Chapter 12: Minimum Property Requirements

© VA Lenders Handbook – VA Pamphlet 26-7

Overview

Purpose of MPRs

VA Minimum Property Requirements (MPRs) provide general acceptability criteria for properties which will become the security for VA-guaranteed loans.

In proposed or under construction cases, the MPRs help ensure that the property is constructed according to the applicable

• building code
• Federal regulations, and
• HUD requirements.

In existing and new construction cases, the MPRs provide a basis for determining that the property is

• safe, structurally sound and sanitary, and
• meets the standards considered acceptable in a permanent home in its locality.

Scope of MPRs

Any reference to “MPRs for existing construction” in this handbook applies to all MPRs outlined in this chapter, except those shown as specifically applicable to “proposed construction.”

Specially Adapted Housing

Additional MPRs apply to Specially Adapted Housing program cases. Each VA office has an SAH agent to answer questions.

In this Chapter

This chapter contains the following topics.

12.01 MPR Variations and Exemptions

Variations

VA may agree to modify the MPRs where justified by certain conditions common to a particular geographic area or occurring on the site, or where such conditions make compliance impractical or impossible.

Exemptions

An MPR for existing construction can be waived by the VA field office if

• a veteran is under contract to purchase the property, and
• the veteran and lender request the exemption in writing, and
• the property is habitable from the standpoint of safety, structural soundness and sanitation, and
• VA is satisfied that the nonconformity has been fully taken into account by way of depreciation in the VA valuation.

12.02 Proposed Construction MPRs

Where a Building Code is Enforced

If the property is located in a jurisdiction which enforces a State, county or local building code, then VA MPRs require that the construction comply with

• the applicable State, county or local building code
• 24 Code of Federal Regulations (CFR) 200.926d, Construction Requirements
• 1992 Council of American Building Officials (CABO) Model Energy Code (MEC), and
• HUD references below.

[CFR 200.926d]

Where a Building Code is Not Enforced

If the property is located in a jurisdiction which does not enforce a State, county or local building code, then VA MPRs require that the construction comply with

• applicable provisions of the current CABO International One- and Two-Family Dwelling Code, and any mandatory codes or standards incorporated by reference
• 24 CFR 200.926d, Construction Requirements
• 24 CFR 200.926e, Supplemental Information for Use with CABO One- and Two-Family Dwelling Code
• 1992 CABO Model Energy Code (MEC), and
• HUD references below.

[24 CFR 200.926d]
[24 CFR 200.926e]

HUD References

The following references from the Department of Housing and Urban Development (HUD) are also included in VA MPRs, as applicable:

• HUD engineering bulletins and materials releases that address, the use of new or unconventional construction methods. or materials that have been reviewed and considered suitable from a technical standpoint by HUD, and
• standards and practices recommended in HUD Handbooks
• Handbook 4140.1, Land Planning Principles for Home Mortgage Insurance
• Handbook 4140.2, Land Planning Procedures and Data for Insurance for Home Mortgage Programs, and
• Handbook 4140.3, Land Planning Data Sheet Handbook.

Using HUD Publications

When Using HUD Publications for VA Purposes

• read all references to “HUD” and “HUD field office” as “VA” and “VA field station”
• construe “insured mortgage” to mean “VA-guaranteed mortgage,” and
• remember that, for MPR purposes, VA treats properties with up to four living units the same as properties with only one living unit.

12.03 Basic MPRs

Entity

The property must be a single, readily marketable real estate entity.

Nonresidential Use

Any nonresidential use of the property must be subordinate to its residential use and character.

If any portion of a property is designed or used for nonresidential purposes, that property is eligible only if the nonresidential use does not

• impair the residential character of the property, or
• exceed 25 percent of the total floor area.

Note: In making this calculation, the total nonresidential area must include storage areas or similar spaces that are integral parts of the nonresidential portion.

Space Requirements

Each living unit must have the space necessary to assure suitable

• living
• sleeping
• cooking and dining accommodations, and
• sanitary facilities.

