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Got a crazy one. We are in the process of purchasing a rural, residential house in Iowa. Will cut to the chase.
There is a 36x36 steel outbuilding with concrete floor on the property. It's less than 10 years old, totally insulated, heated and has power run to it. Great shop building, no issues.
Except... seller buried 2 shipping containers beneath it to serve as some kind of "bunker / cellar". There is about a 4'x4' concrete block entry area in the shop building that has a 5" thick steel vault door. Within the entry is a spiral staircase that leads below into the shipping containers.
I'm not going to lie... it's dicey. We knew it was dicey when we made the offer. There's plenty of info out there on why shipping containers make terrible underground shelters. One of the two containers appears in great shape. The other has about 20 2x4s that look like they were propped in there when the seller realized it was a bad idea. No signs of settling or bulging / caving in.
We were honestly hoping the FHA appraiser would miss it. It's not part of the main dwelling, and the entrance is hidden behind a false plywood wall.
Appraiser has made the appraisal "as is" subject to a structural inspection of the cellar. I don't have my hopes up. We're 3 weeks from closing.
We love the house / property, and want to make this work with the owners (a farm family).
Are there any "creative" solutions to this problem? Anything that could remove the cellar in the outbuilding from the HUD standards? Perhaps "permenantly" blocking access to the cellar. We're open to any ideas / suggestions.
Planning on getting a structural engineer out there next week to provide an opinion.
Sorry appraisal was not "as is", but "subject to".
Here's the text from the appraisal:
"The subject property does not meet all FHA/HUD minimum guidelines as outlined by Handbooks 4000.1 and all applicable mortgagee letters.
The appraisal is subject to a mold inspection, a structural inspection of the cellar/basement/storm shelter that is located under part of the 36x36 building and the repair of the vinyl
siding on the north side of the home and repair of the exposed wiring in the garage. When the repairs are complete and if the inspections find the property to be environmentally safe
and structurally sound the property will meet minimum FHA/HUD guidelines.
Also the moisture/dampness in the basement needs to be investigated for the source. The moisture is minor and may be caused by surface moisture. There will be no effect on the
marketability of the subject when the conditions are cured. (Added 04/05/2017)"
FHA / HUD standards are about minimum HABITABILTY...
...that means that if the RESIDENCE has safety / code violation the seller has to remedy the issues.
Things like sheds / garages / bunkers are NOT dwellings and should generally not be evaluated for habitability.
If the lender wants the "containers" filled in because safety issues I guess the seller would have to comply, but not sure if that is really in current HUD requirement, it would be "site issue"...
Last edited by chet everett; 04-08-2017 at 09:53 PM..
If not.... can you (or the seller) just fill it with dirt?
Hoping to get a structural engineer out there early this week. Best outcome would be a pass as is (which I'm not hopeful on), or maybe some remediation with posts / beams for reinforcement.
Worst case, would be "removal" either through excavation or filling them. Problem is with access for either of these. It's under a concrete slab with limited access (just the spiral staircase, and another "secondary exit" in the shop.
I'm hopeful that the structural engineer can provide an opinion that it is not hurting the structural integrity of the shop building itself. That would at least help dissuade any risk from a catastrophic loss of the building (which is included in valuation).
...that means that if the RESIDENCE has safety / code violation the seller has to remedy the issues.
Things like sheds / garages / bunkers are NOT dwellings and should generally not be evaluated for habitability.
If the lender wants the "containers" filled in because safety issues I guess the seller would have to comply, but not sure if that is really in current HUD requirement, it would be "site issue"...
You know... I personally agree with you, but have seen a great deal of differing information on HUD minimum property standards and the scope of outbuildings as it relates to the 3 S's.
I think because of the location, removal would be difficult, and filling them in sounds like a good idea. I hope the seller goes for it. He'll have to agree. It's a nice building otherwise.
...that means that if the RESIDENCE has safety / code violation the seller has to remedy the issues.
Things like sheds / garages / bunkers are NOT dwellings and should generally not be evaluated for habitability.
If the lender wants the "containers" filled in because safety issues I guess the seller would have to comply, but not sure if that is really in current HUD requirement, it would be "site issue"...
Not true, HUD requires the entire property to be free from hazards. They specifically mention "site" in addition to just the dwelling. All separate structures, including fences have to be checked.
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FHA / HUD standards are about minimum HABITABILTY...
