[Federal Register Volume 91, Number 71 (Tuesday, April 14, 2026)] [Notices] [Pages 19145-19195] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 2026-07176] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR-6504-N-01] National Standards for the Physical Inspection of Real Estate: Implementation Guidance and Inspection Standards for the HOME Investment Partnerships and Housing Trust Fund Programs AGENCY: Office of the Assistant Secretary for Community Planning and Development (CPD), U.S. Department of Housing and Urban Development (HUD). ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: This notice serves as guidance to the ``Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate'' (NSPIRE) rule published May 11, 2023. The rule provided that HUD publish in the Federal Register an additional notice on the NSPIRE Standards for the HOME Investment Partnerships (HOME) and Housing Trust Fund (HTF) programs. In addition, this notice implements the property [[Page 19146]] standards and inspection provisions in the ``HOME Investment Partnerships Program: Program Updates and Streamlining'' rule published on January 6, 2025. This notice also provides guidance to HOME participating jurisdictions and HTF grantees on how to develop HOME and HTF written property standards and inspect assisted projects in compliance with the NSPIRE final rule and the HOME final rule, as applicable. DATES: HUD's National Standards for the Physical Inspection of Real Estate (NSPIRE) final rule for Community Planning and Development (CPD) programs was effective October 1, 2023. In accordance with HUD's Federal Register notice published at 89 FR 55645, the compliance date was extended until October 1, 2025, and subsequently HUD's Federal Register notice at 90 FR 46912 further extended the compliance date to October 1, 2026. The HOME final rule was effective on February 5, 2025, with a one-year compliance period. However, HUD's Federal Register notice delayed the effective date of the 2025 HOME final rule until April 20, 2025, with a one-year compliance period. This notice aligns and extends the compliance dates of the NSPIRE final rule and the updated property standards and inspection requirements in the 2025 HOME final rule for jurisdictions and participants, in the HOME program, and extends the compliance date of the NSPIRE final rule for grantees in the HTF program until April 14, 2027. For all activities with written agreements executed prior to the compliance date, participating jurisdictions and grantees may continue to comply with the previous standards as defined in the HOME and HTF regulations at 24 CFR parts 92 and 93, respectively. FOR FURTHER INFORMATION CONTACT: Caitlin Renner, Acting Director, Program Policy Division, Department of Housing and Urban Development, 2415 Eisenhower Avenue, Alexandria, VA 22314; email [email protected] or telephone (202) 708-2684. (This is not a toll-free number.) HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. SUPPLEMENTARY INFORMATION: I. Previous Standards Prior to implementation of the NSPIRE rule, there were two inspection models used and referenced in the HOME and HTF regulations: the Housing Quality Standards (HQS), which were found at 24 CFR 982.401 and were applicable to units occupied by tenants receiving HOME tenant based rental assistance; and the Uniform Physical Condition Standards (UPCS), which were found at 24 CFR 5.703 with the dictionary of individual UPCS deficiencies contained in a Federal Register notice. The HOME and HTF regulations at 24 CFR parts 92 and 93, respectively, applied HQS to units occupied by tenants receiving HOME tenant based rental assistance (TBRA) and UPCS to the development of written property standards for HOME and HTF rehabilitation and/or acquisition activities and ongoing compliance of assisted rental housing. II. This Notice On May 11, 2023, HUD published the final rule ``Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate'' (88 FR 30442) to align expectations of housing quality and consolidate inspection standards across HUD programs. On January 6, 2025, HUD published ``HOME Investment Partnerships Program: Program Updates and Streamlining'' (90 FR 746) (2025 HOME final rule) which provides additional physical condition requirements and flexibilities for inspections of HOME-assisted projects. Consistent with the preamble to the final rule and the conforming changes at 24 CFR parts 92 and 93 and additional updates in the 2025 HOME final rule, HUD is publishing this Federal Register notice to address implementation of NSPIRE in the HOME and HTF programs. This notice clarifies applicable HOME and HTF property standards requirements and establishes the specific deficiencies that must be corrected in HOME- and HTF-assisted housing projects based on the unified NSPIRE Standards established in the ``National Standards for the Physical Inspection of Real Estate: Inspection Standards'' notice (NSPIRE Standards notice) (88 FR 40832) published on June 22, 2023. The NSPIRE Standards replace both the UPCS and the HQS. Furthermore, the NSPIRE rule and standards were subject to extensive industry and public input and the standards will be updated through Federal Register notices at least every three years in accordance with 24 CFR 5.709(a)(1). Accordingly, HUD will also periodically update program- specific guidance for HOME and HTF to align with changes to NSPIRE, published on June 22, 2023. III. Effective Date and Applicability The NSPIRE final rule is effective for projects to which HOME or HTF funds are committed on or after the effective date of October 1, 2023. However, participating jurisdictions and grantees are not required to comply with changes in the NSPIRE rule until the compliance date. In accordance with the ``Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE); Extension of NSPIRE Compliance Date for HCV, PBV, Section 8 Moderate Rehab and CPD Programs'' (89 FR 55645), the compliance date was extended until October 1, 2025. Subsequently, HUD's notice at 90 FR 46912 further extended the compliance date to October 1, 2026. The HOME final rule was effective on February 5, 2025, with a one-year compliance period. However, the notice delayed the effective date of the 2025 HOME final rule until April 20, 2025, with a one-year compliance period. Due to the delay in publication of this notice, the compliance date for HOME and HTF is further extended to 365 days from the publication of this notice. To implement the requirements described in this notice, it will be necessary for participating jurisdictions and grantees to make extensive revisions to their written rehabilitation and/or property standards and to train local inspectors on such policies. Consequently, HUD has determined that participating jurisdictions and grantees require at least 12 months for implementation before compliance is possible. Therefore, for all activities with written agreements executed prior to the compliance date, participating jurisdictions and grantees may continue to comply with the previous standards as defined in the HOME and HTF regulations at 24 CFR parts 92 and 93, respectively. NSPIRE is only applicable to HOME- and HTF-assisted projects with new commitments made on or after the effective date. Because participating jurisdictions and grantees are required to manage the day-to-day operations of their programs in accordance with all program requirements and written agreements as required for HOME and HTF at 24 CFR 92.504(a) and 93.404(a), respectively, new regulatory requirements cannot be imposed on project owners unless permitted by the project written agreement. However, HUD encourages participating jurisdictions and grantees to standardize [[Page 19147]] ongoing rental property standards across their portfolio of projects. Before imposing NSPIRE on projects for which funding commitments were made prior to the effective date of the NSPIRE final rule, participating jurisdictions and grantees must determine whether the existing project written agreement automatically adopts HOME and/or HTF regulatory changes or if the agreements must be amended to apply NSPIRE requirements in accordance with any applicable amendment clauses. IV. NSPIRE Conforming Changes to the HOME and HTF Regulations The conforming language in the HOME and HTF regulations make several notable changes to the program requirements. First, HUD clarified that ``decent, safe, and sanitary'' as referenced in Section 211 of the HOME statute, Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended (42 U.S.C. 12701 et seq.), and ``decent, safe, sanitary, and in good repair'' as referenced in 24 CFR parts 92 and 93 means in compliance with the national standards for the condition of HUD housing at 24 CFR 5.703, which requires that all residents