**VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections**

## Chapter 14

## Construction Inspections

#### Overview

+------------+---------------------------------------------------------+
| ####       | > The purpose of VA inspections during construction is  |
| # Purpose  | > 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.                                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > A lender may close a loan based on a "clear" final    |
| Consequenc | > inspection report.                                    |
| es of Insp |                                                         |
| ections {# | > Deviations from the construction exhibits may         |
| consequenc | > necessitate revision of the VA value estimate, if     |
| es-of-insp | > appropriate.                                          |
| ections .u |                                                         |
| nnumbered} | > Properties that fail to meet VA MPRs will *not* be    |
|            | > acceptable as the security for a VA loan.             |
+------------+---------------------------------------------------------+

+------------+---+--------------------------+-----------------------------+
| ##### Dete | U |                          |                             |
| rmining th | s |                          |                             |
| e Type of  | e |                          |                             |
| Inspection | t |                          |                             |
|  {#determi | h |                          |                             |
| ning-the-t | e |                          |                             |
| ype-of-ins | t |                          |                             |
| pection .u | a |                          |                             |
| nnumbered} | b |                          |                             |
|            | l |                          |                             |
|            | e |                          |                             |
|            | b |                          |                             |
|            | e |                          |                             |
|            | l |                          |                             |
|            | o |                          |                             |
|            | w |                          |                             |
|            | t |                          |                             |
|            | o |                          |                             |
|            | d |                          |                             |
|            | e |                          |                             |
|            | t |                          |                             |
|            | e |                          |                             |
|            | r |                          |                             |
|            | m |                          |                             |
|            | i |                          |                             |
|            | n |                          |                             |
|            | e |                          |                             |
|            | t |                          |                             |
|            | h |                          |                             |
|            | e |                          |                             |
|            | t |                          |                             |
|            | y |                          |                             |
|            | p |                          |                             |
|            | e |                          |                             |
|            | o |                          |                             |
|            | f |                          |                             |
|            | i |                          |                             |
|            | n |                          |                             |
|            | s |                          |                             |
|            | p |                          |                             |
|            | e |                          |                             |
|            | c |                          |                             |
|            | t |                          |                             |
|            | i |                          |                             |
|            | o |                          |                             |
|            | n |                          |                             |
|            | r |                          |                             |
|            | e |                          |                             |
|            | q |                          |                             |
|            | u |                          |                             |
|            | i |                          |                             |
|            | r |                          |                             |
|            | e |                          |                             |
|            | d |                          |                             |
|            | . |                          |                             |
+------------+---+--------------------------+-----------------------------+
|            |   | When the property is     | Then \...                   |
|            |   | appraised as \...        |                             |
+------------+---+--------------------------+-----------------------------+
|            |   | proposed or under        | -   either a full           |
|            |   | construction with no     |     complement of           |
|            |   | insured ten year         |     inspections is          |
|            |   | protection plan          |     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        | only a final (third stage)  |
|            |   | construction with an     | inspection is required.     |
|            |   | insured ten year         |                             |
|            |   | protection plan          |                             |
+------------+---+--------------------------+-----------------------------+

Continued on next page

January 1, 2001 14-1

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

Overview, Continued

  -----------------------------------------------------------------------
  Determining the Type of Inspection (continued)

  -----------------------------------------------------------------------

+--------------------------------+-------------------------------------+
| When the property is appraised | Then \...                           |
| as \...                        |                                     |
+--------------------------------+-------------------------------------+
| existing construction with     | VA will determine on a case-by-case |
| major                          | basis                               |
|                                |                                     |
| -   alterations                | -   what regular or special         |
|                                |     inspections are required, and   |
| -   improvements, or           |                                     |
|                                | -   if it is appropriate, based on  |
| -   repairs                    |     the nature of the work, to have |
|                                |     the lender certify that it has  |
|                                |     been satisfactorily completed.  |
+--------------------------------+-------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The compliance inspection procedures applicable in    |
| # Speciall | > Specially Adapted Housing cases are identical with    |
| y Adapted  | > those for other types of cases, except that special   |
| Housing Ca | > emphasis should be given to the adaptive features.    |
| ses {#spec |                                                         |
| ially-adap | > Any questions should be referred to the VA Specially  |
| ted-housin | > Adapted Housing Agent at the VA field station.        |
| g-cases .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > This chapter contains the following topics.           |
| ### In thi |                                                         |
| s Chapter  |                                                         |
| {#in-this- |                                                         |
| chapter .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ---------------------------------------------------------- ------------
  Topic                                                      See Page

