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.
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).
The 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.
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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Great discussion starter Ryan. I’ve juggled this question before and it is this kind of stuff that make borrowers and appraisers crazy. To complicate matters, in coastal cities near my area, builders do not paint or finish cedar siding. Some say that the cedar does better in the salty wet environment if there is no finish and the grayed look is popular. It is common to see a house that is only three years old completely grayed out on the cedar siding. Can FHA fund on one of these homes? They do it all the time. Just hopefully an appraiser does not come along and call out the no finish on the naturally weather resistant siding.
Thank you Gary. After hearing about two recent situations where home owners were asked to paint or stain their fence (by the appraiser and then by the underwriter), I thought this post would be important. I hope some others pitch in thoughts and stories to give perspective too. I think your example is spot on. I agree with you that HUD guarantees loans all the time regardless of what the fence is like in terms of paint and such.
Thanks for an informative nugget.
My pleasure. Thanks Al.
I’d really like to see more neighborhoods tearing down their fences and joining their block together
Its weird to me that Californian’s prefer “privacy” to “community”: because its costlier and less safe (can’t see a prowler working behind a neighbors fence) to put up fences
In the Midwest, we don’t have back fences – we put our dogs on chains and the whole block is visible. Its pretty and it feels “open” and bigger.
Thanks Anne. Yeah, fences in California are standard and I think many of us would freak out if we were completely seen by neighbors. I wonder if anyone has tried tearing down fences in Sacramento. Know of any efforts? I remember seeing a Midwest yard for the first time and wondering if it was some sort of PUD development because there were no fences. 🙂 I’ll admit I am part of the fence club for my backyard, though I am very intentional about getting to know neighbors and having good relationships with them.
I don’t know of any efforts for blocks to “tear down their walls” but hoping you’ll pick up the banner and get it started 🙂
Ha. I’ll just add it to my list so I have so much free time. Actually, on a somewhat related note I was contacted yesterday by an Oak Park resident who wants to have her chain link fence removed in the front yard. She was reading an interview I did in 2014 with a community organizer, so I helped her get into contact with a group focused on beautifying the neighborhood with the removal of chain link fences. 🙂 (for anyone interested: https://sacramentoappraisalblog.com/2014/10/21/removing-chain-link-fences-to-beautify-a-neighborhood/)
The biggest reason why there are no fences in the Midwest is due to cyclones and the like. It’s not primarily a neighborly thing but more so a not to have to rebuild every year from wind damage
Good point there Ken. And nice touch on “Maui”. I hope you’re having a good time. 🙂
Good discussion Ryan. I also wrestled with this issue and in researching what I discovered about woods such as cedar and redwood is that they are naturally pest and water resistant on their own; however if they are painted the paint will actually draw out the natural oils and the natural ability diminishes in other words these woods are better protected by the weather in their natural state than painted but once painted you must maintain the paint because the act of painting altered the woods natural defense.
Most cedar and redwood fences I see are not painted. Most cedar and redwood barns I see are not painted and some are older than I am.
Good fences make good neighbors.
Fantastic comment, Bryan. This helped make the post better. I appreciate your insight. It’s amazing how following a so-called “rule” then could actually weaken a fence. 🙂
Uninformed appraisers exposed! Great post Ryan. I think in some instances because FHA is not always clear and because appraisers want to be on the safe side they may ask for unpainted surfaces to be painted as well as the type of house Gary K. talks about. Thanks for clearing things up. Appraisers should always consult with the FHA Resource center if they are unsure about something.
Thanks so much Tom. Yeah, it’s tricky because FHA really isn’t very clear on some issues. That’s understandable because real estate doesn’t always fit into one neat little box, though it’s unfortunate in some cases like this too. In an ideal world if FHA was listening to this conversation, I think they have a great opportunity to speak clarity into this issue and maybe write something more detailed on what they mean by bare wood as it pertains to a property and the fence. This reminds us appraisers to communicate well with each other too so we are doing things that are consistent with standards as well as acting in accordance with what our peers are doing too.
Hi Ryan, it seems like some people are confusing paint with stain or sealant. It says flaking paint needs to be scraped and re-painted, not stain or sealant. So if someone painted a fence with white paint, and that is now flaking, that would need to be scraped and re-painted, but not stain or sealant. I stopped doing FHA appraisals after the new requirement to test kitchen appliances, as I do not want to turn on microwaves, ovens, and dishwashers. That is an issue I think needs to be brought to attention.
Matt Bowersox, SRA
Thanks Matt. I appreciate your take. There is definitely confusion out there. I’m curious why there is a difference in your mind between stain and paint. Why would flaking stain not need to be sealed if the wood is no longer sealed?
I guess stain could contain lead, but if FHA wanted to make that a requirement, they should re-do their documents to say flaking paint and/or stain needs to be scraped and re-painted. I could be missing it in the requirements, but I only ever remember reading the word paint. If they just say paint, I would say we are following the guidelines not to require flaking stain to be scraped and re-painted.
Yeah, it’s not always easy to figure out what FHA is saying and how they are changing too. Part of the struggle is the manual says one thing and you can basically get a different answer each time you call the hotline. For years the issue with paint was seemingly only about pre-1978 because of lead-based paint, but when calling them they would tell you chipping paint after 1978 was also an issue because of economic longevity. I am finally starting to see some language from them regarding this (post-1978). Hopefully they continue to clarify things. Defective paint or stain would fit this same category in my book as something needing to be cured.
