FORMING A ROAD ASSOCIATION

Managing maintenance on private or camp roads that serve multiple users can be difficult. Questions about ownership, liability, and maintenance costs can become very complicated and cause hard feelings between neighbors. Forming a road association can be an effective means of avoiding or addressing these problems. By establishing a road association you can:

centralize decision making;
open lines of communication among members;
legitimize the collection of members dues;
set up an impartial means for managing money;
establish legal authority (if necessary); and
potentially avoid personal liability.

Road associations can be loosely formed or highly organized. Generally, the more organized the association, the easier it is to maintain the road and share the cost. A good option for road associations is to incorporate as a non-profit corporation with the State of Maine and to develop a set of rules by which you will do business (by-laws). The primary purpose for incorporating is to protect individuals from personal liability. If an accident occurs (gross negligence aside), instead of an individual being held liable, the incorporated association would be liable.

One of the best places to visit for detailed information is here:

http://www.maine.gov/dep/land/watershed/roadassociation.htm

INCORPORATING AS A NON-PROFIT

Following are some steps to follow to form a non-profit corporation:

Discuss incorporating ahead of time with all the landowners that benefit from the road. This gives people an opportunity to ask questions, express concerns, and it gives you the opportunity to discuss the benefits.
Notify landowners at least 30 days ahead of time - preferably in writing - of the meeting to discuss and vote for incorporation.
Hold the meeting. Be sure to have a clear agenda and stick to it. Set aside plenty of time for discussion, and take accurate minutes.
Vote. A majority vote is necessary to pass a motion to form your non-profit corporation.
If a majority of the landowners vote for incorporation, visit the Secretary of State’s website here:

http://www.maine.gov/sos/cec/corp/nonprofit.html

Complete the form entitled “Non-Profit Corporation, State of Maine, Articles of Incorporation.” This form can be obtained from the Maine Secretary of State at 101 State House Station, Augusta, Maine 04333-0101 (Tel: 207-624-7736). There is a small annual filing fee. If your annual gross receipts are normally less than $5,000, your non-profit organization is exempt from paying income tax under Section 501(c)(3) of the Internal Revenue Code. If your annual receipts are over $5,000, you can apply to the IRS for exemption designation using form 1023.

By-Laws

Your next step is to adopt by-laws and elect officials. Topics covered by the by-laws should include items such as:

• A purpose statement (describe the location of your private road and that you have formed for the purposes of maintaining the road);
• membership (who is eligible to be a member and vote);
• dues;
• election of officers;
• duties of directors and officers; and
• meetings.

By-laws should be tailored to each association’s needs, so you may want to consider hiring a lawyer experienced in private road agreements to help you set up your by-laws.
The State of Maine has a Private Way Law ( http://janus.state.me.us/legis/statutes/23/title23ch305sec0.html , Subchapter II).

The law allows landowners to underwrite necessary maintenance costs and establishes an enforcement process for collecting dues. To qualify under this law, a private road must:

• provide access to four or more parcels of land;
• benefit three or more different landowners;
• have three or more parcel owners who agree to file; and
• not be a road constructed or primarily used for commercial or forest management purposes.

Essentially, this law allows for the recouping of maintenance costs, but specific procedures must be followed so landowners have the opportunity to vote on proposed maintenance projects. If an owner neglects to pay his or her dues, the money (plus costs and attorneys fees) may be recovered in a civil action.

(Excerpted from "Camp Road Maintenance Manual, A Guide for Landowners"; developed by Kennebec County Soil and Water Conservation District with assistance from the Maine Department of Environmental Protection; June 2000)

Updated June, 2005