Private roads are being used more frequently in recent years in Ontario. When a residential house is situated on a private road and a purchaser offers to buy that residential house, the purchaser should be aware of several associated realities.
Who owns private roads?
First, the house is not on a dedicated municipal road. That means that the municipality has not taken responsibility for the road. The road is owned by a collection of all of the owners of the houses on the private road. Each owner will own a share of the road. The owners may also own other common areas, such as open space and visitor parking areas.
The owners will usually collectively hire a property manager to maintain the road and any associated green space. That is just the first expense in a series of expenses that the purchaser may not have been fully aware of. The property manager creates a budget and charges a fee to each owner to cover the common expenses of that shared property.
Property management budget
The budget created by the property manager will include road, sidewalks and curb repairs as well as utilities associated with watering the common green space or electricity for powering lights. In addition to these relatively small expenses, there is also landscaping of green space, insurance, payment to board members, management fees, and a reserve fund. The largest expense, however, will typically be snow removal. The City snow plows will not be clearing the road in the winter because the city has not taken ownership of the road.
Buying a house on a private road
It is important for a real estate lawyer to search title to the house as well as to the common area. Sometimes an owner of a house did not also receive a transfer of a share of the common property. This will create a major problem. Legal access to the property is not available over the private road unless there is a grant of the common interest. Technically, such a homeowner is trespassing when crossing the private road.
One final point of caution is that, like condominium fees, association fees increase to cover replacement costs for the roads and other common areas. The fees seem quite low at first, but they increase, and over time, the owner will be expending thousands of dollars more than they would if the home was located on a municipally dedicated road.
When buying a residential home on a private road, it is important to hire a real estate lawyer who has experience with the added common land interest. The real estate lawyer should be able to advise the purchaser on all issues related to the home purchase and ensure that the people who are selling the house are able to convey good and marketable title to both the home and a share of the common property.