You’re in contract to purchase a home and everything is going great, until… Out of the blue, you get a phone call or an email from your lender: you need a Shared Driveway Agreement to complete your purchase.
This isn’t uncommon, but it can add confusion or surprise to the process of buying a home.
The good news is, they’re put in place to protect you – to create security and peace of mind.
Here are answers to common questions to help you better understand Shared Driveway Agreements.
What is a Shared Driveway Agreement?
I’m going to put on my lawyer hat here for a minute to explain… What is a Shared Driveway Agreement? Well, it’s a type of easement. But what is an easement? That’s the right to use someone else’s land. A Shared Driveway Agreement is a type of easement that affects multiple property owners.
So, when you have a Shared Driveway Agreement, what it means is that you have a legal document prepared by a lawyer granting mutual rights to neighbors to share a common driveway.
The driveway could be gravel, paved, dirt, or something else, but the right of access to that driveway crosses over a shared boundary line. This may affect two properties, or more. I’ve even seen a case where we drafted a Shared Driveway Agreement for 5 property owners!
Why would property owners need to share access to a driveway?
There’s a general principal in the law that all parcels of real estate must have access to public roadways. Otherwise, legally, it’s considered trespassing across other’s property when you try to get across your property to that public roadway.
A property owner, or someone buying real estate would need shared access to a driveway when their land is located in a position that is otherwise land locked, meaning that property doesn’t have access to a public road.
How can you find out if you need one?
As we’ve covered, a property owner must have legal access to physically get to a public road. You need to have a Shared Driveway Agreement drafted when there is not already an easement recorded but there is physically a driveway that is crossing boundary lines and would cause someone to trespass, by definition of the law.
Typically, your title insurance company will identify a lack of legal access/easement during the title search and call it out on a title insurance commitment. Then, the mortgage lender reviews the title commitment, and will require that the parties have a Shared Driveway Agreement as a loan contingency.
Why would your lender and title company require buyers to obtain a Shared Driveway Agreement?
Well, it’s important to the lender because in securing your loan, they have an obligation to protect the mortgage if they ever have to foreclose and take back the property. So, the lender looks at this situation and says it’s a loan underwriting requirement to have a Shared Driveway Agreement in order to put a mortgage on this property.
The title insurance company wants to insure the title to your property, and to do so, they need to show there’s at least a legal easement in place, to prevent disputes in the future.
What information is covered?
You can have a variety of different terms, but a typically a best practice is to define the location of the access easement and the maintenance provisions.
Ideally, it will define who is going to be paying for what and who is doing what in regard to maintaining the easement. In most situations a shared driveway is paved, but sometimes it’s gravel, or something else. But someone will need to repave it, repair potholes, or replace the gravel from time to time. It’s also important to define who is responsible to clear snow, ice, or other items. In a best-case scenario, every detail would be spelled out.
How can you get a Shared Driveway Agreement?
Typically the process begins when the requirement gets made in order to complete the sale transaction of behalf of the buyer because the buyer and lender both have a reason to need an easement to be drafted. And then the lender specifically wants a shared driveway agreement which governs the maintenance provisions of that.
But who drafts it? Typically, a lawyer as it’s a legal document.
In Ohio and Kentucky the title company typically hires a lawyer on behalf of the parties, so the title company may outsource this to a lawyer. Sometimes title agencies have a law firm that they are associated with, or their owner is a lawyer, so then that law firm or attorney may draft the document on behalf of either the lender who is requesting it or the buyer who needs it in order to be able to buy the property and put a mortgage on it.
In the event you’re purchasing property and find you need an easement like this, it’s a good idea to hire your own attorney to draft it to ensure it protects your interest.
Because if you don’t, the referred lawyer will most likely draft the agreement in a neutral way, instead of drafting it for the interest of the future buyer (you). Sometimes there are additional interests that may come into play, therefore it’s advisable that the buyer needs to have their own counsel.
If you’re searching for a property and you don’t have real estate counsel, that’s ok. Be sure to write in a 7-day review period into your offer letters, and then when you go into contract, reach out to a professional right away.
Often, hiring a lawyer can feel like an unnecessary expense in an already expensive and overwhelming process. But for buyers and sellers alike, the value of hiring an attorney to help you navigate your real estate transaction is to help you avoid running into issues that could become very expensive down the road. And when you’re investing hundreds of thousands of dollars into something you’ll own for potentially decades, it’s wise to be as proactive in protecting yourself as possible.
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