HUD Handbook 4350.3 § 6-29

A.      Overview

                1.       The move-in inspection is an opportunity to familiarize the tenant with the
                         project and the unit, as well as to document its current condition. By
                         performing move-in inspections, owners and tenants are assured that the
                         unit is in livable condition and is free of damages. A move-in inspection
                         gives the owner an opportunity to explain to the new residents the
                         tenant’s responsibility for damages caused to the unit by family members

                         and visitors, discuss the house rules, and familiarize tenants with the
                         operation of appliances and equipment in the unit.

                2.       Upon the unit being vacated by the tenant, an owner performs a move-out
                         inspection to ensure there are no damages to the unit. The owner should
                         list the damages on the move-out form and compare it with the move-in
                         form to determine if the damage is reasonable wear or tear or excessive
                         damage caused by the tenant's abuse or negligence. The tenant should

be given prior notice of the move-out inspection and be allowed to
                         accompany the owner if the tenant chooses. Ideally, the tenant should
                         accompany the owner on the move-out inspection so that any
                         discrepancies can be discussed and a decision reached as to the extent
                         of the damage and who is responsible for the cost associated with the
                         damage.

                3.       Move-in and move-out inspection forms should not be confused with
                         annual unit inspections performed by owners and physical inspections
                         performed by HUD and/or HUD contractors. Owners perform unit
                         inspections on at least an annual basis to determine whether the
                         appliances and equipment in the unit are functioning properly and to
                         assess whether a component needs to be repaired or replaced. This is
                         also an opportunity to determine any damage to the unit caused by the
                         tenant's abuse or negligence and, if so, make the necessary repairs and
                         bill the tenant for the cost of the repairs.

                4.       HUD, or its authorized contractor(s), has the right to inspect the units and
                         the entire property to ensure that the property is being physically well
                         maintained. These inspections assure HUD that owners are fulfilling their
                         obligations under the regulatory agreements and/or subsidy contracts and
                         tenants are provided with decent, safe, and sanitary housing.

        B.      Key Requirements

                1.       Owners in all HUD-subsidized multifamily properties are required to
                         complete move-in and move-out inspections.

                2.       Owners must document these inspections. (See Appendix 5 for a
                         sample unit inspection report.)

                3.       Owners may design their own inspection forms.

        C.      Move-In Inspection Requirements

                1.       Before executing a lease, the owner and tenant must jointly inspect the
                         unit.

                2.       After the owner conducts a unit inspection, the inspection form must
                         indicate the condition of the unit. The condition of the unit must be decent,
                         safe, sanitary, and in good repair. If cleaning or repair is required, the
                         owner must specify on the inspection form the date by which the work will
                         be completed. The date must be no more than 30 days after the effective
                         date of the lease.

                3.       Both the owner and the tenant must sign and date the inspection form.
                         The inspection form must include the statement, “The unit is in decent,
                         safe and sanitary condition”.

                4.       The tenant has 5 days to report any additional deficiencies to the owner
                         to be noted on the move-in inspection form.

Section 4:
                                                                                 4350.3 REV-1 CHG-4
The Leasing Process

5.       The move-in inspection form must be made part of the lease, as an
                         attachment to the lease.

        D.      Move-Out Inspection Instructions

                1.       Owners are advised to encourage tenants to accompany them on the
                         inspection. Upon a tenant's request, he/she must be allowed to attend
                         the move-out inspection conducted by the owner. If a tenant is with the
                         owner during the inspection, disagreements between the owner and the
                         tenant regarding unit damage can be resolved up front.

                2.       If a tenant does not wish to participate, the owner may do the inspection
                         alone.

                3.       HUD does not provide move-out inspection criteria. It is at the owner’s
                         discretion to develop criteria to distinguish between wear-and-tear and
                         damage. If an owner determines that the unit is damaged as a result of
                         tenant abuse or neglect, he/she may use the security deposit to cover the
                         repair costs. (See Section 2: Security Deposits for more information.)

Example – Wear-and-Tear Versus Damage

                      Wear-and-tear: The carpet is worn and has reached the end of
                      its useful life.
                      Damage: A relatively new carpet has rips and tears.