Chapter 12 Minimum Property Requirement
Overview
This chapter contains the following topics.
In this
Chapter
Topic
Topic Name
See
Page
1
Minimum Property Requirement Procedures
12-3
2
Marketable Real Estate Entity
12-5
3
Space Requirements
12-6
4
Access
12-7
5
Encroachments
12-9
6
Drainage and Topography
12-10
7
Geological or Soil Instability, Subsidence, and Sinkholes
12-11
8
Special Flood Hazard Area
12-13
9
Coastal Barrier Resources System
12-14
10
Lava Flow Hazard Areas
12-15
11
Non-Residential Use
12-16
12
Zoning
12-17
13
Local Housing/Planning Authority Code Enforcement
12-18
14
Utilities
12-19
15
Water Supply and Sanitary Facilities
12-20
16
Individual Water Supply
12-22
17
Individual Sewage Disposal
12-24
18
Shared Wells
12-25
19
Community Water Supply/Sewage Disposal Requirements
12-26
20
Hazards
12-27
21
Defective Conditions
12-28
22
Mechanical Systems
12-29
23
Heating
12-30
24
Leased Mechanical Systems and Equipment
12-31
25
Alternative Energy Equipment
12-32
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-2
1. Minimum Property Requirement Procedures, continued
a. MPRs,
continued
Topic
Topic Name
See
Page
26
Roof Covering
12-33
27
Attics
12-34
28
Crawl Space
12-35
29
Basements
12-36
30
Swimming Pools
12-37
31
Burglar Bars
12-38
32
Lead-Based Paint
12-39
33
Wood Destroying Insects/Fungus/Dry Rot
12-40
34
Radon Gas
12-42
35
Potential Environmental Problem
12-43
36
Stationary Storage Tanks
12-44
37
Mineral, Oil and Gas Reservations or Leases
12-45
38
High Voltage Electric Transmission Lines
12-46
39
High Pressure Gas and Liquid Petroleum Pipelines
12-47
40
Properties Near Airports
12-48
41
Manufactured Home Classified as Real Estate
12-49
42
Modular Homes
12-50
43
Energy Conservation and Sustainability
12-51
44
Requests for Waiver of MPR Repairs
12-52
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-3
1. Minimum Property Requirement Procedures
Change Date
October 18, 2019
• This chapter has been revised in its entirety.
a. MPRs
VA has established Minimum Property Requirements (MPRs) to protect the
interests of Veterans, lenders, servicers, and VA. Properties must meet these
requirements prior to guaranty of the loan by VA.
b. Appraisal is
Not a Home
Inspection
While VA-assigned fee appraisers must note any readily apparent repairs that
are needed, it is important to distinguish the differences between a real estate
appraisal and a home inspection report. The fee appraiser will not perform
operational checks of mechanical systems or appliances. The fee appraiser
estimates the value of the property to ensure that it is sufficient for the amount
of the proposed loan.
c. Safe, Sound,
Sanitary
MPRs help ensure that the property is safe, structurally sound, and sanitary.
The scope of MPRs also includes issues related to the property’s location and
legal considerations.
d. Appraisal
Subject to
Repairs to
meet MPRs
The appraiser will prepare origination appraisals “subject to” the completion
of any MPR repairs that appear to be needed and include the contributory
value of the completed repairs in the estimated market value. Liquidation
appraisals are prepared “as-is” (see Chapter 11, Topic 20 of this Handbook).
e. Recommend
Repairs, Not
Inspections
Appraisers must not prepare appraisals subject to inspections. The appraiser
must recommend repairs, not inspections, for any conditions that do not appear
to meet MPRs.
f. Cosmetic
Items
The appraiser should not recommend repairs of cosmetic items, items
involving minor deferred maintenance or normal wear and tear, or items that
are inconsequential in relation to the overall condition of the property. While
minor repairs should not be recommended, the appraiser should consider these
items in the overall condition rating when estimating the market value of the
property.