live in safe, habitable dwellings. Furthermore, the definition of ``Uniform Physical Condition Standards at 24 CFR 92.2 and 93.2 were removed from the regulations and all references to UPCS were replaced with NSPIRE. Additionally, the HOME and HTF programs apply the requirements at 24 CFR 5.703 and the conforming amendments make clear that participating jurisdictions and grantees are not subject to the requirements at 24 CFR 5.705 through 5.713, which include, but are not limited to, the NSPIRE inspection procedures, administrative processes, and the scoring and ranking, and appeals processes. These procedural requirements are generally applicable to inspections under various programs overseen by the HUD Office of Multifamily Housing and Public and Indian Housing but do not apply to HOME and HTF. The conforming amendments in HOME and HTF at 24 CFR 92.251 and 93.301 apply the affirmative requirements at 24 CFR 5.703 to rehabilitation projects with two exceptions. First, the carbon monoxide detection requirements at 24 CFR 5.703(b) and (d) do not apply at this time. These requirements were added to the NSPIRE final rule after the public comment period to comply with statutory provisions imposed on several HUD programs but not the HOME or HTF programs. Consequently, HUD will address carbon monoxide detection requirements in future HOME and HTF rulemaking to provide the public with an opportunity to comment. In the meantime, HUD reminds participating jurisdictions and grantees that they must comply with state or local carbon monoxide detection requirements and strongly encourages participating jurisdictions and grantees to incorporate carbon monoxide detection requirements in their written property standards, even when not required by code or HUD regulation. The second exception is for single room occupancy (SRO) housing. SRO housing projects are only required to comply with 24 CFR 5.703(d), which outlines affirmative requirements for the unit, to the extent that those components exist within the unit. For example, the HOME and HTF definitions of SRO housing do not require that SRO units contain both kitchen and sanitary facilities. In the case of new construction, one or the other is required, and for rehabilitation or acquisition projects neither component is required within an SRO unit. When a participating jurisdiction or grantee is constructing or rehabilitating an SRO unit in compliance with the program regulations and the component is not present in the SRO housing unit, the SRO housing unit is not required to comply with the provisions of 24 CFR 5.703(d)(1) that address the missing components. These provisions require that the unit must have hot and cold running water in both the bathroom and kitchen, including an adequate source of safe drinking water in the bathroom and kitchen. Similarly, participating jurisdictions and grantees will not be required to comply with the requirements at 24 CFR 5.703(d)(4) that the unit contain a kitchen area with a sink, cooking appliance, refrigerator, food preparation area, and food storage area apply for the missing components. Lastly, the participating jurisdictions and grantees will not be required to comply with 24 CFR 5.703(d)(2), which requires the unit to include its own bathroom or sanitary facility-- containing a sink, a bathtub or shower, and an interior flushable toilet--that is in proper operating condition and usable in privacy. However, if the SRO unit has kitchen and/or sanitary facilities, the NSPIRE standards apply to those components. For rehabilitation and acquisition of standard housing projects, the regulations now provide that HUD must establish lists of specific deficiencies, which must not exist in HOME- or HTF-assisted housing upon project completion. The specific deficiency lists must be based on the national standards for the condition of HUD housing at 24 CFR 5.703, and HUD must publish them in the Federal Register. Because the previous version of the HOME rule applied HQS to units occupied by tenants receiving HOME TBRA, the conforming changes are significant for TBRA programs. The rule requires that a participating jurisdiction establish written property standards for a HOME TBRA program, which at a minimum must comply with federal lead-based paint requirements, and with state and local codes and ordinances, including those for health and safety. In the absence of state or local habitability or property condition codes, a participating jurisdiction's TBRA property standards must provide that the project will not contain specific deficiencies established by HUD. Similarly, the rule requires that participating jurisdictions require that HOME- assisted rental housing comply with state and local codes and ordinances during the period of affordability, and in the absence of such codes and ordinances the housing must not contain the specific deficiencies established by HUD. The HTF regulations are slightly different in that they require that at a minimum, the grantee's ongoing property standards for rental housing during the period of affordability must provide that the property does not contain the specific deficiencies established by HUD whether or not state or local codes apply. The specific deficiency lists for all applicable HOME and HTF activities must be based on the national standards for the condition of HUD housing at 24 CFR 5.703, and HUD must publish them in the Federal Register. Finally, for ongoing inspections of HTF-assisted rental properties during the period of affordability, the inspection requirements at 93.404(d) require HUD to set forth guidance that explains ``a statistically valid sample of units appropriate to the size of the HTF- assisted project.'' V. Affirmative Requirements Affirmative requirements are the basic requirements that must be met for HOME- and HTF-assisted housing in accordance with the NSPIRE rule. There are additional requirements contained in 24 CFR 92.251 that apply to HOME units pursuant to the 2025 HOME final rule. These requirements will be described later in this Notice. The NSPIRE rule provides the minimum, or affirmative, habitability requirements for each inspectable area at 24 CFR [[Page 19148]] 5.703(b), (c), and (d) (inside, outside, and unit). Affirmative requirements are designated as pass or fail during an inspection. The affirmative requirements for each inspectable area applicable to the HOME and HTF programs are as follows: A. Inside (24 CFR 5.703(b))--the common areas and building systems within the building interior and are not inside a unit: 1. The inside area must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the property. 2. For the inside area, any outlet installed within six feet of a water source must be a ground-fault circuit interrupter (GFCI) protected. 3. The inside area must have a guardrail when there is an elevated walking surface with a drop of 30 inches or greater measured vertically. 4. The inside area must have permanently mounted light fixtures in any kitchen and each bathroom. 5. The inside area may not contain unvented space heaters that burn gas, oil, or kerosene. B. Outside (24 CFR 5.703(c))--the building site, building exterior components, and any building systems located outside of the building or unit: 1. For the outside area, outlets within six feet of a water source must be GFCI protected and; 2. The outside area must have a guardrail when there is an elevated walking surface with a drop of 30 inches or greater measured vertically. C. Unit (24 CFR 5.703(d))--the interior components of an individual dwelling where the resident lives: 1. The unit must have hot and cold running water in both the bathroom and kitchen, including an adequate source of safe drinking water in the bathroom and kitchen. 2. The unit must include its own bathroom or sanitary facility that is in proper operating condition and usable in privacy. It must contain a sink, a bathtub or shower, and an interior flushable toilet. 3. The unit must meet the below standards or follow the specifications of National Fire Protection Association (NFPA) 72, which satisfies the affirmative requirements for smoke detectors. a. The unit must include at least one battery-operated or hard- wired smoke detector, in proper working condition, in the following locations:On each level of the unit. Inside each bedroom. Within 21 feet of any door to a bedroom measured along a path of travel. Where a smoke detector installed outside a bedroom is separated from an adjacent living area by a door, a smoke detector must also be installed on the living area side of the door. b. If the unit is occupied by any hearing-impaired person, the smoke detectors must have an alarm system designed for hearing-impaired persons. 