Mechanical Systems

Mechanical systems must

• be safe to operate
• be protected from destructive elements
• have reasonable future utility, durability and economy, and
• have adequate capacity and quality.

Heating

Heating must be adequate for healthful and comfortable living conditions.

If the property has an unvented space heater, see the requirements in Section 11.12.

Homes with a wood burning stove as a primary heating source must also have a permanently installed conventional heating system that maintains a temperature of at least 50 degrees Fahrenheit in areas with plumbing.

Solar systems for domestic water heating and/or space heating must:

• meet standards in HUD Handbook 4930.2, Solar Heating and Domestic Hot Water Heating Systems, and
• be backed-up 100 percent with a conventional thermal energy subsystem or other backup system which will provide the same degree of reliability and performance as a conventional system.

Note: VA field stations may determine that climatic conditions are such that mechanical heating is not required.

Water Supply and Sanitary Facilities

Each unit must have the following:

• domestic hot water
• a continuing supply of safe and potable water for drinking and other household uses, and
• sanitary facilities and a safe method of sewage disposal.

Reference: For requirements regarding individual water supplies and individual sewage disposal systems, see Section 12.08.

Roof Covering

The roof covering must

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

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

Crawl Space

The crawl space must

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

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

Any excessive dampness or ponding of water in the crawl space must be corrected.

Ventilation

Natural ventilation of structural spaces such as attics and crawl spaces must be provided to reduce the effect of excess heat and moisture which could cause decay and deterioration of the structure.

Electricity

Each unit must have electricity for lighting and for necessary equipment.

12.04 Shared Facilities and Utilities

Facilities

Facilities such as laundry and storage space or heating may be shared in two-to-four living unit buildings under a single mortgage.

Utilities

Utility services must be independent for each living unit, except

• living units under a single mortgage or ownership may share water, sewer, gas, or electricity as long as there are separate service shut-offs for each unit, and
• living units under separate ownership may share connections from the main to the building line when those connections are protected by
• easement or covenant, and
• a maintenance agreement acceptable to VA.

Individual utilities serving one living unit shall not pass over, under, or through another living unit unless there is a legal provision for permanent right of access for maintenance and repair of the utilities without trespass on adjoining properties.

12.05 Access-Related Issues

Access to Property

Each property must be provided with a safe and adequate pedestrian or vehicular access from a public or private street.

Private streets must be

• protected by a permanent easement, and
• maintained by a homeowner’s association or joint maintenance agreement.

All streets must have an all-weather surface.

Access to Living Unit

Access to the living unit must be provided without passing through any other living unit.

Each living unit must be able to be used and maintained individually without trespass upon adjoining properties. Any easements required must run with the land.

Access to Rear Yard

Access to the rear yard must be provided without passing through any other living unit.

For a row-type dwelling, the access may be by means of

• alley
• easement
• passage through the subject dwelling, or
• other acceptable means.

Access for Exterior Wall Maintenance

There must be adequate space between buildings to permit maintenance of the exterior walls.

12.06 Hazards and Defective Conditions

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.

Defective Conditions

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. Such conditions include but are not limited to

• defective construction
• poor workmanship
• evidence of continuing settlement
• excessive dampness
• leakage
• decay, and
• termites.

Drainage

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.

Wood Destroying Insects/Fungus/Dry Rot

Appraisers must look for and report evidence of wood destroying insect infestation, fungus growth, and dry rot in addition to any VA requirement for an inspection of the property by a wood destroying insect inspector.

Lead-Based Paint

Lead-based paint constitutes an immediate hazard that must be corrected, unless testing shows that lead is not present in the paint at a level above that permitted by law.

Appraisers must

• assume that a defective paint condition (involving cracking, scaling, chipping, peeling, or loose paint) on any interior or exterior surface of properties built prior to 1978 involves lead-based paint
• clearly identify the location of such conditions, and
• recommend correction.

Any defective paint condition identified 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 paint film integrity of the surface needing treatment cannot be maintained.

Party Walls

A building constructed 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 roof ridge. The wall may separate row type townhouses or semi-detached units.