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-4
1. Minimum Property Requirement Procedures, continued
g. Detached
Improvements
Detached sheds or other improvments on the site may be included in value if
the improvement meets VA’s MPRs. If the improvement does not meet MPRs
it must be excluded from value. If the improvement presents a health or safety
hazard, the appraisal must be completed subject to the removal of the
improvement.
h. Home
Inspection
Recommended
After an origination appraisal is completed, the Notice of Value (NOV) that is
issued to the Veteran includes a recommendation that the Veteran may wish to
obtain a home inspection (see Chapter 13, Appendix A of this Handbook).
i. Local
Requirements
Information about MPRs concerning properties in specific locations are listed
by state at
http://www.benefits.va.gov/HOMELOANS/appraiser_cv_local_req.asp.
j. SAH
Additional MPRs apply to Specially Adapted Housing (SAH) program cases.
The Regional Loan Center (RLC) of jurisdiction should be contacted for
assistance with SAH questions.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-5
2. Marketable Real Estate Entity
Change Date
October 18, 2019
• This chapter has been revised in its entirety.
a. Single Real
Estate Entity
The property must be a single, readily marketable, real estate entity.
b. Multiple
Parcels
More than one parcel or lot may be included as long as all of the property is
contiguous and legally marketable. VA does not set a limit on the number of
acres that the property may have. If the property being appraised includes
more than one parcel, the appraisal must be prepared subject to placing all of
the parcels on one deed.
c. Road or
Waterway
Dividing the
Property
If a property is divided by a road or waterway, the appraiser must determine
the effect on the utility of the property to ensure that the property is a readily
marketable, real estate entity.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-6
3. Space Requirements
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Space
Requirements
Each living unit must have sufficient space for:
• living,
• sleeping,
• cooking and dining, and
• sanitary facilities.
b. Non-
Standard
Construction
Non-standard house styles which may be unique in a market area, for example,
log houses, earth sheltered houses, dome houses, and houses with lower than
normal ceiling heights, must meet any local building codes. The appraiser
must consider the marketability of the home in the appraisal.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-7
4. Access
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Street
Access
Each property must be provided with a safe and adequate pedestrian or
vehicular access from a public or private street with an all-weather surface.
b. Private
Road
Requirements
Private roads must be:
• protected by a permanent easement, and
• maintained by a homeowners association or joint maintenance
agreement.
c.
Maintenance
Agreement
Signatures
If a maintenance agreement does not exist, every effort should be made to
obtain the agreement of all owners of properties on the private road to share
the cost of maintaining the road.
d. RLC
Approval
Required if
the Veteran is
Accepting
Additional
Responsibility
In the absence of an agreement signed by all owners, particularly those of
properties located between the subject property and the public road, an
agreement by a Veteran to accept responsibility for a disproportionate share of
the road must be reasonable in regards to the distance from the subject
property to the public road. The RLC of jurisdiction must be contacted in order
to approve the agreement. VA will not accept an agreement in which the
Veteran accepts sole responsibility for maintaining an unreasonable distance
of the private road as this could create a burden for the Veteran as well as
future property owners.
e. Private
Street in PUD
or
Condominium
If private street maintenance is covered in the organizational documents for a
planned unit development (PUD) or condominium, or by state law, the NOV
may be issued without a requirement for further documentation.
f. Easements
Must Run with
the Land
Each living unit must be accessible without passing through any other living
unit or trespassing on adjoining properties. Any easements required must run
with the land.
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-8
4. Access, continued
g. Backyard
Access
Access to the backyard must be provided without passing through any other
living unit. For a row-type dwelling, the access may be by means of
• an alley,
• easement, or
• passing through the subject dwelling.
h. Exterior
Wall Access
Adequate space to perform maintenance of the exterior walls must be present
between buildings.
i. Property
Constructed
Adjacent to
Another
Property Line
A building constructed on or next to a property line must be separated from the
adjoining building by a wall extending the full height of the building from the
foundation to the ridge of the roof.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-9
5. Encroachments
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a.
Encroachments
The appraiser must report any apparent encroachments of the subject’s
dwelling, garage, or other improvements onto an adjacent property, right-of-
way, utility easement, or building restriction line and any apparent
encroachments of a neighboring dwelling, garage, or other improvements onto
the subject property.
b. Prompt
Notification
The appraiser must notify the lender of the encroachment promptly to provide
as much time as possible to resolve the issue.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-10
6. Drainage and Topography
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Grading
The site must be graded so that it
• provides positive, rapid drainage away from the perimeter walls of the
dwelling, and
• prevents ponding of water on the site.
b.
