VA Construction Inspections

VA Lender’s Handbook Chapter 14 Summary

VA Construction Inspection

If you’re lucky enough to find a lender that is willing to finance a VA construction loan, or if you are using a cash-out refinance to make a major addition or improvement to your home, you will come face-to-face with the VA construction inspections, and it will be important for you to know how they work and what to expect. Chapter 14 in the VA Lender’s Handbook covers the construction inspections. We’ve written a series of articles on chapter 14, but we would like to provide this summary of the most important parts of Chapter 14 to give you a better idea if you want to take the time to go through all of the articles we’ve written on the full chapter.

 

Stages of Inspection

There are four stages of inspection that the VA requires every under-construction property to undergo, but the third and fourth usually happen at the same time, so in practice you’ll only need to worry about three inspections. Generally, you’ll have hired a contractor to take care of most of this, so you’ll mostly be a spectator, but Some of these apply more directly to VA construction loans, but most of it fully applies to additions to homes made with a cash-out refinance as well. The first stage is pretty basic. There must be an Equal Employment Opportunity Poster prominently displayed, potentially with a Spanish copy as well as an English copy. More importantly, depending on the nature of the work being done, either the excavation must be complete and ready for the footings and foundations, or the foundation walls are built and ready for backfill. In either case, the VA inspects it to make sure that the work is up to par and being done correctly.

 

The second inspection covers all the construction below the superstructure which was not inspected for any reason during the first inspection. The inspector will also examine the construction of the superstructure, “including quality of materials and workmanship, details of construction, and the suitability of arrangement of all items for subsequent installation of equipment and of interior and exterior finishing materials”. At this stage, the mechanical work should be mostly roughed-in, which should include the plumbing, heating, and electric installations. If you are building a modular home which has pieces that were assembled in a factory, you are exempt from the second inspection because the factory-assembled pieces must already be inspected to meet state standards.

 

The third inspection stage is essentially the final check to make sure that any and all onsite and offsite improvements or construction has been completed. Both the interior and the exterior will be subject to a thorough examination, with the VA checking the compaction of fill material, finish grading, drainage, utility connections, walks, drives, accessory buildings, retaining walls, planting, safety provisions at terraces, porches, and areaways, protection against the elements, masonry pointing, caulking at openings, paint coverage, flashing, design of dwelling structure, materials and details of their installation and finish, and other offsite improvements. The interior inspection includes evaluating the cabinets and millwork, materials, equipment, and details of their installation, interior surfaces, quality and operation of hardware, quality of tilework, glass, linoleum, venting of attics and underfloor spaces, and other things like fixtures.

 

The fourth inspection stage (which usually happens at the same time as the third), is very similar to an appraisal on an existing construction; pictures are taken, and the condition of the property is described, and a valuation is made. Other inspections may be made if there is something unusual or unique about the project, or if the builders being used have been the subject of frequent complaints.

 

Chapter 14 goes into more detail on the different stages and talks about re-inspections, missed inspections, and many other details related to the construction inspections on a VA construction loan or a major addition. If you are interested in further details on these things, you can read all of our articles on Chapter 14, which are written with the borrower in mind, or you can go directly to the VA Lender’s Handbook, which is available online, but written towards lenders. You can also call us or contact us via our website.

 

VA Construction Inspections – Delayed Construction and Changes to Exhibits

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 9

As mentioned in previous articles, the required construction inspections and construction exhibits are determined on a case-by-case basis for existing homes that are to be altered, improved, or repaired with a VA cash-out refinance. In this article, we’re going to cover two situations that might come up and how the VA handles them. This article will give you the first steps you need to take if either of these situations come up. The two situations we’re going to cover are when the installation of appliances or finished floor coverings needs to be delayed, and when changes to the construction exhibits need to be made after the appraisal but before loan closing.

