![](media/image1.emf){width="1.0368055555555555in"
height="1.0305555555555554in"}**[DEPARTMENT OF VETERANS
AFFAIRS]{.smallcaps}**

**Regional Office**

**Norris Cotton Federal Building**

**275 Chestnut Street**

**Manchester NH 03101**

> In Reply Refer To: 373/26
>
> Local Release 26-01-12

TO: Fee Appraisers

SUBJ: New Construction

The purpose of this release is to clarify VA requirements concerning the
appraisal of new construction properties. Effective with the issuance of
the revised Lender's Handbook last year, lenders are now allowed to
order new construction appraisals directly through the VA Internet
assignment system, forward the assignment to the appraiser, and process
the appraisal if they have Lender Appraisal Processing Program (LAPP)
authority. We have found that many of these new construction assignments
are not being processed in compliance with our instructions.

**What are the different types of new construction appraisal requests?**

There are three categories: proposed, under construction, and new
existing construction. "Proposed" means construction has not started.
"Under construction" means that construction has been initiated but the
house is not complete to the point of customer preference items. "New
existing" means that the house is either fully complete or complete to
the point of customer preference items.

**What must the lender send to the appraiser with a proposed
construction or under construction assignment?**

The lender must forward the assignment form (VA Form 26-1805), a copy of
the purchase agreement, and all of the following exhibits:

-   specifications on VA Form 26-1852, Description of Materials, signed
    and dated by the builder in all cases and by the veteran when one is
    under contract in an individual case processed as "proposed or under
    construction". Other specification formats are also acceptable,
    provided they are signed and dated by the builder and veteran as
    described above and are sufficiently detailed for VA appraisal and
    compliance inspection purposes.

-   plot plan which includes the location of the well/septic systems, if
    applicable.

-   all exterior building elevations.

-   foundation or basement plan.

-   plan of all floors.

-   sectional wall details.

-   

-   

-   

-   a certification signed and dated by a technically qualified and
    properly identified individual (such as, builder, architect,
    engineer, etc.) which states, "I certify that the construction
    exhibits for (identification of the property by house type, lot,
    block, subdivision name, etc.) meet all local code requirements and
    are in substantial conformity with VA Minimum Property Requirements,
    including the energy conservation standards of the 1992 Council of
    American Building Officials' Model Energy Code and the requirement
    for lead-free water piping." VA will accept [HUD Form
    92541]{.underline}, Builder's Certification of Plans, Specifications
    and Site, in lieu of this certification.

**What if the appraiser finds out it is proposed or under construction
and the lender has not forwarded a complete set of required construction
exhibits?**

The appraiser must immediately inform the lender and VA that the
assignment is being suspended until receipt of the required exhibits
specified in Chapter 10.10 of the VA Lender's Handbook. Refer the lender
to VA if there are any questions.

**Should these exhibits be included with the appraisal report?**

It is [required]{.underline} that you send all the construction exhibits
listed above with your appraisal report to VA or the LAPP lender. If you
send your reports via e-mail, these items must be scanned and attached
to your e-mail document.

**Is there any other special requirement for appraisals of proposed or
under construction properties?**

The appraisal report must include the following certification:

> *"I hereby certify that the information contained in \_\_\_\[specific
> identification of all construction exhibits (e.g., Smith Construction
> Plan Type A, 9 sheets, [VA Form 26-1852]{.underline}, plot plan by
> Jones, Inc.)\] was used to arrive at the estimate of reasonable value
> noted in this report. \_\_\[appraiser's signature\]\_\_\_"*

**Are these construction exhibits and certification required for a "new
existing" assignment?**

None of these are required for new existing cases. Please appraise these
as you would appraise an existing house. If work such as landscaping or
installation of customer preference items has not been completed at the
time of your appraisal, require completion as a condition of your value
determination.

Please call our appraisal section at (800) 827-6311 extension 6 if there
are any questions.

Keith C. Boerner

Loan Guaranty Officer