Definition

Construction Exhibits and Inspections

To be eligible for appraisal as “new construction”, the property must be fully

completed or completed except for customer preference items (such as, interior wall finishes, floor covering, appliances, fixtures and equipment, etc.) and those improvements for which escrows are permitted (Reference: See Section 9.09).  This eliminates the need for construction exhibits.

Note:  For properties which do not meet the criteria for appraisal as “new construction”, Reference: See Section 10.05 (“Proposed or Under Construction” and “Existing Construction”).

Neither construction exhibits nor VA or HUD inspections during construction are required for properties appraised as “new construction”.

Note:  Appraisal without VA or HUD inspections during construction is a privilege available only to builders who routinely provide good quality construction.  Builders who are required to obtain VA or HUD inspections during construction will be notified by VA in writing.  VA, not lenders, will monitor builder compliance with this restriction.

Construction Warranty

Properties appraised as “new construction” must be covered by either

·        a one-year VA builder’s warranty, or

·        a ten-year insurance-backed protection plan.

If the builder will provide a one-year VA builder’s warranty, then both of the following will be required

·    the veteran purchaser’s written acknowledgment that, “I am aware that VA did not inspect this property during construction and that VA assistance with construction complaints will be limited to defects in equipment, material and workmanship reported in writing during the one-year VA builder’s warranty period.”  Reference: See Section 13.06, “Not Inspected Acknowledgment.”

·   a one-year VA builder’s warranty on VA Form 26-1859, Warranty of Completion of Construction.  Reference: See Section 13.06, “Construction Warranty”.