Attachment III - Minimum_Property_Requirement.pdf

VA Pamphlet 26-7, Revised Chapter 12: Minimum Property Requirements

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23. Heating

Change Date March 28, 2019 This chapter has been revised in its entirety.

a.

Requirement

Heating must be permanently installed and maintain a temperature of at least 50 degrees Fahrenheit in areas with plumbing.

b. Non-Vented Heater

If the dwelling will have a permanently installed, non-electric, non-vented fireplace or other non-vented space heater:

the NOV must be conditioned to require the Veteran’s written acknowledgement that the dwelling contains a non-vented fireplace or space heater which has not been inspected by VA, and a licensed heating/air conditioning contractor must certify in writing that the non-vented appliance is equipped with an approved Oxygen Depletion Sensor and meets the local building authority requirements (if there are no local requirements, the installation must meet the manufacturer’s recommendations).

c. Mild Climate

In areas with a mild climate, heating may not be required (see Topic 1, Subsection h of this Chapter).

d. Air Conditioning

Air conditioning is not required, but if installed, must be operational. If any needed repairs to the air conditioning equipment are apparent, the appraiser must prepare the appraisal subject to the repair of the air conditioning system by a licensed heating/air conditioning contractor.

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24. Leased Mechanical Systems and Equipment

a. No Value to Leased Equipment

The appraiser must not include the value of any leased mechanical systems or any other leased equipment in the estimated market value as leased items are not suitable security for a loan. This includes, but is not limited to, fuel or propane storage tanks, solar or wind systems (including power purchase agreements), and other alternative energy equipment.

b. Leased Equipment to be Noted in the Appraisal

The appraiser must identify leased items in the appraisal report. Some leases may encumber the title making the property less than fee simple. The appraiser must consider any detrimental effect on the value of the property if the leased items are removed by the lessor.

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25. Alternative Energy Equipment

a. Alternative Energy Systems

Alternative energy systems use wind, geothermal, or solar energy to produce energy to support the habitability of the structure.

b. Market Acceptance to be Considered

The appraiser must analyze the market acceptance of special energy-related building components and equipment, including solar energy components, high-energy efficiency housing features and components, geothermal systems, and wind powered components.

c. No Value to Leased Equipment

Leased equipment must not be given value in the appraisal.

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26. Roof Covering

The roof covering must:

prevent entrance of moisture, and provide reasonable future utility, durability, and economy of maintenance.

b. Multiple Shingle Layers

When a defective roof with three or more layers of shingles must be replaced, all old shingles must first be removed.

c. Appraiser Expectation

The appraiser is not required to climb onto the roof.

d. Appraisal Considerations when the Roof is Not Visible

When the appraiser is unable to view the roof, the appraiser must explain why the roof is unobservable and report how the condition of the roof was determined. For example, a roof may be covered with snow yet the appraiser observed no evidence of leaks and documentation was provided to the appraiser verifying the age of the roof. If available, other methods such as drones could be utilized to show the area.

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27. Attics

a. Appraiser Expectations

Fee appraisers must view the interior of readily accessible attic spaces. The appraiser is not required to climb into the attic. The appraiser is not required to move insulation or personal items that may hinder visibility. If there is no scuttle or other access to the attic, there is no requirement to provide access.

b. Deficient Conditions

If a deficient condition (for example, a water-stained ceiling or insufficient ventilation) is apparent, the appraiser must prepare the appraisal subject to the repair.

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28. Crawl Space

Expectation

Fee appraisers are required to view, but not enter, the crawl space.

b.

Requirements

The crawl space must:

have adequate access, be clear of debris, and be properly vented.

c. Floor Joists The floor joists must be sufficiently above the highest level of the ground to provide access for maintenance and repair of ductwork and plumbing.

d. Dampness Any excessive dampness or ponding of water must be corrected.

e. Vacant Area Beneath House

Not all houses with a vacant area beneath the flooring are considered to have a crawl space particularly if no mechanical systems are present, and there is no reason for access. If the area is properly vented and free of moisture, this condition is acceptable.

