Westcoe Realtors, Riverside Ca…Our question today comes from an internet reader, who sounded very confused on what exactly does a seller have to provide a buyer in the way of a termite report or clearance. So, to answer his question (and possibly yours), here is all you need to know about termite reports.
First…the answer to our question above is….NO, the seller does not have to provide a termite clearance…but if you haven’t purchased a home in the past 5 years or so, this will come as a surprise to you. Please allow us to explain.
Years ago, the seller in almost all cases was required to provide a termite report and clearance if there was a new loan being created in the purchase of the property (as opposed to an all cash offer). The reason for this was that the new lender wanted to make sure the home was free of termites, thereby protecting their interest in the property.
About 10-15 years ago (don’t quote me on this), termite reports were split into 2 sections, creatively called “Section 1”, and “Section 2”. With this split, Section 1 items were termite issues that currently existed in the home, that were causing problems right now. Section 2 items were conditions that existed, but were not yet causing a problem, but might in the future.
When this split happened, it became practice for the seller to be responsible for the repair of Section 1 problems, and the buyer was responsible for any Section 2 items if they wanted them repaired. As far as the new lender was concerned, they only cared about the termite issues that existed at the time of the loan…hence, the Section 1 repairs.
However, in January of 2014, for some reason that shall remain locked in the minds of the lending “powers-that-be”, lenders stopped caring about the termite report! To be specific, they no longer required a termite clearance. In fact, they didn’t even require a termite report. Maybe the figured out that it would take termites light years to actually destroy a house…but who knows? The bottom line is that the seller was no longer required to mess with termites.
So, as a result of this 2014 change, how does it stand now?
Easy…everything becomes negotiable between the buyer and the seller. Sometimes the buyer wants just a report, but no clearance…sometimes the buyer wants both, and sometimes the buyer could care less about termites. Every purchase is different, and any repairs or costs the seller will pay simply becomes part of the negotiations between buyers and sellers. Most of the time, this issue is easily resolved, and the principals can move on towards closing escrow.
In the end, if you are a buyer and termites are a big issue with you, then by all means at least ask for a report so you know what you are dealing with (reports cost about $50-$75). If it is clean, then good for you…and if there are problems, then try to work it out with the seller. Maybe they will pay for the corrections, and maybe they won’t…but at least you will know what is happening with regards to termite issues in the home.
Good luck, and thanks for reading our blog. Let us know if there is any other real estate issue you would like us to address for you.