4. The unit must have a living room and kitchen area with a sink, cooking appliance, refrigerator, food preparation area, and food storage area; 5. The unit must have two working outlets or one working outlet and a permanent light within all habitable rooms; 6. Outlets within six feet of a water source must be GFCI protected; 7. For climate zones designated by the Secretary through notice, the unit must have a permanently installed heating source. No units may contain unvented space heaters that burn gas, oil, or kerosene. In accordance with the NSPIRE Standards notice (88 FR 40832), or subsequent versions, HUD will require permanent heating sources in all locales except for Hawaii, Puerto Rico, Guam, U.S. Virgin Islands, American Samoa, and the Commonwealth of Northern Mariana Islands; this follows the International Energy Conservation Code (IECC). Those localities where permanent heating sources will not be required are Tropical (per IECA designation). 8. The unit must have a guardrail when there is an elevated walking surface with a drop off of at least 30 inches or greater measured vertically. 9. The unit must have a permanently mounted lighting fixture in the kitchen and each bathroom. VI. State and Local Codes and Minimum Standards The HOME statute and the HOME and HTF regulations require that a project must comply with all zoning ordinances and meet all state and local codes, ordinances, and standards, which can vary by the type of housing or activity undertaken. Applicable state and local codes include local zoning and building codes as well as state and local occupancy and property maintenance codes. Generally, there are two functional categories of codes: Codes that regulate ``voluntary'' construction or development activity (e.g., zoning ordinances or codes, building codes, rehabilitation codes). Once a specific use and type of building has been determined, the building code generally regulates the construction by establishing minimum technical standards (e.g., footers must be 42'' below grade, wall studs should be 16'' on center, windows must be strong enough to withstand certain wind speeds, etc.). At their core, these are safety standards intended to ensure construction will result in structures that do not present undue risks of structural collapse, fire, or other hazards to their occupants. These codes apply to HOME- or HTF-assisted development projects. Codes that compel an owner to take action (e.g., housing or habitability codes, rental licensing codes/requirements, property maintenance codes). Failure to comply with these codes can result in condemnation, requirements to vacate the property, state or local government orders to make repairs, or actions by the state or local government to directly mitigate the violation and charge the owner. These codes apply to units occupied by tenants receiving HOME TBRA and the ongoing property condition of HOME- or HTF- assisted rental properties during the period of affordability. NSPIRE at 24 CFR 5.703(f) provides that the NSPIRE standards for the condition of HUD Housing do not supersede state and local codes. Therefore, the NSPIRE standards, as applicable in the HOME and HTF regulations, do not replace or override state and local codes but may impose additional requirements not addressed by state and local codes. A. New Construction: The regulations at 24 CFR 92.251(a) and 93.301(a) require that new construction projects meet all applicable state and local residential building codes, ordinances, and zoning requirements. In the absence of applicable state or local building codes for new construction, HOME- and HTF-assisted projects must meet the International Code Council's (ICC) International Residential Code or International Building Code, as applicable to the type of housing being developed or acquired. B. Rehabilitation: Pursuant to the regulations at 24 CFR 92.251(b) and 93.301(b), the participating jurisdiction's or grantee's rehabilitation standards must require the housing to meet all applicable state and local building codes (including rehabilitation codes, if adopted by the state or locality), ordinances, and requirements upon completion. In the absence of state or local building codes that apply to rehabilitation, the participating jurisdiction or grantee must use the International Existing Building Code of the ICC. In addition, the standards of the participating jurisdiction must be such that upon completion, the HOME-assisted project and units will be decent, safe, sanitary, and in good repair [[Page 19149]] as described in 24 CFR 5.703. The housing must also not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register for HOME and HTF assisted projects and units. C. Acquisition of Standard Housing for Homeownership (e.g., Downpayment Assistance): The regulations at 24 CFR 92.251(c) and 93.301(c) require the participating jurisdiction's or grantee's property standards to provide that the housing meets all applicable state and local housing quality standards and code requirements, at a minimum. In addition, the housing must not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register for HOME and HTF assisted projects and units. D. HOME TBRA: The participating jurisdiction's ongoing property standards must require the units occupied by tenants receiving HOME TBRA to meet all applicable state and local code requirements and ordinances. In the absence of existing applicable state or local code requirements and ordinances, at a minimum, the participating jurisdiction's standards must provide that the property does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register for housing occupied by tenants receiving HOME TBRA. E. Ongoing Condition of HOME-Assisted Rental Housing: The participating jurisdiction's ongoing property standards must require the HOME-assisted rental housing to meet all applicable state and local code requirements and ordinances during the period of affordability. In the absence of existing applicable state or local code requirements and ordinances, at a minimum, the participating jurisdiction's ongoing property standards must provide that the property does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register for rental housing (including manufactured housing). F. Ongoing Condition of HTF-Assisted Rental Housing: The grantee's ongoing property standards must require, at a minimum, that the HTF- assisted rental housing does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the Federal Register for rental housing (including manufactured housing). VII. Specific Deficiency Lists The NSPIRE final rule at 24 CFR 5.705(a) requires that HUD establish NSPIRE inspection standards through notice. The final rule also established a new framework for inspection, which focuses on three areas--common areas and building systems inside the building that are not inside a unit (Inside), the site, exterior building components and systems outside the building (Outside) and interior components within the individual dwelling units where the resident lives (Unit) of HUD housing and ensures that they are ``functionally adequate, operable, and free of health and safety hazards.'' The requirements in 24 CFR 5.705 do not apply to HOME and HTF projects. Instead, 24 CFR 92.251 and 93.301 each require HUD to publish specific deficiency lists that will apply to certain HOME and HTF housing projects. This notice is a complementary document which establishes the specific deficiencies that must be corrected before HOME or HTF project completion or during the period of affordability as required by the participating jurisdiction's or grantee's property standards. HUD's goal for the HOME and HTF property standards requirements is to align with NSPIRE to the extent feasible and practical given the unique circumstances of each eligible activity and tenure type. Consequently, the NSPIRE Standards notice (88 FR 40832), and subsequent versions, established the universe of deficiencies that HUD may apply to HOME and HTF. This Notice does not establish new deficiencies. However, HUD acknowledges that the deficiencies in this notice that apply to HOME and HTF may differ due to frequent updates of specific deficiencies in the NSPIRE Standards notice (88 FR 40832). Consequently, HUD's intent is to update this notice periodically to remain consistent with subsequent versions of the NSPIRE Standards notice (88 FR 40832), to the extent feasible. Any changes will be published through notice in the Federal Register before they are applicable. To determine the appropriateness of applying each NSPIRE deficiency to each HOME or HTF eligible activity, HUD analyzed each NPSIRE standard and considered several factors, including: The severity of the deficiency: low, moderate, severe, or life threatening. Whether HOME or HTF funds could be used to fix the