Appraisal Coverages

For the most part, installation of appliances and floor coverings can be delayed until just prior to the closing of the loan, but there are two exceptions: bathroom floor covering and wood finish flooring. The Handbook does not explain why those two-floor coverings cannot be delayed, but even for appliances and floor types that can be delayed, there are conditions. In order to be delayed, the third-stage inspection report (the one that takes place once all construction has been completed) must have a description in Section 1 of

  • all appliances and finish floor covering to be installed as identified in the specifications, for example, carpet manufacturer’s name and carpet quality code number, and
  • the living area(s) involved, if not obvious

 

Also, the inspector must check two boxes in Section 6 of the inspection report: the “Prefinal Report Approved” box and the “Certification is required that lender’s inspection prior to loan closing reveals satisfactory installation of specified appliances and finish floor covering as described in Item 1 in the area(s) identified in Item 1.” The VA does not require that an updated Notice of Value be furnished; the existing Value Notice will still suffice. However, the same is not necessarily true of our second situation: changing the construction exhibits after an appraisal.

 

When changes need to be made to the construction exhibits, what needs to be done depends on whether there is a veteran under contract on the loan. Since we’re talking to veterans in these articles, we won’t be covering what needs to happen when a veteran is not under contract and the exhibits need to be changed. If you are looking for that information, go ahead and read Chapter 14 of the VA Lender’s Handbook. So, when you need to have a change made to the construction exhibits, you the veteran must make a written request to do so. Your lender can help you write and submit this request. The request must be made using VA Form 26-1844, Request for Acceptance of Changes in Approved Drawings and Specifications, then submitted to the local VA office of jurisdiction.

 

There is one exception to that rule – if the property was inspected by the Department of Housing and Urban Development (HUD), and the changes being made to the construction exhibits are clearly described on the HUD inspection report, you the purchaser have signed off on the changes, and the changes are minor, don’t add any cost to you, and won’t really have any effect on the fair market value of the property. Common examples of things that fit into this exception are things like changing the location of electrical outlets or windows, or choosing a different water heater, furnace, hardware, or bath fixtures.

Mailing your Documents

If the changes will not affect the property value, the change request goes to the inspector. When the inspector receives the request for a change in the construction exhibits, they confirm the information on the VA Form, inspect the property according to the plans, specifications, and change order, signs the change order in the appropriate space on the form, gives the builder (or you) the original counter-signed change order to forward to the lender, and will retain a copy. If the change will affect the value of the property, the request must go directly to the VA. The VA staff must approve the changes and will issue an amended Notice of Value (NOV). The amended NOV will be mailed directly to you and gives the lender instructions on how to obtain it.

 

VA Construction Inspections – Manufactured Homes

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 8

VA Guaranteed Manufactured Home Loans

The VA is only willing to guarantee manufactured homes if they are affixed to a permanent foundation and are classified as real estate. However, even under these two circumstances, manufactured homes are different from normal homes. In the case of construction inspections, manufactured homes are actually much simpler and worry-free. There’s actually a lot to be said about getting a manufactured home; it’s usually cheaper than buying a home, certainly cheaper than building your own home, and is much simpler in a lot of ways – especially when it comes to construction inspections.

 

Manufactured homes come in two flavors: those that have yet to be attached to a foundation on a lot and those that have been. We’ll cover both in this article. For a home that has yet to be attached, and is going to be attached as part of the loan, the first inspection is very simple; the inspector merely needs to make sure that the house is attached to the foundation properly. The second inspection on a manufactured home is skipped completely, since everything it would normally check is done in a factory and every state makes sure that manufactured home superstructures are built to code. In the third inspection, if there are any onsite or offsite improvements being made in addition to bringing in the manufactured home, they will need to be checked to make sure they are properly completed.

 

As you can tell, purchasing a new manufactured home is very simple from an inspection standpoint. Since manufactured homes are tested and regulated in-factory, not much needs to take place once it’s on the lot. Now, things get a little bit more complicated if you’re purchasing a used manufactured home and you’re moving it to a different lot. This situation doesn’t come up very often, since leaving a manufactured home on its own lot makes it essentially the same as buying a standard house. When a manufactured home is moved, there are four special inspection reports that need to be done to make sure the home is safe for habitation. These reports are: a Water-Plumbing Systems Inspection Report, an Electrical Systems Inspection Report, a Fuel and Heating Systems Inspection Report, and a certification that the roof was coated after set-up on the new site.

