REAL ESTATE BROKER’S GUIDE TO

HOME INSPECTIONS

 

What Every Broker Needs to Know

Before It’s Too Late!

What Every Home Inspector Should Have Known

Before They Started

What Every Buyer Wished They Knew

Before the Escrow Closed

Proposed Training Manual for Department of Real Estate Continuing Education Requirements for Real Estate Agents.

 

By Brad Deal

 

Introduction

 

With 27 years in the California Real Estate business, with the last ten in the Home Inspection Industry I have come to understand that the real estate community does not understand the importance of Home Inspections.  After 3,500 inspections it has painfully clear that the average real estate agent has little understanding of the inspection process and how it relates to their clients.  Most Agents feel they have an intuitive understanding of the Home Inspection process but have virtually no formal education in this subject.  Most agents consider a home inspection as a “Deal Killer” and avoid a home inspection like the plague.  More enlightened agents embrace a home inspection as a powerful tool to help limit their liability and still be able to negotiate with the sellers for the best possible outcome for their Clients. 

 

Many agents believe that because they have lived in a home all their life that they have an understanding of the inspection process.  What this really means is that they are equal in knowledge and experience to the average client in regards to their homes.  Just because an agent has lived in a home most of their life it in no way qualifies that agent to professionally comment on homes to their prospective clients.  There is a significant lack of formal education for the Real Estate Industry regarding home inspections and the inspection processes in general.  To put these comments into perspective; it takes about 1,600 hours of training to be licensed to cut a person’s hair but takes only takes about 40 hours of formal education to become a real estate agent.  1600 hours for a $12.00 haircut compared to 40 hours to handle the largest purchase the average Californian will make in their life time.  And only a few minutes of these 40 hours is devoted to teaching the agents the very rudimentary names of the various parts of a home.

 

Formal education is necessary for the agents to learn the proper benefits usage and for the inspection processes.  Education will allow agents to provide their clients with the fiduciary representation necessary for a successful transaction and at the same time, limit the agent’s and broker’s liability.  It has been my experience the ethical agents are more likely to rely on a Home Inspection.  The intimidation the Agents feel for home inspections is caused by their fear of losing control of the purchase process.  It is the lack of control over the inspection process that instills insecurity for the agents.  Agents need to understand that until the home is inspected and accepted by the client that there is no contract, only an option to purchase.  Accordingly, very little effort should be invested in any transaction until the inspections are complete and approved by the clients.

 

The following discussion is based on my experiences and will help provide real estate professionals with a basic understanding of the home inspection process. The following is a collection of articles I have written over the years that have been combined into this manual.   It should also provide some powerful tools to limit the agent’s and the broker’s liability. 

 

 

 

Brad Deal has the following Certifications and Licenses:

 

Bachelor of Science Degree Construction Management Fresno State University 1978

Inspector Member California/National Association of Certified Home Inspectors (CalNachi) Board Member and Chairman of the Standards of Practice Committee,

FHA Roster Inspector #N258

FHA 203 K Consulting #S0338

"Board Certified" Council of Engineering and Scientific Specialty Boards

American Indoor Air Quality Council-certified Indoor Environmental Consultant #CIEC 0607094

"Board Certified" Council of Engineering and Scientific Specialty Boards

American Indoor Air Quality Council-certified Microbial Consultant CMC #0701024

American Indoor Air Quality Council-certified Microbial Remediator #CMR 03807

American Institute of Inspectors Certified Mobile Home Inspector #M-3090

Fireplace Investigation, Research & Education Service F.I.R.E.

Certified Fireplace Inspector #66

FEMA / PaRR Disaster Inspector #19250

California Real Estate Brokers License #01149536

Contractors License General Contracting, General Engineering, Concrete #408258 Inactive

 

It Takes More Training to Become a Hair Stylist than it

Takes to Become a Real Estate Salesman

Anybody can be one!

 

C.C. 2079.2. The standard of care owed by a broker under this article is the degree of care that a reasonably prudent real estate licensee would exercise and is measured by the degree of knowledge through education, experience, and examination, required to obtain a license under Division 4 (commencing with Section 10000) of the Business and Professions Code.

 

According to California Real Estate Law the salesperson is not expected to have any extensive, specialized knowledge in regards to the product he is selling.  The agent is not expected to obtain any specialized training regarding the “product” they are selling except to the extent they receive it through on the job experience.  They are however, required to obtain 40 hours of training every 4 years in Ethics, Agency, Trust Fund, Fair Housing, and Risk Management.  Contrast this with a luxury car salesman who is expected to know everything about the car’s performance and amenities.  While the car salesman probably has no training in the contractual portion of the transaction, they can expound all day long on all the performance characteristics of their product.  There is quite a difference between the two industries but the cost of the typical home far exceeds the cost and importance of the car.  The investment the typical purchaser makes in their home is probably the largest and most important investment they will make in their lifetimes.  While the car salesman has specific training on the cars he is required to sell, the real estate agent is not required to obtain any specific training on the various systems in the home, only that training intended to limit their legal liability.

 

Agents are taught throughout their career just to sell.  Just look at the advertisements in the magazines, and the websites online.  There is page after page with add after add with each agent proclaiming, “I can sell the best!” or “I can find your dream house,” but when it is all said and done there is little effort to sell the individual properties. It is all designed to promote the agents.  There is not any significant effort to distinguish the difference between the agents except in regards to commissions and referral fees.  Rarely do you see a resume or even rarer, a curriculum vitae.  Everything is based on selling, and not on education.  Accordingly the agents are perceived by the public to be all about the same.  Just because an agent is successful, that is to say, turns over a larger volume of properties, only indicates that they are more proficient in marketing, not necessarily more educated on the systems of those properties.  I had one successful broker describe the business to me as a machine; you put the client in one side and a commission comes out the other side.  Don’t give the client any more information than is necessary, it only makes more work for the agent and anything that jeopardizes or stops that machine is to be eliminated.

 

Many times in real estate it is not what you know, but who you know.  The cruel truth is that there is a high turn over rate for new agents.  New agents are routinely sought out for employment because the brokers know that the typical person has about 100 people in their sphere of influence and within that sphere there are likely to be two or three prospective home buyers or sellers.  After the new agent has exhausted their group of likely prospects they are subject to being released; or more often, they quit after having learning of the many long hours that the successful agents invest in their “sub business.”  This is one reason why brokers strive to have as many sales persons employed as possible.

Who is REALLY Protected by the Purchase Contract

The Broker is First

 

I renewed my Real Estate Brokers License not too long ago and one of the questions asked on the renewal exam was, “Who is supposed to be protected by Real Estate Law?” and of coarse the answer was the consumer.  But when one really gets down to reviewing the law and how the various disclosures and contracts are written, they are really designed to limit the liability of the broker.  If the consumer happens to be protected along the way then that is so much the better but the real emphasis on the disclosures is an attempt to provide the agent with a “checklist” of every possible disclosure document for every conceivable kind of real property transaction.  As long as the agent can at least be sure to have obtained signed copies of the various disclosure documents, and follow the appropriate time frames then the liability of the broker is significantly reduced.

 

Are You Ready to Run a Business?

Yesterday I was a _____, and today I run a Business

 

The new agent is immersed into an operating business (brokerage) without having had to go through any on the job training or job promotions that is usually associated with a traditional business. Usually years of dedication and training must be invested in a business to learn the skills to become a successful.  This is not true in Real Estate. A housewife or retired teacher can in a matter of hours be thrust into a business environment without any understanding of any basic training in business operations.  It is not even necessary to be proficient in the English language,  The broker offers a framework for the new agents to help them get started but the simple details of things like phone etiquette and the importance of answering or returning phone calls is never taught to the agents.  The simple tools of business are many times over looked and never taught to the new agents.  It can be difficult for the new agent to learn these skills before they are forced to leave the business. 

 

This results in an industry where 80% of the sales are made by 20% of the top agents.  The remaining 80% of the agents compete over the remainder because they have lesser degrees of education and training.  I know from experience that a large portion of the latter group does not really understand the California Association of Realtor (CAR) Purchase contract and especially how it relates to the home inspection industry.

 

The California Association of Realtors

 “The California Real Estate Purchase Contract and Joint Escrow Instructions”

Agents Should have this Stuff Memorized!

You are not in the driver seat unless you understand the terms!

 

There are many places in the CAR purchase contract that refers to the various inspections that are performed in the typical transaction.  When all these sections in the contract and especially when combined with the Buyer’s Inspection Advisory are, the inspection portions represent a significant total of the purchase contract. We will go through the significant sections of the CAR purchase contract and see how they relate to the various inspections. It is interesting to note that the Home Inspection, the only document, prepared specifically for the home buyer is not mentioned one time in the purchase contract.  The entire C.A.R. purchase contract is presented with the sections to be discussed highlighted.  Specific discussions can be found following the complete contract.

 

Sometimes there are obvious signs of newly installed improvements like windows or a new roof.  While it is not required by the standards a competent inspector will prompt the client and/or agent to ask the seller for any warranties for things like roofs, windows and appliances.  Many times the warranties are transferable and represent a significant value to the client.  The agents should use the inspection report as a prompt to help include all the important information to their client.

 

Structural Pest Inspections

www.pestboard.CA.gov

 

In my opinion, a home inspection is incomplete without the inclusion of a competent pest inspection.  Pest Inspectors do not comment on mechanical systems but they do comment on water intrusion issues and infestation issues.  While home Inspectors are not allowed to comment on pest (wood destroying organisms) issues they are required to comment on water intrusion issues. The two issues are almost always connected.  Water intrusion issues are part in parcel of pest and infestation issues and pest inspectors are allowed to probe the suspect areas to locate water damage where a home inspector is performing a visual inspection only, and is not using a probe.  A probe can make a world of difference under certain situations.  .  While the reports are different in nature they do compliment each other to the benefit of the Buyer.  Taken together they will provide better information than if each is taken separately. I always recommend a pest inspection be performed even if the there is no contractual requirement for one. 

 

Some homes are sold “As Is” for cash and do not have the usual lender requirement for a Pest Report. In these instances the Agent should advise their Client IN WRITING to obtain a Structural Pest Report to limit their liability and best serve their customer. The Pest Inspection Company that is to be used is identified in the Purchase contract.  It is important that the Buyer’s agent be informed as to the nature of the company selected.  I have learned from experience that there are “Lister’s Inspection Companies” and “Buyer’s Inspections Companies.”  While each Structural Pest Control Company is governed by strict standards, each company takes on the personality of the company’s management.  Some companies receive their work from agents who want a minimum inspection.  These companies count on continued work by providing a minimum inspection.  These companies do not serve the best interests of the buyer.  On the other hand there are companies who provide a more inclusive pest inspection, which I characterize as “Buyer’s Inspection Company” who routinely discover an increased number of infestation issues.  I have had instances where I have discovered water intrusion issues that were missed repeatedly by a particular pest company.  Once a person become aware of the differences in the quality of the pest reports it becomes very clear which companies should be recommended.  I recommend all agents be informed of the qualifications, experience and personality of the local structural pest inspection companies in order to protect themselves from possible “negligent referral” actions.

 

Sometimes a listing agent may know a particular system on a home is infested or water damaged. Usually, it is the listing agent who orders the Pest Inspection and uses this opportunity to exclude various garages, out buildings, decks, or patio covers from the pest report.  The pest inspector has no idea of what is contractually required and can only proceed on the instructions they are given and must rely on the listing agent for proper guidance. I always recommend that the buyer review the purchase contract to be sure the pest report includes all the contractually required components. I routinely find water intrusion issues in out buildings or other peripheral systems that were excluded on the pest inspection but were required on the purchase contract. 

 

Pest inspectors do not inspect the common areas of condominiums.  They only inspect the “separate use and exclusive use areas.”  In order to provide the client with the common use area information the reserve study should be obtained from the homeowner’s association to determine if there are any monies available for repairing the exterior components of the building.  Always ask if the association is involved with any litigation.

Section 1 and Section 2

What’s the difference?

 

Buyers should be made aware that there are Section 1 and Section 2 items in structural pest reports.  Section one items are issues of current damage or infestation and are usually required to be repaired by the lender prior to funding a purchase loan.  Section 2 items are issues that may lead to future infestation or damage and are not usually required to be repaired by lender.  Sometimes specialty loans do require Section 2 items be repaired.  It is important that the buyer’s agent be informed as to the type of loan the buyers are intending to obtain in order to be sure if the Section 2 items will need to be repaired prior to funding so that it can be included in the purchase offer.

 

Home Inspectors routinely discover dead animals in the crawlspace or the attic. This is rarely reported by a pest inspection but routinely reported in a home inspection as a health safety issue.  While it is excluded by the Standards of Practice most home inspectors will report on these issues.  There is the possibility of anthrax being present in the under dead animals along with other health safety issues.  Dead animals require the removal by a qualified Class 3 pest specialist. 

 

Another important issue is the discovery of rodent droppings; particularly in air supply ducts.  At its worst rodent droppings can produce the deadly Hanta Virus, which is an important respiratory disease that can be fatal.  When the rodent feces turns into dust it can be distributed though out the home causing allergic reactions, respiratory problems, and possible immunological problems.  The standard recommendation is for the area to be evaluated and cleaned by a qualified duct specialist and a qualified rodent specialist. 

 

On one house I found bats in the attic.  Upon disclosing this to my client I learned her husband had been bitten in her previous house by a rabid bat and DIED.  She was devastated at this discovery but proceeded with the purchase anyway.  She had the bats professionally removed.  Needless to say I was also shaken and her agent was mortified.   My point being is that the pest inspector is very specific to wood destroying organisms and is not required to report on animals or animal droppings. Pest does not include animal related issues, it means wood destroying issues. A Class 2 license is required for water destroying pests, and a Class 3 license is required for animal pests.

 

The pest work is not complete until the certification is included in the escrow documents.  Do not close an escrow without a certification from the pest company stating the repairs were performed and that there is not any wood destroying organisms present in the building. Remember that the pest company will not certify work performed by other persons or contractors who were not under the control of the pest company.  These “other” repair persons should also supply a certification for their portion of the work to insure that word was properly performed.

 

Other Inspections and Reports

Where is the Home Inspection?

 

If C.A.R. or the state legislature really wanted to be sure every was properly disclosed then home inspections would at least be included in this section.  It is a clear conflict of interest.  Home Inspections are not mentioned one time anywhere in any of the C.A.R. contract or the disclosure documents.  There is no recognition of the organizations which are specifically trained for this type of work and there is no recognition of any standards of practice for inspections to guide the inspection.  The buyer is left up to his own devices and the fiduciary relationship with the agent in regards to obtaining a proper inspection.

 

Home Inspections are Free to the Buyer.

I’ll Take Two

 

When the issues discovered during the home Inspection become known to the buyer it makes it possible for these issues to be negotiated with the seller.  A proper Home Inspection will almost always reveal safety issues that far exceed the cost of the report.  Most sellers are reluctant to sell a home with known safety issues and will usually agree to repair at least some of these issues as part of negotiating the purchase contract. The amount of repairs is dependant on the market.  In a seller’s market, the sellers will make fewer repairs than in a buyers market because the sellers do not have to compete as hard with the other homes to close a transaction. In a buyers market a seller is more likely to make an increased number of repairs because they to have to compete with the other homes on the market.   It only takes the seller to agree to one or two repairs to exceed the cost of the report. Not to mention the savings of many thousands dollars should a disastrous defect be discovered.  Any additional successfully negotiated issues beyond the cost of the report are all savings to the buyer.  It is not uncommon to discover previously unknown issues worth many thousands of dollars in safety issues.  An Agent should be wary of any inspection priced under market value. 

 

It is important for the agents to understand that these issues will become known over time by the buyer.  The Home Inspection provides certainty in the purchase process so that these previously unknown issues are known at the beginning and can be budgeted for future repairs rather than the periodic eruptions of distressing problems without prior warning.  It is the unknown problems that can destroy the home owning experience for a client and ruin return business for the Agents

 

Do Not Shop Price

The Cheapest Price isn’t always the Cheapest Price

Or You Get What You Pay For!

 

It is interesting to note that the majority of agents who call multiple inspectors shopping price cannot be sure if the home has a crawlspace, a concrete floor, or a basement, or even how many square feet are in the home.  Sometimes they are even unsure on the property’s age. The ability of the Agents to answer these simple questions quickly provides clues to an agent’s experience and education.  When you represent a property, look at the property and see of what it consists.  You are expected to be an expert at purchasing and marketing properties, how you describe a property quickly indicates to your clients and all the other people involved your level of expertise and education.  The agent’s ability to describe a property will either increase or decrease the client’s faith in your ability.  The clients pick up these types of inconsistencies and it will undermine agent’s credibility.  Do not rely solely on the listing information, many times these contain mistakes and misinformation.

 

Everyday I receive requests for inspection prices.  It is the exception to receive a call for my qualifications. When one understands that a home inspection is free then it can only make sense to retain the services of the most qualified and experienced inspector available.  What are the inspector’s qualifications?  Does the inspector belong to a trade organization?  Does the inspector carry any supporting licenses?  What is the inspector’s work history? How many inspections has the inspector performed? These are some of the questions the Home Buyer should be asking prior to hiring a Home.  Every Real Estate Agent should understand that the price of the inspection is inversely proportional to the probability of having an unhappy customer i.e. the price of an inspection is inversely proportional to the probability of being named in a law suit.  Agents who shop price rather than qualifications are breaching their fiduciary obligation to their client! The Agents mistakenly expose their selves to liability when they shop for the cheapest price.