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29. Basements

a. Dampness or Structural Problems

The appraiser must report any dampness, or obvious structural problems that might affect the health and safety of occupants or the soundness of the structure.

b. Sump Pump

If a sump pump is present, the appraiser must recommend repair if it is not hard-wired by an acceptable wiring method or equipped with a factory electrical cord that is connected to a suitable receptacle.

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30. Swimming Pools

a. Pool Equipment

If the pool water contains algae or if the pool has been winterized, and the appraiser cannot determine if the pool equipment is in good working order, the appraiser may complete the appraisal under the extraordinary assumption that the pool and its equipment can be repaired at minimal cost without recommending any repairs.

b. Structural Defects

The appraiser must report readily observable defects including unstable sides and structural issues that would render the pool inoperable or unusable.

Depending on the extent of the damage, the appraiser must prepare the appraisal report “subject to” the repair of the pool, and include the pool in value, or prepare the appraisal “subject to” permanently filling in the pool, in accordance with local guidelines, and re-grading the yard, if necessary.

c. Above- Ground Pools

Above-ground pools which include water filtering equipment and decking may be included in value if the appraiser determines that above-ground pools are customary and accepted in the market area.

d. Local for Securing Pools

Swimming pools must be secured in accordance with any local requirements.

On a liquidation appraisal, if the pool is unsecure, securing the pool must be included on the repair list and reported as a safety hazard on the liquidation addendum.

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31. Burglar Bars

If a property has burglar bars, at least one window per bedroom must have a quick-release mechanism, unless there is an exterior door from the bedroom providing rapid egress.

b. Removal of Burglar Bars

If the appraiser is not able to confirm that quick release mechanisms are in good working order, the appraiser should prepare the appraisal subject to removal of the burglar bars as a safety consideration.

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32. Lead-Based Paint

a. Properties Built in 1978 or Later

If the dwelling or related improvements were built in 1978 or later, the appraiser must report all defective paint surfaces on the exterior and require repair of any defective paint that exposes the subsurface to the elements.

Interior defective paint on a dwelling built in 1978 or later is normally considered cosmetic.

b. Properties Built Before

If the dwelling or related improvements were built before 1978, the presence of lead-based paint must be presumed. Any defective lead-based paint is a safety hazard that must be remediated. The appraiser must clearly identify the location of any defective paint. Economic feasibility is not an acceptable reason for waiver of a repair involving lead-based paint.

c. Correction of Defective Lead-Based Paint

Any defective lead-based paint must receive adequate treatment to prevent the ingestion of contaminated paint. Either:

the surface requiring treatment must be thoroughly washed, scraped, wire brushed or otherwise cleaned to remove all cracking, scaling, peeling, chipping, and loose paint, and then repainted with two coats of a suitable nonleaded paint, or the paint shall be completely removed or the surface covered with a suitable material such as gypsum wallboard, plywood, or plaster before any painting is undertaken if the integrity of the surface needing treatment cannot be maintained.

d. Appraiser Certification of Repairs

The completion of all repairs involving defective lead-based paint must be certified by the VA-assigned appraiser.

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33. Wood Destroying Insects/Fungus/Dry Rot

Change Date March 28, 2019 This chapter has been revised in its entirety.

a. Apparent Damage

Appraisers must report any apparent evidence of wood destroying insect infestation, fungus growth or dry rot. The appraisal must be prepared subject to a wood destroying insect inspection if any infestation or damage is apparent, and all damage must be repaired.

b. Termite Infestation Probability Map

If the property is located in an area on the Termite Infestation Probability Map where the probability of termite infestation is "very heavy" or "moderate to heavy" on origination appraisals, a wood destroying insect inspection report must be required on the NOV.

USDA Forest Service Home and Garden Bulletin 64 (revised 2006)

Continued on next page

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33. Wood Destroying Insects/Fungus/Dry Rot, continued

c. Local

Webpage

The specific borders for some of the zones are difficult to determine from this map. Additional information may be found on VA’s local requirements webpage (see Topic 1, Subsection h of this Chapter).

d. Non- Residential Improvements

Small sheds or other detached, non-residential improvements which were not given value on the appraisal report may be excluded from the inspection report.

e.

for Properties in Condominium Developments

A termite inspection is not required on units in high-rise condominiums (units are stacked vertically). For villa and townhome style condominiums where units are side by side, not stacked, if located in a “very heavy” or “moderate to heavy” zone, a termite inspection must be required on the NOV unless the homeowners association provides evidence of treatment.

