New Document: VA “Not Inspected” Acknowledgment (Cx17723)

According to VA Lender’s Handbook ch. 10.08, properties which are appraised as “new construction” must be covered by either a one-year VA builder’s warranty, or a ten-year insurance-backed protection plan. An exception to these guaranties is made when the builder is not involved with VA financing on a frequent basis and he will not provide either type of guaranty.

Properties are considered “new construction” if they have been either fully completed or if they have been nearly completed, with the only remaining items being “customer preference items” such as appliances, fixtures, floor coverings, et cetera. The property must have been completed (or nearly completed) for less than one year and must never have been owner-occupied (see Ibid. ch. 10.05 & 10.08)

Whether the builder is providing a one-year warranty or a ten-year protection plan, the borrower must execute a written acknowledgment stating, in essence, that he is aware that the VA did not inspect the property during construction and that there are limitations (or prohibitions) with the VA’s assistance with construction complaints.

If the builder is one where the exception is made, the borrower must execute an acknowledgment stating that he is aware that the property does not qualify for VA assistance with construction complaints and that he is also aware that neither type of guaranty covers the property.

Due to the rare instances when these acknowledgments would be necessary, we have provided them in custom documents for some clients over the years. We have now decided to provide a generic document which all clients can use, on an “upon request” type of basis. This document is Cx17723.

We have incorporated the language of the acknowledgments, as set forth in the VA Lender’s Handbook, as well as adding (before them) additional language proposed by one client, which we believe will provide more clarity to the borrower of what exactly he is acknowledging. Cx17723 contains all three acknowledgments, with checkboxes accompanying them to indicate which acknowledgment needs to be signed. The checkboxes will check as follows:

1. Checkbox One (One-Year Warranty): When “VA Loan Warranty Term (Years)” (Field 50845) equals “1.”

2. Checkbox Two (Ten-Year Protection Plan): When “VA Loan Warranty Term (Years)” (Field 50845) equals “10.”

3. Checkbox Three (Exception): When “VA Loan Warranty Term (Years)” (Field 50845) equals “N/A.”

Again, due to the unique circumstances under which this document should print, it will only be available “upon request.” Once requested, it will print only for VA loans, in Closing packages, and when “New Construction?” equals “Yes” in ConformX.

This document is now available. If you have any questions or concerns about these changes, or would like to assign this document to your VA loan Closing packages, please contact your Account Manager or contact Client Support at 1.800.497.3584.


July 31, 2013
DR 138733