Topographic
Conditions
The appraiser must report any danger due to topographic conditions, such as
mudslides from adjoining properties, falling rocks, or avalanches.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-11
7. Geological or Soil Instability, Subsidence, and Sinkholes
Change Date October 18, 2019
• This chapter has been revised in its entirety.
a. Soil
Conditions
The appraiser must report any readily observable soil conditions of the site,
and other physical features that affect the value of the site. The appraiser
should also consider any published reports regarding the instability of the soil
and surface support of the land concerning the subject and nearby properties.
The appraiser must consider any effect on the estimated market value of the
property.
b. Subsidence
Subsidence may be encountered where homes are constructed on uncontrolled
fill or unsuitable soil, in locations near mining activity or extraction of
subsurface minerals (to include fracking), or where the subsoil or subsurface is
unstable and subject to slippage or expansion. Signs of subsidence may
include cracks in the terrain, sinkholes, foundation damage or settlement
problems.
c. Dangerous
Subsidence or
Sinkholes
The appraiser must report any probable or imminent danger of subsidence or
sinkholes. Depending on the extent of the problem, it could be considered a
hazard (see Topic 20 of this Chapter) which would make the property
ineligible. The appraiser must notify the lender promptly when a hazardous
condition is found.
d. Repairs by
Contractor
If a settlement problem that does not have the severity of a hazard is apparent,
the appraisal must be prepared “subject to repair” by a licensed contractor (for
example, step-cracks in an exterior wall, or cracked flooring with significant
vertical displacement).
e. Hairline
Cracks
Minor hairline cracks due to expansion or normal settlement that are common
in the market area do not typically require repair.
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-12
7. Geological or Soil Instability, Subsidence, and Sinkholes,
continued
f. New or
Proposed
Property
For new or proposed construction properties, in areas that have a history of
geological or soil instability, the builder must submit either:
• a certification that to the best of the builder’s knowledge and belief,
any geological or soil-related hazard has been compensated for in the
engineering design of the improvements and no portion of the
construction will rest on fill, or
• evidence from a qualified geologist or engineer that the subject site
either does not present unusual geological soils-related hazards or such
hazards have been compensated for in the engineering design of the
improvements. (Qualified geologists are state licensed or are a
member of a national or state organization which requires
responsibility, experience, education and demonstrated ability in the
field of engineering geology.)
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-13
8. Special Flood Hazard Area
Change Date
October 18, 2019
• This chapter has been revised in its entirety.
a. Flood
Insurance
Properties located in a FEMA Special Flood Hazard Area (SFHA) must be
covered by a flood insurance policy. Properties located in a SFHA are not
eligible if flood insurance is not available.
b. Regular
Flooding
Based on the appraiser’s knowledge of the market area, properties that are
subject to regular flooding are not eligible, whether or not the area has been
designated an SFHA.
c. Verification
of Flood Zone
While appraisers must provide flood zone information on the appraisal report,
flood zone maps do not typically indicate the location of specific properties.
Lenders are responsible for verifying the flood zone information.
d. Flood
Zones
SFHAs are usually designated Zones A, AO, AH, A1-A30, AE, A99, AR,
AR/AE, AR/AO, AR/A1-A30, AR/A, V, VE, and V1-V30. Flood insurance is
not required in Zones B, C, X, and D.
e. Excluding
Non-
Residential
Improvements
At the Veteran’s request, non-residential improvements such as detached
garages and small sheds may be excluded from the flood insurance policy if
they are also excluded from the appraised value. The cost of flood insurance
with and without coverage for the detached building should be compared as
excluding a detached building may not be worthwhile.
f. Private
Flood
Insurance
Veterans may elect to obtain private flood insurance instead of obtaining flood
insurance through the National Flood Insurance Program.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-14
9. Coastal Barrier Resources System
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Eligibility
Properties located in Coastal Barrier Resources System (CBRS) areas are not
eligible for an appraisal.
