Got Questions? Ask Cynthia! The Importance of Termite Inspections & Reports - American Trust Escrow
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escrow termite report california

Got Questions? Ask Cynthia! The Importance of Termite Inspections & Reports

Purchasing a new home is a huge decision, most notable financially. During the home buying process, there are a variety of inspections and reports that your real estate agent may suggest and that your lender may require. The idea is to shelter you from any surprises downline after you have taken possession of the property.

Today, we will take a closer look at the importance of the termite inspect and report specifically.

Buying and living in Southern California means termites are a reality. Wood destroying pests, as they are officially referred to, can wreak havoc on a home. And often, their damage cannot be seen without an untrained eye. That’s why the termite inspection and report is so critical during the home buying process.

Working with your real estate agent and lender, you can determine if termite remediation is something you would like to tackle after the close of escrow, or if you would like your seller to handle it before closing. Some lenders will allow the sale to close without correcting the problem ahead of time, and some will not, so it’s important to have this conversation as soon as the problem is known.

Additionally, knowing the extent of termite damage upfront allows everyone to make the best decision, like getting a second opinion from another pest control company, looking at different options for remediation, etc. This will be beneficial to either the seller or buyer, depending on who will take ownership of the issue.

What Else Is Included In These Reports?

When an inspector is sent to the property to perform an inspection and report, they are not simply looking for visible signs of termites. They will also check for dry rot, any fungus, and wood destroying beetles. Their report is split into two different sections, and it’s common that the seller pays for Section 1 items while the buyer is responsible for Section 2 items after the close of escrow. This is, of course, also negotiable.

But let’s take a look at what the difference is between Sections 1 and 2. Section 1 (again, typical for the seller to pay) includes items of actual infestation/infection that must be corrected in order for the termite company to issue a “clearance.” This includes things like termites, fungus, dry rot, and so forth. Repairs can include but are not limited to tenting the property, replacing damaged wood, locally treating infested areas, etc.

Conversely, Section 2 items include things that are discovered during the inspection and “deemed likely to cause” issues downline. For example, a home with a patio that has wooden posts protruding from grass instead of cement footings is prime for subterranean termites. This is also known as “earth to wood contact.” The termite company issuing the inspection and report will call out any potential wood destroying problems they encounter.

For buyers, it’s important to highlight Section 2 because these kinds of issues can cause hiccups with your lender. On some government-backed VA/FHA loans, lenders will sometimes require that any Section 2 items be repaired prior to closing on the property. This can also be true with conventional lenders as well, so it’s important to have these conversations with your real estate agent and lender so that everyone is on the same page.

Be Choosy

Do your due diligence and go with a reputable termite or pest control company to complete your inspections and reports. Check their credentials, look at their ratings with places like the Better Business Bureau, and read online reviews to get a sense of who is performing the work. While you may be tempted to use a coupon or save a bit of cash by using a friend of a friend of a friend, this can come back to bite you big time in the long run! Imagine this: the transaction closes, your house is filled with termites, and then it is discovered that the company/inspector was not licensed properly at the time of inspection. It happens, and we do not want it to happen to you!

Condos and Shared Walls

This question comes up quite a bit when buyers are pursuing a condo or attached dwelling. That’s because these kinds of structures are maintained by Homeowners Associations and not the individual owner themselves. The best course of action here is to use the HOA Management Company’s preferred pest control company when initiating an inspection or report. Why? Well, condos that are in escrow very well may have termite issues that need to be corrected. However, the onus is often called into question depending on whether or not the damage falls within the HOA’s scope of responsibility or not. Things like exterior doors, balcony railings, decks, and so on are sometimes not maintained by the HOA, so it’s important to educate yourself on the property’s HOA bylaws. The best thing to do is submit the termite inspection and report to the HOA that discloses which items need repair, which can help streamline the process.


For more information about termite inspections and reports, please feel free to contact us. Our knowledgeable escrow officers would be happy to assist you!

Cynthia Moller
661.362.0400
cmoller@glenoaksescrow.com

 

Cynthia Moller is a Senior Escrow Officer at our sister company – Glen Oaks Escrow – who has a passion for education. With nearly three decades of escrow experience, she has an exceptional depth of industry knowledge that she readily offers up in her blog, “Ask Cynthia,” and to her loyal clients.