 

VA QualifiedThe nice thing, though, is that these inspections do not need to be conducted by an assigned VA inspector – they are usually done by their various subject-matter experts. In other words, a plumber fills out the plumbing report, and electrician fills out the electrical report, and so on. All these reports need to be done after the home has been installed and set up on the new lot. The roof coating certification can be made by the lender. The VA simply requires that a “qualified inspector” performs the inspections on each of the different systems. Usually this means plumbers, electricians, etc. but it can also mean other personnel. For example, while a plumber can only perform the plumbing inspection, a licensed manufactured home service personnel can perform any and all of the required inspections. The responsibility of ordering the inspections rests with the lender, but will probably require at least some coordination on your part. If any of the inspections performed on the home are unsatisfactory for whatever reason – done by an unqualified individual, filled out incorrectly, or the home does not meet the requirements of the inspection, then the home will not be eligible for the VA guaranty. In order to be eligible, the home needs to pass every inspection, and each inspection needs to be done properly by a qualified individual.

 

If you are interested in finding out what’s on the reports, the plumbing report is VA Form 26-8731a, the electrical systems report is VA Form 26-8731b, and the fuel and heating report is VA Form 26-8731c. They are all available for viewing and download on the VA website.

 

If you have any questions about construction inspections and whether they’re required for the work you want to do with cash out from a refinance, give us a call here at Low VA Rates or contact us via our website.

 

VA Construction Inspections – Local Building Inspections In Lieu of VA

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 7

 

So far in Chapter 14 we’ve talked about the purpose and scope of VA construction inspections, the difference between the inspections and the VA appraisal, the four stages of VA construction inspections, cases where a special or repeat inspection might take place, and what to do when an inspection was missed. In this article, we’re going to go over the scenarios and circumstances where it is acceptable for the builder or borrower to use inspections conducted by the local building authority in lieu of the VA building inspections.

 

The first thing to remember is that the third and fourth inspections can never be replaced by an inspection conducted by a local building authority; only the first and second inspections can be waived in favor of the building authority’s inspections. This can only happen when two requirements are met: First, the property must be located in an area where the procedures, practices, and track record of the local building authority is acceptable to the Department of Housing and Urban Development (HUD) for loan insurance purposes, and second, the third stage VA compliance inspection is performed by a VA fee inspector assigned by the VA office of jurisdiction. The VA relies on HUD for their evaluation of local building authorities because that’s their area of expertise.

 

As usual, there are exceptions to these rules. The first thing to keep in mind is that allowing the first and second inspections to be done by the local building authority has no effect on the required items of compliance and is really only advantageous because the building authority is going to inspect anyway and it’s nice to only have to deal with 3 or 4 inspections instead of 6 or 7 between the VA and the local building authority. Also, if this is a case of a Specially Adapted Housing grant, the VA must conduct all of its inspections using an assigned VA fee inspector so a local building authority inspection will not count. The VA has special requirements for improvements being made with their SAH grant, and they have found that it’s best to have their own inspectors conduct the inspection.

Building Codes

If you are able to use the local building authority’s inspections in lieu of the VA’s first and second inspections, there’s a little bit of paperwork that needs to be done. Most of this will be done by your lender, but you may need to provide information or input to complete some of it. The lender is required to keep a properly-executed clear third stage compliance inspection report conducted by the official VA inspector, and a copy of the occupancy permit (or something else that provides the same information) that is issued by the local building authority that states the construction was completed in compliance with all building codes.

