• (703) 450-6398
  • (703) 450-6398
  • (703) 350-4118
Inspection Packages
Free Quote
Schedule Online

Building a New Home: What You Need to Know

Two construction workers diligently work on framing a house, surrounded by wood and tools.
Two construction workers diligently work on framing a house, surrounded by wood and tools.

A home inspection is a standard part of the process of buying a house. It can be conducted by the seller, buyer, or inspector. When done by an inspector, the inspection covers exterior and interior of the house as well as landscaping and anything else on site. The goal is to identify any major problems that could arise from maintaining or living in the property.

MPS Supplementing Model Building Codes

Official seal and signature in progress on a professional engineering certification document.
Official seal and signature in progress on a professional engineering certification document.
  • Minimum Property Standards (MPS): Establishes minimum standards for buildings constructed under HUD housing programs, including single-family homes, multi-family housing, and healthcare facilities.
  • Durability Requirements: MPS includes minimum standards for items like doors, windows, gutters, painting, kitchen cabinets, and carpeting to ensure the value of FHA-insured homes is maintained.
  • HUD Field Office Acceptance: HUD requires properties insured with an FHA mortgage to meet nationally recognized building codes or comparable state/local codes. In areas without codes, HUD specifies a comparable building code.

Interstate Land Sales

A serene suburban landscape with lush green fields and a growing community of homes.
A serene suburban landscape with lush green fields and a growing community of homes.
  • Protection: The Interstate Land Sales program protects consumers from fraud and abuse in land sales or leases.
  • Full Disclosure Act: Requires developers of subdivisions with 100 or more non-exempt lots to register with HUD and provide purchasers with a property report.
  • Property Report: Contains information about the subdivision and must be delivered before signing a contract.

Buying Lots from Developers: What to Know

Prime real estate outlined amidst lush green rice fields and suburban homes, with scenic mountains in the distance.
Prime real estate outlined amidst lush green rice fields and suburban homes, with scenic mountains in the distance.
  • Be Informed: Take your time and be wary of investment aspects stressed by sales personnel.
  • Know Your Rights: Understand your rights as a buyer.
  • Know the Developer: Research the developer’s reputation.
  • Know the Facts: Understand the development and the lot you plan to buy.
  • High-Pressure Sales: Be cautious during high-pressure sales campaigns.

Developer Requirements and Property Report Information

A vibrant new housing development nestled amidst lush greenery.
A vibrant new housing development nestled amidst lush greenery.
  • Registration: Companies offering 100+ unimproved lots for sale through mail or interstate commerce may need to register with HUD.
  • Required Information: Developers must file information including corporate charter, financial statements, land details, local ordinances, available facilities, utilities, development plans, and supporting documents.
  • Property Report Contents: Includes distances to communities, mortgages/liens, escrow details, recreational facilities, utility availability, soil conditions, and title type.
  • Read Before Signing: The property report is issued by the developer, not the government. Federal law requires you to receive it before signing.

Your Contract Rights

Sealing the deal on a new home with a firm handshake, pen ready to sign the paperwork.
Sealing the deal on a new home with a firm handshake, pen ready to sign the paperwork.
  • Cooling-Off Period: Buyers have a seven-day “cooling-off” period to cancel the contract and get their money back.
  • Warranty Deed: Unless the contract states the seller will provide a warranty deed within 180 days, the buyer can cancel the contract for up to two years.
  • Contract Provisions: Contracts must include a lot description, buyer’s right to notice of default, and limitations on liquidated damages.
  • Property Report Rights: If a developer is required to register, the buyer must receive a property report before signing.

"Cooling-Off" Period Details

Signing important documents in a calm, green office space.
Signing important documents in a calm, green office space.
  • Right to Revoke: Even with a property report, buyers can revoke the contract until midnight of the seventh day after signing.
  • Contact Developer: Notify the developer in writing to revoke and receive a refund.
  • Cannot Be Waived: This cooling-off period cannot be waived.

Interstate Land Sales Division

A detailed urban map is being meticulously marked with a pen.
A detailed urban map is being meticulously marked with a pen.
  • Role: Administers the law and examines developer registration statements.
  • Limitations: Does not control zoning or land-use planning, dictate land sales, or act as a purchaser’s attorney.
  • Assistance: Helps purchasers secure their rights under the Act.
  • Enforcement: HUD can conduct investigations, hearings, subpoena witnesses, seek injunctions, and pursue criminal indictments.

Exemptions from the Law

A judge's gavel rests atop a stack of open law books.
A judge's gavel rests atop a stack of open law books.
  1. Specific Exemptions: Sales of tracts under 100 lots, lots of 20+ acres, lots with buildings, sales to state residents, low-volume sales, locally compliant lots, and certain multiple-site offerings may be exempt.
  2. Contact HUD: If you believe your sale is not exempt, contact the Interstate Land Sales Division.

Know the Developer and the Lot

A modern timber-framed house takes shape amidst a snowy landscape, showcasing the beauty of construction in progress.
A modern timber-framed house takes shape amidst a snowy landscape, showcasing the beauty of construction in progress.
  • Ask Questions: Inquire about HUD registration, request the property report, and study it.
  • Verify Information: Discuss prices with local brokers, talk to other buyers, and check with the Chamber of Commerce or Better Business Bureau.
  • Avoid Pressure: Don’t be pressured by sales agents.
  • Inspect the Property: Don’t buy “sight unseen.”
  • Hire an Inspector: Consider hiring an InterNACHI inspector for a thorough inspection.
  • Ask Questions: Inquire about the development size, zoning controls, amenities, sewer and water service, access roads, title, and financial protections.

Nine Dishonest Sales Practices

Analyzing data trends with interactive graphs.
Analyzing data trends with interactive graphs.
  1. Misrepresenting Value: Concealing or misrepresenting facts about current and resale value.
  2. Refund Issues: Failure to honor refund promises or agreements.
  3. Misrepresenting Facts: Misrepresentation of facts about the subdivision.
  4. Failure to Develop: Failure to develop the subdivision as planned.
  5. Deed and Title Issues: Failure to deliver deeds and/or title insurance policies.
  6. Abusive Treatment: Abusive treatment and high-pressure sales tactics.
  7. Failure to Deliver Sales Inducements: Failure to make good on sales inducements.

  8. “Bait and Switch” tactics:

    • Overview: Luring buyers with advertised low prices, then switching them to more expensive options.
    • Unavailable or Undesirable Lots: The advertised lot is “sold out” or has significant drawbacks.
    • Inflated Pricing: “Free” lot certificates are factored into inflated prices.
    • Delayed Switch: Buyers may discover their unseen lot is undesirable upon visiting, leading to pressure to “upgrade” at a higher price.
  9. Failure to Grant Rights: Failure to grant rights under the Interstate Land Sales Full Disclosure Act.

Summary: Building Your Home

A couple walks hand in hand through the wooden frame.
A couple walks hand in hand through the wooden frame.

Building a new home requires careful consideration of construction standards, land sales regulations, and developer practices. Understand your rights, research thoroughly, and seek professional advice to make informed decisions and avoid potential pitfalls. The Interstate Land Sales Full Disclosure Act aims to protect buyers from fraud and misrepresentation, providing crucial rights and disclosures.