I was recently asked whether or not HUD homes require Truth-In-Housing evaluations, and my thought was sure, they’re required on all properties… but I said I’d check on it. I did some research on this topic, and I was quite surprised at what I found:
The rules don’t apply to the federal government
In a nutshell, HUD’s position is that Truth-In-Housing evaluations may slow the sale of a property, and “By statute and regulation, HUD is to sell its properties as fast as it can, preferably to owner occupants.” HUD won’t pay for Truth-In-Housing evaluations, and they won’t complete required repairs.
So how are the various cities dealing with this? I contacted every city, and the answers were all across the board. By the way, I use the term 'Truth-In-Housing' loosely – it’s what most people call the required pre-sale city inspection. These are also known as Truth-In-Sale of Housing, Time of Sale, Point of Sale, and I/I Sewer Inspections.
- Bloomington – Still required. The city of Bloomington is currently in the middle of a dispute with HUD, but if a property is offered for sale in Bloomington today, an evaluation is required.
- Brooklyn Park – An evaluation is required after the sale goes through, and the new owner must complete any required repairs. This means that the new buyer is walking in to the deal blind, and could be facing a large list of required repairs immediately after purchasing the home. You can see a letter that HUD wrote to the City of Brooklyn Park regarding this matter here.
- Crystal – No.
- Golden Valley – When I called, I was told “Yes, they’re required on all properties.” This answer makes me think that the city is not yet aware of HUD’s refusal to participate in this program.
- Hopkins – An evaluation is still required, and the buyer must complete the repairs after the sale goes through.
- Maplewood – “Yes, they’re required on all properties.”
- Minneapolis – No.
- New Hope – Same as Brooklyn Park. An evaluation is required after the sale goes through.
- Osseo - “Yes, they’re required on all properties.”
- Richfield – Same as Brooklyn Park. An evaluation is required after the sale goes through.
- Robbinsdale – “Yes, they’re required on all properties.”
- Saint Louis Park - “Yes, they’re required on all properties.”
- Saint Paul – No.
- South Saint Paul – “Yes, they’re required on all properties.”
How this affects the public
When a home is sold without a Truth-In-Housing evaluation, the buyer takes on a larger risk. The obvious and immediate issue is that these HUD homes may have numerous safety hazards that would ordinarily be identified by a Truth-In-Housing evaluation. The obvious solution is to get a private home inspection. Gee, you didn’t see that coming did you? The less obvious issue is that the new owner may be faced with a list of unexpected repairs when it comes time to sell the property. Buyer beware.
Reuben Saltzman, Structure Tech Home Inspections