Lender required repairs are repairs that the lender is requiring to be completed before they will lend money on the property. The appraisal, inspection, title work, or purchase contract may reveal inadequacies in the condition of the home. Generally, cosmetic issues are not a problem. Items that affect the safety of the home, structural problems, zoning violations, or anything affecting the functional use of the home could prevent the loan approval.
In the case of a purchase loan, the seller may be required to complete the repairs prior to the closing. The reason the seller has this requirement is that until the closing, the property belongs to the seller. If the seller chooses, they may sell the property with deficiencies, but may find that there are fewer buyers because the terms of rehabilitation and construction loans are not as favorable.