  14.01 Obtaining an Inspection                              14-3

  14.02 Inspection Stages                                    14-4

  14.03 VA Reliance on Local Building Inspections for First  14-10
  and Second Stages                                          

  14.04 Manufactured Homes Classified as Real Estate         14-11

  14.05 Delayed Installation of Appliances and Finished      14-13
  Floor Covering                                             

  14.06 Lender Use of Inspection Reports                     14-14

  14.07 Changes to Construction Exhibits                     14-15
  ---------------------------------------------------------- ------------

January 1, 2001 14-2

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

#### 14.01 Obtaining an Inspection {#obtaining-an-inspection .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > VA assigns, without favoritism or discrimination, an  |
|  How to As | > inspector from its fee inspector roster               |
| sign an In |                                                         |
| spector  { | -   at the same time as the appraiser, in most cases,   |
| #how-to-as |     or                                                  |
| sign-an-in |                                                         |
| spector .u | -   at the time a notice of value is issued by VA       |
| nnumbered} |     staff, if the appraisal requester does not choose   |
|            |     to have the inspectors assigned at the same time as |
|            |     the appraiser **and** the value determination will  |
|            |     be made by VA staff.                                |
|            |                                                         |
|            |     > VA may assign more than one inspector in the case |
|            |     > of master appraisals.                             |
|            |                                                         |
|            |     > ***Reference***: For information about assigning  |
|            |     > a fee inspector, refer to Section 10.04.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ea   | > To avoid builder delays in starting construction, VA  |
| rly Start  | > can assign the inspector prior to assigning the       |
| Assignment | > appraiser. The builder or sponsor must submit a       |
| s {#early- | > written request which includes                        |
| start-assi |                                                         |
| gnments .u | -   a statement of understanding of the special nature  |
| nnumbered} |     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 Section 10.10, *Construction     |
|            |     Exhibits*.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Requ | > The builder contacts the inspector directly to        |
| esting an  | > schedule inspections as each phase of construction is |
| Inspection | > completed.                                            |
|  {#request |                                                         |
| ing-an-ins |                                                         |
| pection .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > [All compliance inspections will be reported on VA    |
| [Inspectio | > Form 26-1839, Compliance Inspection Report.]{.mark}   |
| n Report F |                                                         |
| orm]{.mark |                                                         |
| }  {#inspe |                                                         |
| ction-repo |                                                         |
| rt-form .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

####  {#section .unnumbered}

July 14, 2003 14-3

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

#### 14.02 Inspection Stages {#inspection-stages .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > This topic contains information about                 |
| Introducti |                                                         |
| on {#intro | -   displaying legal notices                            |
| duction .u |                                                         |
| nnumbered} | -   the stages of inspection                            |
|            |                                                         |
|            | -   what inspectors look for during the inspection      |
|            |                                                         |
|            | -   re-inspections                                      |
|            |                                                         |
|            | -   special inspections, and                            |
|            |                                                         |
|            | -   missed inspections.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > At the initial inspection, inspectors will note any   |
| Equal Empl | > failure of the builder to prominently display VA      |
| oyment Opp | > Poster 26-83-1, Equal Employment Opportunity is the   |
| ortunity P | > Law, as a noncompliance item on the inspection        |
| oster Requ | > report. Each contractor and subcontractor must        |
| irement {# | > display the poster in conspicuous places at job sites |
| equal-empl | > covered by VA value notices for proposed              |
| oyment-opp | > construction.                                         |
| ortunity-p |                                                         |
| oster-requ | > In all areas with significant concentrations of       |
| irement .u | > Spanish-speaking people, VA Poster 26-83-1(S) printed |
| nnumbered} | > in Spanish, must be displayed next to the poster in   |
|            | > English.                                              |
|            |                                                         |
|            | > When noncompliance with the poster requirement is     |
|            | > found, the VA office of jurisdiction will immediately |
|            | > inform the builder that no further inspections will   |
|            | > be made until the poster is displayed.                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > VA supplies the poster to the builder with the VA     |
| # Obtainin | > value notice, if issued by the VA. Although one       |
| g Equal Em | > poster may be used to cover a group of properties     |
| ployment O | > being constructed simultaneously by a builder, VA     |
| pportunity | > will furnish additional posters needed for adequate   |
|  Posters { | > coverage.                                             |
| #obtaining |                                                         |
| -equal-emp | > Posters are available from the VA Forms and           |
| loyment-op | > Publications Depot.                                   |
| portunity- |                                                         |
| posters .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

