A fault detection system for detecting a flow restriction in an air handler is provided. The system includes a coil, air and liquid temperature sensors, a smart valve and a notification device. The coil is located in an air stream of the air handler. The air temperature sensors are located in the air stream, one sensor determining an air temperature of air upstream of the coil and another determines an air temperature downstream of the coil. The liquid temperature sensors determine a liquid temperature entering the coil and exiting the coil. The smart valve includes a controller in communication with the liquid temperature sensors and at least one of the air temperature sensors that uses the measured air temperature downstream of the coil and a valve actuator position to determine whether the coil is operating at a reduced capacity. The notification device communicates with the controller of the smart valve.