 

The VA’s main concerns are that the veteran borrower is getting a suitable home that will last them as long as they need it, or, in the case of a major improvement or alteration, that the improvement truly improves the home and is built properly so as to last as long as the veteran will need it. They want to make sure that the veteran’s investment is protected, and they do everything in their power to make sure that their choice to use the VA loan benefits never comes back to bite them. This is why they require four total inspections, and it’s why they require the builder to provide some sort of insurance on the construction, and it’s why they have a long list of Minimum Property Requirements that a house must meet in order to be purchased with a VA loan.

 

That is also why the VA reserves the right to discontinue relying on a particular building authority if they find excessive construction deficiencies or construction complaints in the area that the building authority presides over. The VA may refuse to rely on a building authority even if HUD still chooses to. If a building authority is not conducting inspections that reasonably assure the VA of compliance with their standards, they will not rely on that building authority to conduct any more inspections.

 

VA Construction Inspections – Special, Missed, and Repeat Inspections

Deciphering the VA Lender’s Handbook Chapter 14 Part 6

 

Aside from the four standard inspections that every proposed or under-construction property must undergo in order to qualify for the VA guaranty, there may be special inspections that need to take place, some inspections may need to be repeated, or an inspection may have been missed by mistake. In any of these cases, the VA has a set of instructions in the Handbook on what needs to happen. If you’re wondering what the VA covers in the standard inspections, check out the articles just preceding this one in the series and you should find all the information you need. Keep in mind these inspections are not just for proposed or under-construction properties; these inspections can also apply to home renovations or improvements being funded through a VA cash-out refinance.

 

There are several cases where it might be appropriate for the VA to require a special inspection by a VA-assigned inspector. These special inspections can take place at any stage of construction and can be used by the VA to monitor cases involving any of the following:Inspection Completion

  • unusual site features
  • unusual construction methods, or
  • builders with frequent construction complaints

 

Special inspections can apply to homes currently under construction or homes being repaired or altered in a significant way. If the home is being repaired or altered, the phase of construction at which the special inspection takes place will be determined by the nature of the proposed work. When the home is under construction, the special inspection will take place in whatever stage of construction that the questionable features, methods, or builders are involved with.

 

Repeat inspections can be required in usually one of two cases. The VA may require a repeat inspection when a first or second stage inspection uncovers a noncompliant item or issue and the item or issue will be concealed before the next regular inspection takes place. A repeat inspection may also be ordered if there was noncompliance or incomplete work discovered at the third-stage inspection. A repeat inspection in that case is necessary because there are no more inspections. However, if two conditions are met, then a repeat inspection may not be required; if the issue is incomplete work and it is something minor, and the lender is willing to certify when it has been satisfactorily completed, then the VA can waive the repeat inspection.

 

While uncommon, there may be instances where a VA inspection was missed. When this happens, it’s usually through an oversight by whatever party is responsible for requesting them. If you have decided to take responsibility for requesting the inspections, it’s best not to forget, because issues can happen. However, if the inspection was missed, it might be able to be waived if the VA field office is provided with the following:

  • a written request signed by the lender and the veteran
  • evidence that the local building authority inspected the construction at the stage(s) not inspected by the VA, and
  • evidence of HUD’s consent to the waiver, if the case is HUD related

 

In other words, if the work you’re doing on your home has been inspected by the local building authority you can probably get a waiver for the inspection. In locations without a building authority to provide inspections at various stages, the VA provides the following note: “In areas without local inspections at prescribed construction stages, the VA inspector must provide a statement regarding his/her experience with the quality of the builder’s workmanship and the builder’s conformity with both constructions exhibits submitted to VA and VA minimum property requirements.”

 

Home Improvement InspectionsMissed inspections can actually have a serious impact on your project. If it’s a missed VA inspection, they may not be willing to guarantee the home loan. If it’s a missed inspection from the local building authority, they might make you undo everything you have done. It’s always best to stay transparent and work with the inspecting agencies that are relevant for your project. While inspections can be annoying and a headache, the consequences of not getting the required inspections can be much more annoying and a much bigger headache. Stay safe, and get your project inspected.