July 14, 2003 14-4

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.02 Inspection Stages, Continued

+------------+---------------------------------------------------------+
| ##         | > VA will notify builders, lenders, and inspectors      |
| ### First  | > which of the following first stage inspection         |
| Inspection | > alternatives are to be used in specific areas:        |
|  Stage Alt |                                                         |
| ernatives  | -   *Excavation complete and ready for footings and     |
| {#first-in |     foundations* usually applies in localities where it |
| spection-s |     is advisable to have the bearing soil examined      |
| tage-alter |     before construction proceeds, or                    |
| natives .u |                                                         |
| nnumbered} | -   *Foundation walls complete and ready for backfill*  |
|            |     usually applies where soil conditions are generally |
|            |     uniform and free of faults likely to cause          |
|            |     foundation problems.                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > For the *completion of excavation* alternative, VA    |
| # Completi | > inspects                                              |
| on of Exca |                                                         |
| vation Alt | -   display of VA Poster 26-83-1, Equal Employment      |
| ernative { |     Opportunity is the Law                              |
| #completio |                                                         |
| n-of-excav | -   the nature of the bearing soil                      |
| ation-alte |                                                         |
| rnative .u | -   form work for footings or the condition and quality |
| nnumbered} |     of the footing trench if forms are not required,    |
|            |     and                                                 |
|            |                                                         |
|            | -   compliance with construction exhibits and VA        |
|            |     Minimum Property Requirements regarding             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the location of the structures on the plot, and     |
|            |                                                         |
|            | -   depth of excavation and its relation to street and  |
|            |     proposed finish grades and to grades of adjoining   |
|            |     improved properties.                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > For the *completion of foundation* alternative, *all* |
| # Completi | > of the above items will be observed and reported. In  |
| on of Foun | > addition, VA will inspect                             |
| dation Alt |                                                         |
| ernative { | -   the size, location, and condition of all footings,  |
| #completio |     foundation walls, piers, and other supporting       |
| n-of-found |     members, and                                        |
| ation-alte |                                                         |
| rnative .u | -   the quality of materials and workmanship of         |
| nnumbered} |     masonry, damp proofing, and foundation drainage.    |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 14-5

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.02 Inspection Stages, Continued

+------------+---------------------------------------------------------+
| ##### Se   | > During the second inspection stage VA inspects        |
| cond Inspe |                                                         |
| ction Stag | -   all construction below the superstructure not       |
| e {#second |     installed or which was installed but not inspected  |
| -inspectio |     or reported upon at the first inspection stage,     |
| n-stage .u |     including footings, foundations, piers, columns,    |
| nnumbered} |     waterproofing and drainage provisions               |
|            |                                                         |
|            | -   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    |
|            |                                                         |
|            | -   plan of the dwelling, including the arrangement of  |
|            |     partitions and the sizes and placement of all       |
|            |     openings                                            |
|            |                                                         |
|            | -   roughing-in of mechanical work, including plumbing, |
|            |     heating, and electric installations with respect to |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   providing for the correct installation of fixtures, |
|            |     equipment, and accessories                          |
|            |                                                         |
|            | -   avoiding impairment of the strength of structural   |
|            |     members, and                                        |
|            |                                                         |
|            | -   proper operation of the completed systems.          |
|            |                                                         |
|            |     > ***Note***: No second stage inspection of the     |
|            |     > dwelling is required for modular construction     |
|            |     > since the unit is fabricated in a factory and     |
|            |     > must be inspected to state standards.             |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 14-6

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.02 Inspection Stages, Continued

+------------+---------------------------------------------------------+
| #####      | > During the third inspection stage VA inspects for     |
| Third Insp | > acceptable completion of *all* specified onsite and   |
| ection Sta | > offsite improvements.                                 |
| ge {#third |                                                         |
| -inspectio | > The table below lists the exterior and interior items |
| n-stage .u | > to be inspected and reported upon during the third    |
| nnumbered} | > inspection stage.                                     |
+------------+---------------------------------------------------------+

