July 2, 2020

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FHA Appraisal Rules: Shared Wells

083From time to time we get asked very specific questions about the FHA appraisal process-some readers want to know about specific aspects of the appraisal and whether or not a certain condition is considered acceptable under FHA loan rules.

As always, we like to remind everyone that FHA appraisal rules often are not the only ones that may apply for a given situation or with regard to a certain feature. In some cases FHA appraisal requirements don’t spell out a specific guideline but instead defer to the local or state building code. In other circumstances, FHA appraisal rules may be quite specific.

One area where FHA appraisal rules are specific has to do with the nature of a property that is served by a shared well. HUD 4000.1 page 162 lists some FHA requirements for shared wells which include (but are not limited to) the following requirements:

“The Mortgagee must confirm that a Shared Well serves existing Properties that cannot feasibly be connected to an
acceptable public or Community Water supply System”. The lender must also be assured that a shared well is capable of “providing a continuous supply of water to involved Dwelling Units so that each existing Property simultaneously will be assured of at least three gallons per minute (five gallons per minute for Proposed Construction) over a continuous four-hour period.”

FHA appaisal rules in this area add the following. “The well itself may have a lesser yield if pressurized storage is provided in an amount that will make 720 gallons of water available to each connected existing dwelling during a continuous four-hour period or 1,200 gallons of water available to each proposed dwelling during a continuous four-hour period. The shared well system yield must be demonstrated by a certified pumping test or other means acceptable to all agreeing parties.”

Naturally, the well must provide safe drinking water. “An inspection is required under the same circumstances as an individual well. This may be evidenced by a letter from the health authority having jurisdiction or, in the absence of local health department standards, by a certified water quality analysis demonstrating that the well water complies with the EPAs National Interim Primary Drinking Water Regulations”.

In some cases the FHA minimum requirements may be supplemented by state or local requirements-FHA loan rules do not override or take precedence over such laws or ordinances.

Shared wells, under FHA loan rules, may not serve more than four properties.

Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:


Joe Wallace - Staff Writer

By Joe Wallace

May 23, 2016

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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