Private Roads and RAs

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Private Roads and Road Associations

There are approximately 1,200 residential properties around the shore of Mississippi Lake. Some properties are accessible directly from a Township road, but most are accessed by private roads that lead to communities along the various shores. The private roads are used primarily by lakeside property owners and their guests, but also by service vehicles and emergency vehicles.

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Private Roads

What is a private road?

Historically, as large parcels of land fronting on township roads were sub-divided to create lakeside communities, single-lane private roads were carved through pastures and woodlots to reach the new lots. Most communities around the shoreline of Mississippi Lake have evolved in this fashion.

These private roads at some point connect to township roads, but until that point the maintenance and upkeep of the private roads is not a municipality responsibility. Instead, a variety of community / road / ratepayers / etc. associations have been formed to carry out a number of activities such as: clearing snow, replacing surface material, grading, and clearing brush to create turn-outs and improve sight-lines in an effort to make the road safe for residents, guests, and service vehicles.

Who owns the road?

Generally, ownership of the road reflects the way in which the original parcel of land was sub-divided. In some cases, the owner of the private road is the landowner for the entire length of the road until it reaches a Township road. In other communities, the private road may be owned in segments by one or more individual property owners; each owning the piece adjacent to their property.

Residents who must passs over another person's property (the private road) to access their own property normally have a deeded "right of way" over the road. Interaction between ownership and right of access, and the rights and priveleges of each category, can become complicated.

The owner of the private road is obviously a key party to any road upkeep issues, but usually the residents of these communities are responsible for the maintenance of the road and bear some measure of liability for safe passage. It is difficult to control who uses the road and in what manner or purpose.

Liability for private roads

Case law in Ontario holds the owner of the road liable for injuries or damages resulting from proven negligence in maintaining the road. In practice, the residents of the community served by the road and their Road Association take responsibility for road maintenance.

The fact that an individual property owner does not own the road does not provide protection from a suit for damages. Often, a litigator will sue “all and several”, naming the principal landowner and each of the individual property owners in separate writs. In this situation, the individual property owner, even though it can be shown that he does not own the road and is not liable for damages, will likely incur legal costs in the process.

Typically, homeowner liability insurance is limited to coverage of $2 million, for incidents occurring on the owner’s property. The individual is unable to purchase insurance for incidents occurring on the private road if he is not the owner of the road.

Here are some helpful references on this topic:

The Ontario Occupiers' Liability Act

Would Cottage Owners be Liable for an Accident on a Private Road?

from Cottage Life

Risk Management and Insurance for Road Groups

from Cade Insurance

Road Associations

There are approximately 35 different communities/shores around Mississippi Lake that have formed Road Associations of one form or another. Check out the following Road and Shore Association Map, to see who are your neighbours! Read on for the key ingredients for starting your a road association on your road

Setting up a Road Association

At minimum, every private road association should have a written constitution, approved by a two-thirds majority of the property owners. The document should set out the following points:

the date of the resolution adopting the constitution
the name of the Association
the dates of the operating year: e.g. 1 Jan-31 Dec, or 1 Apr-31 Mar
the number and titles of the executive officers: e.g. President, Vice President, Secretary, Treasurer
how the officers are elected and the length of their terms
the objectives of the Association: e.g. to maintain their private road in good repair, including snow removal, replacement of surface materials and grading, brush clearing, signage and all other measures deemed necessary by the executive to make passage on the road safe.
the By-Laws of the Association, to cover such matters as rules of conduct relating to speed, giving way, type of vehicle use, and other measures required to assure safety.

There are very many examples of constitutions and by-laws available on the internet that may be readily adaptable to your requirements.

one good example is the MLA's own by-law
here's another example, from Loon Lake Road Association

Insurance

We live in a litigous society. If something happens on a private road, especially if an accident causes extensive material cost or damage, and/or personal injury or even death, you can be sure that a lawsuit is not going to be long in coming. Unless individuals or associations are protected by insurance, financial ruin could ensue.

For associations that are not incorporated, the liability is shared among the road owners and residents. Individual property owners should review their personal and home insurance policies to ensure they have adeqaute coverage.

For incorporated associations, additional insurance is available to protect the Directors and Officers, and the volunteers working on behalf of the association. Associations should consult insurance providers to determine the type and level of coverage best suited for their organization.