+-----------------------+----------------------+----------------------+
| *Exterior             |                      |                      |
| Inspection*:          |                      |                      |
+-----------------------+----------------------+----------------------+
| -   compaction of     | -   protection       | -   offsite          |
|     fill material     |     against the      |     improvements     |
|                       |     elements and     |     including        |
| -   finish grading    |     penetration of   |                      |
|                       |     moisture         | ```{=html}           |
| -   drainage          |                      | <!-- -->             |
|                       | -   masonry pointing | ```                  |
| -   utility           |                      | -   utilities        |
|     connections       | -   caulking at      |                      |
|                       |     openings         | -   storm sewer      |
| -   walks             |                      |     system           |
|                       | -   paint coverage   |                      |
| -   drives            |                      | -   drainage         |
|                       | -   flashing         |     channels         |
| -   accessory         |                      |                      |
|     buildings         | -   design of        | -   grading          |
|                       |     dwelling         |                      |
| -   retaining walls   |     structure        | -   curbs            |
|                       |                      |                      |
| -   planting          | -   materials and    | -   gutters          |
|                       |     details of their |                      |
| -   safety provisions |     installation and | -   paving           |
|     at                |     finish           |                      |
|                       |                      | -   pavement edging  |
| ```{=html}            |                      |                      |
| <!-- -->              |                      | -   subgrade, and    |
| ```                   |                      |                      |
| -   terraces          |                      | -   base and wearing |
|                       |                      |     surface and      |
| -   porches           |                      |     erosion control  |
|                       |                      |                      |
| -   areaways          |                      |                      |
+-----------------------+----------------------+----------------------+
| *Interior             |                      |                      |
| Inspection*:          |                      |                      |
+-----------------------+----------------------+----------------------+
| -   design            | -   cabinets and     | -   quality and      |
|                       |     millwork         |     operation of     |
| -   materials,        |                      |     hardware         |
|     equipment, and    | -   details and      |                      |
|     details of their  |     operation of     | -   quality of       |
|     installation      |     systems,         |                      |
|                       |     equipment, and   | ```{=html}           |
| -   interior surfaces |     fixtures related | <!-- -->             |
|     and their finish  |     to               | ```                  |
|     treatment         |                      | -   tilework         |
|                       | ```{=html}           |                      |
|                       | <!-- -->             | -   glass            |
|                       | ```                  |                      |
|                       | -   plumbing         | -   linoleum         |
|                       |                      |                      |
|                       | -   heating          | -   venting of       |
|                       |                      |     attics and       |
|                       | -   ventilating      |     underfloor       |
|                       |                      |     spaces           |
|                       | -   electric         |                      |
+-----------------------+----------------------+----------------------+

Continued on next page

January 1, 2001 14-7

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.02 Inspection Stages, Continued

+------------+---------------------------------------------------------+
| ##         | > [Individual Water Supply and Sewage Disposal          |
| ### Indivi | > System]{.underline}                                   |
| dual Water |                                                         |
|  Supply an | > The inspector will include with the inspection report |
| d Sewage D | > evidence obtained from the builder that installation  |
| isposal Sy | > in satisfactory to the health authority having        |
| stem {#ind | > jurisdiction.                                         |
| ividual-wa |                                                         |
| ter-supply |                                                         |
| -and-sewag |                                                         |
| e-disposal |                                                         |
| -system .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Generally, this coincides with the third inspection   |
| # Final In | > stage and requires the Compliance Inspection Report,  |
| spection { | > [VA Form 26-1839]{.underline} to                      |
| #final-ins |                                                         |
| pection .u | -   include two photographs (preferably taken from the  |
| nnumbered} |     diagonally opposite front and rear corners) to      |
|            |     record the appearance of the dwelling and indicate  |
|            |     the grading and drainage of the site                |
|            |                                                         |
|            | -   describe the condition, suitability, and readiness  |
|            |     for use of all equipment, fixtures and observable   |
|            |     construction of the property                        |
|            |                                                         |
|            | -   report shortcomings such as scratches in painted    |
|            |     surfaces, poorly fitted doors, stuck windows,       |
|            |     cracks in walls, irrespective of any arrangements   |
|            |     made on the site for corrections, and               |
|            |                                                         |
|            | -   confirm that any instance of inferior workmanship,  |
|            |     defective materials or equipment, or faulty         |
|            |     installation or application of materials or         |
|            |     equipment and/or deviation from approved plans and  |
|            |     specifications is reported on [VA Form              |
|            |     26-1839]{.underline}, and                           |
|            |                                                         |
|            | -   if the property is a unit on a *master* appraisal   |
|            |     either                                              |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   clearly identify any optional variation or item of  |
|            |     equipment included in the construction, or          |
|            |                                                         |
|            | -   state that none is included.                        |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 14-8