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34. Radon Gas

Change Date 2019 This chapter has been revised in its entirety.

a. Testing Recommended by VA

On the NOV that is provided to Veterans with the results of the appraisal, VA recommends testing for radon gas.

b. Builder Certification

On proposed and new construction cases, the builder must certify that radon resistant construction techniques were used where applicable and construction meets any local or state building codes for radon control. Radon resistant construction techniques are considered to be applicable for properties located in Radon Zone 1 as designated by the EPA at the following website:

https://geopub.epa.gov/Radon/.

Additional information about radon resistant construction techniques is available at the following link:

https://www.epa.gov/radon/radon-resistant-construction-basics-and-techniques.

c. Additional Information

Additional information about radon gas is available at the following link:

https://www.epa.gov/radon.

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35. Potential Environmental Problem

a. Potential Environmental Problem

The appraiser must report and consider the effect on value of any apparent indication of a potential environmental problem.

b. Examples Examples include, but are not limited to:

underground storage tanks, slush pits, oil and gas wells (operating or abandoned), hydrogen sulfide gas emitted from petroleum product wells, chemical contamination (including methamphetamine) or soil contamination from sources on or off the property.

c. Appraisal

The appraisal report must be prepared subject to correction of the problem in accordance with any local, state, or federal requirements, or documentation from the appropriate local, state, or federal authority that the condition is acceptable.

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36. Stationary Storage Tanks

a. Distance

If the property is located within 300 feet of an above-ground or subsurface stationary storage tank with a capacity of 1,000 gallons or more containing flammable or explosive material, the appraiser must report this information in the appraisal. This includes storage tanks for domestic and commercial uses as well as automotive service station tanks.

Comparable Sales

The appraiser should use comparable sales in similar locations, if available.

c. NOV

The SAR must include the information on the NOV, requiring the Veteran’s signed acknowledgement to ensure the Veteran is fully informed of the situation.

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37. Mineral, Oil, and Gas Reservations or Leases

a. Influence on Property

The appraiser must analyze and report the degree to which residential benefits may be impaired or the property damaged by the exercise of the rights set forth in oil, gas, and mineral reservations or leases.

b. Appraisal

The appraiser should consider the following:

the infringement on the property rights of the fee owner caused by the rights granted by the reservation or lease, and the hazards, nuisances, or damages to the subject property from exercise of reservation or lease privileges on neighboring properties.

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38. High Voltage Electric Transmission Lines

a. Residential Structure

No part of any residential structure may be located within a high voltage electric transmission line easement.

b. Detached Improvements

Any detached improvements even partially in a transmission line easement will not receive value for VA purposes.

c. Distance

If the property is within 100 feet from the nearest boundary of a high voltage electric transmission line easement, the appraiser must comment in the appraisal.

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39. High Pressure Gas and Liquid Petroleum Pipelines

a. Residential Structure

No part of any residential structure may be located within a high-pressure gas or liquid petroleum pipeline easement.

b. Detached Improvements

Any detached improvements even partially in the pipeline easement will not receive value for VA purposes.

c. Distance

If the property is within 100 feet from the nearest boundary of a high-pressure gas or liquid petroleum pipeline easement, the appraiser must comment in the appraisal.

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40. Properties near Airports

Responsibility

Appraisers must be familiar with noise zones and safety-related zones surrounding airports in areas where they perform appraisals for VA.

b. Appraisal

Whenever a property is located near an airport, appraisers must consider the effect on value of any airport noise and select comparable sales, if available, with the same airport influence.

c. Proposed Construction in a Clear Zone

Proposed construction located in a Clear Zone (also known as a Runway Protection Zone) is not eligible. The appraiser must stop working on the appraisal and notify the lender immediately.

d. Existing or New Construction in a Clear Zone

For existing or new construction located in a Clear Zone, the following Veteran’s acknowledgement must be required on the NOV and signed by the Veteran: “I am aware that the property being purchased is located near the end of an airport runway and this may have an effect upon livability, safety, value and marketability of the property.”

e. Accident Potential Zone

For all properties located in an accident potential zone, the following Veteran’s acknowledgement must be required on the NOV and signed by the Veteran: “I am aware that the property being purchased is located in an accident potential zone and this may have an effect upon the livability, safety, value, and marketability of the property.”

f. Maps Available Online

Airport noise zone maps may be found at https://www.faa.gov/airports/environmental/airport_noise/noise_exposure_maps/.