 

Educated, competent home inspectors will inevitably charge more than a lesser-qualified inspector.  The likelihood of an inspector finding issues worth more than the cost of the report is extremely high.  The information provided by the report will allow the buyer to negotiate for repairs that far exceed the cost of the report.  When the negotiated repairs exceed the cost of the report than all further information is a “bonus” to the buyer.  The information in the report can be used to extend the life of the house systems and save even more long-term maintenance and repair costs.  When an Agent realizes the reports are free, then it makes sense for the client to obtain the highest quality report available rather than a cut-rate report.  From the Agents point of view, if you are going to get a home inspection, be sure to get the most detailed one available in order to limit your liability.  Again, by advising your client to obtain the cheapest report you may be negligently referring your client and be liable for a substandard inspection. I routinely receive requests from agents for prices, but rarely qualifications.  By shopping price an Agent greatly increases the probability of obtaining a substandard report and a possible negligent referral action.  A prudent Agent would recommend shopping qualifications first to protect the Agent and the Client from a poor report. A prudent Broker would require superior inspection reports in every aspect of their business.

 

I was handed a flier from a franchise inspection company recently stating. “We will inspect any home up to 5,000 square feet for $275.00.  Interestingly there was no statement regarding the inspector’s qualification and membership association; not to mention any Standards of Practice.  5,000 square feet for $275.00 should be an automatic red flag for an immanent law suit. No inspector can stay in business for long at these prices.

Who is Working for Whom?

Trust the Seller?

 

When you take a used car to a mechanic to determine if the car has any serious problems do you allow the seller of the car to choose the mechanic?  Accordingly, the Buyer’s agent should not allow the Seller or the Seller’s agent to choose which company is to inspect the roof, chimney, or any other mechanical systems because of the inherit conflict of interest.  The natural inclination for the Seller or Seller’s Agent to choose an inspection company that is more likely to provide a favorable result is a natural conflict of interest; selling Agents quickly learn which inspection companies will accommodate their needs.  The custom of allowing the seller to choose and pay for the inspection company is improper.  This custom does not serve the interests of the Buyer and promotes the possibility of manipulation and deceit by the seller or listing agent.  It should always be clear to the buyer “who is working for who” so that any conflicts of interests can be identified.  Service providers hired by the seller or the seller’s agent work for the seller and do not necessarily act in the best interest of the buyer.

 

Occasionally there will be times where the seller is contractually required to pay for a home inspection.  In these instances the agents should be extra careful to be sure to consider the consequences of addressing the report.  It is important to provide the inspector with the proper information so that the report is addressed to the proper person.  Even though the seller is paying for the report, the buyer should still be the client named in the report in order not to breech the confidentiality agreement in the inspection contract.  If the seller is named in the report, then the buyer becomes a third party in regards to the inspection and may not obtain all the possible benefits from the inspector; and it could cause problems with the inspector’s E&O insurance.  In addition, when the seller is also the client then there is always the possibility of collusion.  Effectively the report has become a listing inspection without allowing of confirmation of the report’s findings by the buyer.  If the seller is contractually bound to pay for the report the buyer should still be the client named in the report.  The inspector does not care who pays for the report or what is stated in the purchase contract, only who signs his contract. 

 

Addressing the Report

To Whom is the Report Addressed?

 

It is interesting to see the headings on the various system reports. They are usually addressed to the seller’s or Broker, sometimes even to the escrow company, but rarely are they addresses to the Buyer, the one person for which the report is created.  In order to limit liability, inspection reports should be ordered by the Buyer or the Buyer’s Agent.  The reports should be addressed to the Buyer, not the Agents, Real Estate Company, Seller, or the Title Company.  Always remember, the ultimate test for any Agent is how a jury would interpret their actions.  When you have a defective inspection addressed to the Listing Broker, sent to the escrow company and ordered by the Listing Agent and the Buyer is accusing you of collusion, how will you defend your actions?  You may very well have acted properly, but if you look guilty then the jury may say you are guilty.  Every one of the Agent’s actions regarding the inspection process must be handled as if it were to be reviewed by a jury.  Most Home Inspector approach their inspection with this attitude because of the high liability involved.  I recommend that an agent should view the Home Inspection process similarly.   It is a sad state of affairs when a report must be written in a defensive legal posture rather than in a user-friendly format.

 

Scheduling the Inspection

Be Prepared and Be Professional

 

Here is some basic information the Agent should be able to provide a Home Inspector when making the appointment. The Agent should be able to provide the following information when ordering an inspection:

 

1)                  Address of the subject property

2)                  What city

3)                  Nearest cross street

4)                  Square footage of the property

5)                  Age of the property

6)                  Any known defects or issues at the property

7)                  Any issues on which the client or agent want the inspector to review?

8)                  Does the home have a crawlspace, basement or a concrete floor?

9)                  Is the home occupied?

10)              Name, phone number of the appropriate Agent

11)              Name, phone number and address of the Client

 

First Man on the Job

Ideally

 

The Home Inspection should be scheduled first prior to other inspections.  The Home Inspection should used by the Buyer as a basis for determining any subsequent inspections.  While Home Inspectors are not specialist in any one field they do have a superior understanding of how the various system are interrelated and have enough knowledge regarding the individual systems to determine if there is a need for a more detailed evaluation.  The logistics of proper scheduling is difficult given the misunderstandings of the inspection process and the contractual time limits. 

 

Confused Schedules

Lets’ Send The “General Inspector,” Last?

 

I performed an inspection on a little house some time ago.  I was the last inspector on the property behind the pest inspector, the fireplace specialist, the roofer and several other specialists.    In the old days before there were home inspectors, it was customary for the agents to schedule inspections based on past experience and intuition.  More recently, the more experienced agents are beginning to change the way they schedule the various inspections for their Clients and have the home inspector visit the property before any other inspectors.  It is not uncommon for the home inspector to find issues that where missed by the previous specialist which causes confusion in the repair process.  The information in the home inspection report should be provided to any subsequent specialist prior to their visiting the property in order to eliminate confusion and provide better service to our Client. 

 

Home inspectors are trained to know a little bit about all the systems in residential housing and at a minimum should be capable of detecting deferred maintenance issues and defective issues that are in need of further review.  What I have come to understand is that the more experienced home inspectors probably know more about the systems in the homes and their safety issues than the specialist who are hired to repair the systems.  It is a sign of the changing times.  Most years I receive around 50 hours by participating in the various educational programs.  In contrast it takes 40 hours of continuing education every four years to maintain my Real Estate Brokers license.  To my knowledge there are no requirements for contractors to obtain any continuing education, although I am sure the successful contractors are continuously learning about their trades, but their employees may not be receiving any continuing education.

 

I always recommend that the home inspector be the first inspector in the home.  After reviewing the home inspection report with the Clients the balance of the inspections can then be scheduled on the property based on real information and not just past experience.  The whole point of obtaining a home inspection is so that a Client can make an informed decision on whether or not to purchase a property, and have reasonable expectations of what is required to bring the property up to the Client’s requirements.  Not every issue has to be repaired, but every reasonable issue should be disclosed to the Client prior to the close of escrow.   Home inspections are a relatively new industry; the Real Estate Industry is slowly learning just how important a home inspection can be for a Client, and his pocketbook.

Chimney Inspections

There’s a Whole Lot to Them

 

There is an important lack of qualified fireplace inspectors.  Most people do not realize that masonry and factory built fireplaces have a design life of about 20 to 25 years.  As the systems approach the end of their design life the amount of reportable issues increases until the cost of repair become prohibitive.  Masonry fireplaces are old technology and are built basically the same way since the early 1900’s.  Masonry fireplaces are a high-risk system that should be cleaned and evaluated every year.  National Fire Protection Association (NFPA) 211 Chapter 14 guidelines require a “Level 2” inspection upon the sale of real property. This document is accepted as the industry standard for proper chimney inspections.  It is widely used by knowledgeable and competent fireplace inspectors, but it is not yet incorporated into California law.  The result is any brick layer can call him self a fireplace inspector.  It there is ever litigation regarding a fireplace you can be assured of the Chapter 14 being the standard by which the fireplace inspection is judged.

 

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National Fire Protection Association (NFPA) 211

Chapter 14 Inspection of Existing Fireplaces

Hello...This is the fireplace Standard To Which You Will Be Held Accountable

 

National Fire Protections Association (NFPA) Level 1, Level 2 and Level 3 Inspection Guidelines.  The complete text is found in the NFPA 211 Standards for Chimneys, Fireplaces, Vents, and Solid Fuel-Burning Appliances, 2003 Edition Chapter 14

 

Definitions:

 

A.3.3.1.1  Readily Accessible (for Inspections):  Readily accessible can be described as quickly or easily reached for inspection, maintenance, or repair.  Readily accessible would not require the use of tools for opening or removal of any panel, door, or other covering, nor would it require the use of ladders.

 

A,3.3.1  Accessible (for Inspections): Access can be described as being reached for the purpose of inspection, maintenance, or repair.  Access could first require the movement or removal of a panel, door, or other covering, the use of ladders, and/or the use of common tools, such as a screwdriver or wrench.  Access does not require any destructive actions to the building or property.

 

3.3.61  Non-Accessible, Concealed (for Inspections):  Not capable of being exposed for inspection, maintenance, or repair without damage to the chimney or building structure or finish, or without the use of special tools.

 

Level 1 Inspection: 

 

Scope:  Readily accessible areas of chimney, structure, and flue.  Lack of obstruction or combustible deposits in flue.  Basic appliance installation and connection.

 

Degree of Access Required:  Shall include readily accessible portions of chimney exterior and interior; accessible portions of appliance and chimney connection

 

Circumstances:  Annual inspection as required by Section 13.2.  During routine cleaning of chimney flue. Upon direct replacement of a connected appliance with one of similar type input rating, and efficiency

 

Indications:  A Level 1 inspection is indicated when verification of the suitability of the chimney for continued service, under the same conditions and with the same appliance or appliances, is needed.

 

Level 2 

 

Scope:  All subjects of a Level 1 inspection.  Proper construction and condtion of accessible portions of the chimney structure and all enclosed flues,  Proper clearances from combustibles in accessible locations.  Size and suitability of flues for connected appliances.

 

Degree of Access Required:  Shall include all accessible portions of the chimney exterior and interior, including areas within accessible attics, crawl spaces, and basements, and accessible portions of the appliance and chimney connection.  Shall include inspection by video scanning or other means of inspection.

 

Circumstances:  Upon addition or removal of one or more connected appliances, or replacement of an appliance with one of dissimilar type of input rating of efficacy.  Prior to relining or replacement of flue lining, Upon sale or transfer of the property.  After an operating malfunction or external event likely to have caused damage to the chimney.

 

Indications:  A Level 2 inspection is indicated when verification of the suitability of the chimney for new or changed conditions of service is needed, or when a Level 1 inspection is not sufficient to determine the serviceability of the chimney.

 

Level 3

 

Scope:  All subjects of Level 1 and Level 2 inspections.  Proper constructions and condition of concealed portions of chimney structure and enclosed flues.  Proper clearances from combustibles.

 

Degree of Access Required:  Shall include external and internal portions of the chimney structure, including concealed areas of the building or chimney.  Shall include removal of components of the building or chimney where necessary.  Removal of such components shall be required only as necessary to gain access to areas that are the subject of the inspection.

 

Circumstances:  Where necessary for the investigation of an incident that has caused damage to the chimney or building.  Where a hazard detected or suspected as the result of a Level 1 or Level 2 inspection cannot be fully evaluated without access to concealed areas.

 

Indications:  A level 3 inspection is indicated when the construction of all or part of the chimney is deemed critical to the renewed or continued use of the chimney.  A Level 3 inspection shall be required only for those areas that cannot be properly evaluated by a Level 1 or Level 2 inspection.

 

To be sure a chimney is not cracked, it should be “scoped.”  A camera is inserted into the flue so that at close up view of the flue to view any cracks. Any crack in the flue is a fire safety hazard and must be replaced or retrofitted.  Cracked flues cannot be repaired in place without relining the flue with a “Listed” repair design. 

 

Ask your chimney inspector what is included in a Level 2 inspection.  If they cannot answer then find another inspector, quick.  There are many inspectors who perform fireplace and chimney inspections but are not qualified. What is worse, these fireplace inspectors do not even know that they are not qualified.  Just because a person has been building or cleaning fireplaces for years does not necessarily mean they are qualified to inspect a fireplace. There are many chimney sweeps that have been cleaning fireplaces for years but do not have the proper training to perform a proper inspection.  Recently has this lack of industry knowledge been address by a few qualified schools and organizations.  I attended the Fire Investigation Research & Education Service, more commonly known as F.I.R.E. and became a Certified Fireplace Inspector.  www.F-I-R-E.com After having inspections approaching 3,500 homes, almost all of them including fireplaces I realized how much I did not know about fireplaces and chimneys.  During my training I quickly came to understand that fireplaces are a complicated and specialized system that requires proper training to inspect and report properly.  Most fireplaces are not receiving proper inspections and are deficient in some way.  Fireplaces are an extremely high liability issue.

 

Wood Stoves and Inserts

Homeowner Installed Nightmares

 

San Joaquin Valley air quality regulations went into effect on 1/1/2004 requiring certification of the wood burning appliances to meet air quality standards.  Any stoves or inserts built prior to 1990 are no longer acceptable.  Any unit after 1990 must have a label and be listed on the EPA list of accepted units.  If the unit is not certified it must be replaced by the seller prior to closing escrow.

 

 

 

 

San Joaquin Valley Air Pollution Control District

Wood burning rules for stoves and fireplaces

Effective date November 1, 2003

 

As of November 1, 2003, there will be rules regarding the burning of wood and other solid fuels here in the San Joaquin Valley. These rules are intended to reduce the amount of particulate matter in our air, thus reducing pollution. In an effort to reduce confusion on this issue, the following information has been garnered, and offered here-in.

 

• There are two stages to the no-burn rule: Voluntary, and Mandatory.
• No burn days will be decided by the air control board, based on the Air quality Index already in place. This index rates air quality from a healthy zero to 300 or more for seriously unhealthy air quality.
• Such decisions will be made on a county by county basis, dependent on each County’s’ air quality.
• When the air quality or AQI is forecast at 100 to 150, which is considered harmful to people with sensitive lungs, the Voluntary phase of the rule will be triggered.
• The voluntary phase simply requests residents of the affected county to refrain from burning wood in old stoves or fireplaces, on a voluntary basis. If people choose to burn on these days. They are encouraged to use cleaner burning manufactured logs such as ‘Duraflame’, Wood stoves and fireplace inserts that are federally certified are encouraged, as well.
• The mandatory Phase is triggered by poor air quality at 151 or more on the AQI. During this phase, even clean burning alternatives should not be used.
• It is now the responsibility of the homeowner to verify it is O.K. to burn that day (or night) prior to burning. Newspaper, T.V. and radio reports will identify the daily status. Symbols are being adopted, such as a yellow triangle reading” burning discouraged”, for voluntary days, and “burning prohibited” on no-burn days. The district will also post this information on their web site. www.valleyair.org . The districts’ phone number is 209-577-6400.
• Estimates are that restrictions might be enforced from 4 to 25 of the most polluted days (or nights) during the winter. And not all areas will be affected, as it is a county by county decision.
• Enforcement will be provided by 58 field inspectors patrolling the areas, and also relying on neighborhood reporting. Fines range from $50.00 to 1,000 dollars, and can increase for repeat offenders.

 

Exemptions

·         The burning of gas or propane will not be affected

·         Homes that rely on wood burning as the sole source of heat.

·         Existing homes above 3,000 feet in elevation.

·         Areas where natural gas service is not available.

 

San Joaquin valley air pollution district www.valleyair.org    www.epa.gov

1-209-577-6400

 

Smoke Detectors and Water Heaters

How Do You Know the Smoke Detector Works?

 

 

The seller is required to provide a certificate stating the smoke detectors is operating.  The Standards of Practice do not require the Home Inspector to test the smoke detectors.  Some Inspectors will push the test button to see if the bell works and the battery is charged. Some Inspectors will even spray simulated smoke into the unit to test the sensor system.  Pushing the test button only tests are the bell and the battery.  The test button does not test the sensor system and does not insure the proper operation of the unit.  The unit could still be defective and still respond to the test button.  There is the danger of the test button sticking in the on position and the bell not stopping.  Many Inspectors refrain from pushing the button for this reason.

 

Spraying simulated smoke into the unit will engage the sensor system is but the debris from the smoke may well coat the sensor and prevent future operation.  There is considerable controversy concerning the use of simulated smoke and it is well outside the Standards of Practice.

 

I feel it is important that at least some effort be made to test these units. I push the test button if I can reach it with my finger and disclose in the report the probability of failure as the units’ age.  Past research has shown that smoke detectors that are 8 years old will fail to respond to an emergency condition 50% of the time.  There are over 77 million outdated smoke detectors in the United States.  Because of their low cost and their important safety protection I recommend any detectors older than a few years be replaced for consistent performance.  Remember, the law requires a functioning smoke detector, not just a functioning battery and bell.  There is no reasonable way for an Agent to know if the smoke detector is working properly.

 

There should be at least one smoke detector located on the ceiling between the Air Conditioning return air register and the bedrooms. Battery powered smoke detectors are acceptable for houses that are not equipped with pre installed hard wire circuits. Houses that are equipped with hard wired smoke detector circuits, battery powered detectors are not acceptable, battery units cannot be used to replace hard wired units.  Remember, hard wired detectors cannot be replaced with a battery powered system. 

 

Do not confuse battery powered smoke detectors with battery back up smoke detectors.  A hard wired smoke detector must have a battery backup to insure operation in the event of power loss.  There is nothing to stop the installation of battery operated unit in additional areas if so desired by the Buyer.  Because of their low cost I recommend that there be a smoke detector in the bedrooms, hallway, attic and garage for increased fire safety.  

Smoke Detector Law

In houses and manufactured housing

How Do You Know if it Works?

 

Health and Safety Code 13113.8

 

13113.8.  (a) On and after January 1, 1986, every single-family dwelling and factory-built housing, as defined in Section 19971, which is sold shall have an operable smoke detector.  The detector shall be approved and listed by the State Fire Marshal and installed in accordance with the State Fire Marshal's regulations.  Unless prohibited by local rules, regulations, or ordinances, a battery-operated smoke detector shall be deemed to satisfy the

requirements of this section.