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.02 Inspection Stages, Continued

+------------+---------------------------------------------------------+
| ##### Spec | > VA may also require special inspections by the        |
| ial Inspec | > VA-assigned fee inspector at any stage of             |
| tions {#sp | > construction to help monitor cases involving          |
| ecial-insp |                                                         |
| ections .u | -   unusual site features                               |
| nnumbered} |                                                         |
|            | -   construction methods, or                            |
|            |                                                         |
|            | -   builders with frequent construction complaints.     |
|            |                                                         |
|            |     > For cases involving major alteration or repair    |
|            |     > work, the stages at which special inspections are |
|            |     > to be made will be determined according to the    |
|            |     > nature of the proposed work.                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Re   | > A re-inspection is required                           |
| -inspectio |                                                         |
| n {#re-ins | -   whenever a first- or second-stage, or special       |
| pection .u |     inspection shows noncompliance and the work         |
| nnumbered} |     involved will be concealed before the next regular  |
|            |     inspection, or                                      |
|            |                                                         |
|            | -   as a result of noncompliance or incomplete work     |
|            |     reported at the third-stage inspection, unless the  |
|            |     VA field station waives the re-inspection because   |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the incomplete work is of a minor nature, and       |
|            |                                                         |
|            | -   the lender is willing to certify that it has been   |
|            |     satisfactorily completed.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Mi   | > Occasionally a required inspection may be missed      |
| ssed Inspe | > through oversight by the builder or other party       |
| ctions {#m | > responsible for requesting them. To waive a missed    |
| issed-insp | > inspection, the VA field office must be provided with |
| ections .u |                                                         |
| nnumbered} | -   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 VA, and                                |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   ***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.                      |
|            |                                                         |
|            | -   evidence of HUD's consent to the waiver, if the     |
|            |     case is HUD related.                                |
+------------+---------------------------------------------------------+

January 1, 2001 14-9

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

#### 14.03 VA Reliance on Local Building Inspections for First and Second Stages {#va-reliance-on-local-building-inspections-for-first-and-second-stages .unnumbered}

+------------+---------------------------------------------------------+
| #####      | > The requirement for a first and second stage VA       |
| Waiving Fi | > inspection is waived in all proposed or under         |
| rst and Se | > construction cases in which both of the following     |
| cond Stage | > requirements are met:                                 |
|  Inspectio |                                                         |
| ns {#waivi | -   The property is located in an area where the        |
| ng-first-a |     inspection procedures of the local building         |
| nd-second- |     authority are acceptable to the Department of       |
| stage-insp |     Housing and Urban Development (HUD) for loan        |
| ections .u |     insurance purposes, and                             |
| nnumbered} |                                                         |
|            | -   a third stage (final) VA compliance inspection is   |
|            |     performed by a VA fee inspector assigned by the VA  |
|            |     office of jurisdiction.                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Exce | > This provision has no affect on other proposed or     |
| ption {#ex | > under construction-related VA requirements and does   |
| ception .u | > not apply to cases involving a VA Specially Adapted   |
| nnumbered} | > Housing grant.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > For each loan processed under this provision, the     |
|  Lender's  | > lender's loan origination file must include *both*    |
| File Docum |                                                         |
| entation { | -   a properly executed *clear* third stage (final)     |
| #lenders-f |     compliance inspection report on [VA Form            |
| ile-docume |     26-1839]{.underline}, and                           |
| ntation .u |                                                         |
| nnumbered} | -   an occupancy permit or other appropriate            |
|            |     documentation issued by the locality to verify that |
|            |     all construction has been acceptably completed.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > VA may discontinue relying on the inspections of a    |
| # Disconti | > particular building authority if VA staff detects     |
| nuing VA R |                                                         |
| eliance on | -   excessive construction deficiencies, or             |
|  Local Ins |                                                         |
| pections { | -   construction complaint activity in that building    |
| #discontin |     authority's jurisdiction.                           |
| uing-va-re |                                                         |
| liance-on- |                                                         |
| local-insp |                                                         |
| ections .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

