We are not aware of any general requirement to obtain a termite inspection report when providing a cash-out refinancing of a loan secured by an apartment building. However, it is possible that a secondary market purchaser may require a termite inspection; for example, Fannie Mae requires termite inspections for multifamily properties in some circumstances. Otherwise, whether you choose to require such a report is a business decision for your bank to make, informed by safety and soundness and other considerations.
In addition, the Americans with Disabilities Act (ADA) does not apply to apartment buildings, but the Fair Housing Act (FHA) requires that certain apartment buildings be readily accessible and usable by persons with disabilities.
The ADA applies to places of public accommodations, and several courts have held that residences, such as apartment buildings, are not places of public accommodations. However, the FHA’s accessibility requirements apply to “covered multifamily dwellings” designed and constructed for first occupancy after March 13, 1991. “Covered multifamily dwellings” means buildings with four or more dwelling units, if such buildings have one or more elevators, and ground floor dwelling units in other buildings with four or more dwelling units. The apartment you described has eight units, so if it was first occupied after March 13, 1991, the FHA’s accessibility requirements will apply. HUD has published guidelines regarding the FHA’s accessibility requirements, which we are including in our resources section below.
For resources related to our guidance, please see:
-
Fannie Mae, Form 4099, Instructions for Performing a Multifamily Property Condition Assessment (May 2017), printed page 26 (“Observe for the presence of termites and other wood destroying organisms. If evidence of termites is observed, identify how evidence was observed and extent of observation and include sufficient photographic record. If evidence of termites is observed, recommend additional assessments or inspections.”)
-
Americans with Disabilities Act, 42 USC 12182(a) (“No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.”)
-
Torrence v. Advanced Home Care, Inc., 08–CV–2821, 2009 WL 1444448 (N.D. Ill. May 21, 2009) (“[T]he legislative history of the ADA indicates that residential apartment buildings are not places of public accommodation . . . Moreover, a number of federal district courts have held that residential apartment buildings are not ‘public accommodations’ within the meaning of the ADA.”)
-
Gragg v. Park Ridge Mobile Home Court, LLP, 10-3313, 2011 WL 4459701 (C.D. Ill. Sept. 23, 2011) (“Courts have found that residential facilities — such as apartments and condominiums — do not fall within the definition of public accommodation.”)
-
Fair Housing Act, 42 USC 3604(f) (“{I}t shall be unlawful . . . (1) To discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap . . . (2) To discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap . . . .”)
-
Fair Housing Act, 42 USC 3604(f)(3)(C) (“For purposes of this subsection, discrimination includes . . . in connection with the design and construction of covered multifamily dwellings for first occupancy after the date that is 30 months after September 13, 1988, a failure to design and construct those dwellings in such a manner that (i) the public use and common use portions of such dwellings are readily accessible to and usable by handicapped persons. . . .”)
-
HUD Fair Housing Act Regulations, 24 CFR 100.201 (“Covered multifamily dwellings means buildings consisting of 4 or more dwelling units if such buildings have one or more elevators; and ground floor dwelling units in other buildings consisting of 4 or more dwelling units.”)