(b) On and after January 1, 1986, the transferor of any real property containing a single-family dwelling, as described in subdivision (a), whether the transfer is made by sale, exchange, or real property sales contract, as defined in Section 2985 of the Civil Code, shall deliver to the transferee a written statement indicating that the transferor is in compliance with this section.  The disclosure statement shall be either included in the receipt for deposit in a real estate transaction, an addendum attached thereto, or a separate document.

 

Carbon Monoxide Detectors

How Do You Know if it Works?

 

Carbon Monoxide detectors look very much like a smoke detector and perform a similar function. A carbon monoxide detector is not required by law but it does add significant protection in case of fire.  Carbon monoxide is a colorless and odorless gas that is created by improperly operating gas fired appliances. A properly operating natural gas flame does not create any appreciable amount of carbon monoxide.  Natural gas combustion creates only water and Carbon Dioxide both of which are harmless in reasonable concentrations. Carbon Monoxide is created when there is an improper air to gas ratio, if there is improper combustion air supplied to the flame, or if the flame impinges (hits or touches) on the heat exchanger. 

 

Carbon Monoxide is an insidious gas that can cause multiple symptoms depending to the exposure levels.  The symptoms are dependant on the concentration and the length of time that a person is exposed. They can range from chronic headaches to death.  Many times a chronic illness is difficult to diagnose and the problem is traced back to a defective furnace or water heater that is emitting carbon monoxide.  If the inspector ever expresses concern over carbon monoxide the agent should use extra caution to insure the inspector’s recommendations are followed to the letter.  People can and do die from carbon monoxide exposure.  If somebody dies due to carbon monoxide then you can be sure that everyone involved with the transaction will be named in the resulting lawsuit.  By then it’s too late to mitigate any liability and you could be partially responsible for somebody’s death.

 

I do not inspect carbon monoxide detectors.  I suspect carbon monoxide detectors wear out over time much way as smoke detectors and recommend that they be changed out after 4 years.  In addition, there is much controversy regarding the proper placement of CO detectors. Carbon Monoxide is very nearly the same weight as air and will slowly collect at the ceiling levels if there are no air currents.  Any air movement may cause the Carbon Monoxide to collect at a lower level. I recommend that Carbon Monoxide detectors be installed at the ceilings next to the smoke detectors and about 18" above the floor level under each Carbon Monoxide detector to be sure that all the likely areas are covered. 

 

Water Heaters

They Can Be Dangerous!

 

Every home owner should know some basic information regarding their hot water heater.  While the units are very safe when the equipment is in operating condition, many times age, neglect, or incorrect installation or repairs can defeat the safety equipment.  Most people do not realize the explosive force inside a water heater is the same as a pound of TNT.  The "TPR" or the "Pressure/Temperature Relief valve is usually located on the top or side of the unit and is designed to release the pressure when the temperature reaches 210 degrees or when the pressure reaches about 140 pounds in order to keep the unit from exploding.

A water heater can blow out entire rooms in a home if they burst.  The resulting steam scalds anybody in the blast area and the resulting injuries can be devastating. If you notice any corrosion or leaking on the safety valve, any damage or plugging of the relief piping you should immediately have the system evaluated and repaired by a qualified plumber.  The safety valve only costs $30-$40.

 

There are very specific requirements for seismic strapping on the water heaters. The purchase contract requires that seller supply the buyer with a certificate stating that the water heater is properly seismic strapped.  The State of California has a complete design available on the web describing how a heater is to be strapped.  These are a typical government design and difficult to utilize.  I have never seen a homeowner designed strapping meet these requirements.  The standards are very complicated and difficult to install. The easiest way to meet the strapping requirements is to purchase one of the manufactured kits designed to meet the State requirements and follow the instructions.  Many times a FHA appraiser will “pass” improper seismic strap only to be reported as defective by a Home Inspector.  Do not be misled by a limited FHA appraisal inspection. All 13 pages of the State recommended strapping methods can be found at:

 

www.documents.dgs.ca/dsa/pubs/waterheaterbracing01.31.02pdf

 

There is the common misconception that the reason for seismic strapping is to prevent gas leakage from a broken gas lines.  While broken gas lines are an important fire safety hazard, another equally important issue is the possibility of broken water lines.  Large numbers of broken water heater supply lines can lower the municipal water pressures and decrease or eliminate the ability of firemen to fight fires in the nearby areas due to lack of water pressure.  This could be a disaster in an emergency condition.

 

Boiling Sounds

Honey, what is that licking noise?

 

The typical water heater is rated to last about 9 years.  One important clue that your water heater is nearing the end of its life cycle is when you begin to hear boiling and clicking noises inside the tank during a heating cycle.  Minerals from the water will collect at the bottom of the tank.  This debris looks very much like heavy sand and can fill the tank up as high as 24 inches. This deposit is called a “Pill.”  This mineral debris will trap the water between the bottom of the tank and the bottom of the sand; when this water boils it creates a bubble and lifts the debris off the bottom of the tank.  This is what you hear when there are the boiling and clicking sounds.  These deposits decrease the heating efficiency of the unit and decrease the capacity of the unit.  When you hear these sounds it is best to begin to budget for a new water heater in the near future. 

Temperature Sensitive Leaks

Why is that fitting so crusty?

 

Another important clue is corrosion around the fittings.  Obviously free water on the unit will indicate a leak in the pipes but when you see corrosion but no water it probably means there is a Temperature Sensitive Leak in that fitting.  When the temperature is just right the fitting leaks a tiny amount of water.  When the water reaches the surface of the fitting it evaporates and leaves behind the corrosion that you can see but no free water.  Sometimes this corrosion can be seen at the upper or lower portion of the tank.  This is another important clue that your water heater is nearing the end of its life cycle. 

 

Odors

Why Can’t YOU Smell It?

 

Have you ever had an odd odor at one of the faucets in your home?  This can be caused by anaerobic bacteria in the water heater tank.  The bacteria give off hydrogen sulfide gas that collects at the end of the water pipes and can be smelled when the water is turned on. It has been proven that women 3 times better at smelling than men; accordingly, odors can drive male plumbers crazy.  Many times the house wife will insist there is an odor and the plumber just thinks she is crazy. Cleaning out the tank with bleach, or better yet, a new water heater, may solve this elusive problem.

 

Flammable Liquids

This is serious stuff!

 

Any time there is a possibility of storing flammable liquids near a water heater the ignition source is recommended to be 18" above the floor.  This is a fire safety hazard. Industry Standards recommend raising water heater 18" off floor for fire safety. This includes electric water heaters; in addition I recommend installing drip pan for increased protection in case of a water heater leak.  A leaking water heater may not be noticed for some time and is a likely cause mold in the resulting wet walls.  Mold can be a devastating condition for some houses.  A drip pan is cheap insurance to protect your home.

 

Here is the law for Water Heater Seismic Strapping in Residences

This includes electric water heater too!

CALIFORNIA CODES

HEALTH AND SAFETY CODE

SECTION 19210-19217

19210.  (a) The Legislature finds and declares that there exists a serious threat of fire, explosion, or electrocution to the people of California from water heaters that overturn or experience damage to the plumbing or electrical wiring during an earthquake, and that a large number of structures will suffer damage from water heaters due to the lack of adequate strapping or bracing.

19211.  (a) Notwithstanding Section 19100, all new and replacement water heaters, and all existing residential water heaters, shall be braced, anchored, or strapped to resist falling or horizontal displacement due to earthquake motion.  At a minimum, any water heater shall be secured in accordance with the California Plumbing Code, or modifications made thereto by a city, county, or city and county pursuant to Section 17958.5.

(b) The seller of any real property containing a water heater shall certify to the prospective purchaser that this section has been complied with.  This certification shall be made in writing, and may be included in existing transactional documents, including, but not limited to, the Homeowner's Guide to Earthquake Safety published pursuant to Section 10149 of the Business and Professions Code, a real estate sales contract or receipt for deposit, or a transfer disclosure statement pursuant to Section 1102.6 or 1102.6a of the Civil Code.

(d) For the purposes of subdivision (a), "water heater" means any standard water heater with a capacity of not more than 120 gallons for which a pre engineered strapping kit is readily available.

(e) Notwithstanding Section 669 of the Evidence Code, the failure of any person to comply with this section shall not create a presumption of a failure by that person to exercise due care.

 

Water Heater Strapping in Mobile Homes

Just spend the $12 and strap the stupid thing.

You may save some kid from being burned alive!

 

There is some controversy regarding whether a water heater in a mobile home on a leased lot is required to be strapped. Technically this is not Real Property and not covered by Real Estate Law.   Many listing agents for mobile homes routinely state that the strapping is not required.  Most attorneys indicate it is not clear cut and subject to interpretation.  Do not make this mistake.  If something goes wrong and it can be blamed on the water heater you can be sure the opposing attorney is going to point out that water heater strapping is required on every 1 to 4 unit transaction in the state and that you had the opportunity to install the strapping.  Always keep in mind how a jury will respond to your actions.  If the lack of water heater strapping goes to trial and you use the leased lot excuse you will lose. The jury will have to consider if a $12.00 water heater strap could have eliminated the hazard.  Remember, water heater have the best safety record of all the appliances in the typical home but when they malfunction they typically result in a steam explosion with terrible scalding injuries, or fire from gas explosion.  When a water heater malfunctions it can be catastrophic. 

 

CALIFORNIA CODES

HEALTH AND SAFETY CODE

SECTION 18025-18033.1

 

18031.7. (a) Nothing in this part shall prohibit the replacement of water heaters in manufactured homes or mobilehomes with fuel gas burning water heaters not specifically listed for use in a manufactured home or mobile home or from having hot water supplied from an approved source within the manufactured home or mobile home, or in the garage, in accordance with this part or Part 2.1 (commencing with Section 18200).

(b) Replacement fuel gas burning water heaters shall be listed for residential use and installed within the specifications of that listing to include tiedown or bracing to prevent overturning.

(c) Replacement fuel gas burning water heaters installed in accordance with subdivision (b) shall bear a label permanently affixed in a visible location adjacent to the fuel gas inlet which reads, as applicable:

__________________________________________________________________

WARNING

         This appliance is approved only for use with natural gas (NG). 

'__________________________________________________________________'

OR

_________________________________________________________________

     '

   '

     '                          WARNING   '

     '   This appliance is approved only for use with liquefied petroleum gas (LPG).

   '________________________________________________________________'

Lettering on the label shall be black on a red background and not less than 1/4 inch in height except for the word "WARNING" which shall be not less than 1/2 inch in height.

18031.8. (a) Nothing in this part or the regulations promulgated. There under shall prohibit the replacement in manufactured homes or mobilehomes of ovens, ranges, or clothes dryers with fuel gas burning ovens, ranges, or clothes dryers not specifically listed for use in a manufactured home or mobile home.

b) Replacement fuel gas burning ovens, ranges, or clothes dryers shall be listed for residential use and installed in accordance with the specifications of that listing to include tie down and bracing to prevent displacement.

(c) Replacement fuel gas burning ovens, ranges, or clothes dryers installed in accordance with subdivision (b) shall bear a label in compliance with subdivision (c) of Section 18031.7.

                                                                       

Get the Lead Out!

Be Sure to Fill Out the Required Disclosures

 

Lead along with other heavy metals can cause all sorts of health problems, especially in growing children. Once lead enters the body it is hard to remove and accumulates until it becomes toxic.  Lead enters the body by being either eating or by breathing in the dust.  Lead was used in construction prior to about 1978.  The paint manufactures were allowed to use up existing stocks of leaded paint so some leaded paint may have been used after the 1978 date. Do not use the 1978 date as an exact date but as a guideline.  Children have been known to eat the flaking paint chips in deteriorating buildings, which caused multiple health problems.  These flaking paint chips can become air born if they are sanded during a remodel or retrofit.  If there is known lead paint present then any workmen in the area should wear respirators and environmental suits.  The simplest way to remediated lead paint is containment, that is to say, apply another coat of paint over the deteriorating lead paint in order to glue it to the wall and prevent any chips from coming loose.  Personally I am far more concerned with lead paint dust than any asbestos hazards. 

 

Inspecting for lead is well outside of the standards for a home inspection but every inspector should be aware of the basics.  If the inspector expresses a concern about lead then the agent should carefully follow his advice.  There are very strict requirements from the State of California regarding the inspection of lead.  It is a separate business and should be performed by qualified specialists.

 

A copy of the EPA’s “Protect Your Family from Lead in Your Home” is included in the appendix.  

Discovery of Adverse Conditions

Disclose Everything Up to the Close of Escrow

 

If a seller becomes aware of any “adverse conditions materially affecting the property” (something breaks) or any “material inaccuracy in disclosures” (mistake in disclosure) the client is obligated to inform the client of the condition.  There is no time frame in mentioned in the contract but one would assume it would be within a few days.  This information should be included on the Transfer Disclosure Statement as an addendum and as such could allow the buyer to cancel the escrow all the way up to the day of closing if not disclosed in a timely manner.  Listing agents should urge their clients to be truthful about the condition of the property.  This is important to understand in case something that was reported in the home inspection as “operating” but was inoperative at the close of escrow.  The home inspection only says that the item was in working condition at the time of the inspection.  No warranty is implied or offered by the inspector.  This is another reason why the final walk through is so important

 

 

Conditions Affecting Property

Now We Get to the Meat of the Coconut

 

A.  The home is sold in its condition as of the signing of the purchase contract.  It is the owner’s responsibility to maintain all the systems in the home in the same condition as of the date the purchase contract was executed.  The Deed of Trust that secures the seller’s loan almost always requires the home be maintained.   in order to insure the value of the secure the loan.  The lenders want the owner to maintain the home in order to protect their collateral.  Accordingly the seller is not only required by the purchase contract to maintain the home in its “present condition” but by the Deed of Trust as well.  This is important because many times a disgruntled home owner will become aware of a relatively minor problem with the home and intentionally neglect that problem.  This is why a final walk through inspection is so important.  The condition of the home must be confirmed just prior to the close of escrow and confirmed by the buyer so that they cannot come back and say “the plants are dead” or the floor is stained.  The list goes on and on.

 

B.  This is the seller’s “I told you so” clause.  It is important that the agents insist that all the concerned parties disclose everything they know about property.  Insurance claims usually do not become an issue until the end of the escrow period when the buyer contacts his insurance agent to obtain a property policy and discovers that there was an insurance claim last year and that the property was uninsurable; everybody loses in this instance.  I recommend determining the insurability of the subject property during the inspection period. The agents should always ask the escrow company to run a statement of identity during the inspection period to make sure there are no liens or judgments against the buyer.  Discovery of an unknown judgment can and often does cause a transaction to fail.

 

C.  I am amazed that a potential buyer would decline to obtain a home inspection after reading this clause; especially when they are asked to sign a disclaimer stating that they had the opportunity to obtain a home inspection and declined; extra especially when the inspection is virtually free.

 

D.  This section explains the options the buyer has in regards to the inspections.  It is self explanatory.  The contract is silent to issues or conditions that are discovered during the final walk through.  The length of time of any inspection is not specified.  I have had several instances where the seller felt that I was taking too long and asked me to leave.  On two occasions I had the listing agent and one time where an escrow coordinator told me to leave the job.  In these cases the listing agent and seller take on all the responsibility of undiscovered issues in the home.  The buyer has every right to spend as much time as he or his inspectors need to complete their inspections. 

 

Buyer’s Investigation of Property and Matters Affecting Property

Why don’t they just require a home inspection?

 

 

 

Invasive or Destructive?

What does really mean?

 

A.  The purchase contract expressly prohibits “invasive or destructive” inspections without the Seller’s prior written consent.  Obviously this is intended to prevent someone from cutting holes in a floor or wall for inspections, but what does invasive really mean?

 

The CREIA definition of destructive is as follows right out of the Standards of Practice:

 

A. A real estate inspection is a survey and basic operation of the systems and components of a building which can be reached, entered, or viewed without difficulty, moving obstructions, or requiring any action which may result in damage to the property or personal

 

Survey is defined by the Random House College Dictionary as: “to view, consider, or study in a general or comprehensive way.”

 

Inspectors are not required to take off any inspection panels.  Always ask yourself what an ordinary person would take apart as normal maintenance?  Ordinary people are afraid of electricity and will not take anything electrical apart.  Dead front covers (the inner cover in an electric panel), the covers on disconnect boxes, furnace covers, the cover over the kitchen hood, the panels on gas fireplaces are not required to be removed during a home inspection but many times some or all of these things are removed for evaluation by a experienced inspector.  Exceeding the standards of practice is up to the inspector’s level of education, experience and a “probable cause,” much like the intuition used by a policeman or detective.  Remember, do not expect too much for a general home inspection.  A qualified inspector is underpaid for his services and there is a limited amount of time available for the inspection.

 

Trim should never be taken apart. Covers on ovens, fireplaces or dishwashers all have a finish to them that could be damaged if taken apart and require extra time to remove and take on the liability of any cosmetic damage from the owner.  Every agent and inspector has experienced the mini blind that when pulled comes loose from the wall and falls onto the ornamental decorations on the window sill; likewise, any cosmetic damage becomes critical.  Owners can be very critical when they think they may have an inspector over a barrel. “That doodad was my great grandmother’s and is priceless!”  Now what do you do?

 

Code Inspections are Prohibited by Contract

Don’t Even Get Me Started

 

Building code inspections are prohibited by this section.  Home inspections do not perform code inspections for multiple reasons that will be discussed.  The seller must approve in writing any governmental code based inspection.  Code inspections would cause a tremendous amount of work and probably be impossible to pass.  Building codes are designed for new construction and have a limited value for existing housing. The code issue is discussed in detail later in this document.

 

Building Codes and the Informed Purchase Decision

Here is an article I wrote for CalNachi which was posted on their web site.

