On June 15, 2022, the Veterans Benefits Administration’s Department of Veterans Affairs (“VA) issued a Circular addressing the VA’s policies regarding wood-destroying insects (“WDI”) inspection fees and repair costs.
Historically, the VA has authorized that Veterans may be charged for a WDI inspection report in a very limited number of states and territories. However, the traditional understanding was that a Veteran could not pay for the pest inspection on a home purchase when using a VA loan.
As of June 15th, the VA made clear that Veterans may pay WDI inspection fees, where such inspections are required by the VA Notice of Value. Additionally, Veterans may also be charged for any repairs required to ensure compliance with the Minimum Property Requirement (WDI inspection reports are required for certain properties located in areas on the Termite Infestation Probability Map where the probability of termite infestation is either “moderate to heavy” or “very heavy.”) An itemized invoice identifying the Veteran and the property is required to verify the cost on the Closing Disclosure Statement (CD), and lenders should include the invoice in the loan file.
A significant result of this new policy is that Veterans are no longer prohibited from incurring the costs and fees associated with such inspection and reports. Rather, Veterans buyers are now encouraged to negotiate the cost of the WDI inspection and repairs with sellers. The NVAR Residential Sales Contract currently allows for the parties to negotiate for payment of the inspection (e.g., Buyer at Buyer’s Expense OR Seller at Seller’s Expense). However, the default provision make the seller responsible for paying for any recommended treatment and/or repairs.