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j. Inspection Contingency (11/10/2026)
i. Standard
After HUD ratifies the sales contract, the buyer has 15 Days to:
• access the Property to conduct any inspections, tests, or risk assessments at their expense; and
• for Properties constructed before 1978, review all available records and reports relating to lead-based paint or lead-based paint hazards in the Property.
If the HUD REO appraisal was completed without the utilities being activated and the buyer is using FHA-insured financing, the Mortgagee or buyer must complete the
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IV. CLAIMS AND DISPOSITION B. Title II Disposition
2. REO Property Disposition
systems check while the utilities are activated. The Mortgagee or buyer may contact the Field Service Manager (FSM) to request activation of utilities; HUD may charge a fee for this service.
ii. Repairs Necessary to Comply with Mortgage Lender or State, Tribal, or Local
Law Requirements
HUD sells REO Properties as-is. When necessary to comply with mortgage lender requirements or state, tribal, or local law, a buyer may submit a request to the AM for repairs. The buyer must include with its request:
• documentation reflecting that such repairs are necessary to comply with lender or state or local requirements; and
• a copy of a home inspection report identifying the property condition at issue.
HUD will review requests on a case-by-case basis and, at its sole discretion, may make the requested repairs, if approved.
iii. Withdrawal from Sales Contract
Before the expiration of the inspection contingency period, the buyer may terminate their obligation to purchase the house and request a refund of the earnest money deposit by providing to the AM:
• written notice of its withdrawal from the sales contract; and
• a copy of a home inspection report identifying serious problems or conditions with the Property that were not previously disclosed or corrected, or documentation of the presence and/or condition of lead-based paint or lead-based paint hazards.