 CalNachi.org

 

Two Standards: Home Inspectors are held accountable for two standards of practice.  The first is the practical standard by which a client will be provided the necessary information to make an informed purchase decision. This is the standard the client expects the inspector to meet in order to compliment his purchase transaction.  The second standard is the one that is determined in a court of law. It is based on the B&P Code 7195-7199 and the standard of care for the home inspection profession in that geographical area. There is significant conflict between the two standards that must be recognized by the inspector so that he might provide useable information to his clients and still minimize his legal liability.

 

The standards of practice provided by the various inspection organizations are very similar.  After reviewing them carefully, it becomes clear they are conflicted in that they are designed to speed up the inspection thereby increasing profit at the expense of being thorough.  While they raise the minimum standards above the B&P Code 7195, they still are minimal and provide for only a basic inspection.  In my opinion, there is a need for an escalating scale of standards allowing for a more complete inspection could be performed and still be covered by a yet to be invented higher standard.  This would allow the more detailed and experienced inspectors to charge the appropriately higher fees for the product they are already providing.

 

It takes me at least 3.5 hours per home for a very simple inspection, plus another two hours of office time to complete the report.  The required time increases significantly with the difficultly of the property.  Include with this a 1.5-hour walk through with the client, travel time and I can only perform one inspection per day.  I will never get rich this way, but I feel good about my job.  Inspectors who go through a home in 1.5 hours may somehow meet the minimum standards but they do not provide the necessary information for an informed purchase decision.

 

Uncertainty:  There is some uncertainty in the inspection industry regarding the proper way to report a potential liability issue.  The difficulty for the inspector lies in how to determine the difference between the issues to which an inspector may be held accountable in a court of law, i.e. an imminent hazard or code violation, and what is functionally safe.  While an inspector may choose not to report a seemingly insignificant code violation, that same code violation could be presented in a court of law as negligence to a jury.  The inspector is therefore forced to provide information that will not only influence a purchase decision but also the information that could be interpreted in a court of law as a safety hazard. Thus, for liability reasons both standards must be reported even though code inspections are clearly not included both by contract, and by the standards of practice.  Including these liability-reducing issues in the report serves not only to increase the length of the reports but also irritates the real estate agents, and confuses the clients. 

 

For example:  “Mrs. Client, having both the neutral wire and the ground wire under the same lug is a clear code violation but it is still functionally safe.” “Well Mr. Inspector, how can it be both a code violation and still be safe?  I am so confused.”  Well, so am I.

 

This is a difficult question but goes directly to the subject, how does this finding influence the client’s purchase decision?  The home inspection industry would be well advised to emulate the teachings of every real estate agent in this regard; prepare every transaction (inspection report) as if it were going to be presented to a jury.  Note: Quoting building codes in a report is never recommended as that may be used by an attorney to suggest the entire report is a code inspection. While this advice has been around for as long as I have been in the business, I have never seen any case law to support this assertion.  If anyone has any case law in this regard, please share it with us.

 

Applicability:  The applicability of building codes has a variable function of importance dependant on the age of the home.  Codes are of a decreasing importance as a home increases in age.  It is impossible to rationally apply a building code to a home built in the early 1900’s, as codes were not available to be adopted, much less enforced at that time.  As the age of the home approaches the mid 1970’s when the more modern codes were adopted, they become more important.  Moreover, as the age of the home approaches a new home, the codes importance proportionally increase until we reach the new home inspection, (the new home walk through) where codes are of their highest importance.  Even at the new home walk through inspection the codes are not the only standard; the manufacturer recommendations, and building practices must still be included.   Thus, codes move through a spectrum of lower to higher importance to the home inspector and homebuyer.

 

Conversely, the older the home, the more the inspector must rely on alternate sources of information and training to determine whether a particular system is safe.  The older homes require the inspector to understand why a system is deficient rather than relying on the “cook book” building codes. Only by understanding why a system is deficient or unsafe, can an inspector apply his knowledge and provide his customer with the appropriate purchase information.  Manufacturer’s installation instructions become more and more important as the age increases. Ultimately, the inspector should report his findings in such a manner as to inform the client of the basic reasons on which a finding was based.  The inspector must never forget that codes are not retroactive.  They apply only to new construction. 

 

Take for example the electric panel on a mid 1970’s home.  It has been suggested that only a code inspection can be performed in this instance.  I disagree.  First, the inspector must look at the electrical system and note if it has operated for the last 35 years without serious failure.  Next, it is a Federal Pacific, or a Zinsco panel, or some other manufacturer that has inherit design problem that may require replacement?  Is the outside of the panel badly deteriorated?  Are the doors present? Are there holes in the panel allowing children access to the energized components?  Is this panel worn out? The insurance industry typically depreciates an electric panel over 15 years.  Is there sufficient access to the panel as required by code? Is there reasonable access to the panel? Current codes do not allow the panel to be placed inside a closet but many older homes have sub panels in all sorts of odd locations.  Does the client really care where the panel is located?  Relocating these panels is costly and not necessary. These are not code issues per se but they are related to the manufacturer recommendations, which supersede the code.  These are issues that may be important to the client but they require a combination of code and practical knowledge to provide useable information to the client. 

 

Police Power:  The government enforces building codes by the use of “Police Power,” http://www.answers.com/topic/police-power?cat=biz-fin and as such are not subject to the usual democratic process to which U.S. citizens are accustomed.  Building Codes are imposed on the building industry through this process for good reason but it is a never-ending process of review and application. These are quasi-governmental organizations subject to all the influences and pressures of lobbyists and manufacturers and are not accountable to the voting public.  Not every code is based on safety concerns, sometimes they are based on other influences. In addition, the code organizations must update and revise their codes periodically in order to justify their existence.  Citizens abrogate their constitutional rights and allow the government to impose restrictions without the usual protections or accountability.  Police power gives bureaucrats tremendous power over our property.

 

Imposing current codes on older homes would throw the entire real estate industry into unnecessary chaos.  Having said that, every experienced home inspector has seen such poorly installed systems as to be negligent with absolutely no oversight that place the occupants at risk.  Unregulated flips, additions, and changes need to be more closely monitored not only to protect the occupants but also to keep the nation’s housing stock healthy.  In my opinion, only a licensed general contactor should be allowed to “flip” a home, as there are far too many fraudulent flippers in the resale market.  Also, in my opinion, our tax system should be revised to promote long-term ownership of homes and penalize speculators who take advantage of the industry for short-term profit. Many of our current industry problems are related to speculation and uncontrolled greed.  Whether this may seem right or wrong, this is the reality of the home inspections industry

 

Scare Tactics:  The new inspectors are subject to all sorts of influence and pressures from trade organizations, vendors, schools, and other inspectors with a personal agenda.  It takes years to understand the home inspection business and how it relates to the real estate industry.  There are people who will extol the importance of becoming “code certified” and recommend joining the International Code Council.  Others will tell you to pay your tuition and go to school to learn to be a home inspector as if a true profession can be learned in two or three weeks, or even a year.  In addition, there are trade organizations who demand proctored testing prior to acceptance.  All these entities presume to have all the answers and will demand to be paid for their services. The new inspector must quickly learn to differentiate between meaningful training or possibly go out of business.  These pressures are used to scare the hell out of the new inspector but if he stays in the business, he will realize that they use fear to induce participation.  In my opinion, the real and final answer is this: it does not take much training to meet the minimum requirements of Business and Profession Code 7195-7199. A minimum home inspection does not rise to the level of a “professional” inspection but only a “tradesman” inspector. Any reasonably intelligent person can meet these standards with some training and a few ride alongs. 

 

The problem is that this minimum inspection does not provide the necessary information to allow a client to make an informed purchase decision.  A home inspection is the beginning inspection on which every thing else is based.  It is the first inspection in a long line of inspections and research that instigate the fireplace inspection, the roof inspection, and HVAC systems, ultimately moving up to structural investigations, environmental, mold, asbestos, and lead. Each one of these ancillary inspections can have a significant impact on the appraised value of the home, thus home inspections are a form of an appraisal. If the inspection does not induce the client to move forward with the “appropriate specialist,” then the client will be at risk for a poor investment i.e. unforeseen expenses.  When the inspection finally provides for a truly informed purchase decision, the inspection then meets the threshold for a “professional” designation.  A professional home inspector is truly a powerful tool for the homebuyer.  I foresee the day when there will be a B.S. degree for a “residential hygienist” that will encompass all the facets of home inspections.

 

Conflicted Interests:  Home inspectors have the least amount of influence in the real estate industry. Accordingly, they do not receive the industry wide respect that a well-trained and experienced inspector deserves.  While inspectors may not have industry wide influence, they do have a definite influence on the client.  What is not commonly known is that the home inspection report is the only document prepared specifically for the client during the purchase process.  Every other document has dual functions to benefit the other participants in the purchase transaction and only protects the client secondarily.  While the client is presented with mountains of agent disclosures, loan documents, transfer disclosure statements, etc. virtually all of these documents are designed to protect the agent from litigation.  It is interesting to note our clients, (the typical homebuyer) do not have representation at a legislative level that they deserve.  They are left to the conflicted interests of their agents.  Lobbyists represent the lenders, title companies etc; virtually every real estate related business is represented. In addition, one of the most powerful lobbies in the nation represents the real estate industry.  Even the lowly home inspection industry is represented, barely, but the homebuyer has no lobbyists to protect their interests.  

 

The basic precept in a capitalistic society is that everyone acts in his or her own best interests.  While real estate law says that an agent must use fiduciary duty when dealing with their clients, it is rare that this is the case.  Agents are salespersons in the business of selling property.  Anything that interferes with this process is eliminated.  Accordingly, the more detailed an inspector, the less likely he is to receive referrals from the agents, particularly the higher volume agents with their salesperson personality need to close the deal ASAP.  High volume agents need to have easy home inspections in order to close the transactions and make their money.  The high volume agents require an inspection that is just enough to convince their clients that an inspection has taken place, but not so much as to jeopardize the close of escrow.  Conversely, the lower volume agents tend to have a more personal tie to their clients and are a little more concerned with their client’s welfare.  These agents usually use a more detailed inspector. This is probably part of the reason why these agents are not higher producers.

 

Safe Enough:  How safe is safe enough?  Somewhere between living in a cardboard box and living in a padded cell, there must be a reasonable acceptable level of safety. In my opinion, every citizen must take responsibility for their own actions.  Our homes in California are among the safest places in the world to live.  There are people living in cardboard boxes in third world countries who would gladly trade places with the worst home in California.  Our legal system is designed to protect the most uneducated and irresponsible citizens from performing the most dangerous acts.  Citizenship in our democracy requires a certain level of education and self-reliance in order for our society to stay healthy.  Some people refuse to act in a responsible manner and expect the government to assist them in every stupid act, regardless of the circumstances. It is impossible to protect people from harming themselves. Defense attorneys will always take advantage of the legal system to extort money from the insurance carriers and the inspector.  There is little chance for reform so long as attorneys dominate the legislature.  This is a classic “Conflict of Interest.”  No matter what, some consumer will stick a knife in a toaster and blame it on the home inspector and there will be an attorney eager to take the case.  In my opinion, there should be a minimum threshold of damage a person must meet before they can file a lawsuit. That is a topic for another day.

 

Pest Inspections and Probing

Is a Pest Inspection Invasive? Who ordered the report?

 

This is an interesting point about the invasive or destructive investigations.  Pest inspectors regularly use a probe to locate areas of water damage.  When the seller orders a pest inspection then probing is accepted under the contract but when the buyer orders the pest inspection then the probing is prohibited under the contract.  Pest inspectors rarely know who ordered the inspection and they use the probe as a valuable tool in locating water damage and pest infestations.  I have never heard of anyone complaining about the damage caused by a pest inspectors probe.

 

When is the Report to be Delivered to Seller?

The contract is silent

 

The contract is silent to when the inspection reports are to be delivered to the Seller.  I have had clients who have specifically instructed me not to give my inspection report to anybody, including the buyer’s agent, and not to give out any information what to anybody what so ever.  These are usually more experienced buyer’s who have specific reasons for not wanting the seller to have the report.  Sometimes they may feel it compromises their bargaining position, and sometimes it may be because they do not trust the concerned parties.  In any case the buyer only has to supply the reports sometime before the close of escrow.

Third Party Liability

Don’t Spread Around These Reports

 

Every Broker should be aware of THIRD PARTY liability in regards to Home Inspections.  California courts have recently held that inspectors can be held liable for subsequent users of the report, even if the inspector does not have a contract with, or even has knowledge of any subsequent users of the report.  In third party cases, there is no contract with the 3^rd party user; therefore there is not any E&O insurance to protect the Broker, the Buyer, or the Home Inspector.  The 3^rd party user will not have the benefit of any on site discussions with the Inspector and will not be aware of any systems intentionally left out of the report that was agreed to by the original Client. The Broker is exposed to negligent referral actions when their agents provide inspection reports to 3rd party users.  Every broker should be aware of this possibility and train their agent not to provide any reports to subsequent buyers.  This is potentially a very serious exposure to the Broker and Home Inspector and should be avoided at every instance.  Agents who attempt to supply their Clients with a “second hand” inspection report are acting negligently and could be exposing all the associated parties to legal action.  The agent may not be aware of any contractual omissions in the report or of any verbal communications between the Inspector and the Client regarding certain issues.  Every Broker should educate their agents about this hazard to limit liability.  This is another very important issue that needs to be addressed by the legislature.  One in four home inspectors is sued each year.   See Leko v Cornerstone in the appendix for agents’ third party liability.

 

No Time Limit for Inspection

The buyer can take as long as he wants

 

There is no time limit to the amount of time any inspector may stay on the property to complete his report.  The listing agent will many times inform the seller that the home inspector will take only 30-45 minutes to perform his inspection.  This may well be true for an inspector who is not following the standards of practice, but for a true inspection it takes at least 3.5 hours for an easy home not to mention the extra couple of office hours it takes to complete the paperwork and include the pictures. 

 

The contract specifically says the water, gas and electricity and all operable pilot lights to be on for Buyer’s investigations.  I have had many instances where one or all of the utilities have been turned off, usually for non payment or to save money.  A home inspector cannot completely perform his tasks if the utilities are not provided.  The seller is responsible for the extra charges to return to the property to reinspect after the utilities are supplied.

 

Repairs

Agents do not need to be a licensed General Contractor

 

By law agents are exempted from needing a contractor’s license when scheduling repairs on a home under contract.  But Agents need to understand that just because a permit to perform certain work may not be required due to the small scale of the project it does not mean that the work does not need to meet current code requirements.  This is the one area where the codes do play a role in the inspection process.  Home owners are generally not qualified to perform any substantial repairs on their homes.  When a homeowner performs a repair the probability of having defective work increases dramatically; many times they may make the repair their selves in order to save money or time.  Rarely does the homeowner installed repairs meet industry standards.  This usually comes into play when the homeowner has performed the section 1 or 2 items on the pest report prior to the home inspection.  It can be distressing to the homeowner when the inspector discovers the poor workmanship and reports it to the buyer.  The buyer is immediately suspicious of all the repairs and is therefore more circumspect. 

 

It is important that the purchase contract be followed in this regard.  Seller is to provide receipts for the repairs performed by others, prepare a written statement indicating what repairs were prepared by the seller and the date of repairs, and the receipts for the materials prior to the final walk through.  This is akin to the pest inspector’s certification that all the work was done properly.  This process is rarely followed and can lead to a poor experience for the buyer.  I recommend that the agents follow the contract in the regard to prevent a disgruntled homeowner from escalating this issue into a negligence accusation.

Reinspections

Don’t Do IT!

 

Occasionally a home inspector will be asked to revisit a home to inspect repairs performed that were disclosed original home inspection.  While on the surface this appears to be a reasonable request but it is fraught with liability.  First, reinspections are not insured.  Second, the inspector can only report what he sees.  He cannot comment on conditions that are hidden from view.  It is unfair to try and transfer the liability for poor repairs onto an inspector.  If you really want a proper reinspection the inspector must first be notified before the work is started so that arrangements can be made to inspect all the phases of the work, including parts that would normally be covered.  This would be similar to the course of construction inspections for new construction. A reinspection amounts to a code inspection with all the implied liability. I will do it only for customers that I have a working relationship with the understanding that I report only what I can see and I do not inspect what I cannot see.  I make no guarantee to the quality of the work.  This is a grey area where an inspector must make a business decision based on the circumstances.  If the agent insists on a reinspection they may be taking on the liability of non insured work and be in breach of the insurance portion of the purchase contract.  In addition the E&O insurance may not cover the inspection.

 

BUYER INDEMNITY AND SELLER PROTECTION

FOR ENTRY UPON PROPERTY

Sign the Inspectors’s Contract! Sign it first! Sign it Now!

Sign it for your client to cover your assets.

 

The buyer’s agent should keep in mind that the Home Inspectors insurance is not validated until the inspection contract is signed either by the buyer or the buyer’s agent.  Without the signed contract there is no inspection insurance.  Failure to have the inspection contract signed is used to show negligence on the part of the buyer’s agent. By contract the agents are required to confirm that all the workmen working for the Buyer on the home carry the usual business insurances.   Every agent should be aware that they can sign the contract for their client; there is far more liability to the agent and broker if the contract is not signed.  In my opinion the agent should sign the contract anytime the buyer is unavailable to sign.  If the buyer will not sign the standard contract, or if the buyer insists on changing the terms of the contract then I recommend passing on this client and moving on to another low risk customer.  The litigation rate skyrockets when a client insists on changing an inspection contract.  In over 3,500 inspections I have never had a customer refuse to sign a contract and have never allowed any changes or deletions to one of my contracts.

 

Get the Contract Signed!!

Don’t You Want Insurance?