I would taking anything the people on the hotline say with a grain of salt. They many times have to look it up, and then they are trying to interpret what FHA means by that. I would trust the judgment of interpretation of appraisers with 10+ years of experience over the hotline people any day. I personally believe they are concerned with lead-based paint when it talks about flaking paint on a fence, and not a maintenance issue. The reason I believe this is because they say it only relates to properties constructed prior to 1978. They do take it a step further and say that flaking paint on house siding worn to bare wood needs to be repainted. This would be a maintenance issue. But since they don’t specifically say (to the best of my knowledge) that flaking paint on a wood fence needs to be scraped and repainted if worn to bare wood if the house was built after 1978, I thing it is reasonable to conclude their concern relating to fences is lead.
I hear you. Thanks for your take Matt. I appreciate it very much.
Actually HB4000.1 is very clear about defective paint on improvements built after 1978 and it is not just about lead. See excerpt below from HB4000.1 page 495:
j. Defective Paint
If the dwelling or related improvements were built after 1978, the Appraiser must report all defective paint surfaces on the exterior and require repair of any defective paint that exposes the subsurface to the elements.
Thanks Bryan. I appreciate the word. I have been saying this for years. I even have a video from 2009 I think that talks about this. Though I’m not sure it was in writing in the previous manual. I could be wrong, which is fine. I’m glad to see it is actually in writing. Fantastic!!
I see what you mean there. I guess now we need a definition of “related improvements”, and whether or not that includes fencing, or just things attached to the dwelling like porches, etc. Glad I don’t do FHA anymore.
I have called FHA regarding “related improvements” they told me it it included porches, outbuildings, fences, even barns. If they have peeling paint on the exterior it has to be fixed. Along with any safety issues. I have had to have barns and out buildings, inspected, painted, repaired or razed to meet FHA standards. They are still very vague about repairs when they are asked. It is very frustrating that they will not be specific about requirements.
Thanks Ripley. Sounds about right. FHA takes a “whole enchilada” approach in that if it is within the parcel lines, it needs to meet FHA minimum property standards.
It’s true, the FHA isn’t always the clearest with standards and as a result there will be confused appraisers at times. This is an interesting discussion. Great post Ryan, thanks for sharing!
Thanks. 🙂
Hi, thanks for the great article!
I have a question for my case. We’re trying to buy a house that we’re renting at the moment. It was built in 2006, cabin style. Paint inside is great and most of the outside is great also, except for the part of the patio that is not covered. That part was not painted, just stained. It requires constant cleaning because there are a lot of trees around our house so it gets green quite a bit. It doesnt look bad but it’s not nearly as nice as covered part of the patio which is painted. Would that be something to worry about with FHA appraisal? It’s also fairly cold so I’m not sure it’s a good idea to paint it before appraisal comes.
Hi Zel. Thanks for reaching out. Good luck on the purchase too. Stain should be fine. I wouldn’t worry about it unless there is obvious damage that is somehow impacting the marketability of the property. 🙂
Fence painting is nothing but an important part of wood fence maintenance. A wood fence does not need to be painted regularly. It needs some painting in every 3- 4 years. However, if wood fence is contaminated with some high quality sustainable materials then I think there is no need to paint the fence. But it is a usually a good idea to paint in order to prolong the life span of the fence. I did not have any idea FHA standards. But After going through your blog I have gained a lot about this. Though I can’t tell whether to paint or not in order to meet the FHA standards but I can tell one thing that repair and seal the damaged portions of the fence is very necessary in order to meet FHA standards as well as to gain more privacy and safety. Thank you for sharing.
Thank you for your take Devon. I realize you are speaking from the place of a fence company and I appreciate that. From an FHA perspective, based on all the information above, I conclude a fence does NOT need painting. While it may be an advantage to prolong the life of the fence as you mentioned, I would say overall it is not necessary from an FHA perspective.
Ryan,
Thank you for this discussion. I have a situation where the value of the property was about 20K greater than the sales price. There is an issue with the fence with peeling paint. I can’t finalize my loan because there is an escrow hold back because the appraiser wants the fence scraped and painted. The seller did some underhanded estimate and there was an escrow hold back for $600 to scrape and paint the fence. Shoddy work was done and it did not pass again. The appraiser assigned a value of 3k to the fence. I want to tear it down. Can the mortgage company just reduce the value by 3k (which would still be over the purchase price), I tear down the fence and everyone is happy?
Thank you for your time.
Bryan
Hi Bryan. Thanks for reaching out. First, the appraiser was correct to call out the peeling paint in this situation. It’s a real issue for FHA. But it sounds like the repair was not handled properly. I think the remedy comes down to the lender. A fence may not actually be required per code, and if fences aren’t normative in your market, then I suppose there wouldn’t be a marketability issue if there wasn’t a fence. It is possible the lender can reduce the value if the appraiser does so after a fence is removed, but the fence is going to have to be removed. Yet in this case there is no black and white rule to follow. It’s going to come down to what the appraiser says and what the lender says. The appraiser is going to have to sign his/her name to the file no matter what is decided. I will say being that the appraiser says there is value for the fence, it might not work well to remove the fence because it might become a marketability issue to not have a fence (which is an issue for FHA). I have seen instances where an FHA repair could go two ways though where the remedy would be fixing the issue or removing something that was not compliant. This cannot happen for every type of repair of course (such as central heat). If I were you I’d still ask the lender and appraiser though if this is a possible solution. Or maybe the seller can do a better job on the repair to get this done?