deficiency, which applies in rehabilitation projects at the time of rehabilitation but not acquisition of standard housing projects or HOME TBRA units. Whether the deficiency is considered a low health and safety risk and considered a pass for a Housing Choice Voucher (HCV) program. The impact of the deficiency on the assisted occupant's unit, particularly in the homeownership context. For HOME TBRA and homebuyer acquisition, whether the owner was likely to correct the deficiency, because their failure to do so would remove the unit from the available inventory for HOME-assisted projects. And, for homebuyer acquisition, whether buyers should retain some choice to repair certain minor deficiencies at a later date by excluding such deficiencies from the HOME and HTF requirements (to ensure an adequate availability of homebuyer options, given the constrained housing market). The specific deficiency lists are applicable based on the type of activity undertaken, the tenure type of the project, and the structure of the building. For example, to streamline the inspection process for single unit structures, HUD will not require any of the ``Inside'' deficiencies from the checklists to be inspected because the entire interior of the building constitutes the ``Unit'' and therefore the ``Inside'' inspectable area is not applicable. The lists are attached as Appendices A-D as follows: Appendix A: Specific Deficiencies for Rehabilitation of Rental and Homebuyer Projects and Ongoing Rehabilitation Appendix B: Specific Deficiencies for HOME Owner-occupied Rehabilitation Projects Appendix C: Specific Deficiencies HOME Tenant-Based Rental Assistance Units Appendix D: Specific Deficiencies for Acquisition of Standard Housing for Homeownership VIII. Life-Threatening Deficiencies The HOME regulations at 24 CFR 92.251(b) and 92.251(f) and the HTF regulations at 24 CFR 93.301(b) and 93.301(e) require a participating jurisdiction's or grantee's rehabilitation and ongoing property standards for both rental housing and HOME TBRA units to specify the life-threatening deficiencies that must be addressed immediately if a housing unit is occupied. In addition, NSPIRE at 24 CFR 5.703(e) requires that the inside, outside, and unit must be free of health and safety hazards that pose a danger to residents. [[Page 19150]] Consistent with the Housing Opportunity Through Modernization Act of 2016 (Pub. L. 114-201) (HOTMA), HUD published a list of life- threatening conditions (``HOTMA LT List'') through notice in ``Housing Opportunity Through Modernization Act of 2016: Implementation of Various Section 8 Voucher Provisions'' (82 FR 5458). In addition, HUD included the HOTMA LT List in the NSPIRE Standards Notice (88 FR 40832), and subsequent versions, and is attached to this notice as Appendix E. In the NSPIRE Standards, deficiencies which are considered life-threatening for purposes of the Housing Choice Voucher (HCV) and Project-Based Voucher (PBV) programs are noted with a 24-hour HCV Correction Timeframe for occupied units. While neither the HOTMA LT List nor the 24-hour HCV Correction Timeframe formally applies to HOME or HTF, participating jurisdictions and grantees are still required to specify life-threatening deficiencies in their standards. Accordingly, HUD strongly encourages participating jurisdictions and grantees to adopt the HOTMA LT List as part of their rehabilitation, ongoing rental, and HOME TBRA property standards to meet HOME and HTF health and safety requirements. In such instances, participating jurisdictions and grantees may also specify additional deficiencies as life-threatening. IX. Major Systems and Capital Needs Assessments A. Major Systems. As part of its rehabilitation standards, a participating jurisdiction or grantee must develop useful life standards for all major systems, which the regulation at 24 CFR 92.251(b) and 93.301(b) defines as structural support; roofing; cladding and weatherproofing (e.g., windows, doors, siding, gutters); plumbing; electrical, and heating, ventilation, and air conditioning. For rental housing, a participating jurisdiction's or grantee's rehabilitation standards must require an estimate (based on age and condition) of the remaining useful life of these major systems, upon project completion. If the remaining useful life of one or more major system is less than the applicable period of affordability, a participating jurisdiction or grantee's standards must ensure that a replacement reserve is established and that monthly payments to the reserve are adequate to repair or replace the systems as needed. For multifamily housing projects with 26 total units or more, a participating jurisdiction or grantee's standards must require that this determination be made through a capital needs assessment (CNA) for the project. For homeownership housing, the rehabilitation standards must require that upon project completion, major systems must have a remaining useful life of at least five years, or a longer period specified by a participating jurisdiction or grantee. If the estimate of useful life of any major system is less than five years, it must be rehabilitated or replaced as part of the scope of work for the rehabilitation. For rehabilitation projects that do not require a CNA, the participating jurisdiction or grantee should require the project owner to identify the remaining economic life of the major system components after the proposed rehabilitation. Participating jurisdiction or grantee staff may review this analysis internally based on the rehabilitation scope, an onsite inspection of the major system components, and a standard useful life table as the primary inputs. Alternatively, a participating jurisdiction or grantee may hire a professional to conduct the useful life analysis. B. Capital Needs Assessments (CNA). For multifamily rental projects with 26 or more total units, the participating jurisdiction's or grantee's rehabilitation standards must require that the scope of work for the HOME- or HTF-assisted rehabilitation and the long-term physical needs of the project, including but not limited to major systems, are determined through a CNA. A CNA is an inspection of the property to provide an extensive analysis of building systems, recommendations for specific improvements, and funding estimates for long-term replacement costs. A participating jurisdiction or grantee should establish standards for CNAs and qualifications for providers of CNAs. Technical Standards: The HOME and HTF regulations do not specify a specific technical standard for CNAs used by participating jurisdictions or grantees. Participating jurisdictions and grantees are encouraged to consult existing standards, such as the ASTM E2018-15 Standard Guide for Property Condition Assessments or the HUD Multifamily Accelerated Processing (MAP) Guide (4430.G), or the Fannie Mae Instructions for Performing a Multifamily Property Condition Assessment (Form 4099 Version 2), when developing local policies. Provider Qualifications: The CNA must be completed by a qualified professional, such as an architect, engineer, or expert in building systems, as defined by the participating jurisdiction or grantee. A participating jurisdiction or grantee has the option to directly procure a CNA provider for a project under consideration (subject to applicable procurement requirements in 24 CFR part 92 and Part 93 respectively); establish a pre-approved list or qualifications and require an owner/applicant to obtain the CNA from an acceptable provider; or accept reports initially prepared for another funder or lender. In any case, a participating jurisdiction or grantee must independently review the CNA and ensure the rehabilitation scope and amount of replacement reserves complies with its HOME or HTF rehabilitation and underwriting standards. In general, if the previously performed CNA is more than a year old at the time of project commitment, the participating jurisdiction or grantee should determine if it is reflective of current conditions and the planned improvements included in the scope of rehabilitation or if the CNA should be updated. Costs of Providing a CNA: The cost of conducting a CNAs for a HOME- or HTF-assisted rehabilitation project may be charged as an administrative cost under 24 CFR 92.207(a) or 93.202 or as a project- related soft-cost under 24 CFR 92.206(d) or 93.201(d) as applicable. X. Lead-Based Paint In accordance with 24 CFR 5.703(e), 92.355 and 93.351, all ``target housing'' assisted with HOME or HTF is subject to the lead-based paint requirements at 24 CFR part 35, subparts A, B, J, K, M and R, as applicable. Target housing is any housing constructed prior to 1978, except housing for the elderly or persons with disabilities or any 0- bedroom dwelling (unless any child