Maine Alliance for Road Associations
Our association is both Statutory and Volunteer (original members). Bylaws cover both. In recent years, we have some members who have constructed a second domicile. Some are income rentals, some for family members. Some occupied, some not. We originally thought that we could address it by charging a second fee if the owner received 2 tax bills from the town, but we find that one only receives one tax bill. How do other associations handle this situation?
You have presented a "sticky wicket". Don't ask me to define this term, but it seems to apply and won't leave my head!
Leaving your partial Statutory, partial Volunteer road association aside, I will address my reply to the "second domicile" problem. We also have this situation in our association. One owner receives two tax bills for their two parcels having domiciles so this works well but other owners have extra domiciles on their parcels that are currently being used intermittently for relatives or caretakers in the winter months without additional association charges. At some point, I expect our association will need to address this situation. To do so, however, has the potential to ruffle feathers so nothing is being done currently.
I like the idea of focussing on the "dwelling unit" comprised of a bedroom, bathroom and kitchen. Each property owner needs one to be able to inhabit their property. More than one dwelling unit may be seen as redundant having the potential to increase traffic and burden the road and the neighborhood. It would be "fair and equitable" for the statutory association to assign extra dwelling units additional maintenance fees. I recommend you keep things simple: an extra charge for each extra dwelling unit. Fee assignment could also be based on current use, i. e., family, rental, seasonal, etc., but this might create a source of chronic friction.
I am interested in other views. I would also like to hear more from you about how you manage the Volunteer members' voting privileges and delinquent maintenance fees.
I am also intrigued by the "Statutory and voluntary" situation. Could you explain further? I would have thought the "statutory" would include everyone who benefits from the road, so where do the "voluntary" come in?
The statute allows considerable leeway in how you assess dues. My understanding is that courts have viewed the statute's "fair and equitable" requirement to mean that whatever formula you devise, that formula must be applied to everyone the same way. In other words, if you charge everyone the same amount, that's fair and equitable. If you charge year-round homes one amount and seasonal homes a lesser amount, that is also fair and equitable. But if that was your "formula" and you charged one of the seasonal homes at the year round rate when other seasonal homes paid less, that would not be fair and equitable.
In your situation, it sounds like you could have a formula that was based on number of dwelling units. So all owners of properties with one dwelling unit would pay one amount, and all owners of properties with two dwelling units would pay another amount, (or would all pay double the rate as those who have a single dwelling, or whatever your formula states.) You just have to make sure that everyone in each category pays the same as others in that category, and that the basis for your formula is fair. (For example, it would be unfair if your formula said those with two dwellings don't pay, and those with one dwelling do pay.)
The original association is voluntary and is a non-profit corp. Only 10 of the 16 members signed agreements. Over the years, payment from the non-members dwindled off to nothing. They knew we couldn't come after the payments. Therefore, we sent out a new warrant, had majority in favor, and formed a statutory association so we could collect from everyone. Deed for the roads is owned by the original 10 members. This is the first time we are having to rebill and add interest for nonpayment. I'm not sure yet what we will do regarding voting. Owners are expecting a full second vote if they pay a second fee for the second dwelling. We also have had the question posed to us regarding the maximum number of votes one couple (one property) can have so as not to have the majority of votes in the association. They have purchased additional properties in the association and also have a second dwelling on one. For the question of interest, my research so far leads me to think we will charge the same amount of interest and follow the same procedure as our town. Any suggestions in this area would be appreciated also. We are in the process of rewording the bylaws to reflect our new "environment". Thank you both for your input!!
Thank you for your considered, well-written reply! I believe our readers would benefit from hearing your Road Association's solutions to the challenges you have shared with us. Please keep us informed of your progress.
Consider exploring our Resources Page. Our resource entitled, "Sample Late Payment Penalties" was the most popular WORD.docx download last month. Its simple interest rate is based on the Town Tax interest penalty you are considering.
I suggest limiting the number of votes to one vote per owner. One vote per parcel is favored in the Private Ways Statute, §3101 (4), but allows your by-laws to override and provide no more than two votes per parcel. Limiting the voting power of individual owners will provide balance to insure an acceptable majority decision for all owners. Since each extra dwelling unit burdens the road and the neighborhood, It makes sense to me for the road association by-laws to foster policies that keep the number of dwelling units per owner to a minimum. With this in mind, I believe owners with extra units should not be "rewarded" with an additional vote.
Your definition of a parcel can also be helpful in limiting the number of votes per owner. For instance, a parcel may be: "Lots with an owner in common". For more details on defining your parcel, consider listening to Cliff Goodall's Talk, a recorded presentation among our resources.
I would suggest going by the statute's default of one vote per parcel, and I also like the definition of "parcel" as being "lots with an owner in common." Our road association had one developer who owned several undeveloped lots. We considered billing him per lot, but felt that if we did so, we would also have to grant him one vote per lot, giving him more leverage with the association than would be fair to the other owners. We considered it again when a builder bought three of the developer's lots and put a house on each. But again, billing him for each house would have given him three votes. Besides, he was one of our non-payers anyway. So in the end, we just counted him as one owner with one vote, and billed him for one share. As he sold off the houses, the new owners added to our income by increasing the number of separate owners.
But in his case, the houses were vacant while the builder still owned them, so we were not contending with increased daily use of the road. (We did, however, have issues with wear and tear on the road during home construction - but that's another question.) If one owner has two houses and they both have people living in them and using the road daily, there should be some provision written into your assessment "formula" to allow you to charge for each inhabited dwelling.
As for the "part voluntary, part statutory" road association, I don't know why you couldn't do what we did with ours in a similar situation. We had a non-profit association, but people found out we had no practical way to enforce payment, so each year we lost a few more. With fewer payments, we were able to do less, resulting in fewer people being willing to pay. In the end, with only twelve members paid, we folded the non-profit and started over again as a Statutory road association. It's taken some time, but we now have only two unpaid members out of 53. It doesn't make sense to have two road associations on the same piece of road. If they were both functioning, that would be redundant. If one of them isn't really functioning anyway, it should be terminated, or any remaining functions assumed by the new association.
Dissolving the voluntary association was our original plan, but the new board didn't follow through. There were other issues that developed, and the new board retained a different attorney, and it was recommended to them that they combine the two associations. I was on the original board and am now on the board of the statutory association. It does say, however, in the newest edition of the Guide To Forming a Road Association, that you can have both.
Can you tell me on what page of the Guide it says that you can have both a voluntary and a statutory road association? I don't see how the two are compatible, where participation in one is voluntary and participation in the other is mandatory. I know a road association can be both statutory and non-profit, but that's a bit different. I can understand pulling the voluntary association into the statutory association, but I can't understand how it could remain voluntary.
You are right. One is a non-profit. I was referring to the original language used to describe the association. Thank you for pointing that out.
The Maine Alliance for Road Associations