 

VA Loan Construction Inspections – Third Inspection Stage

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 5

 

As you’ve hopefully read from the two articles previous to this one, the VA construction inspections are broken up into three stages. Technically, though, there are actually four stages, but the third and fourth usually occur at the same time. In the previous articles we covered stage 1 and then stage 2, and in this one we’ll go over the third stage. This is obviously important information for builders to know, but it’s also important for the borrower to know if they are trying to get a VA construction loan – especially if they are planning on doing some or all of the work themselves. Also, it’s helpful for any VA borrower to know that if the home was built with VA inspections, there was an in-depth examination of the property done so if you find something wrong with your home after you’ve bought it, you can usually track down the inspection reports and see why it didn’t come up. This also applies to those who are making major improvements to their home using a cash-out refinance.

Construction Inspection Step 3The third (and fourth) inspection takes place after construction has been completed on the property, and the inspector checks for acceptable completion of all of the onsite and offsite improvements or construction. The third inspection really is a long and comprehensive process. The items that the inspector must check are grouped into two categories: exterior and interior, and cover the entire property from top to bottom, inside and out. The Handbook includes a full list of all the things that the inspector is to check for, which we have included below. The exterior list of things covers the pouring of the cement for the sidewalk and driveway, any retaining walls, utility connections, painting, and anything else that you might see, hear, or smell while living there. Here is the list for the exterior inspection:

  • compaction of fill material
  • protection against the elements and penetration of moisture
  • utilities
  • finish grading
  • masonry pointing
  • storm sewer system
  • drainage
  • caulking at openings
  • drainage channels
  • utility connections
  • paint coverage
  • grading
  • walks
  • flashing
  • curbs
  • drives
  • design of dwelling structure
  • gutters
  • accessory buildings
  • materials and details of their installation and finish
  • paving
  • retaining walls
  • pavement edging
  • planting
  • subgrade
  • safe terraces
  • base and wearing surface and erosion control
  • safe porches
  • safe areaways

 

Remember, the above list only covers the exterior things that need to be inspected. The third inspection also includes a thorough examination of the interior of the property. The superstructure and foundation of the home undergo their examinations at the first and second stage inspections, so the interior portion of the third inspection covers all of the finish work and work done in, around, and through the superstructure. Here is the list of the things that the interior inspection covers, as provided by the Handbook:

  • design
  • cabinets and millwork
  • quality and operation of hardware
  • materials, equipment, and details of their installation
  • details and operation of systems, equipment, and fixtures related to plumbing
  • quality of tilework
  • interior surfaces and their finish treatment
  • “” “” related to heating
  • quality of glass
  • “” “” related to ventilating
  • quality of linoleum
  • “” “” related to electric
  • venting of attics and underfloor spaces

 

In addition to all of the things in both the interior and exterior inspections, the inspector will also check that the individual water supply and sewage disposal system is in full compliance with the health authority having jurisdiction.

Construction Completion

Now, as mentioned above, the fourth inspection usually takes place at the same time as the third inspection, so what does the fourth inspection cover? It’s quite simple in comparison to the third; the inspector needs two pictures, a short description of the suitability of the property, a report of any shortcomings on the property, and state that any issues have been reported. The two pictures are to record the appearance of the dwelling and indicate the grading and drainage of the site. The short description should describe the condition, suitability, and readiness for use of all equipment, fixtures, and observable construction of the property. Shortcomings that might be reported include scratches in paint, poorly fitted doors, stuck windows, cracks in walls, etc.

 

If you’re interested in more information about the VA inspections, call or contact us here at Low VA Rates.

 

VA Loan Construction Inspections – Second Inspection Stage

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 4

 

VA construction inspections are broken up into three pieces, usually referred to as ‘stages’. The first stage inspection takes place either right before the foundation is laid, or right after, and examines the soil, the excavation, and the foundation (if it has been poured). It also makes sure that the VA’s Minimum Property Requirements have been met up to that point and that the construction is adhering to the construction exhibits that were submitted to the appraiser. The second inspection takes place later in the construction process and covers more items. We’ll cover the second inspection thoroughly in this article, and get going on the third inspection in the next article.

