Is an environmental review required for condominium project approval?

No environmental review is required for condominium project approval.  HUD only approves condominium projects that are fully complete and built out projects or phases.  Since HUD’s review and approval occurs after the project or phase is fully complete and built out, it is too late for any reasonable application of the National Environmental Policy Act (NEPA) to HUD’s reviews and approvals. Accordingly, when an application for mortgage insurance on an individual unit is received by HUD or processed by a mortgagee under the Lender Insurance (LI) program following construction of the unit, an environmental review would not be performed in connection with insurance of the unit, regardless of whether the condominium project approval was performed under Direct Endorsement Lender Review and Approval Process (DELRAP) or under HUD Review and Approval Process (HRAP).

In the case, where there could be development activities occurring prior to HUD’s involvement, these would be governed by State and local law and subject to controls at the State and local level. 

In addition, pursuant to FHA Single Family Housing Policy Handbook 4000.1, the Builder’s Certification of Plans, Specifications, & Site (form HUD 92541), is required for FHA mortgage applications for all new construction units (unoccupied units completed within the past 12 months), even when the project is complete. The site analysis portion of the form requires information about environmental issues, including flood hazards, noise issues (such as proximity to airports), toxic waste hazards, flammable storage hazards, and soil and ground condition hazards.  Appraisers must get a copy of this form to complete the appraisal and builders must provide additional documentation demonstrating mitigation of any issues noted in the form.  

For additional information see, Handbook 4000.1, Section II.D.3.c.v available at: 

https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

For more information regarding condominium projects refer to the FHA Condominium Mortgage Insurance page at:  https://www.hud.gov/program_offices/housing/sfh/ins/sfh_ins_condominiums

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-02370