who is less than 6 years of age resides or is expected to reside in such housing). A participating jurisdiction or grantee's written property standards must require the target housing to meet the lead-based paint requirements for the type of assistance and the type of activity being undertaken. The NSPIRE final rule did not alter any lead-based paint requirements for the HOME or HTF programs. Additionally, EPA's regulations at 40 CFR 745 continue to apply, especially for renovation, repair and painting projects in target housing where lead-based paint may be disturbed (40 CFR part 745 Subpart E). XI. Accessibility The HOME regulations at 24 CFR 92.251 (a) and 92.251(b), and the HTF regulations at 24 CFR 93.301(a) and 93.301(b) require compliance with 24 CFR part 8, which implements Section [[Page 19151]] 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (U.S.C.1213-12189) implemented at 28 CFR parts 35 and 36, as applicable. Covered multifamily dwellings, as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). A participating jurisdiction's or grantee's written rehabilitation standards must require that all housing meet these accessibility requirements at project completion and during the HOME or HTF period of affordability. A participating jurisdiction's or grantee's standards may also require improvements that are not specifically required by regulation or statute to permit use by a person with disabilities. The NSPIRE final rule did not alter any accessibility requirements for the HOME and HTF programs. XII. Energy Efficiency Section 481 of the Energy Independence and Security Act of 2007 (``EISA,'' Pub. L. 110-140) amended section 109 of the Cranston- Gonzalez National Affordable Housing Act of 1990 (Cranston-Gonzalez) (42 U.S.C. 12709), and establishes procedures for setting minimum energy standards. EISA references two standards: the International Energy Conservation Code (IECC) and ANSI/ASHRAE/IES Standard 90.1. The IECC standard applies to single family homes and multifamily low-rise buildings (up to three stories), while the ASHRAE 90.1 standard applies to multifamily residential buildings with four or more stories. Sections 109(c) and (d) of Cranston-Gonzalez, as amended by EISA, establish procedures for updating HUD and USDA energy standards following periodic revisions to the IECC and ASHRAE 90.1 codes, based on: 1. A determination by HUD and United States Department of Agriculture (USDA) that the revised codes would not negatively affect the availability or affordability of housing covered by the Cranston- Gozalez National Affordable Housing Act of 1990 (NAHA), and 2. The Secretary of Energy's determination under section 304 of the Energy Conservation and Production Act (42 U.S.C. 6833) that the revised codes would improve energy efficiency (42 U.S.C. 12709(d)). On July 28, 2021, the Department of Energy (DOE) published final determinations that the 2021 IECC and ASHRAE 90.1-2019 standards would improve energy efficiency (86 FR 40529 and 86 FR 40543). On April 26, 2024, HUD and USDA issued a notice of final determination (Final Determination notice) (89 FR 33112) that the 2021 IECC and ASHRAE 90.1- 2019 energy codes will not negatively impact the affordability or availability of housing covered by EISA. The effective date of this determination is May 28, 2024. Following the publication of the final determination, HUD published on its website a list of alternative compliance paths, which are high performance building standards that HUD determined meet the 2021 IECC and ASHRAE 90.1-2019 standards. While the 2013 HOME final rule reserved the energy efficiency requirements at 24 CFR 92.251(a), the requirements in the HOME statute apply to all HOME-assisted new construction projects. Specifically, section 215(a)(1)(F) and section 215(b)(4) of NAHA (42 U.S.C. 12745(a)(1)(F) and (b)(4)) require that all newly constructed HOME- assisted housing meet the energy efficiency standards promulgated in accordance with Section 109 of Cranston-Gonzalez and, therefore, Section 481 of EISA. The 2025 HOME final rule now includes an explicit provision in 24 CFR 92.251(a)(3)(ii) that newly constructed housing shall qualify as affordable housing under 24 CFR part 92 only if it meets the energy efficiency standards promulgated by the Secretary in accordance with section 109 of the HOME statute. In addition, the HTF regulations at 24 CFR 93.301(a) impose the energy efficiency at Section 109 of NAHA on HTF-assisted new construction projects. The Final Determination notice (89 FR 33112) established a compliance date for HOME and HTF projects one year after the effective date of the determination. Consequently, all HOME- and HTF-assisted new construction projects with commitment dates on or after November 24, 2024, must meet the 2021 IECC or ASHRAE 90.1-2019 energy codes, as applicable, or one of the alternative compliance pathways. However, HUD and USDA adopted later compliance dates for other types of covered housing, ranging from 12 to 24 months. If a HOME or HTF project with a commitment on or after November 24, 2024, is also subject to the updated energy efficiency requirements in the Final Determination notice through another funding source that has a later compliance date, then the participating jurisdiction or grantee is permitted to require compliance with the energy efficiency standards in accordance with the later compliance date for that funding source. XIII. Disaster Mitigation Where relevant, a participating jurisdiction's or grantee's standards must require the housing to be constructed to mitigate the impact of potential disasters (e.g. earthquakes, hurricanes, flooding, wildfires, etc.) in accordance with state and local codes and ordinances, or other such requirements that HUD may establish. HUD encourages participating jurisdictions and grantees in earthquake prone areas to adopt the earthquake-resistant design provisions of the 2015 editions, or successor editions, of the International Building Code (IBC) or the International Residential Code (IRC) promulgated by the International Code Council (ICC), or equivalent codes, consistent with the provisions of and to the extent required by 40 U.S.C 3312. XIV. Broadband For new HOME or HTF commitments made after January 19, 2017, all new construction or substantial rehabilitation multifamily rental projects must include the installation of broadband infrastructure. In accordance with 24 CFR 92.251(a) and 93.301(a), HOME and HTF- assisted new construction multifamily rental projects are excluded from this requirement if a participating jurisdiction or grantee determines and documents its determination that: The location of the new construction project makes the installation of broadband infrastructure infeasible; or The cost of installing the infrastructure would result in a fundamental alteration in the nature of the participating jurisdiction's program or activity or create an undue financial burden. Furthermore, in accordance with 24 CFR 92.251(b) and 93.301(b), HOME- and HTF-assisted multifamily rental substantial rehabilitation projects are excluded from this requirement if a participating jurisdiction or grantee determines and documents its determination that: The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible; The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of the participating jurisdiction's program or activity, or an undue financial burden; or, The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible. [[Page 19152]] XV. Carbon Monoxide and Smoke Detection A. Carbon Monoxide. In accordance with 24 CFR 92.251(a), 92.251(b), 92.251(c) and 92.251(f), a carbon monoxide alarm must be installed in the housing unit in a manner that meets or exceeds the carbon monoxide detection standards set by HUD through Federal Register publication. This requirement applies to projects with HOME commitments made on or after April 20, 2026. This Notice does not provide the carbon monoxide standards for HOME projects. B. Smoke Detection. In accordance with 24 CFR 92.251(a), 92.251(b), and 92.251(c), projects with HOME commitments made on or after April 20, 2026, must include 1. A hardwired smoke alarm must be installed: a. On each level of each housing unit; b. In or near each sleeping area in each housing unit; c. In the basement of each housing unit and in each common area of a project. A hardwired smoke alarm is not required in crawl spaces or unfinished attics of housing units; d. Within 21 feet of any door to a sleeping area measured along a path of travel; and e. Where a smoke alarm installed outside a sleeping area is separated from an adjacent living area by a door, a smoke alarm must also be installed on the living area side of the door. 2. Each hardwired smoke alarm must have an alarm system designed for hearing-impaired persons. 