Construction Inspection Step 2

What is included in the second inspection actually depends a bit on whether the first inspection was conducted before or after the foundation was laid. The foundation needs to be inspected no matter what, so if the first inspection took place before the foundation could be inspected, then the inspector needs to look at the foundation during the second inspection. “All construction below the superstructure not installed or which was installed but not inspected or reported upon at the first inspection stage, including footings, foundations, piers, columns, waterproofing and drainage provisions”. The inspector’s goal is to make sure that the foundation was built correctly and soundly, and that the construction exhibits were followed in the construction.

 

The inspector will also look at the construction of the superstructure during this inspection. He or she will observe the quality of the materials and workmanship, the details of construction, and the suitability of the arrangement of all items for installing equipment later on and of all the interior and exterior finishing materials. “Superstructure” is defined as any part of the house built onto the foundation. While “inspecting the superstructure” may sound very broad, the inspector will know what to look for and will usually be fairly detailed in examining the workmanship and materials being used in construction. The purpose of the inspection is to make sure that the workmanship and materials are both high-quality, and to make sure that the home is being constructed according to the construction exhibits that were provided to the appraiser.

 

The inspector needs to observe the plan of the dwelling, including the arrangement of partitions and the sizes and placement of all openings. This part might take a few minutes for the inspector to make sure that all the openings are large enough and that the exhibits are being followed. The inspector makes sure that the plan is up to local code. In my area, that means things like every bedroom must have a window, and all bedroom and bathroom doors must be wide enough for a wheelchair. Each area will have different code requirements, and the inspector will be familiar with these.

 

, including the plumbing, HVAC, and electric installations. Granted, most of this work will be in-progress at this point, but the mechanical work should at least be roughed-in, and the inspector needs to examine the work in regards to making sure that the fixtures, equipment, and accessories are installed correctly, the installations do not impair the strength of any structural members, and that the installation allows for proper operation of the completed system. The second inspection is not the last inspection, so these things will be evaluated when the home is near-completion or has been completed, but it’s important that they are evaluated before they are finished in case there is something unacceptable in the way the basic components are being installed.

 

Important note for those buying a manufactured home and putting it on an empty lot – the first inspection (foundation) will need to take place, but the second inspection does not need to be conducted for manufactured homes. This is because the home is built in a factory and must be inspected to be in compliance with state standards in order for the company to legally sell the home. Unless you are getting a manufactured home, however, an inspector will need to conduct a second-stage inspection on the construction of the home.Passing the Home Inspection

 

VA Loan Construction Inspections – First Inspection Stage

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 3

 

The VA loan construction inspection process consists of three stages of inspections. In this article we’ll cover the first stage, and we’ll cover the second and third in subsequent articles. The three stages consist of a total of four inspections, but the last two are usually done at the same time, so in practice there are only three inspections. In the first stage, not very much is inspected because it is supposed to take place at the very beginning stages of construction on the home. The first and second-stage inspection requirements can be satisfied by inspections conducted by the local building authority in some, but not all, cases. If the VA is going to be performing the first and second-stage inspections, then there are two times the first inspection might take place at, and it depends on the conditions in the area.

Construction Inspection Step 1

The VA will notify the builder, lender, and inspector which time the first inspection should take place, so if you want or need to know which is the case for your home, you can ask your lender. The two times are “excavation complete and ready for footings and foundations”, and “foundation walls complete and ready for back fill”. They apply in two different situations, as explained in the Handbook:

 

  • Excavation complete and ready for footings and foundations usually applies in localities where it is advisable to have the bearing soil examined before construction proceeds, or
  • Foundation walls complete and ready for back fill usually applies where soil conditions are generally uniform and free of faults likely to cause foundation problems.