b. Appraiser
Responsibilities
Appraisers who perform appraisals for VA near the Atlantic Ocean, the Great
Lakes, the Gulf of Mexico, or the Caribbean Sea must be familiar with any
CBRS areas. If the appraiser finds that a property on which an appraisal has
been ordered is located in a CBRS area, the appraiser must stop work and
promptly notify the lender.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-15
10. Lava Flow Hazard Zones
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Appraiser
Responsibility
Lava Flow Hazard Zones are designated by the United States Geological
Survey. Appraisers who perform appraisals for VA in affected areas must be
familiar with these zones.
b. Property
Eligibility
Properties in Zones 1 and 2 are not eligible for appraisal. If the appraiser
finds that a property on which an appraisal has been ordered is located in
Zone 1 or 2, the appraiser must stop work and promptly notify the lender.
c. Market
Value to be
Considered
If the property is in a Lava Flow Hazard Zone other than Zone 1 or 2, the
appraiser must report the zone information in the appraisal and analyze the
effect on market value.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-16
11. Non-Residential Use
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Eligibility
Considerations
A property that has both a residential and business use may be eligible for loan
guaranty if:
• the property is primarily for residential use,
• the non-residential use does not impair the residential character,
• the property contains no more than one business unit, and
• the property is legally permitted and conforms to current zoning, or is a
legal, non-conforming use that is accepted by the local authority.
b. No Value to
Business or
Commercial
Property
No value may be given to the business operations or commercial fixtures in
the appraisal.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-17
12. Zoning
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Zoning
Compliance
The property must comply with all applicable zoning ordinances.
b. Legal, Non-
Conforming
Use
If the property does not comply with current zoning ordinances, but is
accepted by the local authority, the appraiser must describe the property as
“Legal Non-Conforming” and comment on the property’s marketability and
any adverse effect this classification may have on value. The appraiser must
state whether or not the dwelling may be legally rebuilt if destroyed.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-18
13. Local Housing/Planning Authority Code Enforcement
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Local
Authority
Requirements
If the property is located in an area where specific local housing/planning
authority code requirements are enforced in conjunction with the sale of
homes, the appraiser must describe the requirements in the appraisal report.
b. Repairs
Required by a
Local
Authority
If the appraiser is aware of any repairs that will be required due to local code
enforcement, for example, the removal of unpermitted improvements, the
appraiser must prepare the appraisal subject to these repairs.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-19
14. Utilities
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Electricity
Each living unit must have electricity for lighting and for necessary
equipment.
b. Appraiser
Not
Conducting
Operational
Checks
Since the appraiser does not perform any operational checks of mechanical
systems or appliances, the utilities are not required to be turned on when the
appraiser visits the property.
c. Electrical
Wires
Any visible frayed or exposed electrical wires must be repaired.
d. Utilities for
Living Units
Utility services must be independent for each living unit, except
• units in a two to four-unit property may share water, sewer, gas,
or electricity as long as there are separate service shut-offs for
each unit, and
• units under separate ownership may share connections from the
main to the building line when those connections are protected by
an easement and a maintenance agreement acceptable to VA.
e. Access for
Maintenance
and Repair
Individual utilities serving one living unit shall not pass over, under, or
through another living unit unless there is a legal provision for a permanent
right of access for maintenance and repair of the utilities without trespass on
adjoining properties.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-20
15. Water Supply and Sanitary Facilities
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Water and
Sewer
The property must have:
• a continuous supply of safe and potable water for drinking, bathing,
showering and sanitary uses,
• hot water,
• sanitary facilities, and
•
a safe method of sewage disposal.
b. Safe
Drinking
Water
Given the importance of safe drinking water, appraisers must ensure that
accurate water supply information is reported in the appraisal and the Staff
Appraisal Reviewer (SAR) must condition the NOV appropriately. If the
appraiser is aware of any issues regarding the water supply, the appraiser must
comment in the appraisal.
c. Market
Value
Considerations
Appraisers must comment and adjust for any market reaction discovered as a
result of water contamination, as well as any environmental stigma.
d. Filtration of
Water
Proper mitigation of lead contaminated water must include a central filtering
system which filters all water that could serve the property’s occupants. When
public water must be filtered, the requirements for individual water filtering
under Topic 17, Subsection d of this Chapter including a Veteran’s
acknowledgement, must be applied. Information about water filtration is
available at http://www.nsf.org/newsroom/consumer-guide-to-nsf-
international-certified-lead-filtration-devices.
