An inspector certified by the Real Estate Assessment Center (REAC) will contact the owner/manager to schedule a date and time to conduct a physical inspection. This inspection is required for every FHA insured loan or Section 8 property with a HUD or MHDC administered HAP contract. At this time Management should notify all residents that an inspection is set for the scheduled date and their unit could be selected for inspection.
On the day of the inspection, the owner should have staff available to escort the inspector around the development. Hundreds of items will be inspected under REAC’s inspection protocol. Areas include:
Once these baseline inspections are complete, HUD will determine how frequently future inspections are needed. Inspectors will record observable conditions of a targeted area, including Exigent Health and Safety deficiencies. If Exigent Health and Safety (EH&S) deficiencies are noted during the inspection, the Inspector gives the owner a “citation” identifying EH&S conditions requiring immediate repair. The owner must correct all EH&S conditions within 72 hours. Within 72 hours of the inspection, the Contract Administrator (CA) is notified that a physical inspection has been completed, including whether any EH&S conditions require corrective action. The inspector will also notify local authorities (i.e. fire department, county health, etc.) immediately after the inspection if fire safety hazard and smoke detector conditions are observed.
As soon as the CA is notified of EH&S conditions, they must immediately contact the owner. The CA follows up by sending a letter to the owner by fax and mail, confirming the owners awareness of the EH&S conditions and the need for corrective action. The owner must certify to the CA, on owner letterhead, that all EH&S have been corrected. If the owner fails to correct or mitigate the EH&S conditions, subsequent monitoring and follow-up is conducted. The CA makes every attempt to achieve compliance. The owner failure to respond may result in regulatory and /or contractual default. In such an event, the CA recommends to the HUB/PC to seek other remedies or terminate the contract. If the owner fails to correct EH&S conditions the CA and the HUD office may consider Section 8 abatement of individual units. If HUD decides to terminate the contract, appropriate termination procedures must be followed.
The inspection is given a numerical score based on the conditions noted. Physical inspection scores range from 0 to 100, with 100 being the highest obtainable score. The CA‘s actions are dependent upon the score. Owner appeals of physical inspection results must be submitted directly to REAC by the owner. Scores of 59 or below are automatically referred by REAC to the Department Enforcement Center (DEC) within 30 days of the inspection. The CA notifies the owner in writing that the inspection has been referred to the DEC and includes a copy of the inspection. Scores of 60 and over should make repairs as part of ongoing maintenance program.
Real Estate Assessment Center (REAC)