Substantial Rehabilitation [HUD] Law and Legal Definition

Pursuant to 24 CFR 235.1206 (f) [Title 24 Housing and Urban Development; Subtitle B Regulations Relating to Housing and Urban Development; Chapter II Office of Assistant Secretary for Housing Federal Housing Commissioner, Department of Housing and Urban Development; Subchapter B Mortgage and Loan Insurance Programs under National Housing Act and Other Authorities; Part 235 Mortgage Insurance and Assistance Payments for Home Ownership and Project Rehabilitation; Subpart H Eligibility Requirements: Contract Rights and Obligations; Assistance Payments Contracts; Servicing Responsibilities Refinancing Mortgages Under Section 235(R) of the National Housing Act; Eligibility Requirements; Direct Endorsement], the term Substantial Rehabilitation means “the improvement of a unit in substandard condition to a decent, safe and sanitary level, meeting FHA's standards for mortgage insurance. Units are in substandard condition when, while they may be structurally sound, they do not provide safe and adequate shelter, and in their present condition endanger the health, safety, or well-being of the occupants. Such housing has one or more defects, or a combination of potential defects in sufficient number or extent to require considerable repair or rebuilding, or is of inadequate original construction. The defects are either so critical or so widespread that the structure should be extensively repaired. The estimated cost of the rehabilitation should normally not be less than 25 percent of the value of the property (including land) after rehabilitation. The rehabilitation should be of such scope that, when completed, all the components in the house are operable and should not be anticipated to require any work or major expense over and above normal maintenance for the first one-fourth to one-third of the mortgage term.”

Pursuant to 24 CFR 242.1 [Title 24 Housing and Urban Development; Subtitle B Regulations Relating to Housing and Urban Development; Chapter II Office of Assistant Secretary for Housing Federal Housing Commissioner, Department of Housing and Urban Development; Subchapter B Mortgage and Loan Insurance Programs under National Housing Act and Other Authorities; Part 242 Mortgage Insurance for Hospitals; Subpart A General Eligibility Requirements], the term Substantial rehabilitation means “additions, expansion, remodeling, renovation, modernization, repair, and alteration of existing buildings, including acquisition of new or replacement equipment.”