 

Get the contract signed!!  As an agent with a fiduciary relationship with the client you have the authority to sign an inspection agreement for your client. What is not commonly known by most agents is that the liability of not having a signed contract greatly outweighs the liability of signing a contract on your client’s behalf.  There is only liability to the agent if the inspection contract is somehow defective or the inspector is not qualified, basically the same parameters as negligent referral.  The IMPORTANT issues here is that the insurance companies will accept a contract signed by the agent as being sufficient to activate the errors and omission insurance.  Insurance that covers the agent and the broker!  If the contract is not signed then there is no insurance.   It could be argued that the failure of an agent to sign an inspection contract as being negligent; and an unsigned contract as an extremely poor business decision for the broker.  The agents should be using inspectors that are a member of a state organization, and they should be using a contract prepared by the state association; then there is virtually no liability to the agent for signing the contract.

 

It is important that the Agent understand that the Home Inspector has a contract with the Client, NOT with the Agent or Broker.  While the Agent is accustomed to being in control of the transaction and is used to having the auxiliary reports being issued to their selves, the Agents have no control over the Home Inspector.  The Home Inspector has no contractual obligations to the Agent what so ever. From a business standpoint, a Home Inspector should involve the agent with the inspection process as necessary to build a working relationship.  The Home Inspector should explain the contractual obligations to their Clients and to the Client’s Agent to insure proper understand of responsibilities for all parties involved with the transaction.  In addition the Home Inspector is not a party to the purchase contract and accordingly is not required to provide extra copies of the inspection report to the other parties named in the purchase contract. The report is usually supplied to the Client and it is up to the Client to distribute the reports.  The contract between the Inspector and Client usually has a confidentiality agreement and an indemnity agreement holding the Inspector harmless for third party liability.  Agents distribute inspection reports at their own risk. In addition, the purchase contract is silent in regards to WHEN the copies of the various reports are to be supplied to the seller.

 

One issue I have come across twice so far in my career is the client’s position of stating they did not receive a copy of the home inspection report prior to the close of escrow.  In one case the agent forgot to give a copy of the report to the client and it was not discovered until my bill was sent out. And the second was when the client claimed he did not receive the report when it was in fact in his files in an unopened envelope.  Neither case developed into a problem but the potential was there.  It is common practice to have the pest report signed as received on the front page and kept in the agent’s files but this is not common practice on home inspections.  I recommend that a copy of the report be signed and dated by the client be kept in the agent’s file to insure there is no misunderstanding of the client receiving a copy of the home inspection.

Inspection Contracts

The Agent is NOT a Party to the Inspection Contract!

 

Most Brokers and Agents do not understand the importance of having the inspection contract signed the Clients.  Almost always the Home Inspector’s Errors and Omission Insurance covers the Broker and the Agent in case of a dispute with the inspection.  The E&O insurance is very specific and requires that an approved Home Inspection Contract be signed prior to the inspection in order to validate the insurance policy.  If the contract is not signed there is no insurance for the Inspector or the Agent.  I recommend that the Agent assist the signing of the inspection contract and that a copy be kept in the Broker’s transaction file.

 

There are Different Types of Inspector Insurance

Claims Made vs. Occurrence.  Be sure you know the difference,

 

Occurrence Coverage is the traditional coverage.  Occurrence coverage is the traditional form of insurance used to proved liability insurance during the policy period and 4 years thereafter. This is by far the superior insurance.

 

There are several advantages to occurrence coverage for inspectors; fixed costs, long term protection(4 years), mobility from one insurance company to the next, and peace of mind, (even if the inspector is cancelled the prior inspections are still covered). But occurrence coverage is generally more expensive that claims made coverage.

 

Claims Made Coverage is an alternate form of insurance designed to lower the insurance costs.  This type of insurance covers claims made and reported for the policy period only.  Any prior claims are not covered.  Remember that the business and professions code requires Inspectors to be responsible for 4 years for negligent inspections.  The claims made inspection insurance may not be adequate for this circumstance in California.

 

E&O Insurance is Not Enough

Oh and don’t forget the Liability Insurance too!

 

Error and Omission insurance is not enough to satisfy the insurance requirements in the purchase contract.  General liability is also required by the purchase contract to protect the buyer for damage to the property during the inspection. Example: the inspector’s ladder falls onto the homeowner’s piano and damages the finish. This repair could be quite costly and is required to be covered by the purchase contact; besides having one very unhappy client.

 

All inspectors should be required to have occurrence coverage and general liability insurance on file at the broker’s office.

 

 

 

Notice of Non-Responsibility

Not my problem

 

The “Notice of Non-responsibility” is part of the mechanics lien law. It is a notice that is posted in a conspicuous place at the job site informing any workmen or material suppliers that the property owner will not be responsible for paying any of their bills.  It effectively prohibits an unpaid workman or material supplier from filing a mechanics lien on the property.

CALIFORNIA CODES

CIVIL CODE

SECTION 3094

CC 3094.  "Notice of Non-Responsibility" means a written notice, signed and verified by a person owning or claiming an interest in the site who has not caused the work of improvement to be performed, or his agent, containing all of the following:

   (a) A description of the site sufficient for identification.

   (b) The name and nature of the title or interest of the person giving the notice.

   (c) The name of the purchaser under contract, if any, or lessee, if known.

   (d) A statement that the person giving the notice will not be responsible for any claims arising from the work of improvement.

   Within 10 days after the person claiming the benefits of non-responsibility has obtained knowledge of the work of improvement, the notice provided for in this section shall be posted in some conspicuous place on the site.  Within the same 10-day period provided for the posting of the notice, the notice shall be recorded in the office of the county recorder of the county in which the site or some part thereof is located.

Home inspectors have the right to file a lien on the property in order to be paid for their inspection just the same as any other material supplier or workman.  

Time Periods; Removal of Contingencies; Cancellation Rights:

It’s not always 17 days

 

The Title of the CAR Purchase contract is misleading and should be changed to “The California Real Estate Option to Purchase During the Inspection Period Contract and Joint Escrow Instructions.”  The inspection period as stated in the contract is typically 17 days long but this time period can be shortened to any time agreed to by the concerned parties.  What is not commonly known is that the inspection period automatically extends past the stated inspection period until the “Notice for Buyer to Perform” is presented from the Seller to the Buyer.  In reality the 17 day inspection period really has little effect if the Notice to Perform is not presented to the buyer.  In the case of the Transfer Disclosure Statement, the Buyer has the right to cancel the sale up to the close of escrow if the TDS is not properly delivered to the Buyer. 

 

The point I am trying to make is that there is a high probability for the escrow to cancel during the inspection period.  Agents will get caught up in the momentum of the transaction and invest a substantial amount of time in opening escrows, ordering appraisals, etc. and create the unreasonable expectations in the minds of the seller and the buyers for a successful closing.  All of the involved parties are disappointed when one of the inspections discovers a problem with the home and the buyer cancels the transaction.  When the Agents allow the expectations of their Clients to become out of control then there is the probability for the Clients to become disenfranchised with their agent and look for alternate representation.  Only after the inspections are approved by the buyer then there is high probability that the home will close.  This becomes especially important in contingent sales where multiple transactions are waiting on the inspection on the first home.  (This is always a 100 year old fixer upper)

 

I recommend that the agents refrain from investing too much effort in the transaction until after the inspection reports are accepted and approved by the Buyer. This circumstance should be explained to the Buyer and the Seller so that their expectations can be controlled. The Agent can then move forward with the transaction with a reasonable expectation of a successful closing. 

 

This is equally as true for the Selling Agent as for the Buyer’s Agent.  The selling agent needs to accept the responsibility for overpricing their listings.  A home that is over priced or a home has some other known (including suspected conditions) but not yet disclosed condition, a condition that will ultimately be discovered during the inspection period, will require renegotiation of the sales price.  Undisclosed conditions will be discovered and a request for repair or a discounted price will be requested by the Buyer to bring the sales price into an acceptable sales price.  When the true value of the home is finally determined then the sales price will have to be adjusted or a new buyer will need to be located.  (I believe “Listing Inspections” will become the norm as it already is in the San Francisco Bay area).

 

The Selling Agent is obligated to disclose any existing reports to any subsequent buyer. I am unaware of any time limit in this regard. If you are aware of an inspection report from a previous transaction 4 years earlier you had better report it to the Buyer just to be sure that you are not exposed to any liability.  Once the Seller is informed of the issues in a report he/she must disclose the newly disclosed conditions in the home to any subsequent buyers.  Listing Agents who convince their clients that they will receive unreasonably high prices for their properties are doing a disservice to their client and to the industry in general.

 

Final Walk Through Inspections

Your Last Chance to Document the Property Condition

 

The CAR contract allows for a final walk through about 5 days prior to the close of escrow to confirm all the contractual obligations of the seller have been performed and the condition of the property is unchanged.   According to the contract this walk through is not required and the agents many times do not use this final opportunity to document the condition of the property.  It is my experience after having listened to many agents and home inspectors that this final walk through could be used to eliminate many complaints from unsatisfied customers and limit possible litigation.

 

I am surprised to see that there is little documentation provided by CAR regarding final walk though inspections.  The agents generally quickly walk through the home and take a few notes.  The buyer is busy checking the colors and deciding where to put their furniture and do not pay attention to the details.  Buying a home is a person’s most important investment and every opportunity should be given to insure the buyer understands exactly what they are buying.  I believe that an agent should have a written inspection list with all the rooms and appliances listed with a check mark stating “acceptable” or “not acceptable” much the same as one would perform a “Rental Walk Through” with a prospective tenant prior to occupying the rental property.  This document should be fill out in the buyer’s own hand and signed by the buyer and the agent.  Every appliance should be operated, every floor inspected for staining, every ceiling checked for staining, every sink checked for leaks etc.  The agent should take digital pictures of everything in the home to document the condition of the home at the time of inspection. When you are filling out the forms be sure to include any comments like, “We are going to remodel the kitchen anyway”.   It is amazing how many times a disgruntled buyer will find undisclosed issues in the rooms they are planning to remodel.  They sometimes used this as a way to get a free kitchen out of the inspector or agent.  This may sound like over kill but when you are called to testify there will be no opportunity for your performance to be attacked. Proper documentation will stop any attack before it is started. The important issue is to remember is that some unsavory people will lie about the condition of the home, both the seller and or the buyer.  Documenting the condition of the home prior to the close of escrow is an overlooked part of the home buying process.  I recommend taking pictures of everything.

 

CC 2079.5. Nothing in this article relieves a buyer or prospective buyer of the duty to exercise reasonable care to protect him self or her self, including those facts which are known to or within the diligent attention and observation of the buyer or prospective buyer.

There is very little difference between the mechanics of the buyer’s final walk through inspection and a Renter’s walk through inspection. Both activities are basically performing the same function.  They are confirming the condition of the home at a stated date in time.   It is interesting to note the C.A.R. Move in/Move Out rental form is far more comprehensive than the C.A.R. Verification o Property Condition (Buyer Final Inspection) walk through form.  Lastly it is interesting that the clause “NOT AS A CONTINGENCY OF THE SALE” is included.  If the repairs are not completed as contractually required, or if the repairs are poorly installed than what recourse does the Buyer have?  What if the home is somehow substantially damaged and not in the same condition as the time of sale?  The typical response is to refuse to close the escrow, which is in violation of this clause.  In reality, the final walk through is a contingency of the sale.  Whether or not it is a legal contingency is unknown but the agents should be aware that even a buyer with average experience will not close an escrow on a home that has substantial problems with the repairs or worse, problems that were either unknown or undisclosed in the proper time frames.

 

Selection of Service Providers and Negligent Referral

What Do You Really Know About Your Inspector?

 

 

When the agent recommends a particular inspection company they can be held responsible for negligent referral.  This clause offers little protection when you have a “fiduciary duty” to act in your client’s best interests.

 

Every Agent must understand there are no licensing requirements for Home Inspectors in the State of California.  Inspections and disclosures are mentioned many times in the California Association of Realtors purchase contract. The purchase contract provides the release of liability for the Agents but the single document that ties all the disclosures together and provides the most important information to the Buyer is the home inspection, and it does not require any licensing. The lack of licensing greatly increases the negligent referral liability exposure of the Agent.  Anybody can print up a business card and go into the Home Inspection business.  Accordingly it is especially important for the Agent to be aware of the pitfalls and exposures for unqualified home inspectors. Brokers and Agents are obligated to know the qualifications of the available inspection companies in order to protect their clients.  One area that agents should be especially careful is that of referring a company without some research and documentation by the referring agent.  It is no longer acceptable to just hand a buyer a phone book open to Home Inspectors and say “Pick One.”  The courts have held that the Agents were negligent by not providing proper guidance to their clients. In addition, the clients may feel slighted by this action and react negatively toward their Agent.

 

Do Not Hand Your Client 3 Business Cards or Brochures

But I gave them 3 cards!

 

This can only be done if you have done your due diligence and researched the different inspection companies.  The Agent must be knowledgeable about each company and inform the Client about their qualifications.  One agent was sued for negligent referral and was asked in cross-examination, “What steps did you take to qualify the three companies you provided to your client?”  The response was “I heard they were good.”  Given that the agent did little or no investigation of the three companies, the arbitrator ruled against the Realtor.

 

Do Not Recommend Licensed Contractors

These Guys are Builders, Not Inspectors

 

Architects and engineers should only be retained for specialized issues as recommended by the home inspector. I have been a licensed contractor since 1981 with a B.S. Degree in Heavy Construction and tons of experience.  While the experience I obtained during my construction career greatly contributed to my understanding of home systems, it did not qualify me to perform home inspections.  I was astonished at the different ways an inspector and a contractor view the same issues.  Contractors rarely have any knowledge of the required Standards of Practice and do not understand proper inspection protocol.  I know that I would never have been able to perform a proper home inspection prior to my inspection training.  Even though contractors are mentioned in the civil code as being able to perform a home inspection they are almost certainly not qualified to perform a home inspection. A Realtor would be exposing himself or herself to a negligent referral action by referring a contractor to perform a Home Inspection.  The California Contractors License Board will not act on any complaints regarding Home Inspections.

 

Proper Verification

Here’s My Diploma (Hot off the Presses)

 

In order to prevent negligent referral, a Broker should verify the qualifications of any inspector used by his or her agents.  While I do not advocate any “list” of recommended inspectors, I do recommend preparing a detailed resume of any inspector who is allowed to inspect for your Agents.  This list of resumes should be available for review by all clients without bias.  Any inspectors not willing to provide this information is suspect and should not be included on the Broker’s list.  There should be a disclaimer on the list indicating that the client is in no way bound to use any of these inspectors and is free to locate and use an inspector of their choosing. But the client should be advised to obtain and VERIFY the same information for any other inspector they may choose.  This availability list of home inspectors should be presented to the client at the same time as the “For Your Protection: Get a Home Inspection” CAR FORM HID-11 is presented.   

 

1)      Name of the inspection company?

2)      Names of all the inspector employees of the company?

3)      Contact numbers and addresses for the inspectors?

4)      How long have the inspector been in the area?

5)      Work history of the individual inspector?

6)      What professional licenses and credentials does the inspector have and are the active?

7)      Are they a graduate of an inspection school?

8)      How many years have they been inspecting?

9)      How many inspections have they performed?

10)  Does the inspection company offer to make repairs on inspected properties?

11)  Does the inspection company use the term “licensed”?

12)  Is the inspector a member in good standing with a recognized professional trade organization?

 

 

What is a Home Inspection?

It is an Appraisal?

 

Regardless of how the Home Inspection Industry characterizes a Home Inspection, for purposes of the homebuyer it is an appraisal. The Home Inspection industry takes great care to separate the Home Inspection process from the Appraisal and the Structural Pest Inspection in order to maintain professional boundaries and not infringe on the licensing requirements for the other industries required by the State.  The California Business Code identifies a home inspection as a “non-intrusive physical examination, performed for a fee, designed to identify material defects in the systems, structures, and components of a building as they exist at the time of the inspection.”  There is no discussion of value in the California Law.  It is left up to the buyer to assign value to the “Defective Systems” discovered during the inspection and disclosure process.  For the purposes of the Home Buyer, a Home Inspection is an appraisal prior to the close of escrow.

 

What does a first time homebuyer expect out of the home buying process?  I think we can all agree that they hope to get the best value for their dollar. Also they are afraid of making a poor business decision; but mostly they are afraid of being cheated by the seller or by one of the sales agents. When the buyer’s review process is reduced its essence, the buyer’s are only interested in the home’s value prior to the close of escrow.  The buyers try to determine the home actual value by reviewing the documentation provided by the agents.  To this end the homebuyers gather the various reports provided by the agents, in the mistaken belief these documents were prepared for the buyer’s protection when in fact these reports are designed to limit liability for the agents and sellers.   The Home Inspection is one of the few, if not the only disclosure document addressed specifically to the buyer. 

 

A secondary use of a Home Inspection is using the reported issues to renegotiate the sales price.  Only after the close of escrow does the inspection report take on the accepted role of defect inspection. Home Inspection reports are ultimately used to help determine the value of a property for the buyer.  Any argument that Home Inspectors do not assign monetary value is naïve.  Knowledgeable buyers very quickly come to understand that a Home Inspection provides a basis on which to determine a final value for their purchase.  When a report recommends further evaluation and repair of a discovered defect by a qualified specialist along with a recommendation for estimated cost to repair prior to the close of escrow, the Home Inspectors are by de facto assigning value, through the estimated costs of repairs.  The adjusted value is always a negative value.  It is this negative value that has given the Home Inspection the reputation as a “Deal Killer” where the real responsibility lies with the lender’s appraisal being based on incomplete information.  A home inspection is the final step in completing the appraisal process to determine the final value of the home.  

 

Buyers have the mistaken belief that the appraisal was prepared for their benefit. While the appraisal is generally accepted as the value of the property it is not the absolute value.  Keep in mind, “fair market value,” or “a willing Buyer and a willing Seller” can be the basis of value, but the appraisal industry standards do not acknowledge the importance of disclosing the condition of the property to the appraiser so that the defective issues can be included in the appraised valve.  A buyer might not be so “willing” to purchase a property if he knew there was a significant crack in the foundation.  Only recently has Buyer was been allowed to have a copy of the appraisal. Recent changes in appraisal law now allow a home buyer a copy of the appraisal if it is requested with in a certain amount of time and in writing. The buyers generally have no idea how the basis of value was determined on their homes; the vast majority of homebuyers never see the appraisal, the document on which they make the largest purchase of their lives.  The lenders are not concerned with the Home Inspection because the negative value discovered in the report rarely impacts their loan; i.e. no losses to the lender. 

