24 C.F.R. § 200.145

Property and mortgage assessment

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(a) The mortgagor is responsible for making those investigations, analyses and inspections it deems necessary for protecting its interests in the property.

(b) Any appraisals, inspections, environmental assessments, and technical or financial evaluations conducted by or for the Commissioner are performed to determine the maximum insurable mortgage, and to protect the Commissioner and the FHA insurance funds. Such appraisals, inspections, assessments and evaluations neither create nor imply a duty or obligation from HUD to the mortgagor, or to any other party, and are not to be regarded as a warranty by HUD to the mortgagor, or any other party, of the value or condition of the property.

(c) For all new construction as well as structural repairs and/or renovations of existing properties, to the extent that an inspection is required to determine if construction quality of a one- to four-unit property is acceptable as security for an FHA-insured loan, the following requirements apply:

(1)(i) In areas where local jurisdictions provide building code enforcement and the requisite documentation, the lender shall provide a copy of:

(A) The building permit, or its equivalent, and a copy of the certificate of occupancy, or its equivalent; or

(B) A satisfactory inspection notice for work completed, or its equivalent.

(ii) The documentation provided under paragraph (c)(1)(i) of this section shall be considered satisfactory evidence of completion of the work.

(2) In jurisdictions that do not provide building code enforcement and requisite documentation, three inspections are required for new construction. For existing construction, only one inspection and certification of work completed for structural repairs and renovations is required. For both new and existing construction, the lender shall, in order to ensure compliance with FHA requirements:

(i) Select a Residential Combination Inspector (or its successor designation) or a Combination Inspector (or its successor designation) certified by the International Code Council (or its successor organization) who is licensed or certified as a home inspector in accordance with the applicable State and local requirements governing the licensing or certification of those jurisdictions that license or certify such inspectors in the respective jurisdiction. The lender shall provide a certification from such inspector that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.

(ii) In the absence of such Residential Combination Inspector and Combination Inspector, the lender shall obtain an inspection performed by a third party, who is a registered architect, a professional engineer, or a trades person or contractor, and who has met the licensing and bonding requirements of the State in which the property is located. The lender shall provide a certification from such inspector that the inspector is licensed and bonded under applicable State law, and that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.

[61 FR 14404, Apr. 1, 1996, as amended at 83 FR 31042, July 3, 2018]

Notes of Decisions

Cited in 4 cases, 1961–2000 · leading case: United States v. Neustadt, 366 U.S. 696 (1961).

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United States v. Neustadt, 366 U.S. 696 (1961). “3 24 CFR §§200.145 , 200.146, 200.148 (1959 ed.”

Gibson v. Evansville Vanderburgh Bldg. Comm'n, 725 N.E.2d 949 (Ind. Ct. App. 2000). “Further, to comply with § 226 of the National Housing Act, the sellers had to deliver to the buyers, prior to the sale of the property, a written statement setting forth the FHA appraised value. This written statement of appraisal is what the plaintiff relied on in purchasing…”

Carolinas Cotton Growers Ass'n, Inc. v. The United States of Am. & John R. Block, Sec'y of Agric., 785 F.2d 1195 (4th Cir. 1986). “The purpose essentially was to assure that federal mortgage money would be protected, in the sense that the lender could lend no more than an agreed on percentage of the appraisal value as fixed by the FHA.”

Untitled Texas Attorney Gen. Opinion (Tex. Att'y Gen. 2000). ““); 24 C.F.R. § 200.145 (1999) (“Any appraisals, inspections, environmental assessments, and technical or financial evaluations conducted by or for the [Federal Housing] Commissioner are performed to determine the maximum insurable mortgage, and to protect the Commissioner and…”

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