3. The Secretary may establish additional standards through Federal Register publication. 4. Following the relevant specifications of the International Code Council (ICC) or the National Fire Protection Association Standard (NFPA) 72 also satisfies the HOME requirement for smoke detection. 5. In accordance with 92.251(b), and 92.251(c), if the installation of hardwired smoke detectors places an undue financial burden on the owner or is infeasible, a participating jurisdiction may provide a written exception to allow the owner of housing that is rehabilitated or housing that is acquired in standard condition to install a smoke detector that uses 10-year non-rechargeable, non-replaceable primary batteries. The smoke detector must be sealed, tamper-resistant, contain a means to silence the alarm, and otherwise comply with the HOME property standard requirements. The HOME regulations at 24 CFR 92.251(f) require that the participating jurisdiction's ongoing property standards require housing to contain smoke detectors in accordance with the requirements contained in 24 CFR 5.703(b) and (d) instead of the above requirements. XVI. Inspection Procedures A participating jurisdiction or grantee must establish and follow written inspection procedures for initial, progress, final, and ongoing inspections in accordance with 24 CFR 92.251(g) and 93.301(e)(4). These inspection requirements apply whether the participating jurisdiction's HOME funds or grantee's HTF funds are used for construction costs--for example, if HOME funds are disbursed only for acquisition and soft costs or if HOME funds are only provided as permanent financing upon completion of construction. The written policies and procedures must include the following provisions: A. Inspector Qualifications: The regulations at 24 CFR 92.251(g) and 93.301(e)(4) require that the procedures describe the minimum inspector qualifications and/or training for the required on-site inspections. The regulations do not require that participating jurisdiction or grantee staff conduct the inspections. A participating jurisdiction or grantee may rely on inspections conducted by third parties if the entity responsible for inspections is professionally obligated to the participating jurisdiction. When using third party inspectors, a participating jurisdiction or grantee may procure inspectors to provide services across its portfolio or coordinate with other debt providers and/or public funders to undertake shared inspections. The participating jurisdiction or grantee is ultimately responsible for ensuring that work is completed in accordance with its HOME or HTF property standards. In addition, the inspection covers applicable state and local codes, standards, and other federal requirements and the participating jurisdiction or grantee must review inspection results for compliance. B. Cost of Inspections: The cost of conducting on-site inspections may be charged as an administrative cost under 24 CFR 92.207(a) and 93.202(b) or as a project-related soft-cost for a project at 24 CFR 92.206(d) and 93.201(d) before project completion. Ongoing inspections of rental housing may not be charged as a project-specific soft costs because they occur after project completion. Alternatively, pursuant to 24 CFR 92.214(b) and 93.204(b), participating jurisdictions and grantees may charge a reasonable annual monitoring fee to owners of rental projects for compliance monitoring during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of the assisted rental projects. The basis for determining the amount of the fee must be documented and the fee must be included in the costs of the project as part of the project underwriting. A third party, including another project funder, may also pay for the cost of the inspections, as long as the inspector is contractually obligated to the participating jurisdiction or grantee to inspect to HOME or HTF property standards. Inspections may not be paid for or conducted by the owner or related parties, including an equity investor or other member of a partnership entity. C. Frequency of Inspections 1. Initial Inspections of Existing Housing The regulations at 24 CFR 92.251(b) and (c), and 93.301(b) and (c) require that the participating jurisdiction or grantee conduct an initial property inspection to identify deficiencies that must be addressed before completion of the rehabilitation or acquisition project. If an initial property inspection of an acquisition of standard housing by an entity other than a homebuyer identifies deficiencies that require rehabilitation, then the project shall be considered a rehabilitation project. A rehabilitation project must meet the participating jurisdiction's or grantee's rehabilitation standards as described in 24 CFR 92.251(b) or 24 CFR 93.301(b) and this Notice. This includes being free of the deficiencies identified in Appendix A of this Notice and the requirements for progress and final inspections described below. For acquisition of standard housing by a homebuyer, the inspection must occur no earlier than 90 days before HOME or HTF funds are committed in accordance with 24 CFR 92.251(c) and 24 CFR 93.301(c). If an initial inspection acquisition standard housing for acquisition by a homebuyer in HOME or HTF identifies deficiencies that require rehabilitation and the homebuyer uses HOME or HTF funds to rehabilitate the housing unit, the housing must meet the applicable participating jurisdiction or grantee's rehabilitation standards in accordance with 24 CFR 92.251(b) or 24 CFR 92.301(b) and this Notice. This includes being free of the deficiencies identified in Appendix A of this Notice and the requirements for progress and final inspections described below. [[Page 19153]] 2. Progress and Final Inspections The number and frequency of progress inspections for rehabilitation projects in accordance with 24 CFR 92.251(b) and 93.301(b) will depend on the size, scope, and complexity of the project. Progress inspections are intended to ensure that work is done in accordance with applicable codes and requirements, the construction contract, and related construction documents (e.g., plans and specifications). They also serve to verify construction work that will later be covered and no longer visible at final inspection; to ensure work is completed prior to approval of payment requests; and, to monitor whether the project will meet project and program deadlines. Consequently, when establishing a schedule for progress inspections, the participating jurisdiction or grantee should consider standard disbursement procedures, key construction milestones, and a minimum inspection frequency. In addition, for HOME, a participating jurisdictions should consider whether to adjust the inspection schedule based on results of progress inspections or to ensure that the project will comply with the HOME four-year project completion deadline at 24 CFR 92.205(e) . In accordance with 92.251(b) and (c), 93.301(b) and 93.404(d), before completing the project in the Integrated Disbursement and Information system, the participating jurisdiction or grantee must perform an on-site inspection of the project to determine that all contracted work has been completed in accordance with the construction documents and work writeups and that the project complies with the property or rehabilitation standards and requirements. Under the 2025 HOME final rule, 24 CFR 92.251(b) permits a participating jurisdiction to accept a determination made under another funding program that upon completion of the rehabilitation project that the project and units are decent, safe, sanitary and in good repair, based on an inspection conducted in accordance with NSPIRE. If a participating jurisdiction accepts the determination made under another funding program, they are not required to inspect the project for compliance with the NSPIRE requirements at 24 CFR 5.703, however a final on-site inspection may still be necessary to determine compliance with state and local codes and other components of the participating jurisdiction's rehabilitation standards. For HOME-assisted homebuyer acquisition projects, a final inspection is required when the housing does not meet the participating jurisdiction's property standards at acquisition. If HOME funds are used in the rehabilitation, the property must meet the minimum deficiency requirements for rehabilitation projects, including being free of the minimum deficiencies described in Appendix A of this Notice. If HOME funds are not used in the rehabilitation, then the homebuyer acquisition project must meet the requirements for standard acquisition of housing by a homebuyer and Appendix D of this Notice. In the 2025 HOME final rule, 24 CFR 92.251(c) permits the participating jurisdiction to require that the property meet its standards within six months of acquisition if funding is secured to complete the rehabilitation. The participating jurisdiction may provide an extension of up to 12 months from the acquisition and must conduct a final inspection. 