Selling on an Unadopted Road

Peterhy32

Hi All,

I'm in the process of selling my property which i've owned for 6 years and remortgaged at the start of last year with Nationwide.

We are close to exchange, however I have just been informed that Nationwide have refused my buyers mortgage because I am living on an unadopted road with no formal maintenance agreement. I have been told a Deed of Covenants is needed.

A Deed of Covenants will not be possible, as I legally cannot get the other 5 properties to agree to it. 4 are private and 1 is Council owned (with no one living in it for nearly a year). Even if it was possible, it'd take a long time to be registered against each title. We informally maintain the area of land outside each of our properties and in the 6 years of living here there has never been an issue.

My mortgage broker has confirmed that Nationwide are strict on their Mortgage Lending Handbook, however Natwest, Santander and HSBC are a bit more flexible (may require indemnity insurance).

The issue I have is that my buyers solicitor is saying all banks "will" have the same response and their Mortgage broker has advised them against switching to an alternative lender due to the higher rates since they got the mortgage in May/June.

I have offered a goodwill gesture of £1,000 for them to consider an alternative lender or go to my mortgage broker (who is certain they can help find a deal).

If they refuse this, I guess I have little other option than to relist and caveat that the buyer will have to find a mortgage for an unadopted road with no maintenance agreement?

Does anyone know of any other banks where this isn't as strict of a consideration as Nationwide?

Thanks

Section62

https://forums.moneysavingexpert.com/discussion/6683506/selling-on-an-unadopted-road

and 1 is Council owned

Did the council originally build all the houses, or were they private and the council has purchased one?

Peterhy32

https://forums.moneysavingexpert.com/discussion/comment/82138577#Comment_82138577

Not entirely sure, they have been there since late 1800s. Would this be a potential lead to help?

Section62

https://forums.moneysavingexpert.com/discussion/comment/82138755#Comment_82138755

Pre-1900 is very unlikely to be council then.

If the houses were built by the council I'd expect the roadway to be owned by them, if not maintained as a public highway. Having the council as owners would mean that despite not having a formal maintenance agreement, the buyer's mortgage company could take some comfort that there was a council corporate responsibility for the road.

But if the council weren't involved in the building then that isn't relevant.

Albermarle

What actual effect has living on this unadopted road had on you for the last 6 years?

Are you having to pay for anything extra? Is the road in a poor state? etc

RiskAverse100

In order to ascertain whether a lender will have a problem with the road, it is necessary to establish if it is a private road (which the public at large might not have rights to use) or it is a highway which is not maintainable at public expense. I am assuming that it is the latter. By the sounds of it, the road is still subject to public rights of way, but the public do not contribute towards its maintenance by the Council.

Such roads are far from uncommon and are very often highways as a result of them being used by the public as of right and without anyone stopping them for at least 20 years.

I am also assuming that the road is unregistered and the real owner is not known.

Under the law, the responsibility for maintaining such a road falls on the owners of the adjoining houses.

With an unadopted road, lenders are usually keen to know two things. Firstly, they want to be sure that the property benefits from rights to use the road. Individual properties may have had a right to use the road granted many years ago and so this could be mentioned in old transfers which are referred to in the title registers. If there are no such rights then, even if it is fairly obvious that the road is a highway as a result of long usage, it may be that to satisfy the lender, absence of rights indemnity insurance must be taken out.

Secondly, they want to know if the road is actually maintained by the properties using it. If it is not then in theory it could fall into such poor condition that it represents a danger to the public, and that could affect the value of the adjoining houses.

Legislation does allow Councils to carry out works to unadopted roads so as to avoid them being a danger to the public, and then collect the costs from the owners of the adjoining houses. The risk of this happening might also be of concern to a lender.

Nationwide Building Society require the conveyancer acting for them to firstly ascertain if there are acceptable legal rights of access in place. If there are rights granted in old transfers then great. However, if not then, as a conveyancer would never agree to put their neck on the line and say that the road is definitely a highway (because of long usage) the mortgage may be declined as NBS specifically say that they will not agree to indemnity insurance as a solution.