12.07 Fuel Pipelines and High Voltage Electric Lines

Gas and Petroleum Pipelines

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

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

If a proposed residential structure will be located outside the pipeline easement, but within an area that extends 220 yards on either side of the centerline of the pipeline itself, the VA notice of value will be conditioned for the following, as applicable:

• High Pressure Gas Pipelines – A statement from an authorized official of the pipeline company certifying compliance with 49 CFR 192.607, 192.609, 192.611 and 192.613.
• Liquid Petroleum Pipelines – A statement from an authorized official of the pipeline company certifying compliance with 49 CFR 195 and amendments thereto.

[49 CFR 192.607, 192.609, 192.611 and 192.613] [49 CFR 195]

High Voltage Electric Transmission Lines

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

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

12.08 Individual Water Supply/Sewage Disposal Requirements

Connection to Public System

Connection to a public or community water/sewage disposal system is required whenever feasible.

Water Quality

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 maximum contaminant levels established by the Environmental Protection Agency (EPA) will apply.

If the health authority is unable to perform the water quality analysis in a timely manner, a commercial testing laboratory or a licensed sanitary engineer acceptable to the health authority may take and test the water sample.

Water Treatment Systems

Water treatment systems are not acceptable for wells which do not meet VA quality standards due to insufficient depth or a contamination source near the supply.

However, if public water is not available and individual water supplies in the area are served by an aquifer confirmed by the health department to be contaminated, the property is eligible for a VA loan if the lender provides

• a copy of the health department letter confirming the aquifer contamination
• evidence that all of the requirements in HUD Mortgagee Letters 92-18 and 95-34, concerning individual water purification systems, have been met for the property, and
• the veteran purchaser’s written acknowledgment that he/she understands that the well water serving the property must be continuously treated by the homeowner, as required by the local health department, to be considered safe for human consumption.

Shared Wells

The following requirements must be met for a shared well:

• The 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.
• There must be a permanent easement which allows access for maintenance and repair.
• There must be a well-sharing agreement which
• makes reasonable and fair provisions for maintenance and repair of the system and the sharing of those costs
• is binding on the signatory parties and their successors in title, and
• is recorded in local deed records.

Springs or Cisterns

Springs or cisterns are permitted where such facilities are customary and the only feasible means of water supply, provided they are installed in accordance with the recommendations of the local health authority, and the veteran purchaser acknowledges in writing his/her awareness of the situation.

If the local health authority has no requirements, U.S. Public Health Service requirements apply.

Sewage Disposal System

An individual sewage disposal system must adequately dispose of all domestic wastes in a manner which will not create a nuisance, or in any way endanger the public health.

Pit Privies

Individual pit privies are permitted where such facilities are customary and are the only feasible means of waste disposal, provided they are installed in accordance with the recommendations of the local health authority.

If the local health authority has no requirements, U.S. Public Health Service requirements apply.

12.09 Community Water Supply/Sewage Disposal Requirements

Basic Requirement

If the property will be served by a community water and/or sewage disposal system, VA must be satisfied that the type of system and organization will provide adequate, continuous service at reasonable rates.

The water supply must be sufficient in size for the project. The quality of the water must be approved by the local or State health officials.

The sewage system must also be adequate in size and properly operated and maintained so as to prevent it from becoming obnoxious or a menace to public health.

Documentation Required

For properties appraised as existing or new construction, the only requirement is evidence of approval of the facilities by the appropriate State or local public utility and health authorities.

For properties appraised as proposed or under construction, the VA field station will review the following documentation:

• evidence of the financial stability and technical experience of the corporation, firm or organization operating the facilities
• evidence of approval of the facilities by the appropriate State or local public utility and health authorities, and
• rates for the water supply and/or sewage disposal systems (to ensure that they are not greater than the charges for like services to properties similarly situated).

When a Trust Deed is Required

The trust deed will be designed and established to ensure satisfactory control and adequate protective measures if the State Board of Health, Public Utility Commission, or similar State authority does not

• enforce compliance with its requirements
• fix rates, or
• provide for prompt relief in case of deficient operations or service or exorbitant rates.

