Performance Based Contract
> Real Estate
- 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, Owner should have staff available to escort the inspector
around the Development.
- Hundreds of items will
be inspected under REAC’s inspection protocol. The inspectable areas
Exigent Health and Safety conditions
- 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
- 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
- As soon as the CA is
notified of EH&S conditions, the Contract Administrator 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
- 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 Contract Administrator
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
HUB/PC 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
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 Contract Administrator
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