 

This negative value can be very important to the homebuyer as it represents the net equity in their home.  This net equity may represent the difference between a satisfactory homeowner experience and a disastrous homeowner experience.  I would summit that an appraisal is the value of a home in its undisclosed condition.  A home inspection represents the final process in determining the home’s final actual value for the buyer. Accordingly a home inspection must be an appraisal.

 

A typical residential appraisal is performed for the lender based on guidelines designed to protect the lender. The appraisal and the associated loan have built in margins designed to protect the lender from loss so that the usual issues in the Home Inspection do not impact the lender’s security. In addition, the lender also has the Borrower’s credit as a backup to cover any discrepancies in the Appraisal.  Even more protection is provided by the homeowner’s insurance policy that covers lender’s potential losses. The buyer’s are

responsible for the loan regardless of any yet to be discovered issues that may arise in the property. If, after the close of escrow the home is found to be infected with mold and has to be vacated the buyer is still obligated for the loan.  The buyers are obliged to repair these issues, or at least live with them in order to protect their credit and equity.  Do not make the mistake in believing the Appraisal was prepared to protect the Borrower.  In my opinion the Home Inspection Reports will become more important to the lenders as their loans approach 100% financing.  If these types of loans ever go into foreclosure on a significant scale you will see the lenders become more interested in Home Inspections and require them on high ratio loans in order to protect their investments.  If the lenders begin to require Home Inspections then proper regulatory legislation will not be far behind.

 

An Appraiser spends approximately 20 minutes at the subject property reviewing the various components. An Appraiser develops a general knowledge of the property and a specific knowledge of the neighborhood values.  A Home Inspector spends up to 5 hours or more at the subject property developing specific knowledge important to the value of the home but has a limited knowledge of the neighborhood conditions.  Only by combining the two processes can the Buyer develop a true value of the property. In my opinion the Home Inspection should be performed prior to the appraisal and supplied to the Appraiser so that accurate valves can be assigned.  Accordingly the Home Inspection would officially become part of the appraisal process.

 

CALIFORNIA CODES MONTOYA ACT
BUSINESS AND PROFESSIONS CODE
SECTION 11422-11423

 

11422.  The office shall, on or before February 1, 1994, and at least annually thereafter, transmit to the appraisal subcommittee specified in subdivision (d) of Section 11302 a roster of persons licensed pursuant to this part.
11423.  (a) For purposes of this section:
   (1) "Applicant" means a person who has made a written request for an extension of credit which is proposed to be secured by real property.  The term does not include a guarantor, surety, or other person who will not be directly liable on the loan.
   (2) "Appraisal" shall have the same meaning as set forth in subdivision (b) of Section 11302.
   (3) "Residential real property" means real property located in the State of California containing only a one-to-four family residence.
   (b) A lender in a loan transaction secured by real property shall provide notice as described in this section to a loan applicant of the applicant's right to receive a copy of the appraisal, provided he or she has paid for the appraisal.
   An applicant's written request for a copy of an appraisal must be received by the lender no later than 90 days after (1) the lender has provided notice of the action taken on the application, including a notice of incompleteness, or (2) the application has been withdrawn.
   (c) The lender shall mail or deliver a copy of an appraisal within 15 days after receiving a written request from the applicant, or within 15 days after receiving the appraisal, whichever occurs later.
   (d) Where the loan is proposed to be secured by residential real property, the notice of the applicant's right to a copy of the appraisal as provided in subdivision (b) shall be given in at least 10-point boldface type, as a separate document in a form that the applicant may retain, and no later than 15 days after the lender receives the written application. The notice shall specify that the
applicant's request for the appraisal must be in writing and must be received by the lender no later than 90 days after the lender provides notice of the action taken on the application or a notice of incompleteness, or in the case of a withdrawn application, 90 days after the withdrawal.  An address to which the request should be sent shall be specified in the notice.  Release of the appraisal to the applicant may be conditioned upon payment of the cost of the appraisal.
   (e) Where the loan is proposed to be secured by nonresidential real property, the notice of the applicant's right to a copy of the appraisal shall be given within 15 days of receiving the appraisal.
The notice shall specify that the applicant's request for a copy of the appraisal must be in writing and that the request must be made within the time specified in subdivision (b) and that the applicant is only entitled to receive the appraisal or appraisals obtained by the lender for the purpose of evaluating the applicant's pending request for an extension of credit.  Release of the appraisal to the applicant may be conditioned upon payment of the cost of the appraisal and the cost of duplicating the appraisal.
   (f) Nothing in this section is intended to effect a change in current law in any manner with respect to reliance on an appraisal by anyone other than the lender who released the appraisal.
   (g) This section does not apply to appraisals obtained by lenders on property owned by the lender, nor to appraisals obtained by the lender in anticipation of modifying any existing loan agreement if the lender has not charged for the appraisal.
   (h) In the case of loans secured by residential real property, compliance with Regulation B (12 CFR Part 202 et seq.) of the Federal Reserve Board is deemed to be compliance with the provisions of this section and Section 10241.3.

 

Adding a Home Inspection to the appraisal could result in a new classification for an appraisal; i.e. “The Buyer’s Appraisal?” In the real world of California politics this is unlikely to happen.  It is interesting to note that the Federal Housing Authority (FHA) has recognized this circumstance with their limited FHA appraisal inspections.  The problem with FHA inspections is that the appraisers are not qualified to perform home inspections and the scope of a FHA inspection is inadequate when compared to a proper home inspection according to State law.  The home buyers may mistakenly believe they are protected by a FHA inspection when in fact they may they are still subject to yet to be discovered issues.

 

When the Home Inspection assigns de facto value it becomes clear that Home Inspectors have the potential of exerting a tremendous amount of influence over the individual purchase transaction and by extension, the Real Estate Industry in general.  Any influence over an industry that controls billions of dollars annually with something like 400,000 members in the California Association of Realtors will definitely be met with opposition.  In my opinion home inspection industry is perceived as a threat to the Real Estate Industry.  Control of such a valuable resource is not likely to be relinquished without a struggle

 

The Buyer Has an Affirmative Duty to Inspect

If he invested a quarter million dollars in the stock market he would inspect!

CC 2079.5. Nothing in this article relieves a buyer or prospective buyer of the duty to exercise reasonable care to protect him self or her self, including those facts which are known to or within the diligent attention and observation of the buyer or prospective buyer.

 

The buyer is required to read the reports and act on the information provided in all the disclosure documents including the inspection reports.  The buyer’s advisory states the buyer has an “affirmative duty to exercise reasonable care to protect yourself, etc.”   Buyers rely on their agents far too much in this regard and should be more assertive.  The agent is conflicted and will consciously or subconsciously try to minimize the reported issues.  Many times the agents do not understand the issues and improperly communicate the importance of the issues to their client.  I am forever mystified why a client will decline to call me about an issue and have their agent call instead. I recommend that the agent insist that the client call the inspector directly about any questions to be sure there are no misunderstandings.

Green Alligators

Read the entire Report

 

My chapter was concerned that the clients were not reading the complete report.  They all decided to create a little test and agreed to put the sentence, “There is a green alligator in your closet” in the rear of the report.  The inspector who received the most calls from his clients asking about the alligator would win a prize.    After 6 months the winner won with 2 inquiries and the runner received one call.  I am always distressed when a client calls and asks about something that is clearly described in the report.  It indicates that the reports are not being completely read but only “glossed over.”  Most inspectors concur that the only time the report is ever carefully read is after the escrow has closed and the client is trying to confirm the issue was covered in the report in anticipation of having the inspector repair or replace the suspect condition.

 

Seller Rights and Duties

Disclose Everything!

 

The seller is obligated to disclose everything he knows that affect the value or desirability of the property.  He is not required to inspect the property for the buyer and he is not expected to know everything about the property; only what a reasonable person would come to know by living in the property.  This relates primarily back to the Transfer Disclosure Statement (TDS).

 

Understanding the Inspection Report

Salesmen are not Technical People!!

 

After dealing with so many agents it has become clear that the typical agent does not have the proper training to even understand the inspection report, much less be able to use the report as a success full tool for purchase negotiations.  Agents, particularly male agents, feel they have some intuitive knowledge regarding home design and construction.  Just because a person has lived in a home for their entire life does not qualify one as an expert, or even competent in their knowledge regarding homes.

 

There is no training for the appropriate use of the only disclosure document prepared solely for the home buyer!  Agents are never taught how to understand the technical issues or how to handle the reported issues contained in an inspection report. 

 

While many agents have experience with pest reports and equate a pest inspection with a home inspection, they are very different reports.  Where almost anybody can understand the pest report, the home inspection can be far more technical and difficult to understand.  In addition, the quality of the inspection report is largely based on the training and experience of the inspector.  A new inspector will not be able to provide the same level of information as an experienced inspector.  Accordingly, a new agent who obtains an inspection report from an experienced inspector may be buried by the sheer volume of information and may not be able to cope.  These agents will automatically be steered toward inspectors who provide less information in the mistaken belief that because there is less information it makes the report more understandable.  As the detail of the inspection report increases the higher level of education is required by the reader.  While the better inspector will try to write the report in such a manner to help the client understand the report, someone must have the skills to identify the issues in the report that are important to the purposes of the transaction; the typical agent is unable to identify the truly important information.

 

If you do not understand anything in the report CALL THE INSPECTOR and ask for an explanation or advice.  I am always happy to talk to my clients; this is part of my service.  The inspector should always be an unbiased third party participant but the inspector also has an obligation to be sure the client makes a properly informed decision regarding the purchase transaction.  No inspector wants a failed transaction; rather the inspector should work towards making a successful transaction by providing accurate information regarding the home. No inspector wants to be known as a “deal killer.”  The inspector has a duty to be sure the client and agents are properly informed, which almost always results in a successful purchase transaction.

 

You Are Advised to Conduct Investigations:

The Standards of Practice Cover Most of these Systems

 

It is the buyer’s responsibility to obtain all the inspections for the property.  You cannot say the broker did not tell you not to inspect.  The agent say, “You don’t really need a home inspection do you?  It costs another 300-400 dollars and doesn’t it really do all that much…”  The agent has just breached their fiduciary duty to their client.

 

Square Footage, Age and Boundaries:

Sometimes they are wrong

 

These issues are outside the scope of a home inspection but an experienced inspector will sometimes comment on these issues if in the inspector’s opinion it may clarify or prompt his client to investigate a potential issue.  Several times I have prompted my client to confirm or deny if a particular room was properly included in the square footage.  On at least 2 occasions there was a room that the owner had not included in the total living space so when they closed escrow they automatically had a “credit” of several hundred square feet.  Conversely, I have more instances where the owner had tried to include areas in the total square footage that should not have been included.  In these cases my client had the opportunity to renegotiate or back out of the transaction before it became an issue of misrepresentation.

 

The age of the property is important; not just age of the original home but the age of all the subsequent additions and changes.  I would never buy a car without knowing exactly how old it was but for a home people don’t seem to understand that the age of the home and additions does make a difference in regards to the types and life expectancies of the systems, whether or not there are regulated substances used in the building materials and when the various building code cycles were enforced.  The maintenance cost of a home is directly proportional to the age of the home.   Your clients should be advised to budget for repairs and maintenance accordingly.

 

Locating the property lines is outside the scope of a home inspection but again, an experienced home inspector may notice an unusual layout or fence location and prompt the client to at least look at the preliminary title report to locate the property lines.  Technically a surveyor should dig up the property corners but most owners are aware of the property lines and are obligated to show you their locations if you ask.  I had one case where a one acre lot had been cut off from a large tract of land.  There was a driveway to one side with a fence.  About one month after the close of escrow there was a surveying crew placing stakes down the center of the driveway inside the of the fence.  The developer was getting ready to subdivide the land and the property line was located in the middle of the driveway.  The location of the property line was incorrectly disclosed by the seller.  I had recommended locating the property corners prior to the close of escrow.  The last I heard the case was in litigation.

 

Wood Destroying Pests

Here it is again

 

Remember, pest inspections are not required by contract; they are usually required by the lender as a condition of obtaining a loan.  I always recommend spending the $100.00 for a pest inspection to be sure you are not buying somebody else’s problem.

 

Soil Stability

This issue is what started all the disclosure laws.

 

Seemingly innocent water ponding against the foundation can lead to multiple problems

The gutter system is very important to the welfare of your home.  Water causes most of the damage I see during my inspections.  It is important that all the water from the roof be controlled so that it cannot cause water damage to the eaves or be allowed to penetrate the wall systems.  These are the obvious reasons for maintaining the gutters but the biggest reason is to protect the foundation.  Water should never be allowed to pool against the foundation.  Soil is like a sponge; it will expand like a sponge when it gets wet and it will shrink like a sponge when it dries out.  Over the seasons this movement sometimes causes a foundation to move and crack.  Under the right conditions it can actually cause a foundation to fail.  While the soil moves only a tiny amount, the force it exerts is measured in tons per square inch.  This force can be more than a foundation can resist.

 

Another reason is when water pools against the foundation the water can move through the soil under the foundation and into the crawl space or create wet spots under a slab foundation. This water movement is called sublimation.  Water should never be allowed to pool under a home; in the case of a raised foundation ponding water can cause the piers to settle into the wet soil, attract all sorts of insects including termites, and allow mold to grow under the home.  In the case of a slab foundation the concrete can absorb the water and create moist areas in the floor over the sublimated water.  The moist concrete can cause vinyl floors to discolor and cause mold under the carpet pads.  The exterior walls are the typical place for this moisture to show up but it can extend into the interior areas of the typical slab home.  If you have an odor that you cannot find this could be the reason.  Check the carpets with your hands to see if there is a moist area; if you find a wet area then pull back the carpet and look under the pad and see if there are any growths.  This could be the cause of the odors.

 

Water should always drain away from the foundation for at least five feet and then be directed toward the street.   This has been required by code for many years, and even before it was a code issue the good builders understood that proper drainage was important for the long term welfare of their homes.  What I find on many of the older homes is that there is a smooth negative slope towards the foundation causing unwanted ponding.  What happens is that when a person rakes the leaves away from the foundation they pull back a small amount of soil with the leaves.  Over the years this tiny amount of soil becomes large enough to change the grade from the original positive slope to a negative slope resulting in ponding water along the edge of the foundation. 

 

Another important source of ponding is the landscape sprinklers.  Sprinklers should always spray away from the exterior walls, never ever towards the walls.  Water sprayed at the exterior walls over a long period of time will cause damage regardless of the type of wall.  Many times the sprinklers will have a slow leak that keeps the soil wet; this is the same as if there were ponding water from a rain storm.  Any sprinklers that spray toward the walls should be relocated and any leaking valves should be replaced.  Simple little things that are low cost and easy to fix but I see them every day that cost thousands of dollars to repair when it comes time to sell your home.

 

As you live in your home walk around your foundation to see if there are any areas that are ponding.  Then when the yard dries out you can either re-grade the low areas or add a wheel barrow full of soil to the low areas so that the water drains away from the foundation.  These simple steps can save you a ton of money over the life of your home.

 

Roof Inspections

But We Already Have a Roof Cert.!!

 

I have spent considerable time trying to track down the proper protocol for a roofing contractor’s roof certification/inspection.  The closest I can find is an obscure reference in the FHA lender guidelines asking for a roof certification if the subject roof appears to have less than two years of remaining life.  It merely asks for a certification from a qualified roofer stating the roof will not leak for two years.  There does not appear to be any guidelines from conventional lenders.  This lack of guidelines is unknown to the Buyers and leads them to believe the roof system has somehow been certified by a roofer to be satisfactory.  If one examines the typical roof certification, you will note they are very limited in scope and offer to repair only a leak in the roof for a given period of time. Usually they do not offer to repair any subsequent damage to the ceiling or the contents of the building if a leak does occur.  In addition they do not describe the condition of the roof or the roof systems and do not offer any advice on how to extend the life expectancy of the roof system.  By providing a “Roof Certification” to a Client without the properly explaining the process the Agent may misleading the Client to believe that a roofer has performed an roof evaluation, where in fact the roofer has only guaranteed to fix any roof leaks for a given period of time.

 

What is a roof and more importantly, what does your Client think is a roof? What a roofer considers a roof can be quite different from what your Client believes to be a roof.  When a Home Inspector looks at a roof he sees a system on top of the structure designed to shed water and to protect the structure from the elements. The system includes not only the roofing, but also the flashings, valleys, vent pipes, electrical penetrations, gutters and downspouts, A/C units, TV antennas, Chimneys and Chimney Flashings and any supplementary roof systems at the subject property. In addition the attic should be included as part of the roof inspection.  The Client may be thinking of a roof certification in terms of systems life expectancy, and the roofer is providing a leak free only roof certification then there is the possibility of negligent referral on the part of the Agents. 

 

I recommend that the Broker prepare a standardized list of the various components of the roof to be filled out by the roofer who performs the certification so that at least a minimal amount of proper information is provided to the Clients in order to limit exposure and liability.  In my opinion, a proper roof certification should include at a minimum the following:

 

1)                  The description of the roof covering including all the subsidiary roofs.

2)                  Condition of the roof coverings

3)                  An estimate of the remaining useful life expectancy of the roofing and related systems.

4)                  The condition of the roof flashings, many times the original flashings are reused on a replacement roof and will not survive the life of the new roof.

5)                  A statement regarding the condition of the paint on the flashings, or the lack thereof

6)                  A statement of the condition of the gutter system along with an estimated remaining life expectancy, including the lack of any roof to gutter flashings

7)                  Is there any vegetation impacting the roof systems?

8)                  Evaluation of the accessible spaces in the attic.

9)                  Suggestions to extend the life of the roof systems.

