Does a fence need to be painted to meet FHA standards?

Does a fence need to be painted or stained to meet FHA minimum property standards? During an FHA refinance an appraiser recently told a home owner that his fence needed paint or stain for the loan to work. Is that really true though? Let’s dig into this issue. I’d love to hear your take in the comments.

FHA appraisal standards for wood fence - sacramento appraisal blog

The Quick Gist: FHA requires appraisers to identify defective paint surfaces on a home’s exterior (which also includes the fence). However, this doesn’t mean a fence actually needs to be painted. Being that most fences such as cedar, cypress, and redwood are already considered a sustainable wood (or sealed or treated), they don’t actually need to be painted. Think about it practically in that new home builders don’t paint their fences and neither do the vast bulk of property owners. But if a fence has been painted in the past and now has defective paint (peeling, chipping, flaking), then the defective portion should be scraped and sealed according to FHA standards (see p 497 in FHA Manual 4000.1 for a paragraph on defective paint).

FHA-photo-by-Ryan-LundquistThe Reality: Appraisers are not trained to identify whether wood is sealed or not. Maybe some appraisers have that skill set, but most probably don’t. While on the phone with HUD yesterday I even asked them how an appraiser would specifically identify a fence that was not sealed. Crickets. The person on the phone did not have an answer other than to say FHA requires a fence to be sealed from the elements. This means a reasonable focus for appraisers would be to call out defective paint on fences, but otherwise assume the wood is sealed unless there is evidence to suggest otherwise. Does that seem like good common sense? One further point to consider is something my friend Realtor Dean Rinker said in a conversation recently. Even if the standard was the fence needed to be painted, would that also include the neighbor’s portion of the fence too? Imagine that.

14727880 - 3d illustration: a group of cans of paint and roller

Yeah, but the house was built in 1968: I’ve seen people quote the following section from the old FHA manual (or a recent FAQ) in support that fences need to be painted. The idea is that if a fence was built before 1978 when lead-based paint was used, then the home’s fence should be painted to curb any safety issue. First off, if the fence has never been painted, there is NO safety issue with lead-based paint. Thus the age of the house is not the driving issue in this conversation on fences. Most of all, this section states an appraiser should be looking for defective paint on the fence, but it does NOT state the fence needs paint. It is true FHA does not want bare wood on the house, but it is entirely normal for fences to be “bare” (keep in mind wood on fences is sealed or treated though, so it is technically not bare).

If the home was built before 1978, the appraiser should note the condition and location of all defective paint in the home. Inspect all interior and exterior surfaces – wars [sic], stairs, deck porch, railing, windows and doors – for defective paint (chipping, flaking or peeling). Exterior surfaces include those surfaces on fences, detached garages, storage sheds and other outbuildings and appurtenant structures (FHA’S 4150.2 Old Manual).

When it comes to FHA the standards aren’t always as clear as we’d like them to be. This is why it’s critical to know what the FHA manual actually says, consider the spirit of the FHA manual, be in tune with how the bulk of appraisers deal with issues, and of course use common sense.

Questions: Any stories, insight, or examples to share? Did I miss anything? I’d love to hear your take.

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Photos of 5 common FHA loan issues

I wanted to share some photos of five common FHA condition issues I come across during appraisal inspections. If you see something like this at a property you’re selling or buying, it’ll likely require correction before FHA will guarantee the loan.

Green Pool Water: Yes, this is deemed a health issue. The water shouldn’t be green, right? Besides, if you cannot see the bottom of the pool, you never know if there is damage at the bottom anyway.

photo of green pool water

Empty Pool: An empty pool might be a skateboarder’s paradise, but it’s an obstacle to obtain financing due to being considered a safety issue. A pool like this one (covered, but empty) typically has to be filled up before the close of escrow. The lender will most likely ask the appraiser to go back out to the property to verify the pool has been filled (not verify whether it is actually working like it should since most appraisers aren’t pool experts).

Photo of covered empty pool

Paint Cans Hiding in the Crawl Space: There is no rule from FHA saying paint cans cannot be in a crawl space, but when I see something like this, it’s a red flag because chemicals should not have the opportunity to seep into the soil. Since calling out potential health or safety issues is sometimes a subjective decision for the appraiser to make, it’s important to contact HUD on occasion as well as reach out to fellow local appraisers to say, “would you call this out too?” In this case, all that needs to happen is for the containers to be removed from the crawl space. That’s easy enough, right? By the way, regarding the attic and crawl space, a bit of debris is fine, but anything excessive could likely be an issue requiring repair.

Photo of paint cans in the crawl space

Security Bars without Safety Release: If there is no safety release mechanism on a set of security bars, that’s an obvious safety issue that’ll need to be corrected before FHA can guarantee the loan. Usually the bars are removed and then the appraiser will go snap a photo to show the lender the bars were removed.

Photo of security bars without safety release mechanism

Dangling Wires: Electrical wires hanging from the ceiling or walls is a big deal since even small wires can cause a huge jolt and be life-threatening too. If you see wires like this in a house heading toward FHA financing, expect to have to solve the problem by installing a new fixture (or doing electrical work if need be).

Photo of dangling wire on ceiling

I hope this was helpful. Let me know if you have any questions. I’ve written quite a few FHA appraisal articles in case you wish to learn more about what to expect during the appraisal process.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Tripping on driveways and FHA loans

Can a cracked or raised driveway be an issue for an FHA loan? If the damage is deemed a safety issue for whatever reason, then it is something that will require correction. However, if the damage is minimal and hardly noticeable, it shouldn’t be a big deal. Let’s look at a real life example.  

The tree roots in this front yard in Sacramento have made a very obvious impact to the driveway. It’s not hard to miss damage like this, right? The photo above does give the illusion that the raised driveway is truck-sized, but my shoe below helps show more clearly that one slab has been pushed 3-4 inches higher than the other slab. It’s always important to bring in an object to the photo to help give perspective (maybe a ruler, quarter, dollar, etc… or shoe).

A trip hazard is a subjective call to make by the appraiser and not necessarily an automatic repair, but in this case above my sense is that this is a legitimate safety issue. There is confusion over trip hazards due to HUD Mortgagee Letter 2005- ML-48 (pdf) which indicates that trip hazards are no longer an automatic repair. Sometimes this is interpreted to mean that trip hazards are no longer an issue to be called out, but that’s not really the intent of FHA because guidelines require a property to be free of all known hazards and adverse conditions that might affect the health and safety of occupants.

Do you think a driveway as such might be a safety hazard? Have you encountered difficulties funding a loan due to a driveway like this?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook

FHA Appraiser Tip: Strapped water heaters & garage doors in Sacramento

There are many requirements for a property to qualify for an FHA loan. It’s important to understand all the little things if you are considering getting an FHA loan, selling your Sacramento area house or listing a property for a client. If you didn’t know, FHA loans comprised 28% of the market in 2010 in the Sacramento area, so details like this are very important.

In this video I take one minute to discuss the importance of water heater straps and self-closing garage doors. You can view other videos and FHA content here. Keep me posted if you have any questions.

If you have any real estate appraisal, valuation consulting, or property tax appeal needs, contact me at 916.595.3735, or via Facebook.