The position with other lenders is a bit hit and miss. Many do not say what their requirements are and so it will be a case of the conveyancer reporting the position, suggesting indemnity insurance as a solution (where appropriate) and seeing if the lender is happy to proceed. It is categorically not the case that all lenders will take the same quite tough position as NBS do.

Not that it helps you, but lenders are much happier if the adjoining property owners have set up some kind of Residents Association so that the road can be properly maintained. Annual sums are collected so that there is a reserve fund and sometimes legal research has been carried out and there is a legal opinion available which concludes that the road definitely is a highway and so there are public rights of way over it. This makes the job of the conveyancer acting much easier!

Chloe3186

I have just had this exact issue. I am a buyer purchasing a property on a nearly 100 year old unadopted road. Got to about month 3 and had the Legal Authority search back. Solicitor had to refer the unadopted road to nationwide as our lender and because we don’t have a formal maintenance agreement they said they cannot lend on the property. We have rights of way and we also offered indemnity policy and the would not take it. We got a mortgage broker in place and he applied to Santander and we got it straight away with the indemnity policy. Literally took a week from applying to get their offer. I am not going to lie though, we have opted in for a tracker mortgage as all the fixed rates are super high, it is giving me slight anxiety with all these rate hikes! I hope you don’t mind me asking, have you had any issues living on an unadopted road? It has opened a can of worms for us, owner is a company that no longer exists, unregistered, a covenant to say the original builder back in 1935 and us as owners do not need to maintain the road etc. Good luck!

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82139856#Comment_82139856

not really a relevant question
OP has stated that each property (informally) "maintains" the section of road along its own frontage.

It appears OP has been "lucky" and not had to spend anything for the last 6 years. But that does not negate the risk for a buyer that someone further along the road will not spend money when the need arises on their section. Everyone on the road would therefore suffer with a road becoming potholed in one section. That would affect the value of all properties, hence lenders do not like private roads with no management schemes in place.

Section62

https://forums.moneysavingexpert.com/discussion/comment/82140373#Comment_82140373

In order to ascertain whether a lender will have a problem with the road, it is necessary to establish if it is a private road (which the public at large might not have rights to use) or it is a highway which is not maintainable at public expense. I am assuming that it is the latter. By the sounds of it, the road is still subject to public rights of way, but the public do not contribute towards its maintenance by the Council.

From what the OP has said, I'd expect it to be the former. Some private roads have public rights (for example a footpath or bridleway) but it is relatively unusual for a private road to have full public rights of way.

Such roads are far from uncommon and are very often highways as a result of them being used by the public as of right and without anyone stopping them for at least 20 years.

This sounds like Dedication. In reality Dedication is more complicated than the way being used by the public for at least 20 years. Dedication can be rebutted, and in some cases can be limited to certain classes of user.

Under the law, the responsibility for maintaining such a road falls on the owners of the adjoining houses.

This is overly simplistic. Unless there is a specific maintenance obligation - for example a covenant in the deeds - the owners/occupiers of land adjacent to a road have limited (or no) maintenance responsibility.

Whilst the highway authority (for highways) and streetworks authority (for 'streets') have various powers to require improvement of private ways used by the public, the use of these powers is complex and not without risk for the highway/streetworks authority. The way would need to be in a shocking state before most authorities would get involved.

This is why unadopted roads with no maintenance agreement are such a nightmare - the routes to force adjoining owners to carry out or pay for maintenance are very unstraightforward.

Peterhy32

https://forums.moneysavingexpert.com/discussion/comment/82139856#Comment_82139856

No impact at all, had to pay for nothing other than a few bags of stones to fill in a hole. We all work together to clear up leaves/snow etc.

Peterhy32

I saw the other thread with your situation. Glad to hear you managed to get it sorted through Santander, they are one of the lenders my broker has suggested the buyers go through. I have now increased my offer to the buyers of a a £3,000 reduction if they are willing to go to another broker to offset some of the impact, but it sounds like their broker is saying this issue is across all lenders… I've never had a single issue with living on an unadopted road, because there are only a few of us, there is almost a community feel where we just get bits done.