10)              The certification should include the living space, patio, overhangs and any auxiliary buildings included in the purchase contract

11)              A visual inspection of the attic

12)              Any supplemental roofs on garages or patios should have the same guidelines

 

It can be embarrassing for the Agent when the roofer has certified a roof prior to a Home Inspection.  When the Home Inspector points out to the Clients that the roof is at the end of its life cycle and will need to be replaced shortly. The Agent steps up and says “But we already have a roof cert!”   The Home Inspectors pointed out the defective issues in the roof and recommends further evaluation by a qualified roofer.  The roofer provides a roof certification with no supporting observations or documentation. The Home Inspector’s recommendations for further evaluation were not followed.  The Client may very well feel short changed when he discovers the roof is certified but still needs to be replaced. 

 

An Agent should not be expected to know the various systems and intricacies of the pool plumbing system.  Typically if any of its systems are leaking, deteriorated or rusted the entire pool should be evaluated.  There are many important safety systems that need to be evaluated by a qualified specialist on almost any pool.  Child safety is the highest liability issue.  If you obtain a home inspection always include a pool inspection, preferably from the same home inspector who inspected the home.  Always get the pool inspected to protect yourself from negligent referral.  Remember if a child should drown in the pool then everybody will be called to the matt to answer for their actions.  Do not put yourself in this position; and it could save a child’s life.  And it is not your money anyway that pays for this service.

 

A pool or spa report is incomplete without inclusion of home inspection. Many house issues may impact the pool and some pool issues could impact the house.  If you obtain a home inspection you should try to have the same inspector perform the pool inspection at the same time.  This will provide an increased level of inspection protocol than having the pool inspected separately.  The Agents should always keep in mind that the typical pool technicians probably never have been taught any inspection protocol and probably do not apply the same emphasis on safety issues as would a qualified home inspector.  A swimming pool is a high liability item; if a child is injured in the pool then there is a high probability of the inspection being included in any law suit. An informed agent will always include the pool in the home inspection.

 

Pool safety is probably the most important responsibility of a homeowner.  The following comments are generic and may be a prompt to help you identify a potential hazard. 

 

ASK YOURSELF THESE QUESTIONS EVERY TIME YOU USE THE POOL.  REVIEW THESE QUESTONS WITH YOUR CHILDREN EVERY TIME THE POOL IS USED.

 

Is the barrier fencing deteriorated between the pool and the neighbor's yard?

Is the fence child proof with an unclimbable design?

Are the gates self closing with latches that are unreachable by the younger children

Do the gates swing away from the pool?

Are all the gates locked when not in use?

Are the doors and windows open to the pool area alarmed to notify child care people of access by children? 

Can these windows and doors be locked to keep out children? 

Is rescue equipment such as a long handled hook and a ring buoy kept near the pool?

Is the pool cover properly installed?

 

 

 

FACTS YOU SHOULD KNOW ABOUT POOLS

 

In California, drowning is a leading cause of accidental death for children up to the age of four.  A child can drown in less time than it takes to answer the telephone.  Two thirds of all drowning deaths occur in their own backyard pool, spa, hot tub or fountain.  The majority of drownings occur while the caretaker assumes the child was indoors.  25% of children who have drowned or nearly drowned have had swimming lessons.  The risk of drowning is highest in the first 6 months of when a family owns a pool.  For every drowning, five near-drowning cases are treated in the emergency room.  Brain damage occurs in three to five minutes.  Remember, drowning is a silent killer.  The victims can't cry for help.  They are not getting enough air to breathe, so they don't have extra air needed to call for help.

 

Swimming pools are a wonderful and important recreational system for your family.  There are multiple safe and fun things a family can do together in a pool, just be sure to learn the safety recommendations to protect your family.  And remember to put on your sunscreen.

 

There are multiple child safety hazards at the pool fencing.

 

There are multiple safety recommendations regarding barrier fencing around swimming pools and spas. These include but are not limited to the following:

 

1)  Fences are recommended to be 60" high measured from the side opposite of the pool

2)  Any gates or doorways into the pool area including patio doors from the home should open away from the pool to prevent inadvertent opening by toddlers

3)  All doors opening into the pool area should be self closing and self latching

4)  All latches on gates or doorways opening into the pool area should be 54" high on the opposite side of the pool or if on the inside of the gate it should be at least 3" from the top with a screen with no more than 1/2" openings extending 18" past the latch to prevent unsupervised access by children

5)  The fence should not allow a 4" ball to pass through and should be no more than 2" above grade at the bottom

6)  The fence should be unclimbable from the opposite side from the pool, including any shared fences with the neighbors

7)  All doors and windows opening into the pool area should be equipped with an approved alarm to notified supervising adults of unauthorized pool access by children

8)  Chain link fences should not be greater than 1-1/4" square or 1-3/4" with slats

 

These recommendations vary from jurisdiction to jurisdiction. I recommend evaluation by qualified pool safety specialist and inquiry at the local building authority.  I also recommend inquiry with your insurance carrier to determine coverage and policy costs.

 

CALIFORNIA CODES

HEALTH AND SAFETY CODE

SECTION 115920-115929

115920.  This act shall be known and may be cited as the Swimming

Pool Safety Act.

115921.  As used in this article the following terms have the

following meanings:

   (a) "Swimming pool" or "pool" means any structure intended for

swimming or recreational bathing that contains water over 18 inches

deep.  "Swimming pool" includes in-ground and above-ground structures

and includes, but is not limited to, hot tubs, spas, portable spas,

and nonportable wading pools.

   (b) "Public swimming pool" means a swimming pool operated for the

use of the general public with or without charge, or for the use of

the members and guests of a private club.  Public swimming pool does

not include a swimming pool located on the grounds of a private

single-family home.

   (c) "Enclosure" means a fence, wall, or other barrier that

isolates a swimming pool from access to the home.

   (d) "Approved safety pool cover" means a manually or

power-operated safety pool cover that meets all of the performance

standards of the American Society for Testing and Materials (ASTM),

in compliance with standard F1346-91.

   (e) "Exit alarms" means devices that make audible, continuous

alarm sounds when any door or window, that permits access from the

residence to the pool area that is without any intervening enclosure,

is opened or is left ajar.  Exit alarms may be battery operated or

may be connected to the electrical wiring of the building.

115922.  Commencing January 1, 1998, except as provided in Section

115925, whenever a construction permit is issued for construction of

a new swimming pool at a private, single-family home it shall be

equipped with at least one of the following safety features:

   (a) The pool shall be isolated from access to a home by an

enclosure that meets the requirements of Section 115923.

   (b) The pool shall be equipped with an approved safety pool cover.

   (c) The residence shall be equipped with exit alarms on those

doors providing direct access to the pool.

   (d) All doors providing direct access from the home to the

swimming pool shall be equipped with a self-closing, self-latching

device with a release mechanism placed no lower than 54 inches above

the floor.

   (e) Other means of protection, if the degree of protection

afforded is equal to or greater than that afforded by any of the

devices set forth in subdivisions (a) to (d), inclusive, as

determined by the building official of the jurisdiction issuing the

applicable building permit.  Any ordinance governing child access to

pools adopted by a political subdivision on or before January 1,

1997, is presumed to afford protection that is equal to or greater

than that afforded by any of the devices set forth in subdivisions

(a) to (d), inclusive.

115923.  An enclosure shall have all of the following

characteristics:

   (a) Any access gates through the enclosure open away from the

swimming pool, and are self-closing with a self-latching device

placed no lower than 60 inches above the ground.

   (b) A minimum height of 60 inches.

   (c) A maximum vertical clearance from the ground to the bottom of

the enclosure of two inches.

   (d) Gaps or voids, if any, do not allow passage of a sphere equal

to or greater than four inches in diameter.

   (e) An outside surface free of protrusions, cavities, or other

physical characteristics that would serve as handholds or footholds

that could enable a child below the age of five years to climb over.

115924.  Any person entering into an agreement to build a swimming

pool shall give the consumer notice of the requirements of this

article.

115925.  The requirements of this article shall not apply to any of

the following:

   (a) Public swimming pools.

   (b) Hot tubs or spas with locking safety covers that comply with

the American Society for Testing Materials-Emergency Performance

Specification (ASTM-ES 13-89).

   (c) Any pool within the jurisdiction of any political subdivision

that adopts an ordinance for swimming pool safety that includes

requirements that are at least as stringent as this article.

   (d) An apartment complex, or any residential setting other than a

single-family home.

115926.  This article does not apply to any facility regulated by

the State Department of Social Services even if the facility is also

used as the private residence of the operator.  Pool safety in those

facilities shall be regulated pursuant to regulations adopted

therefor by the State Department of Social Services.

115927.  Notwithstanding any other provision of law, this article

shall not be subject to further modification or interpretation by any

regulatory agency of the state, this authority being reserved

exclusively to local jurisdictions, as provided for in subdivision

(e) of Section 115922 and subdivision (c) of Section 115924.

115928.  Whenever a construction permit is issued for the

construction of a new swimming pool or spa, the pool or spa shall

meet all of the following requirements:

   (a) (1) The suction outlet of the pool or spa for which the permit

is issued shall be equipped to provide circulation throughout the

pool or spa as prescribed in paragraph (2).

   (2) The swimming pool or spa shall have at least two circulation

drains per pump that shall be hydraulically balanced and

symmetrically plumbed through one or more "T" fittings, and that are

separated by a distance of at least three feet in any dimension

between the drains.

   (b) Suction outlets that are less than 12 inches across shall be

covered with antientrapment grates that cannot be removed except with

the use of tools.  Slots or openings in the grates or similar

protective devices shall be of a shape, area, and arrangement that

would prevent physical entrapment and would not pose any suction

hazard to bathers.

   (c) Any backup safety system that an owner of a new swimming pool

or spa may choose to install in addition to the requirements set

forth in subdivisions (a) and (b) shall meet the standards as

published in the document, "Guidelines for Entrapment Hazards:

Making Pools and Spas Safer," Publication Number 363, January 1998,

United States Consumer Product Safety Commission.

115929.  (a) The Legislature encourages a private entity, in

consultation with the Epidemiology and Prevention for Injury Control

Branch of the department, to produce an informative brochure or

booklet, for consumer use, explaining the child drowning hazards of,

possible safety measures for, and appropriate drowning hazard

prevention measures for, home swimming pools and spas, and to donate

the document to the department.

   (b) The Legislature encourages the private entity to use existing

documents from the United States Consumer Product Safety Commission

on pool safety.

   (c) If a private entity produces the document described in

subdivisions (a) and (b) and donates it to the department, the

department shall review and approve the brochure or booklet.

   (d) Upon approval of the document by the department, the document

shall become the property of the state and a part of the public

domain.  The department shall place the document on its Web site in a

format that is readily available for downloading and for

publication.  The department shall review the document in a timely

and prudent fashion and shall complete the review within 18 months of

receipt of the document from a private entity.

 

Septic Systems

Very difficult and high risk inspections

 

Septic systems require specialized knowledge to evaluate properly.  The systems are usually designed based on the number of bedrooms in a home and an estimation of water usage to determine the size of the septic tank and the size of the leach field.  When there are additions to a home there is no way to know if the septic system was enlarged to accommodate the increased usage. Many times a system will be adequate for a small family but when a large family occupies the home, the septic system will be overloaded.  This is a difficult circumstance when the new buyer calls the Agent and indicates the septic tank is overflowing.  This is especially a concern on rural properties.

 

Vegetation with shallow root systems should be planted over a leach field; trees planted on the leach field may well impact the drainage system and clog the underground drains.  Contrary to popular opinion, a large amount of the water in the leach field escapes from evaporation rather than peculation.  Vegetation will help the evaporation process.

 

The location of the leach field should be disclosed.  Leach fields will become saturated and wear out over time.  An equal sized area should be available for future replacement.  Another reason to disclose the leach field location is that it may block the installation of a swimming pool.

 

The separation from the water well and the leach field is considered a health safety issue. The well and the leach field usually have a separation of 100 feet so keep the leach fields from contaminating the water well. The separation distances vary according to the type of soils and requirements of the local health departments.  I recommend contacting the local health department to determine the permit history of the septic system and for the separation distance to the water well.  I recommend contacting the current service company who may be knowledgeable about the subject system. I always recommend complete evaluation by a qualified septic system specialist. And lastly, I recommend asking the Seller in writing if there has been any recurring blockage or pumping issues with the septic system.

 

In order to avoid negligent referral the Agent who orders the septic system report should be sure these issues are addressed in the septic system report.  Customary, septic system evaluations only include pumping the sewage out of the holding tank and running a garden hose in the tank for a few minutes to determine its leaching rate.  This may not be sufficient effort to determine if a septic system is adequate. I am aware of no standardized evaluations for septic systems and an Agent may have to rely on the expertise of the service provider.  In my opinion inspecting septic systems is a high liability business that does not get the respect it deserves.

 

Are You Sure it’s Hooked Up?

Its better to be safe than sorry

 

Is the sewer really hooked up to the city sewer?  One time I inspected a home in the older part of town that was originally on septic tanks.  These tanks were abandoned and connected to the city sewer as the tanks began to fail.  On this house I could not find the clean outs and was not convinced that the home was actually connected to the city sewer. Both the listing agent and the seller indicated the sewer was connected to the city sewer.

 

It turned out the sewer was not connected and the septic system was still in use.  The little old lady did not understand the difference between the city sewer and the septic system, and the listing agent did not properly explain the issue to the elderly home owner.  When my client asked to see the bill it all became clear to the homeowner what we were trying to determine.  In the end she paid the $15,000.00 or so to connect to the city sewer and abandon the septic system.  I believe this was an honest mistake on the part of the homeowner but it could easily have been an effort to deceive.  Consider all the consequences for the concerned parties if this was not discovered before the close of escrow.  Unless I am convinced there is a city sewer hook up I recommend confirmation by the seller by some supporting documentation from the owner just to be sure.

 

 

 

Well Inspections

There is a Whole Lot More to it than Just the Water Test

 

The purchase contract requires a water test and a determination of the productivity of the water well.  I regularly hear about the water test (the easy part), but never once has an Agent talked about the productivity of the well.  This is a high liability area in times of drought or where water supply is suspect.

 

Water well evaluations are a very specialized service.  Water wells have many issues that are important to investigate prior to the close of escrow.  While the quality of the water is important and could be a health safety issue, that is only the beginning of what your Client needs to know about the well. The investigations should include the following;

 

1)  What is the depth of the water table?

2)  What is the depth of the water pick up?

3)  What type of pump (submersible or jet)?

4)      What is the horse power?

5)      What is the output flow of the pump?

6)      What is the replenishment flow of the water table?

7)      Is there a proper casing?

8)      What is the maintenance and repair history of the well system?

9)      What is the condition of the wiring and controls?

 

I recommend contacting the current service company whom is probably knowledgeable about the subject system to answer these questions. I can evaluate the easy stuff that is visible at the well head but the underground conditions are always a mystery. I always recommend a complete evaluation of the well systems by a qualified water well specialist.

 

 

Environmental Hazards

 

Radon

It’s Invisible, Odorless and Tasteless

 

Radon is an odorless gas created by the breakdown of naturally occurring uranium found deep in the earth’s crust.  This gas is radio active and moves through the cracks in the soil to the surface and collect may collect inside your home. Many times this gas follows termites’ nests that usually terminate under your home.  When this gas finds its way into the home’s living spaces then it becomes a health safety hazard for the occupants.  When the gas is in held into the lungs over a long period of time it can cause lung cancer; and smoking more than doubles the probability of cancer. 

 

There are simple air tests that can be performed to identify this hazard.  If a home is found with radon contamination than it can be repaired by using under house venting systems using perforated pipes and air pumps.  There is a low probability of radon being found in California and I am unaware of any radon in the San Joaquin Valley.  Again, if an agent has reason to suspect there may be a radon issue be sure to recommend further evaluation by a qualified specialist to limit liability.  Identifying radon is outside the scope of a home inspection.  More information can be found at    www.epa.gov/radon

 

“The U.S. EPA and the U.S. Geological Survey have evaluated the radon potential in the U.S. and have developed this map is to assist National, State, and local organizations to target their resources and to assist building code officials in deciding whether radon-resistant features are applicable in new construction. This map is not intended to be used to determine if a home in a given zone should be tested for radon. Homes with elevated levels of radon have been found in all three zones. All homes should be tested regardless of geographic location. The map assigns each of the 3,141 counties in the U.S. to one of three zones based on radon potential. Each zone designation reflects the average short-term radon measurement that can be expected to be measured in a building without the implementation of radon control methods. The radon zone designation of the highest priority is Zone 1.”

 

 

U.S. Department of Labor
Occupational Safety & Health Administration
200 Constitution Avenue
Washington, D.C. 20210

 

Dear OSHA;

 

I am a Council-certified Indoor Environmental Consultant providing Indoor Environmental Residential Assessments for Clients who have "difficult to diagnose" chronic health conditions. When we are called out to a home, we have a higher than usual probability of encountering health safety issues than would normally be the case due to our unique type of service.

Part of our service is to assess the attics and crawl spaces for our clients in order to determine if there are health safety issues contributing to their chronic health condition.

Recently, one of our employees became trapped in a residential crawl space. He was in a very large home at the far end of the crawl space away from the access opening when a child closed the lid on the access opening. Our employee was unaware of the closure and upon returning to the approximate location of the access opening was unable to find the exact location for the lid. He was accustomed to finding the light at the opening to guide his way out of the crawl space.

There was nobody home in the house and the child had disappeared; my employee's cell phone did not have any signal while in the space. He was apparently trapped in the crawl space for over 2 hours before he was able to find the lid and raise the cover to escape.

Needless to say, at this point the child's safety was at significant risk; not to mention my employee’s safety.