3. Annual HOME TBRA Inspections The participating jurisdiction must perform annual on-site inspections of rental housing occupied by tenants receiving HOME- assisted TBRA to determine compliance with the participating jurisdiction's standards. Under the 2025 HOME final rule, 24 CFR 92.251(f) permits a participating jurisdiction to accept a determination made under another funder's program that within the past 3 months the unit was determined to be decent, safe, sanitary and in good repair, based on an inspection conducted in accordance with NSPIRE. 4. Ongoing Inspections of Rental Housing The participating jurisdiction or grantee must perform on-site inspections of assisted rental housing projects within the first 12 months after project completion and at least once every three years during the period of affordability in accordance with 24 CFR 32.251(f) and 93.404(d). Under the 2025 HOME final rule, 24 CFR 92.251(f) permits a participating jurisdiction to accept a determination made under another funder's program that within the past 12 months the project and units were determined to be decent, safe, sanitary and in good repair, based on an inspection conducted in accordance with NSPIRE. However, a participating jurisdiction may not accept a determination made under another funder's program for the first ongoing inspection occurring 12 months after project completion. If a participating jurisdiction or grantee finds during an ongoing inspection that a property has life-threatening deficiencies, as defined in its property standards, it must adopt a more frequent inspection schedule for that property. The 2025 HOME final rule permits an exception to this rule for small-scale HOME rental projects (one-to- four-units). In the 2025 HOME final rule, 24 CFR 92.251(f) permits, but does not require a participating jurisdiction to adopt, a more frequent inspection schedule for small-scale housing projects where a life- threatening deficiency is identified. A participating jurisdiction must describe this exception in its inspection procedures. The regulations at 24 CFR 92.504 (which has been moved to 24 CFR 92.251(f) under the 2025 HOME final rule) and 93.404(d) require rental property owners to certify to the participating jurisdiction or grantee annually that each building and all assisted units in the project are suitable for occupancy. The certification must cover state and local health, safety, and other applicable codes, ordinances, and requirements, and the ongoing property standards established by the participating jurisdiction to meet the requirements of 24 CFR 92.251 and 93.301. These self-certifications do not relieve a participating jurisdiction or grantee of the requirement of its obligation to perform an on-site inspection of all HOME- or HTF-assisted rental housing at least every three years. D. Ongoing Rental Inspection Sample: Prior to the 2025 HOME final rule, both the HOME regulation at 24 CFR 92.504(d) and HTF regulation at CFR 93.404(d) required the inspection to be performed on a statistically valid sample of units appropriate for the size of the assisted project. The 2025 HOME final rule has moved this requirement to 24 CFR 92.251(f) and revised this requirement to require ongoing rental inspections to be performed on a random sample of the HOME- assisted units. HUD has determined that the below satisfies both the HTF requirements and the HOME requirements. For projects with one to four HOME- or HTF-assisted units, a participating jurisdiction or grantee must inspect 100 percent of the HOME- or HTF-assisted units. For projects with more than four HOME- or HTF-assisted units, a participating jurisdiction and grantee must randomly sample and inspect the following number of HOME or HTF units, as applicable: [[Page 19154]] Minimum Inspection Sample Size for HOME Rental Housing Projects ------------------------------------------------------------------------ Number of units that must be selected in Number of HOME-assisted units in the HOME project the random sample (i.e., minimum unit sample size) ------------------------------------------------------------------------ 1-20.................................................... 4 21-25................................................... 5 26-30................................................... 6 31-35................................................... 7 36-40................................................... 8 41-45................................................... 9 46-50................................................... 10 51-55................................................... 11 56-60................................................... 12 61-65................................................... 13 66-70................................................... 14 71-75................................................... 15 76-80................................................... 16 81-85................................................... 17 86-90................................................... 18 91-95................................................... 19 96-100.................................................. 20 101-105................................................. 21 106-110................................................. 22 111-115................................................. 23 116-120................................................. 24 121-125................................................. 25 126-130................................................. 26 131-166................................................. 27 167-214................................................. 28 215-295................................................. 29 296-455................................................. 30 456-920................................................. 31 921+.................................................... 32 ------------------------------------------------------------------------ For projects with more than one building, the inspection must include all inspectable areas (Inside, Outside, and Unit) and at least one HOME- or HTF-assisted unit in each residential building in the HOME or HTF project. E. Correction of Deficiencies: The participating jurisdiction or grantee must have procedures for ensuring that timely corrective and remedial actions are taken by the project owner to address identified deficiencies. Life-threatening health and safety deficiencies must be corrected immediately, in accordance with 24 CFR 92.251, 93.301 and 93.404. This applies to initial, progress, final, or ongoing inspections, as applicable for all HOME or HTF activities if the unit is occupied. However, if life-threatening deficiencies are determined during an initial inspection for a rehabilitation project, then the housing is not yet a HOME- or HTF-assisted project and the participating jurisdiction or grantee must meet the HOME or HTF commitment requirements before HOME or HTF can be used to pay for the costs of correcting such deficiencies. For non-life-threatening deficiencies identified during the period of affordability, the regulations at 24 CFR 92.504(d) (or 24 CFR 92.251(f) under the 2025 HOME final rule) and 93.404(d) require that a follow-up on-site inspection must be performed within 12 months to verify that deficiencies were corrected. However, a participating jurisdiction or grantee may establish a list of non-hazardous deficiencies for which correction can be verified by third-party documentation (e.g. a paid invoice for a work order) rather than through re-inspection. XVII. Recordkeeping A. Written agreements: The participating jurisdiction, subrecipient, state recipient, grantee, or HTF subgrantee must impose ongoing property standards on an assisted project in its written agreement with the owner of the housing in accordance with 24 CR 92.504 and 93.404. For rental housing and units assisted with HOME TBRA, the written agreement must require the owner to maintain each building and assisted unit in compliance with the participating jurisdiction's or grantee's property standards, and should: Obligate the owner to comply with the onsite inspection schedule: annual for units occupied by tenants receiving HOME TBRA and at least every three years during the period of affordability for HOME- or HTF-assisted rental housing. The agreement should also allow for changes in frequency of inspections based on findings of health and safety defects; Require the owner to correct deficiencies identified during onsite