Utilities, HOA/POA/Condo Documents and Inspections
Utilities and Home Inspections are the buyer's responsibility at the buyer's expense
Now that you have received the Ratified Contract via email from the Asset Manger, you have 15 calendar days from the date of ratification for inspections. Here are steps to follow in order to successfully activate utilities and schedule a home inspection.
This activation process is fairly simple as long as the procedures are followed. Please note that any damage incurred during utility activation is the responsibility of the buyer. YOU MAY NOT DO ANY WORK/REPAIRS TO THE PROPERTY PRIOR TO CLOSING regardless of lender requirements. The buyer is responsible for having the utilities activated. The buyer’s agent
must be present at all times when the buyer is at the property.
The de--winterization process will vary with each Field Service Manager. Please read the specific Field Service Manager's instruction for de-winterization and re-winterization.
1. Contact the appropriate Field Service Manager (FSM) to submit an application for authorization to have the utilities activated. The FSM contact info will be in the email sent from the Asset Manager. You can also inquire with the Listing Broker or find the contact info on the HUDhomestore under the tab Property Contacts.
Enter the HUD Case Number and contact information will be populated.
The purchaser shall present this signed authorization to the utility provider when ordering activation. Purchaser agrees to NOT attempt activation without prior written authorization. The form must be signed by both the Purchaser and Agent and returned to the FSM for authorization.
2: Once you have received authorization from the FSM to activate Utilities, then contact the appropriate utility company and coordinate with your buyer and utility company to have utilities activated in the Buyer's Name.
All expenses associated with the activation of the utilities and testing of the systems shall be at the expense of the purchaser. The Purchaser is responsible for contacting the utility companies to have utilities turned on after authorization. (Note: Properties with already activated electric or water services should remain active and not transferred to the Buyer’s name). This does not grant permission for the Realtor or Buyer to put utility accounts in either the FSM name or HUD’s Name.
Having Utilities Activated utility prior to obtaining the required authorization will result in forfeiture of earnest money.
Outstanding utility bills: If there are outstanding utility bills, please contact the FSM.
3. The Purchaser and Agent must be present at the time of the activation and must confirm that all water valves are closed prior to activation. Refer to the FSM Utility Activation Form for the responsible party for de-winterization.
Approval to activate utilities does not remove any liability of damages done to the property by the Purchaser. The Purchaser agrees to hold the Field Service Management and HUD harmless for any damage resulting from negligence from testing the systems and further agrees that they are liable for any such damage. Purchaser should proceed cautiously.
Systems that are obviously and seriously compromised should NOT be activated in the interest of safety and preservation of the property.
Do not turn on water until the property’s thermostat has reached 60º F from October 1st through April 1st in all freeze zones.
After the system has been charged (Turned On), the main valve to the structure must be turned off at all times the structure is not being inspected or occupied. This is to protect the asset from a line break and flooding, and is not a RE-WINTERIZATION.
4. The Purchaser agrees to have the utilities activated for a period of 72 hours and further agrees to notify Field Service Manager immediately upon completion of deactivation and testing. Please notify FSM prior to any appraisals.
The utility activation period cannot exceed 72 hours (excluding all federal holidays and weekends).
Purchaser accepts responsibility for any freeze damage that may occur due to their failure to notify the FSM that testing has been completed.
Heat sources should be left on and returned to a 55---degree setting after testing until then home has been winterized.
It is the agent’s responsibility to communicate with the FSM.
Properties with sump pumps must have electricity on at all times. It is the responsibility of the Buyer or Agent’s to ensure electric services are uninterrupted during utility tests. If the electric provider will not re-activate the account in HUD’s name, the buyer’s agent must make contact with the FSM immediately.
Review the Property Condition Report (PCR). Prior to requesting utility activation, review the PCR to establish whether the utilities are operational. If the system is faulty we will not grant permission for utility activation as it can cause damage and risk the safety of anyone in the property.
If the PCR (Property Condition Report) indicates there are problems with the utilities, Do Not Activate.
