By Steven L. Fussell, Senior Consumer Protection Officer
When listing and selling properties in residential subdivisions, especially newly developed subdivisions, brokers should check on the status of the streets (public vs. private). Brokers should not assume that all streets are public. All streets essentially begin as private streets and some eventually become public streets.
A public street is one that was constructed in compliance with state (North Carolina Department of Transportation – NCDOT) standards and then was transferred to the NCDOT – usually upon the sale of a certain number of dwellings along the street or in the subdivision, .
Upon acceptance of a street by the NCDOT, ownership and maintenance of the street will lie with the NCDOT. During the period between the construction of the street and the transfer of the street to the NCDOT, the developer and/or the lot owners are responsible for street maintenance. A street that is constructed to State standards, but falls into disrepair while waiting for the NCDOT to accept the street, may have to be repaired by the developer and/or residents before the NCDOT will accept it.
Private streets may or may not be constructed to state standards and the responsibility for maintaining them remains with the developer and/or the residents who live along the street. Persons who live on private streets that were not constructed in compliance with State standards would be wise to have a written road maintenance agreement signed by all of the property owners on that street.
Pursuant to North Carolina General Statute § 136-102.6(f), developers are required to give lot purchasers a subdivision street disclosure statement. This requirement applies to the first sale of a lot. Brokers who list lots for developers should remind the developers of the requirement.
There is no standard preprinted form for making this disclosure. Brokers assisting buyers of lots from developers should request a copy of the disclosure statement from the developer. Brokers who list and/or sell homes in relatively new subdivisions should inquire about the status of the roads, because the roads may not have been transferred to the NCDOT and a buyer may bear some or all of the responsibility for road maintenance until this transfer occurs.
The high cost of maintaining and repairing streets makes the status of a street a material fact. Over the years, the Commission has dealt with a number of complaints, usually from buyers who learned after their closings that the streets in their subdivision were private and that they would share in the cost of maintaining and repairing the roads.
In a few cases, buyers learned shortly after their closings that the neighborhoods were preparing to issue assessments to obtain the money necessary to repair the streets. In one case, the buyer of an unimproved lot in a 20-year old subdivision learned that the streets in his section of the neighborhood were private. Two years later, the streets had fallen into such disrepair that public school buses and emergency vehicles were unable to travel the streets.
Astute brokers will add “Verify street status” to their regular transaction checklist and verify the status of streets in order to better protect their clients. To verify that a street has been accepted into the State system, you may visit either the NCDOT website, https://apps.ncdot.gov/srlookup/, and enter the necessary information or go to www.ncdot.gov/doh/divisions/, hover over each division on the state map to determine the correct division for the county in which a road is located, click on the correct division and select “Directory” to contact someone within that division to confirm that a street has been accepted into the state system.
Verifying that a street has or has not been accepted into the State system will better protect your clients as well as reduce the incidence of complaints and the likelihood of disciplinary actions against brokers.
This article came from the October 2015-Vol46-2 edition of the bulletin.