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-21
15. Water Supply and Sanitary Facilities, continued
e. Individual
Water Supply
If the property has an individual water supply see Topic 17 of this Chapter for
additional requirements.
f. Individual
Sewer Supply
If the property has an individual sewer supply see Topic 18 of this Chapter for
additional requirements.
g. Connection
Mandated by
a Local
Authority
If public water or sewer is available and the local authority mandates
connection, the appraiser must prepare the appraisal “subject to” connection.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-22
16. Individual Water Supply
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Health
Authority
Requirements
Water quality for an individual water supply must meet the requirements of the
health authority having jurisdiction. If the local authority does not have
specific requirements, the guidelines established by the Environmental
Protection Agency (EPA) will apply. Additional information is available at
the following websites: https://www.epa.gov/privatewells/private-drinking-
water-well-programs-your-state and
https://www.cdc.gov/healthywater/drinking/private/wells/testing.html.
b. Third Party
Testing
All testing must be performed by a disinterested third party. This includes
collecting and transporting the water sample from the water supply source.
The sample may be collected and tested by the local health authority, a
commercial testing laboratory, a licensed sanitary engineer, or other party that
is acceptable to the local health authority. At no time will the Veteran or other
interested party collect and/or transport the sample.
c. Conditions
Requiring a
Veteran’s
Signed
Statement
The appraiser must comment in the appraisal and the Veteran must
acknowledge awareness in writing when the water to the property is:
• supplied by dug wells, cisterns, or holding tanks used in conjunction
with water purchased and hauled to the site,
• provided with a mechanical chlorinator,
• provided through springs, lakes, rivers, sand-point or artesian wells, or
• supplied with a rainwater catchment system.
d. Water
Filtration
System
If the property has a water filtration system, the Veteran must acknowledge in
writing that the water must be continuously treated as required by the local
health authority to be considered safe for human consumption and for this to
be effective, the system must be inspected and maintained to include filter
replacements per the manufacturers’ recommendations.
Continued on next page
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-23
16. Individual Water Supply, continued
e. Distance
Requirements
The appraiser must be familiar with the minimum distance requirements
between private wells and sources of pollution. The appraiser is not required to
sketch or note distances between the well, property lines, septic tanks, drain
fields, or building structures.
f. Testing
Validity
Period
Water quality test results are valid for 90 days from the date certified by the
local health authority unless the local authority indicates otherwise.
g. Connection
Mandated by
a Local
Authority
If public water is available and the local authority mandates connection,
connection is required (see Topic 16 of this Chapter).
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-24
17. Individual Sewage Disposal
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Individual
Sewage
Disposal
An individual sewage disposal system must adequately dispose of all domestic
wastes in a sanitary manner which will not create a nuisance, or in any way
endanger the public health.
b. Pit Privies
Individual pit privies are acceptable where such facilities are customary and
installed in accordance with the recommendations of the local health authority.
c. Health
Authority
Approval
On proposed construction cases, or new or existing construction cases where
the appraiser notes a problem, or if the area is known to have soil percolation
problems, health authority approval of the individual sewage disposal system
is required.
d. Connection
Mandated by
a Local
Authority
If public sewer is available and the local authority mandates connection,
connection is required (see Topic 16 of this Chapter).
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-25
18. Shared Wells
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Shared
Well
Requirements
A shared well refers to a well that serves two or more properties. The shared
well must be:
• capable of providing a continuing supply of safe and potable water to
each property simultaneously, so that each dwelling will be assured a
sufficient quantity for all domestic purposes,
• protected by a permanent easement, which allows for maintenance and
repair, and
• maintained under a well-sharing agreement containing provisions for
the cost of repairs that is binding on the signatory parties and
successors in title and has been recorded in public records.
b. Appraiser
Responsibility
The appraiser must report that that the property is served by a shared well and
note any readily apparent deficiencies.
c. Lender
Responsibility
The lender must obtain the shared well agreement and review the agreement to
determine eligibility.
d. Water
Quality
The water quality must meet the requirements for individual wells described in
Topic 17 of this Chapter.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-26
19. Community Water Supply/Sewage Disposal Requirements
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Community
Water/Sewer
to be Noted in
an Appraisal
A community water/sewage system refers to a central system that is owned,
operated, and maintained by a private corporation or a nonprofit property
owners’ association. The appraiser must note that the property is on a
community water/sewage system in the appraisal report.