1. If there is an existing sump pump, the power may be active. Do not deactivate the power to a sump pump or transfer out of the FSM's name.
2. The purchaser is responsible for contacting the utility companies, and any costs incurred are the purchaser’s expense. This does not grant permission for the Realtor or Buyer to put utility accounts in either the FSM's or HUD’s name. Doing so will have ramifications that may include the buyer losing their contract and earnest money, and/or the Realtor being responsible for the entire amount of the bill.
3. If the property is a condo or townhouse, the heat may be on, and if so, should be set to a temperature of 55 degrees. Do not deactivate the power at these units and make sure the heat remains on.
4. When water is activated and the property is properly de-winterized, you should not hear water running and you should not see movement in the meter. If this happens, cut the water off immediately.
5. Prior to activating the gas or power to a water heater, make sure there is sufficient water in the unit to prevent a burnout.
6. Utility turn-ons are the responsibility of the buyer. Utilities may be activated for a period not to exceed 72 hours. Please notify the FSM prior to any appraisals. If you complete the inspection sooner, please notify the FSM to re-winterize the property.
Inspections: 15 Calendar Days
HUD encourages all purchasers to obtain a home inspection. The home inspection must be completed within 15 calendar days of contract ratification.
Home inspections are at the responsibility and cost of the buyer. Once the correct Utility activation procedure has been followed and completed then you should be ready to conduct the Home Inspection.
HUD will do NO REPAIRS. If issues are found and requested by purchaser or lender, then the repairs will have to be escrowed in a loan. Learn more about 203B or 203K loans for repair escrows.
Purchasers can also decide to cancel the contract. Click here to learn more about canceling a HUD contract.
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Wood Destroying Insect inspection Reports (WDI) are only ordered on FHA Loan Ratified Contracts. HUD will order the report from their vendor and supply the findings. If treatments are required, then HUD will authorize HUD's vendor to perform the treatments not to exceed $1000.
No Moisture reports will be conducted by HUD. This will be the responsibility of the purchasers.
NO REPAIRS will be conducted. If repairs are needed due to WDI issues or moisture issues, it will be the responsibility of the purchaser to have the repairs escrowed in the loan or cash brought to the closing table if required by lender.
NO REPAIRS ARE TO BE DONE BEFORE CLOSING.
NO WDI reports or treatments for VA, Conventional, USDA or Cash purchasers.
Lead Base Paint Inspections
Lead Base Paint (LBP) Inspection conducted with FHA purchaser and on homes built prior to 1978. The LBP inspection will only be conducted after contract is ratified for FHA purchasers.
NO LBP inspections for Va, Conventional, USDA or CASH purchasers.
If evidence of Lead Base Paint is present:
FHA 203b Financing (2) bids received from "Certified LBP Stabilization/Abatement' vendor.
FHA 203K financed -buyer receives a credit up to $4000 on the HUD1.
If LBP stabilization estimate exceeds $4000 for 203B or 203K financing, a credit can be offered up to $500 and the buyer is responsible for the difference.
If the subject property is located in an area managed by a HOA (Homeowners Association), POA (Property Owners Association) or Condo, then you will want to make contact with the HOA/POA/Condo Association Management Company to order the Re-Sale Package. This contact information can be obtained from the assigned Listing Broker.
IT IS VERY IMPORTANT TO HAVE THE HOA/POA/CONDO documents, re-sale package and past due balance information before closing.
HUD will reimburse the cost/fee of ordering the HOA/POA/Condo Documents if they are submitted to the BSCA (Buyer Select Closing Agent ) prior to closing to be placed on the HUD1 for final approval. Do not wait until the day of closing or past closing to present the invoice/bill for the HOA/POA/Condo Documents re-sale package. HUD will also authorize past due balances to be pay at closing from the date of Foreclosure forward on the HUD1.
The Re-sale package will disclose any past due balances, special assessments, repairs to be the responsibility of the new owner, any maintenance issues and overview of the HOA/POA/Condo By Laws, Governing Rules and Regulations and any rental prohibitions