Trust Deed Forms

The forms of trust deed for privately owned community systems (illustrated in HUD Handbook 4075.12) must generally be used without modification. Those HUD forms do not apply to systems owned and operated by an acceptable home owners’ association.

Trust deeds will not be supplied as VA forms.

Acceptability of Trust Deed

The VA field station will accept the trust deed if

• the trustee is a responsible firm
• the description of the property in the trust deed is accurate and complete, and
• the charges set forth and the trustee’s fee (normally about 5 percent and in no event in excess of 10 percent of gross receipts) are reasonable.

The trustee will preferably be a VA or HUD-approved lender, but may be any responsible, established firm (such as a title company) in the community. In the latter case, there must be no identity-of-interest between the sponsoring group and the trustee.

Builder Costs Included in Valuation

If the builder recoups system installation costs via sale of lots and the VA value estimate is predicated on the inclusion of such cost in the value of the lots, the service rate must not permit the builder to realize the installation costs a second time.

System Transfer

When the VA value estimate considers the system installation costs to be paid in full by the builder, then additional controls are needed to protect against possible future excessive rates or assessment charges which may result if the system is transferred to a public utility company.

The trust deed must provide that transfers

• may be made only to a governmental authority or public utility company controlled by a State utility commission or similar body, and
• any funds gained from such transfer shall be distributed among property owners served by the system.

This protection will be obtained by insertion of an alternate paragraph 1 in the trust deed.

Reference: See HUD Handbook 4075.12, Appendix A, page 11, or Appendix B, page 11, as applicable.

Lower Valuation

Any lack of assurance of satisfactory service, at reasonable rates, without the possibility of a future charge to pay for the utility systems would be reflected in a lower reasonable value.

Field Station Review for Problems or Changes

If trust deed amendments are proposed or the above conditions are not satisfied, the situation must be reviewed by the VA field station legal staff prior to acceptance. In this situation, the field station may also need to coordinate with the local HUD office.

HUD Handbook References

HUD Handbook references for community water and sewerage systems requirements include

• 4940.02, Minimum Design Standards for Community Water Supply Systems
• 4940.03, Minimum Design Standards for Community Sewerage Systems, and
• 4075.12, Central Water and Sewerage Systems-Ownership and Organization.

12.10 Manufactured Homes Classified as Real Estate

Existing Construction

When the foundation for a manufactured home has been fully completed and the manufactured home unit has been installed, the home is considered to be “existing construction.”

There are two MPR-related requirements for these existing construction cases:

• The site, manufactured home unit, and other on-site improvements must meet VA MPRs for existing construction described in this Chapter.
• The manufactured home unit must be properly attached to a permanent foundation system which is constructed to withstand both supporting loads and wind-overturning loads, and is acceptable to the building authority having jurisdiction.

Note: If the fee appraiser has reasonable doubts as to the acceptability of the foundation system where there are no local requirements, a statement from a registered professional engineer is acceptable. Considering their cost, such statements should be required only when necessary and not just as a measure of liability protection for fee appraisers.

Proposed or Under Construction

When the foundation for a manufactured home has not been fully completed and the unit has not been installed, the home is considered to be “proposed or under construction.”

There are two MPR-related requirements for these proposed or under construction cases:

• The site and on-site improvements (but not the manufactured unit itself) must meet the requirements outlined in Section 12.02.
• The manufactured home unit must be properly attached to a permanent foundation system which is constructed to withstand both supporting loads and wind-overturning loads, and is acceptable to the building authority having jurisdiction.
• References: In addition to Proposed Construction MPRs in this chapter, additional information regarding manufactured home installations can be found in
• the manufacturer’s installation instructions (used to determine the permissible points of support for vertical loads and points of attachment for the anchorage system used to resist horizontal and uplift forces), and
• the Appendix section of the CABO One- and Two-Family Dwelling Code.

Foundation Requirements

The following table lists each foundation component and any related requirements for “proposed or under construction” cases.