 

Let’s talk about the differences between the two possibilities. Obviously, the second possibility takes place at a later point in the construction process than the first, so logically, the second possibility will encompass more items to be inspected than the first. For the first possibility, where the excavation is complete but the foundation has not been put in yet, there are only so many things the VA can inspect. The inspector makes sure that VA Poster 26-83-1, Equal Employment Opportunity is the Law, is posted somewhere conspicuous, he checks the nature of the bearing soil that the foundation will be mounted on, and he checks the form work for the footings or the condition and quality of the footing trench if forms are not required. He will also make sure that up to this point the builders are complying with the construction exhibits and the VA Minimum Property Requirements that cover the location of the structures on the plot, and the depth of the excavation and its relation to street and proposed finish grades and to grades of adjoining improved properties.

VA Thorough Home Inspection

So if the inspection takes place before the foundation has been laid, essentially only 5 things are checked to make sure all is well. The second possibility for the first inspection to take place is also fairly simple, and takes place when the foundation is completed. In this second possibility, all of the things that would be checked before the foundation was laid are also checked at this time. So the VA Poster, the bearing soil, the form work for footings or the footing trench, and compliance with the VA MPRs concerning the excavations. In addition, however, the second possibility will also take into account the size, location, and condition of all footings, foundation walls, piers, and other supporting members, and the quality of materials and workmanship of masonry, damp proofing, and foundation drainage. These things aren’t checked in the first possibility because they aren’t there yet.

 

As mentioned above, the first or second possibility will be decided upon by the VA, and it depends on the soil conditions in the area the home is being built. In places where the soil is mostly uniform and doesn’t have any problems, the VA can wait until after the foundation is poured before inspecting it. In places where the bearing soil has a chance of being shifty or faulty in some way, however, the VA needs to inspect everything before the point-of-no-return. In the next article we’ll jump into talking about the 2nd-stage inspection.

 

VA Loan Construction Inspections – Obtaining an Inspection and Inspection Stages

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 2

 

In the last article we gave an overview of VA loan construction inspections and covered some basic information that this article (and following articles on Chapter 14) will build off of. If you haven’t read that article yet, you should go back and read it before moving on with this article. The first thing you need to know in this article is that . An appraiser’s main job is to determine a fair market value for the home being financed with a VA loan and make sure that the home meets the VA’s Minimum Property Requirements. This appraisal is not an inspection. An inspector’s job is to make sure that the build and construction of the home is up to professional quality and is safe for habitation. There is some overlap in what they do, but the inspector doesn’t care what the value of the home is; the inspector only cares whether the plumbing, wiring, framing, and roofing were all done in compliance with code and using professional methods.

VA Inspections and Appraisals

So, now that we know the difference between an inspector and an appraiser, let’s talk about how inspectors are assigned. The VA is the one who assigns an inspector from its roster of inspectors, and it does so “without favoritism or discrimination”. In most cases, the inspector is chosen at the same time as the appraiser, but if the appraisal requester chooses not to request the inspector at the same time and the Notice of Value will be issued by the VA staff, then the inspector can be assigned at the time that the VA issues the Notice of Value. In some cases, the inspector might be assigned before the appraiser is assigned. This can happen in cases where waiting for an appraiser to be assigned would delay construction. If you want to request an inspector before requesting an appraiser, then you need to work with your lender to submit a written request which includes the following:

  • a statement of understanding of the special nature of the procedure and the fact that inspection fees will be paid whether or not a VA value notice is issued, and
  • construction exhibits which are properly certified in accordance with Chapter 10, section 10 of the Handbook

 

Once an inspector is assigned by the VA, the builder is expected to communicate directly with the inspector to schedule the inspection(s). If you are the builder, make sure to get the inspector’s contact info so you can do so. The construction may be subject to up to three inspections, which are officially referred to as “compliance inspections” on VA Form 26-1839. Inspections are different based on which stage they are in. Chapter 14 talks about the different stages and what the inspectors specifically look for in each stage.