b. Sufficient
Water Supply
The water supply must be sufficient in size for the project. Water quality must
be approved by the local or state health authority.
c. Adequate
Size Sewage
System
The sewage system must be adequate in size and properly operated and
maintained to prevent it from becoming a menace to public health.
d. Local/State
Authority
Approval
The lender must obtain evidence of approval of the facilities by the local or
state health authority.
e. Trust Deed
A trust deed is required if the local or state authority that approved the system
does not:
• enforce compliance with its requirements,
• fix rates, and
• provide for prompt relief in case of deficient operation, service, or
exorbitant rates.
f. Trust Deed
for Private
System
If a trust deed is required for a privately-owned system, it should be similar to
the trust deed found in HUD Handbook 4075.12.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-27
20. Hazards
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Hazards
The property must be free of hazards which may:
• adversely affect the health and safety of the occupants,
• adversely affect the structural soundness of the dwelling and other
improvements to the property, or
• impair the customary use and enjoyment of the property by the
occupants.
b. Prompt
Notification of
the Lender
The appraiser must notify the lender promptly when a hazard is identified so
that the eligibility of the property may be addressed and, depending on the
nature of the hazard, to provide as much time as possible to resolve the
situation.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-28
21. Defective Conditions
Change Date October 18, 2019
• This chapter has been revised in its entirety.
a. Definition
Conditions which impair the safety, sanitation, or structural soundness of the
dwelling will cause the property to be unacceptable until the defects or
conditions have been remedied and the probability of further damage
eliminated. The integrity of the envelope of the structure must not be
compromised.
b. Appraisals
“Subject to”
Repair of
Defective
Conditions
Appraisals must be prepared “subject to” the repair of any defective conditions
with the contributory value of the completed repair included in value.
c. Examples
Examples of defective conditions include:
• defective construction,
• poor workmanship,
• evidence of continuing settlement,
• excessive dampness,
• leakage,
• decay, and
• termites.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-29
22. Mechanical Systems
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a.
Requirements
Mechanical systems must be:
• safe to operate, and
• protected from destructive elements.
b. Appraiser
Responsibility
While the appraiser is not required to test the operation of any mechanical
systems, the appraiser should recommend the completion of any repairs that
are readily apparent.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-30
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-31
24. Leased Mechanical Systems and Equipment
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-32
25. Alternative Energy Equipment
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-33
26. Roof Covering
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a.
Requirement
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-34
27. Attics
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-35
28. Crawl Space
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Appraiser
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-36
29. Basements
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-37
30. Swimming Pools
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Requirements
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-38
31. Burglar Bars
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a.
Requirement
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-39
32. Lead-Based Paint
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
1978
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-40
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
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-41
33. Wood Destroying Insects/Fungus/Dry Rot, continued
c. Local
Requirements
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.
Requirements
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-42
34. Radon Gas
Change Date
October 18, 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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-43
35. Potential Environmental Problem
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Considerations
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-44
36. Stationary Storage Tanks
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Distance
Requirement
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.
b.
Comparable
Sales
The appraiser should use comparable sales in similar locations, if available.
c. NOV
Requirement
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-45
37. Mineral, Oil, and Gas Reservations or Leases
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Considerations
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-46
38. High Voltage Electric Transmission Lines
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Requirement
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-47
39. High Pressure Gas and Liquid Petroleum Pipelines
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Requirement
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-48
40. Properties near Airports
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. Appraiser
Responsibility
Appraisers must be familiar with noise zones and safety-related zones
surrounding airports in areas where they perform appraisals for VA.
b. Appraisal
Considerations
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/.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-49
41. Manufactured Home Classified as Real Estate
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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
Requirements
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
Requirements
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-50
42. Modular Homes
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
a. State/Local
Codes
Modular homes must meet all state and local building codes.
b.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-51
43. Energy Conservation and Sustainability
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
VA Pamphlet 26-7, Revised
Chapter 12: Minimum Property Requirements
12-52
44. Requests for Waiver of MPR Repairs
Change Date
March 28, 2019
• This chapter has been revised in its entirety.
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.