January 1, 2001 14-10

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

#### 14.04 Manufactured Homes Classified as Real Estate {#manufactured-homes-classified-as-real-estate .unnumbered}

+------------+---------------------------------------------------------+
| ##         | > The following inspections are required on             |
| ### Requir | > manufactured homes classified as real estate.         |
| ed Inspect |                                                         |
| ions {#req | > ***First and third (final) inspections***:            |
| uired-insp |                                                         |
| ections .u | > To verify that the manufactured home is properly      |
| nnumbered} | > attached to the permanent foundation as specified in  |
|            | > the construction exhibits, and that all onsite and    |
|            | > offsite improvements are properly completed.          |
|            |                                                         |
|            | > ***Special inspections***:                            |
|            |                                                         |
|            | > As discussed in the topic *Inspection Stages* in this |
|            | > chapter, and as necessitated by the construction of   |
|            | > other onsite improvements financed with the VA        |
|            | > guaranteed loan.                                      |
|            |                                                         |
|            | > ***Note***: Second stage inspections are not          |
|            | > generally required since manufactured homes are       |
|            | > factory fabricated.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > In cases involving a *used* manufactured home moved   |
| ### Additi | > to the purchaser's lot to be affixed to a permanent   |
| onal Inspe | > foundation, all of the following additional           |
| ctions for | > manufactured home inspection reports are required to  |
|  Used Manu | > ensure the safety of the dwelling:                    |
| factured H |                                                         |
| omes {#add | -   Water-Plumbing Systems Inspection Report, [VA Form  |
| itional-in |     26-8731a]{.underline}                               |
| spections- |                                                         |
| for-used-m | -   Electrical Systems Inspection Report, VA Form       |
| anufacture |     26-8731b                                            |
| d-homes .u |                                                         |
| nnumbered} | -   Fuel and Heating Systems Inspection Report, VA Form |
|            |     26-8731c, and                                       |
|            |                                                         |
|            | -   certification that the roof was coated after set-up |
|            |     on the site.                                        |
|            |                                                         |
|            |     > These reports must be completed by qualified      |
|            |     > third-party inspectors, for example, experienced  |
|            |     > plumbers, electricians, heating and               |
|            |     > air-conditioning contractors and manufactured     |
|            |     > home service personnel, following the             |
|            |     > installation and setup of the manufactured home   |
|            |     > on the lot. The roof coating certification can be |
|            |     > made by the lender.                               |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 14-111

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

14.04 Manufactured Homes Classified as Real Estate, Continued

+------------+---------------------------------------------------------+
| ##         | > While inspectors will perform only those inspections  |
| ### Qualif | > for which they are qualified, licensed manufactured   |
| ied Inspec | > home service personnel will be permitted to perform   |
| tors {#qua | > any of the required inspections.                      |
| lified-ins |                                                         |
| pectors .u | > Lenders must order the inspections and retain the     |
| nnumbered} | > original of the reports in their loan origination     |
|            | > file. No loan on a manufactured home with             |
|            | > unsatisfactory inspections is eligible for VA         |
|            | > guaranty.                                             |
+------------+---------------------------------------------------------+

January 1, 2001 14-122

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

#### 14.05 Delayed Installation of Appliances and Finished Floor Covering {#delayed-installation-of-appliances-and-finished-floor-covering .unnumbered}

+------------+---------------------------------------------------------+
| ####       | > With the exception of floor covering in bathrooms and |
| # What is  | > wood finish flooring, installation of appliances and  |
| Required { | > finished floor covering may be delayed until as late  |
| #what-is-r | > as just prior to loan closing, provided the           |
| equired .u | > third-stage inspection report includes the following: |
| nnumbered} |                                                         |
|            | -   In Section 1, a description of                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   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.        |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   In Section 6, check                                 |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   "Prefinal Report Approved," and                     |
|            |                                                         |
|            | -   "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."                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > A revised VA Value Notice is not required.            |
| ### What i |                                                         |
| s not Requ |                                                         |
| ired {#wha |                                                         |
| t-is-not-r |                                                         |
| equired .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