inspections, including a requirement to immediately correct health and safety defects; and, For rental housing, require the owner to annually certify each building and all assisted units in the project are suitable for occupancy. B. Construction documents and cost reasonableness: A participating jurisdiction's or grantee's property standards must describe requirements for the submission of construction or rehabilitation contracts and documents that detail the scope of work for the project in accordance with 24 CFR 92.251(b) and 93.301(b). The description of the work must be in adequate detail to establish the basis and schedule for a uniform inspection of the housing to determine compliance with a participating jurisdiction's or grantee's property standards. The participating jurisdiction or grantee must also review and approve written cost estimates for construction and determine that costs are reasonable and document its approval. The Uniform Administrative Requirements at 2 CFR 200.404 state that a cost is reasonable if, in its nature and amount, it does not exceed what would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In its determination of cost reasonableness, a participating jurisdiction or grantee should consider market prices for comparable goods or services for the geographic area and document its decision. C. Initial, Progress, Final, and Ongoing Inspections: In accordance with 24 CFR 92.508(a) and 93.407(a), the participating jurisdiction or grantee must maintain records (e.g., inspection reports) demonstrating that each project meets the property standards of 24 CFR 92.251 or 93.301 at project completion. In addition, during the period of affordability, records for rental projects that demonstrate compliance with the HOME or HTF property standards and actions pursuant to 24 CFR 92.251(f) or 93.404(d). The specific records applicable to each eligible activity are as follows: 1. New Construction In its project file, a participating jurisdiction or grantee must maintain the approved written cost estimates, construction documents, and contracts and the signed and dated checklists or reports for all progress and final inspections in accordance with 24 CFR 92.251(a) and 93.301(a). Absent detailed inspection records, a general certification that the property meets applicable building codes is not sufficient to satisfy the inspection requirement. In addition, approved building plans must be maintained, and the certificate of occupancy and any architect's certifications, if available, should be maintained in the project file. To demonstrate compliance with the minimum energy standards required under Section 109 of the HOME statute (and at 24 CFR 92.251(a)(3)(ii) of the 2025 HOME final rule) and 93.301(a)(2)(ii), participating jurisdictions or grantees must maintain at least one of the following: a third-party certification conducted by a home energy rater, a certification from the architect or engineer for the project, or an inspection conducted by the participating jurisdiction or its inspector including the local building inspector or code official. 2. Rehabilitation At a minimum, the regulations at 24 CFR 92.251(b) and 93.301(b) require that the project file must contain approved written cost estimates, construction [[Page 19155]] documents, contracts and signed and dated checklists or reports for the initial, progress, and final inspections. Under the 2025 HOME final rule, the HOME regulations at 24 CFR 92.251(b)(1)(viii) permit a participating jurisdiction to maintain records of a determination made at the time of completion of the rehabilitation that the project is decent, safe, sanitary and in good repair in satisfaction of another funder's required inspection under NSPIRE. As applicable, the file should also include the architect's certification and the certificate of occupancy or other similar documentations of local code approvals. 3. Acquisition of Newly Constructed Standard Rental Housing A participating jurisdiction or grantee must maintain records of the approved building plans, the certificate of occupancy, and a signed and dated inspection checklist or report demonstrating that the inspection was conducted no earlier than 90 days before the commitment of HOME or HTF funds in accordance with 24 CFR 92.251(c) or 93.301(c), respectively. 4. Acquisition of Standard Housing for Homeownership The participating jurisdiction or grantee's project file must contain a signed and dated checklist or report of the final property inspection to demonstrate compliance with property standards. The records must demonstrate that inspection of the property was performed no earlier than 90 days before the commitment of HOME or HTF assistance in accordance with 24 CFR 92.251(c) and 93.301(c), respectively. For the HOME-assisted projects operating under the new flexibilities in the 2025 HOME final rule, if the housing is not rehabilitated to meet the standards of 24 CFR 92.251(c) before acquisition, the project file must include the following in accordance with 24 CFR 92.251(c)(3)(ii): a. The written agreement between the participating jurisdiction and the homebuyer which requires the property to meet the standards within 6 months of acquisition with HOME assistance; b. Evidence that funding was secured to complete the rehabilitation necessary to comply with the standards; and c. Documentation that the final inspection was conducted within six months after acquisition and that the property met the standards. d. If applicable, documentation of any extension (of up to 12 months from acquisition) provided by the participating jurisdiction to the homebuyer to meet the standards and an amended written agreement that reflects the extension and requires a final inspection to be conducted within 12 months of acquisition. 5. TBRA In accordance with 24 CFR 92.251(f), a participating jurisdiction must maintain signed and dated inspection checklists or reports of the initial and ongoing inspections. Under the 2025 HOME final rule, the HOME regulations at 24 CFR 92.251(f)(4)(ii) permit a participating jurisdiction to maintain records of a determination made within the prior 3 months that the unit is decent, safe, sanitary and in good repair, in satisfaction of another funder's required inspection under NSPIRE. 6. Ongoing Property Condition of Rental Housing In accordance with 24 CFR 92.251(f), 93.301(e), and 93.404(d), the participating jurisdiction's or grantee's rental housing project file must contain signed and dated inspection checklists or reports of ongoing inspections. The records must demonstrate that an inspection occurred at project completion, 12 months after project completion, and at least every three years during the project's period of affordability. Such records must demonstrate that any deficiencies were corrected pursuant to the regulations, and the property met the participating jurisdiction's or grantee's property standard requirements. Under the 2025 HOME final rule, the HOME regulations at 24 CFR 92.251(f)(3)(i)(B) permit a participating jurisdiction to maintain records of a determination made within the prior 12 months that the project and units are decent, safe, sanitary and in good repair, in satisfaction of another funder's required inspection under NSPIRE. However, the participating jurisdiction may not accept a determination made by another funder for the initial ongoing inspection conducted 12 months after project completion. In addition, a participating jurisdiction or grantee must retain records of the owner's annual certification that each building in the project and all HOME- or HTF-assisted units in the project are suitable for occupancy. For target housing, the participating jurisdiction or grantee must retain records of its conducting visual assessment for deteriorated paint surfaces (24 CFR 35.1215(a)(1)) and the failure of any hazard reduction measures at unit turnover and every twelve months (24 CFR 35.175, 35.1220 and 35.1355(a)(2)). D. Correction of deficiencies: When there are observed deficiencies, the regulations at 24 CFR 92.251(f)(5) and 93.301(e)(3), project file must contain records demonstrating that a follow-up onsite inspection occurred within 12 months, or a reasonable timeframe, to verify that all observed deficiencies were corrected. If the participating jurisdiction or grantee established a list of non- hazardous deficiencies for which correction can be verified by third party documentation rather than reinspection, the file must contain the third-party documentation. Furthermore, the file must include evidence that the participating jurisdiction or grantee adopted a more frequent inspection schedule for properties that were found to have health and safety violations. 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