Recently, I had this question come up from a loan officer. We had just appraised a home they were lending on, and we completed an FHA appraisal. While the house was ok, there was an old storage building on site that had peeling paint on the interior and exterior. We had to call for the paint to be removed, and the loan officer wanted to know their options. So I thought I’d turn our conversation into a quick FAQ post.
For anyone not familiar with the Federal Housing Administration, or FHA, as well as VA and USDA, they all have very specific (and some not-so-specific!) guidelines regarding peeling paint. These, as well as all of their guidelines, are in place to protect the health and safety of anyone on the property, as well as to maintain the overall integrity of the residence and grounds.
When does this rule apply?
This rule applies to any home built prior to 1978, but if the home was built post-1978 and has peeling paint that is negatively affecting the structural integrity of the home, the appraiser may still call for its removal.
The peeling paint rule always applies to FHA, USDA and VA appraisals, but it can also apply to conventional appraisals. If an appraiser notes that peeling paint is a health or safety concern, even on a conventional appraisal, it will need to be remedied before the loan can close.
This rule applies to any surface showing signs of peeling and/or chipping paint, regardless of when the material (i.e. wood) was painted. You may have painted the wood trim three years ago, but if the paint has started to peel, and your home was built in 1945, the peeling paint must be removed.
Remember that this rule applies to any structure on the property. This includes the home (interior and exterior) of course, plus any other structures like garages, storage buildings, and decks.
Here’s what FHA has to say on the issue:
The Appraiser must note the condition and location of all defective paint and require repair in compliance with 24 CFR § 200.810(c) and any applicable EPA requirements. The Appraiser must observe all interior and exterior surfaces, including common areas, stairs, deck, porch, railings, windows and doors, for defective paint (cracking, scaling, chipping, peeling, or loose). Exterior surfaces include those surfaces on fences, detached garages, storage sheds, and other outbuildings and appurtenant Structures.
If you want to get ahead of this issue, just go around the interior of your home, looking at all the painted surfaces, and see if you find any peeling paint. Then, go outside and do the same. Look at the windows, trim, and shutters. Then go check out any concrete porch or patio that may have been painted at some time, and then don’t forget about storage buildings or barns, or any other structure.
So how do you remove peeling paint on a pre-1978 home?
According to the HUD website, peeling, chipping or flaking paint must be removed by the approved method of scraping the defective surface(s) and then reapplying new paint. It’s very important to pay close attention to flakes of paint which might fall during the removal process as they could still present health and safety concerns. To be safe, remove any flaking or peeling paint down to the bare wood and repaint. And keep a drop cloth under you so cleanup is a breeze!
Here it is in even simpler terms:
Scrape. Any surface that has peeling or chipping paint needs first to be scraped. It’s important to not skip this step and go straight to step 2 (paint). First things first: scrape the old flaking paint off.
Paint. Apply a new coat of paint over any bare surfaces, or any surface you just scraped.
Remove. Get rid of those old paint chips! This may be the most often-overlooked step in the whole process. If you follow steps one and two, but fail to pick up the paint chips you scraped off, the appraiser will need to come back again. Often times, leaving loose paint chips on the ground is more of a health concern than when they were on the house, because now, the chips are easier for little fingers to grab when the kiddos are playing out in the yard.