July 14, 2003 14-133

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

#### 14.06 Lender Use of Inspection Reports {#lender-use-of-inspection-reports .unnumbered}

+------------+---------------------------------------------------------+
| ##### [Re  | > [If construction is acceptable and there are no       |
| ceipt of I | > deviations or substitutions, the compliance inspector |
| nspection  | > will submit the inspection report (VA Form 26-1839)   |
| Reports]{. | > in the following manner:]{.mark}                      |
| mark} {#re |                                                         |
| ceipt-of-i | > []{.mark}                                             |
| nspection- |                                                         |
| reports .u | -   [*If the lender is known*:]{.mark}                  |
| nnumbered} |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   [Provide the lender with a copy,]{.mark}            |
|            |                                                         |
|            | -   [Provide the builder with a copy, and]{.mark}       |
|            |                                                         |
|            | -   [Keep a copy for his/her file.]{.mark}              |
|            |                                                         |
|            |     []{.mark}                                           |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   [*If the lender is not known*:]{.mark}              |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   [Provide the builder with two copies, one of which  |
|            |     the builder will forward to the lender when known,  |
|            |     and]{.mark}                                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   [Keep a copy for his/her file.]{.mark}              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Considering the requirements to obtain VA loan        |
| #### [Use  | > guaranty, before the loan is closed, the lender       |
| of Inspect | > should ensure that                                    |
| ion Report |                                                         |
| s]{.mark}  | -   all VA value notice requirements regarding          |
| {#use-of-i |     inspections are met                                 |
| nspection- |                                                         |
| reports .u | -   any deviations and/or noncompliance items listed on |
| nnumbered} |     the third-stage inspection report are resolved to   |
|            |     VA's satisfaction                                   |
|            |                                                         |
|            | -   any appliances or floor coverings installed under   |
|            |     Section 14.05 are the same as those described in    |
|            |     Section 1 of the third-stage inspection report, and |
|            |                                                         |
|            |     > the third stage inspection report includes all of |
|            |     > the information required for a final inspection.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > The lender must retain all inspection-related         |
| ## [Retent | > material in their loan origination file.              |
| ion of Ins |                                                         |
| pection Re |                                                         |
| ports]{.ma |                                                         |
| rk} {#rete |                                                         |
| ntion-of-i |                                                         |
| nspection- |                                                         |
| reports .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

July 14, 2003 14-144

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

#### 14.07 Changes to Construction Exhibits {#changes-to-construction-exhibits .unnumbered}

+------------+---------------------------------------------------------+
| ##### Ho   | > Use the table below to request a change to            |
| w to Reque | > construction exhibits after the appraisal.            |
| st a Chang |                                                         |
| e {#how-to |                                                         |
| -request-a |                                                         |
| -change .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

  ------------------------ ----------------------------------------------
  When a Veteran is \...   Then \...

  under contract           the veteran under contract must make a written
                           request for any changes.

  *not* under contract     the builder, lender, or sponsor making the
                           written request for modification must certify
                           that the property is not under contract to a
                           veteran.
  ------------------------ ----------------------------------------------

+------------+---------------------------------------------------------+
| ##### Chan | > VA Form 26-1844, [Request For Acceptance of Changes   |
| ge Request | > in Approved Drawings and Specifications]{.mark} must  |
|  Form {#ch | > be used to request the change. There are two          |
| ange-reque | > exceptions:                                           |
| st-form .u |                                                         |
| nnumbered} | -   If there is no veteran-purchaser involved and the   |
|            |     change is limited to substitution of mechanical     |
|            |     equipment of equal value, then the fee inspector    |
|            |     may check [VA Form 26-1839]{.underline}, Section    |
|            |     1B, Substitutions or Deviations*,* describe the     |
|            |     change of equipment and the value attributed to the |
|            |     substituted equipment and note the change on the    |
|            |     related plans and specifications.                   |
|            |                                                         |
|            | -   If the property was inspected by HUD, provided      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the additions, substitutions or variations are      |
|            |     clearly described on the HUD inspection report      |
|            |                                                         |
|            | -   the veteran-purchaser has signed his/her acceptance |
|            |     of the changes, and                                 |
|            |                                                         |
|            | -   the change items are of a minor nature with no      |
|            |     additional cost to the veteran involved and no      |
|            |     change in reasonable value is indicated.            |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   ***Example***: Substitution of water heater,        |
|            |     furnace, hardware, bath fixtures and/or relocation  |
|            |     of electrical outlets, windows, etc.                |
+------------+---------------------------------------------------------+

