NH Housing – RD Rehab

 Here are some basics:

1) you must use a contractor or up to 3 contractors for all the work (subcontractors hired by a contractor do not count toward the three maximum contractors you can hire).

2) each contractor must give a detailed line item proposal for labor and materials (must break down a dollar amount for labor and material for each item) .  The proposal must reference the borrower’s name and the property address.  It must have the contractor’s contact info (name, address & phone #) and it must be signed by both the contractor and borrower(s).   If any licensed subcontractors are required (electrician or plumber for example) then the contractor must also name them on his proposal.

3) contractor(s) must complete the contractor approval worksheet  which requires references – we will check the references – and other information.   Subcontractors of a contractor due not need to do all the paperwork (but they do need to provide proof of insurance)

6) contractor must sign the Homeowner/Contractor Agreement

7) contractor must provide proof of liability insurance ($500,000 minimum) and his/her agent must provide a certificate naming you and the property as an additional insured.

8)each sub-contractor must provide proof of liability insurance ($500,000 minimum) and his/her agent must provide a certificate naming you and the property as an additional insured.

9)After all of the contractor’s paperwork is submitted, the construction manager will review.  It is common for there to be requests to modify the proposals.

10) After the proposals are finalized, we can order the appraisal.  It is common for the appraiser to add additional requirements and then the contractor has to modify his/her proposal(s) to include the additional requirements of the appraiser.

11) the permit form must be completed by the town prior to closing (needed as soon as possible)

12) if you want a disbursement of funds within 48 hours of closing (50% max) you need to have permits in place,  mortgage construction notice and construction funding notice posted at the property and you must have signed the disbursement request form (usually signed at closing).  Click here for specific disbursement instructions.

Note: typically a 10% contingency requirement is added to the rehab account but for vacant or foreclosed property, 15% is typically required.  If the water or other major systems are not operational then as much as a 20% contingency can be required.    The total amount of rehab including financed fees and contingency must be $35,000 or less.