.g., snow removal for elderly or disabled individuals).
If a dispute or concern does arise despite these best intentions, the matter should be quickly and clearly documented to avoid misunderstandings and to ensure the record reflects what transpired. If necessary, the dispute could be resolved through a court proceeding or arbitration if the agreement was designed by the parties with an alternative dispute resolution mechanism.
Case Studies: Examples
Let’s look at some real-life examples where road maintenance agreements have worked out and one where it hasn’t. In the latter case, the parties still haven’t worked it out. They haven’t even signed a road maintenance agreement, but the facts and law here illustrate the legal ramifications for not having such an agreement.
In the first case, the implementation of a road maintenance agreement between two small public agencies (though they don’t call it a "road maintenance agreement") can pretty much eliminate one agency’s liability if the internal rules are followed. The law provides that a public agency in charge of a road becomes immune from liability for injury caused by failure to initially construct or maintain it in a proper condition for public travel when a different public agency assumes responsibility over the same road. Here, one transit agency provided road maintenance (fixing defects and improper conditions) on the highway intersection where a serious accident occurred. This transit agency was the "successor" in liability, so it had to pay for the injuries as the public roadway agency that had full responsibility immediately prior to the other agency’s assumption of responsibility qualified for the immunity described above.
In the second case, involving a private road between several property owners, two adjoining property owners who had agreed to jointly maintain the private road met with a tragic end in the middle of a street fight about who was responsible for certain repairs. A property owner’s dog was hit by a vehicle driving on the private road. This property owner sued the other in California state court . The court dismissed the case for lack of "substantial evidence" that the defendant had negligent. The California Court of Appeal affirmed that a party cannot passively let others use a roadway and still be held liable for negligence. "The mere failure to keep the road in perfect repair is not sufficient to impose liability." Here, there were many possibilities of negligence and even "active negligence" by third parties. The takeaway is that parties should formally enter into a road maintenance agreement and actively prepare and carry out a maintenance plan.
In the final case, the local transportation agency terminated an agreement with a residential property owner (even though the private road had not previously been open to the public for vehicular traffic) because the local agency had no statutory authority to enter into the agreement with the private property owner. As a result of the agency’s termination, the road reverted back to a non-public or private road and the private property owner was left with independent liability for the road. This case illustrates that private development, no matter how small, must be developed according to established standards or the developer may remain fully liable and have no responsibility shifted to the local government.
In these cases, the courts were either able to find a legal way to allocate traffic and liability responsibility (even if the agreement was not formally labeled a "road maintenance agreement") or leave the parties stuck with their own duties and responsibilities for personal injury – duties and responsibilities derived from applicable statutes and common law rules.