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41. Manufactured Home Classified as Real Estate

a. MPRs Manufactured homes must meet the VA MPRs described in this Chapter.

b. Real Estate Entity

The manufactured home and site must be considered a real estate entity in accordance with state law and meet all local zoning requirements for real estate.

c. Permanent Foundation

The manufactured home must be placed on a permanent foundation, constructed to withstand both supporting loads and wind-overturning loads, that meets state and local requirements.

d. HUD Standards

The manufactured home must be built to HUD Manufactured Home Construction and Safety Standards.

e. Space

The manufactured home must have a floor area of not less than 400 square feet for a singlewide, or 700 square feet for a double wide manufactured home.

f. State/Local

Fee appraisers are expected to be familiar with state and local regulations governing manufactured homes (for example, missing HUD labels, alterations, modifications, additions, or component replacements), and to prepare appraisals subject to appropriate requirements for compliance.

g. Proposed Construction

If the manufactured home is appraised as proposed construction, the following exhibits are required:

foundation plan, floor plan showing room layout and exterior dimensions, elevation plans, and specifications for flooring, heating, plumbing, electrical equipment, appliances and other items included with the manufactured home.

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42. Modular Homes

a. State/Local Codes

Modular homes must meet all state and local building codes.

Comparable Sales

The appraiser will typically treat modular housing and on-frame modular housing in the same manner as conventionally built housing. The appraiser must select comparable sales that would be competing properties on the market which may include modular homes, conventionally built homes, or manufactured homes.

c. On-frame Modular Home Requirements

On-frame modular housing is factory built on a permanent chassis. The appraiser must ensure that:

all running gear is removed, the crawl space is covered by a vapor barrier with vented permanent masonry skirting, the skirting has an access hatch, and the home is secured to a permanent foundation that meets state and local requirements.

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43. Energy Conservation and Sustainability

a. Energy Efficient Mortgages

Energy efficient mortgages are described in Chapter 7 of this Handbook.

Veterans are provided information about this program in item #1a on NOVs issued for existing properties (see Chapter 13, Appendix A of this Handbook).

b. Energy Conservation Encouraged

VA encourages home improvements that conserve energy, reduce water usage, enhance safety or strengthen disaster preparedness.

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44. Requests for Waiver of MPR Repairs

a. Waiver Requested by a Veteran

After the NOV has been issued, at the request of the Veteran, VA will consider waiving MPR repairs if the following conditions are met:

the request is signed by the Veteran, the lender concurs with the Veteran’s request, and the property is habitable from the standpoint of safety, structural soundness, and sanitation.

These requests should not allow for the Veteran to waive MPRs that could result in safety issues with the home.

b. Inspection Report

In support of the waiver request, while not required, providing an inspection report from a licensed professional who is qualified to assess the condition of the item in question will ensure the Veteran is fully informed about the condition of the item.

c.

Contributory Value

If the request is approved, VA staff will amend the NOV, removing the repair requirement(s). Since appraisals are prepared “subject to” repairs, VA staff may reduce the value by the contributory value of the waived repair(s). If the contributory value of the repair item(s) is not material, the NOV may be issued without a change in value.

d. Materials Shortage Following a Natural Disaster

Following a natural disaster, shortages of materials could delay the completion of repairs. The RLC of jurisdiction should be contacted for consideration of repair waivers on a case-by-case basis when a Veteran wishes to proceed with purchasing or refinancing a home in need of repairs when needed materials are not readily available.

e. Escrowed Funds for Completion of Repairs

Depending on the nature of required repairs, it may be advantageous for the Veteran to have the MPR repairs completed after closing on the loan. Lenders may hold funds in escrow for repairs to be completed after closing, however all repairs must be completed and escrowed funds distributed before the loan may be guaranteed by VA.