Although some members may feel insurance is an unnecessary additional cost, the association must consider the risks involved and act accordingly to protect itself. Without adequate (or any) insurance, it will also be difficut to attract individuals to serve the association in an executive or voluntary capacity, as they will be less willing to assume personal risk while volunteering their time on behalf of their neighbors.

Dues collecting policy

Establishing a dues collection policy

At minimum, Associations should set out in their by-laws:

the Association's right to levy dues;
the procedures for setting the dues amount;
deadlines for payment; and
procedures for addressing unpaid dues.

Here is one example of a process for collection of past-due fees:

Friendly Reminder, soon after the payment deadline has passed;
First notice requesting payment when 30 days past-due;
Second notice, in stronger language, 60 days past-due; and
Registered letter, when 90 days past-due.

Some Associations might find the above timelines too lenient; they are absolutely at liberty to prescribed shorter periods. However, regardless of the process agreed upon, Associations must be prepared to carry out the prescribed measures without exception.

Every member should have a copy of the by-laws. When everyone knows the rules, it is often easier to carry out the unpleasant steps to collection.

Guidelines for collecting dues

Further guidelines for unpaid dues

Many road associations report that their most frustrating and disheartening issue is their inability to collect 100% of their annual road dues in a timely way. While most residents pay their annual dues promptly, a few and often the same few, refuse to pay, citing their right to free access, that they are infrequent or absentee owners or, they simply dispute the authority of the association to collect dues.

If a member fails to comply with oral and written reminders, and therefore remains delinquint, Small Claims Court is the next option to consider. Legal or paralegal services should also be considered at this point, to ensure the submission to the Court has been prepared adequately.

In Ontario, there is ample case law enforcing payment of road association dues, based on the principle of “unjust enrichment”, which is the enjoyment of a benefit without sharing the cost. The precedent case for claiming "unjust enrichment" is: Point Abino vs. Lee

Provided the association has clearly documented policy in its by-laws, has followed reasonable steps in giving notice, and has exhausted other means to collect, a court ruling for unpaid dues will invariably favour the road association. The resulting judgement voids all challenges and directs the property owner to pay.

A court ruling is a major step, but even with a judgement in hand, the road association must still collect. The process consumes time and is emotionally draining on voluntary association secretaries and treasurers. Delinquents often get away with non-payment because the association executive does not have the time or the resolve to pursue the property owner. Unfortunately, until the delinquints are compelled to pay up, in effect the dues-paying members of the association are subsidizing the delinquent residents.

Here is a Case Study describing an Association's efforts and results in electing to proceed to Small Claims Court.

It is always best to attempt to collect unpaid dues in a friendly, neighbourly manner. When this approach fails, the road association with well-documented and publicized policy around dues and collection, will have a better chance of 100% dues collection.

Incorporating or not?

Incorporating

The act of incorporation renders an association a legal entity or "person" that is independent of the individuals in the community. An incorporated association can conduct business, own assets, borrow money and shield itself from liability.

Some advantages of an Incorporated Road Association are:

liability is limited to the assets of the corporation;
requirements and standards for Constitutions and by-laws are much more elaborate and beneficial to the association;
regulations for financial accounting are more robust; and
formal recognition by courts, municipalities, and other organizations.

Some disadvantages of an Unincorporated Association are:

members, Directors, and Officers are severally and equally liable for negligence, mismanagement, and/or inaction leading to civil or criminal lawsuits; and
associations are not considered a legal person, and therefore cannot initiate lawsuits or other legal proceedings (real estate sales, equipment purchases, etc.) in their own name. Individual members of that association would need to take this action on behalf of their association, and would asume the risk of liability and responsibility on their own.

There are numerous other sources of advice and guidance for incorporating in Ontario or federally. Here are a few good references to begin with:

government Handbook regarding incorporating in Ontario under the Ontario Not-for-profit Corporations Act (ONCA);
Corporations Canada website regarding incorporating in Canada under the Canada Not-for-profit Corporations Act (CNCA);
Corporation Center website regarding incorporating.

A final word of advice: incorporated or not, every road association should have a written constitution or charter and by-laws, hold regular meetings, elect officers, collect association dues in a timely way, and conduct itself in a businesslike fashion.