 

In the initial inspection, the inspector needs to look for and note any absence of VA Poster 26-83-1, Equal Employment Opportunity is the Law. If the builder fails to prominently display the poster, it will be listed as a noncompliance item on the inspection report. Every contractor (and subcontractor) is required to display the poster in noticeable places at any job sites that are being covered by VA value notices for proposed construction. The VA may not require this if you are making repairs or improvements to an existing home, especially if you are doing the work yourself. Check with your lender to be sure. If the home is in an area with significant concentrations of Spanish-speaking people, the Spanish version of the poster must be posted next to the English version. The VA takes this poster very seriously; if the poster is not up, the VA will inform the builder that no further inspections will take place until the poster is being displayed.

 

The VA does, however, provide the posters to the builder along with the NOV (Notice of Value) if the VA issues the NOV. If the builder needs additional posters for adequate coverage, they can contact the VA Forms and Publications Depot. In the next article, we’ll start covering the rest of the information in the inspection stages.

VA Loan Construction Inspections – Overview

 

Deciphering the VA Lender’s Handbook Chapter 14 Part 1

 

Chapter 14 of the VA Lender’s Handbook is dedicated to talking about construction inspections. We went over some of this information in our articles on Chapter 12, but Chapter 14 is the bible of VA construction inspections. This is great information if you are getting a VA construction loan, but it’s also great information if you are taking the more-likely route of refinancing your home to get cash-out in order to pay for an addition to your home. Either way, VA policies and procedures regarding construction inspections affect you, and you should know what to expect and how to handle them from your end. Not all home additions require construction inspections, and we’ll cover the differences between the ones that do and the ones that do not.

VA Loan Construction Inspection

First, the purpose per the Handbook: “The purpose of VA inspections during construction is to ensure that all onsite and offsite improvements have been acceptably completed according to the construction exhibits on which the VA value estimate is based, and VA Minimum Property Requirements (MPRs) per Chapter 12.” In other words, the inspections are in place to make sure that the construction was done properly and accurately based on the construction exhibits that the VA evaluated (if the construction was for an addition, there will still be construction exhibits required of some sort required). If you are looking for more information on what the VA requires for construction exhibits, check out our articles on Chapter 10 of the Handbook, which covers VA requirements for construction exhibits in depth.

 

Construction inspections can have a profound effect on your VA loan depending on the results. If the final inspection report comes back “clear”, then the lender can close the loan. If, however, the actual construction deviated from the construction exhibits that the appraiser used to determine the value of the home, the value may need to be adjusted accordingly. Also, if the inspection determines that the home does not meet the VA MPRs, then the VA will not guarantee a loan for the home. The type of inspections required depends on what the property is being appraised as, and the Handbook provides a handy table that goes over that information quite succinctly:

When the property is appraised as… Then…
proposed or under construction with no insured ten-year protection plan
  • either a full complement of inspections is required, or
  • a final (third stage) inspection is required, only if local building authority inspections are acceptable in lieu of VA first and second stage inspections.
proposed or under construction with an insured ten year protection plan Only a final (third stage) inspection is required.
existing construction with major

  • alterations
  • improvements, or
  • repairs
VA will determine on a case-by-case basis

  • what regular or special inspections are required, and
  • if it is appropriate, based on the nature of the work, to have the lender certify that it has been satisfactorily completed.

 

As you can see from the table, if the builder of the home is offering a ten-year insurance plan, then the inspections will be limited to the final inspection. In cases where the home is an existing construction and is getting major alterations made to it, the VA will determine what inspections are required.

 

You may be wondering if there are special requirements for Specially Adapted Housing. Specially Adapted Housing is housing that has unique features installed that make it more suitable to a person with a disability. The VA does not have any special requirements for SAH, other than encouraging inspectors to pay special attention to making sure that the adaptive features are, in fact, suitable. From the Handbook, “The compliance inspection procedures applicable in Specially Adapted Housing cases are identical with those for other types of cases, except that special emphasis should be given to the adaptive features.” If you are making plans to make a major improvement to your home, or you are planning on trying to get a construction loan, you may want to specifically ask your lender what inspections are going to be required. We will be covering a lot more details on VA construction inspections in the rest of the articles on this chapter.

 

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