Continued on next page

July 14, 2003 14-155

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

14.07 Changes to Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| ##### Ap   | > Fee inspectors may approve and distribute a properly  |
| proval of  | > completed VA Form 26-1844, containing all required    |
| Changes no | > signatures, which does not involve deletions or a     |
| t Affectin | > change in value. In these cases, the builder must     |
| g Property | > complete VA Form 26-1844 in duplicate and have the    |
|  Value {#a | > form at the job site at the time of the scheduled     |
| pproval-of | > inspection.                                           |
| -changes-n |                                                         |
| ot-affecti | > The inspector                                         |
| ng-propert |                                                         |
| y-value .u | -   confirms the above information                      |
| nnumbered} |                                                         |
|            | -   inspects the property according to the plans,       |
|            |     specifications and change order                     |
|            |                                                         |
|            | -   signs the change order in the appropriate space     |
|            |                                                         |
|            | -   gives the builder the original counter-signed       |
|            |     change order to forward to the lender, and          |
|            |                                                         |
|            | -   retains one copy.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > VA staff must approve any VA Form 26-1844, [Request   |
| Approval o | > for Acceptance of Changes in Approved Drawings and    |
| f Changes  | > Specifications]{.mark}, including deletions or a      |
| Which Affe | > change in value, by [issuing an amended NOV]{.mark}.  |
| ct Propert |                                                         |
| y Value {# | > VA will generally find it more appropriate to pursue  |
| approval-o | > this action in cases which also involve changes in    |
| f-changes- | > notice of value conditions or legal requirements,     |
| which-affe | > legal descriptions substitution of plan types, etc... |
| ct-propert |                                                         |
| y-value .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

July 14, 2003 14-166

*VA Pamphlet 26-7, Revised Chapter 14: Construction Inspections*

*Change 3*

14.07 Changes to Construction Exhibits, Continued

+------------+---------------------------------------------------------+
| #####      | > For changes approved by the VA staff, VA              |
| Notificati |                                                         |
| on {#notif | -   mails a copy of the [amended NOV]{.mark} directly   |
| ication .u |     to the veteran-purchaser,                           |
| nnumbered} |                                                         |
|            | -   [places copy of amended NOV]{.mark} in the VA loan  |
|            |     file, and                                           |
|            |                                                         |
|            | -   [notifies the lender that the amended NOV is        |
|            |     available through TAS]{.mark}.                      |
|            |                                                         |
|            | > If no veteran is under contract, a copy will be       |
|            | > attached to the veteran's copy of the notice of value |
|            | > in the loan file and mailed to him/her upon receipt   |
|            | > of a loan application or loan report.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Any violation of the Conditions of Acceptance printed |
| ## Cancell | > on the reverse of VA Form 26-1844 will be cause to    |
| ation of V | > withdraw or cancel VA's acceptance of the changes.    |
| A Approval |                                                         |
+------------+---------------------------------------------------------+

July 14, 2003 14-177

Additional Inspections, 14-11

Approval of Changes Affecting Property Value, 14-16

Approval of Changes not Affecting Property Value, 14-16

Assigning an Inspector, 14-3

Cancellation of VA Approval, 14-17

Change Notification, 14-17

Change Request Form, 14-15

Completion of Excavation Alternative, 14-5

Completion of Foundation Alternative, 14-5

Consequences of Inspections, 14-1

Construction Exhibits, 14-15. *See* Section 10. 10

Construction Inspections, 14-1. *See* Chapter 12, VA Minimum Property
Requirements (MPRs)

Delayed Installation of Appliances and Finished Floor Covering, 14-13

Delays in starting construction, 14-3

Determining the Type of Inspection, 14-1

Discontinuing Reliance on Local Inspections, 14-10

Equal Employment Opportunity Requirement, 14-4

Exterior Inspection, 14-7

Final Inspection, 14-8

First and Third (final) Inspections, 14-11

First Inspection Stage, 14-5

How to Request a Change, 14-15

Individual Water Supply, 14-8

Inspection Stages, 14-4

Interior Inspection, 14-7

Lender Use of Inspection Reports, 14-14

Lender's Loan Origination file, 14-10

Manufactured Homes Classified as Real Estate, 14-11

Missed Inspections, 14-9

Obtaining an Inspection, 14-3

Qualified Inspectors, 14-12

Re-inspection, 14-9

Requesting an Inspection, 14-3

Required Inspections, 14-11

Second Inspection Stage, 14-6

Sewage Disposal System, 14-8

Special Inspections, 14-9, 14-11

Specially Adapted Housing Cases, 14-2

Third Inspection Stage, 14-7

VA Reliance on Local Building Inspections, 14-10

Waiving First and Second Stage Inspections, 14-10