Upon learning of this circumstance and discussing it among the crew it became clear that we were unsure how to categorize a residential crawl space; and to a lesser extent the attic.  It is not residential construction, as the home is already constructed, but it is a work space while we are assessing the crawl space. It can be clearly described as some type of confined space. Due to the typical foundation venting there is a low probability of accumulation of poisonous gasses but there is significant risk of entrapment, especially when one considers an employee at the far end of the crawl space who has become incapacitated from an electrical shock, heart attack, snake bite, etc.  The safety list goes on and on.

It is common place to see where pest inspectors or other workmen have dug trenches in the soil to move under ducting or other obstacles to reach the outermost areas. (Is this considered a sloping area?) In addition, there can be any number of safety issues from electrical wiring laying in soil to cat feces and dead animals in the path of the assessor. In these cases it is even more treacherous to travel to the outer areas. There is virtually no way to retrieve an incapacitated person from these remote areas in an emergency condition.

The very nature of our business increases the chances of finding environmental and other safety issues. We now have instituted make shift policy not to enter any area where the employee has any question of personal safety based on our current understanding of the OSHA standards. It should be noted that only one person is present on the job during the assessment. There is no extra person present to monitor the crawl space while it is being assessed.

 

Question: Does OSHA apply to existing residential crawl spaces and attics while being inspected for environmental conditions? Are the attics and crawl spaces considered a work area? What sections would apply?

Any information regarding this issue would be greatly appreciated.

Thank you for your help.

Brad Deal
20/20 Home Inspections

 

So far OHSA has refused to comment on my request.  The political repercussions of classifying a residential crawl space as a confined area would cause many problems for the various industries who regularly access these areas.

 

Some Things You Should Know About Candles

They Are Not Very Good For You

 

Did you know that the ordinary wax candle can be a source of lead in your home?  It has recently been learned that some overseas manufacturers of candles are using a lead core in the wicks.  When the candle is burned the lead in the wick is expelled into the air in the form of a gas and can be inhaled into your lungs.  Lead is a “heavy metal” which the Environmental Protection Agency considers an important health safety hazard when breathed or eaten by anybody, particularly children.  Lead is especially harmful to children; it collects in the body and cannot be easily expelled from the body.  Even in low concentrations it affects the child’s mental development and can cause life long health problems.  In addition, the soot that is created by the flame will collect on the walls and ceiling of your home creating unsightly staining.

 

Every effort should be taken to protect your family from this easily identified health safety hazard.  When the wicks burn the lead in the wick becomes airborne and can be breath into the lungs.  It only takes a few micrograms of lead ions to be a safety issue for children.  Lead can also gain entry into one’s body by being eaten.  Some children in the inner cities were eating paint chips that were flaking off the trim and becoming sick.   Apparently, lead based paint has a slightly sweet taste which may account for the chips being eaten by the children.  This began the investigation into the causes of lead poisoning and resulted in some very strict guidelines in what is considered safe and how it should be remediated in residential housing.

 

Another interesting issue is on some of the older homes from the turn of the century may have lead water laterals from the main city water line to the property line.  The cities apparently do not make much effort to locate these lead water pipes but will replace them when they are discovered from road work or some other reason.  If one looks closely the lead water lateral can be found at the valve in the main turn off valve at the property line; sometimes.  If I suspect there may be a lead water pipe I recommend that a water test be performed to determine if lead is present in the drinking water.  Also the older solder that was used on the copper water lines contained lead.  Every soldered joint has the potential of some tiny amount of contamination.  This is another reason for obtaining a water test.  Remember, the municipal water supply is very strictly monitor for quality but there is no monitoring of the water after it reaches your home.

 

Every Home Inspection is a Preliminary Mold Inspection

Even if the Home Inspector Doesn’t Believe it!

 

There have been some developments in the Mold Industry that is of interests to home inspectors and real estate agents.  Three prominent mold related associations, IAQA, the Indoor Air Quality Association, www.iaqa.org IESO, the Indoor Environmental Standards Organization, www.iestandards.org and the AmIAQ, the American Indoor Air Quality Council www.AmIAQ.org have combined as of January 1, 2006 to form the largest air quality association in the nation.  With a membership of over 5,000; the new association, which is using the name “Indoor Air Quality Association” or “IAQA” for short is finally bringing some common sense to the mold industry.  Every CREIA member understands the importance of the Standards of Practice for protection from frivolous lawsuits and now the IAQA now incorporates the IESO’s “Standards of Practice for the Assessment of Indoor Environmental Quality” to provide a basis for a common sense approach to residential  mold sampling.

 

In order to use these standards of practice, just like our CREIA standards, one must belong to IAQA and must attend a course that lays out proper procedures and sampling practices.  There is a closed book exam at the end of the course that must be passed with an 80% to become a “Council-Certified Residential Mold Inspector.”  After passing the exam, theoretically the mold inspector is qualified to visually inspect a home and take samples of suspected mold infested areas. The IESO “Level 2 Assessment: Standard Guide for Inspecting Residential Structures for Mold Contamination” provides standardized procedures to be used for the inspection and sampling of residential structures. The mold inspector is not qualified to offer any advice or opinions as to the cause of any mold condition, or how to remediate the condition or to offer any health related advice to the occupants of the home.  Their training is clear and does not allow a mold inspector to comment on issues for which they are not qualified. This is only an entry level certification. 

 

The purpose of the sampling protocol is to determine if there is a mold condition present or a defect that may lead to a mold condition in the home so that the occupant can make an informed decision on whether a problem really exists. The Standards require using a laboratory that follows the ISO (International Standardization Organization) #10725 Standard for performing analysis for mold.  Just like everything else there are many laboratories with varying degrees of certification. I was surprised to learn that there was one laboratory that operated out of a garage at the owner’s home.  Following the 10725 laboratory standard insures the client of using a highly qualified laboratory. 

 

Based on the laboratory results a decision can be made if a more qualified specialist, like a Council Certified Indoor Environmentalist “CCIE” or even a more qualified Certified Indoor Hygienist “CIH,” should evaluate the condition of the home.  The CCIE or the CIH can then more completely evaluate the home’s condition and advise the occupants on how to remediate the damage. 

 

Remediate and the Remediation Specifications are terms applied to the mold industry.  “Remediate” means to repair a mold condition, and “Remediation Specifications” are the plans and specifications prepared by the CCIE or CIH that should be followed by the remediators to remove the damaged materials out of a home. The scope of remediation does not necessarily include rebuilding the areas that are removed. Many times the repairs are left up to conventional contractors.  Usually the remediation portion of the job is performed by the “Certified Mold Remediators” or CMR’s.  These are the guys in the moon suits; if you see one coming then get out your check book because their services are not cheap!  And these guys earn every penny.  Just try wearing a PPE or Personal Protection Equipment, a “moon suit,” with a respirator for a few minutes and you will appreciate the home inspection business that much more.  It takes a healthy young man in good shape to withstand the rigors of wearing PPE.  That is why they get paid so much.

 

The standard also allows for acceptable levels of contamination: they follow the recommendations in the Bioaerosols: Assessment and Control, one of the prevailing publications in the mold industry.  A 10 times level of indoor airborne mold compared to the outdoor airborne level is an automatic health safety issue.  There is a grey area from the 10 times level to the “Natural Fungal Ecology” of the home that takes interpretation.  Typically if the outside airborne mold is 2 times the indoor level it is a concern.  In these lower level cases the types of mold become more important as to the recommendations.  Just from a matter of liability, if the level of mold at the interior is higher then the exterior then their will need to be some cleaning or possible remediation necessary.  Sometimes just a good whole house cleaning will resolve the issue.  Sometimes the home needs to be rebuilt.

 

The IESO Standard includes the visual inspection of the various systems in a home very much like the CREIA Standards.  It is readily apparent that there was some collaboration between IESO and ASHI (American Society of Home Inspectors) in regards to developing the inspection portion of the standards:

 

3. Inspection

            3.1 Inspect the following areas for visible suspect conditions and record these conditions,

            3.2 Grading and drainage within 10 feet of the structure

            3.2.2 Exterior wall coverings and all penetrations

            3.2.3 Decks and other attached structures

3.2.4 Adjacent potential sources of water that might impact the exterior of the structure (e.g. water features)

3.3 Foundation

3.3.1 Stem Wall/Foundation

            3.3.2 Basement

            3.3.3 Crawlspace

            3.3.4 Ventilation Systems

3.4 Roof

      3.4.1 Penetrations

      3.4.2 Drainage and flashing

 

 

 

      3.4.3 Type and condition of roof covering

3.5 Attic

3.5.1 Insulation

3.5.2 Ventilation

3.5.3 Condensation drainage

3.5.4 Framing and sheathing

3.6 Interior

      3.6.1 Walls, Ceilings, floors and floor coverings

      3.6.2 Carpets, rugs, and fleecy furnishings

      3.6.3 Doors and windows

      3.6.4 High moisture areas-laundry, bathroom, kitchen

3.7 Plumbing

3.7.1 Relevant fixtures supply and drain lines

3.8 Heating, Ventilation, and Air Conditioning Systems

      3.8.1 Visible duct work

      3.8.2 Air handling unit (if accessible)

      3.8.3 Filters

      3.8.4 Fans

 

It is immediately apparent by these standards that a residential mold inspection is an abbreviated home inspection; only the moisture related areas are addressed and all the mechanical areas are exempted.  Both inspections are concerned with moisture and moisture intrusion.   The difference is that the home inspector does not sample any areas of likely contamination. Accordingly by default every home inspection is a preliminary mold inspection.

 

Home Inspectors are uniquely qualified to perform a level 2 mold inspection.  Their home inspection training makes the visual portion of the inspection just a continuation of their regular business.  Only the sampling requires some education.  The only weakness I can see in the standards is that it does not address any safety issues that may be encountered while performing a Level 2 Inspection.  If a mold inspector finds a safety issue like a disconnected vent or a missing TPR valve on a water heater then I am sure some attorney will try to hold them responsible for damages should an occupant be harmed by an unreported issue.  I would add a clause to the final report that states, “This is not a Home Inspection and I recommend that you obtain a home inspection for a Certified Home Inspector.”

 

The class I attended was a very diverse group of individuals.  A few were trying to obtain their certification, while others were attending to get their continuing education credits or to gain first hand knowledge of the new Standards.  Some of these guys were highly educated: one was a scientist who worked only in a laboratory, and one was a chemist who spoke well above my level of education.  All the students had varying degrees of education in mold related industries but I was the only home inspector in the class.  All these people were experienced, highly educated in their own fields but it was very quickly apparent they did not understand the home inspection business and were probably not qualified to assess water intrusion issues when compared to a Certified Home Inspector.   

 

All home inspectors are aware of the enormous amount of education that the business requires.  I would bet my paycheck that not one of the students could correctly identify a “headwall” flashing or “PEX” plumbing.  The list goes on and on.  But these guys did not bat an eye while reviewing the inspection standards.  Every one of these students would be greatly improved by studying the home inspection industry but I suspect this is unlikely to happen.

 

When I discover a suspicious growth during a home inspection I do not call it mold.  It could be bacteria, or just an unusual stain.  I say, “There is a suspicious area that could be a biological growth.  I recommend further evaluation by a qualified mold specialist to determine the nature of the suspect area.”  I then comment on the source of the water.  As a CIE I do not try to characterize the suspect biological growth.  Even with advanced training you cannot be sure of the nature of the growth without laboratory analysis. 

 

Most Home Inspectors are circumspect in regards to mold.  We have all heard the horror stories about high payout law suits and mis-characterizing staining issues.  Mold is not so mysterious.  When I describe mold to Realtors I describe mold as a microscopic field of mushrooms.  Some of these mushrooms can be poisonous just like the full size version and they reproduce by giving off spoors very much like flowers give off pollen. These spoors can be allergenic, just like pollen.  Some spoors can be more allergenic than others; depending on the individual, the symptoms can range from a runny nose all the way up to neurological damage.  The symptoms are dependant on the “dose,” or the amount of mold present in the air, the length of time a person is exposed to the “dose,” the specie of the mold present in the “dose,” and the susceptibility of the individuals exposed to the “dose.” 

 

In addition, it depends if the mold is “happy” and comfortable in its environment, or if the mold “unhappy” and is in competition with other molds or bacteria.  When a mold is stressed by something in their environment then they produce poisons to attack the other organisms that are competing for the same food source.  These poisons or “mycotoxins” can be extremely toxic, depending upon the type of mold and the way the mold is forced to compete with the surrounding organisms. These poisons can accompany the spoors into the air thereby greatly changing the symptoms in the exposed individuals.  And lastly, even when a mold goes dormant from the lack of water or is killed with a biocide, the debris is friable and is allergenic.  This airborne debris can still affect the occupants; all the poisons are still present and can become airborne by the disturbance of the mold debris.  So under the proper conditions any mold can be toxiogenic.  I warn the Realtors not to make distinctions between so called toxic molds and safe molds; it just depends on the conditions. 

 

Lastly, I explain that the EPA does not recommend sampling mold when it is visible.  The reasoning being that if you can see it then it really does not matter what kind of mold is present, only that it needs to be cleaned up.  But these recommendations are for home owners only, not for home buyers!  The consequences for buying or selling a home that is infected with mold can be dramatic and fraught with liability.  Any mold issue on a resale home must be properly mitigated to protect the buyer.  Do not be misled by improperly interpreting the EPA’s recommendations.

 

When a spoor lands in a suitable location it will begin to grow.  Mold needs three things to grow: a food source, free water, and a surface.  Our houses are mostly built out of cardboard and the paper in the card board is an excellent food source.  So when there is a water leak there will be mold sooner or later.  The key is that mold needs water to grow and that is why a home inspection is so important.  Home Inspectors are uniquely trained to locate water intrusion issues. 

 

So as generalists every home inspector should be aware of the basics of mold and always, “identify, describe, disclaim, and defer,” suspect areas of staining and water intrusion and treat mold just like any other condition that requires further evaluation by an appropriate specialist.  And remember, whether you like it or not, every home inspection is a preliminary home inspection.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The MOLD HOUSE!!

Every Realtor’s Nightmare. I mean Everybody’s Nightmare

 

Copies of this MOLD HOUSE flyer were available at the weather proof holder to any interested persons at the front yard.  You do not want to be a part of this nightmare!

 

Indoor Air Quality Evaluations

Mold Inspections are Forensic Past and Present Water Intrusion Inspections!

 

Most people do not realize that there are no accepted standards of practice for mold evaluations in the State of California.  Just like in home inspections, anybody willing to print up a business card can get into the mold evaluation business. While there are several national associations that have "Standards of Practice" which cover how mold problems should be reported and mitigated, the State of California has not yet recognized any single operating method (Standard of Practice) to regulate to mold evaluations.  The State did pass legislation that would provide guidance to the industry but due to the State's current financial problems there has been little progress made on the issue and no guidance has been provided. 

 

Home inspections do not include mold inspections but many of the issues discovered in a home inspection can lead to mold infestations. A Home inspection is the first step in determining if there is a mold related issue.  Almost any time there is a water intrusion problem it can become a mold infestation hazard under the proper circumstances; some types of mold can grow in as little as 12 hours. While a home inspector is not qualified to perform a mold evaluation he is certainly qualified to identify suspicious growths or odors.  Usually a Home Inspector will identify a suspicious growth as a "Possible Biological Organism" and avoid the mold word for liability reasons.  Only an Industrial Hygienist is qualified for to identify and classify mold and determine if the suspect "Biological Organism" is in fact mold, bacteria, or some other creepy crawly.  A proper home inspection is the first step in determining if there is a potential mold infestation issue.

 

There is considerable controversy on whether mold is a health hazard.  Some old school doctors do not believe that mold is really a health safety issue.  Other doctors are now performing blood tests to determine if someone has been exposed to mold.  As the professionals in the associated industries become more knowledgeable in the air quality field there will be a higher level of understanding and service available to the consumer.  In my opinion mold is just another source of pollution, too much pollution and you get sick.  Some people get sick easier than other people.  Do not suggest to your clients that mold is not important unless you want to commit business suicide.

 

The mold problem has become an increasingly important issue as the State of California began requiring increasingly efficient energy standards.  Part of the energy requirements to obtain a building permit included reducing the amount of ventilation in the average home in order to save heating and cooling costs.  As the homes became more and more airtight the concentrations of indoor air borne contaminants began to increase.  The EPA now says that the average indoor air is 5 times more polluted than the outside air. The important thing for the homeowner to understand is that a mold, or any other indoor pollutant, may not be toxic at low concentrations in a drafty home can be a serious health hazard in a tightly sealed home.  To add another level of confusion to the issue is that some people are more susceptible to molds than others, and there are several different substances that can be given off from a single type of mold that can affect a person differently. 

 

There is nothing really mysterious about mold, just think of it like a tiny mushroom/plant combination.  It gives off spoors, just like a plant gives off pollen.  These spoors float in the air just like pollen hoping to find a place to reproduce. These spoors are a primary source of air borne contamination that can cause an allergic reaction.  Some of the more nasty molds give off something called Mycotoxins.  This is a toxin; (poison) is contained in the mold and is given off with the spoors or any other debris (dust) near the mold that may become air borne. This toxin can be quite potent on some molds.  The mycotoxins from the mold "Stachybotrys" was actually used by the Russians as a biological weapon. Lastly, the debris from the structure of the mold can be allergenic.  Imagine a plant that is all dried up from lack of water.  When the plant is crushed by mechanical actions, like sweeping out a cabinet, the debris become airborne and can cause a reaction.

 

Some people require extremely high concentrations of these airborne contaminants to be adversely affected.  Other people become ill after being exposed to a substantially lower concentration. People with immunological problems, chronic health problems, very young children and the elderly are more likely to be susceptible to mold related issues.  Generally if you can see the mold or if you can smell a pungent musty odor than mold is likely present, and can be easily identified.  It is the mold you cannot see or smell that causes the most serious problems. If you are ill and cannot find the cause, consider having a mold evaluation performed by a qualified technician to be sure you are not suffering from an unknown mold infestation.

 

A mold evaluation is the second step after a home inspection to discover and report mold related issues. The technician will look for visible mold in the Air Conditioning systems, under the dishwasher, in the drip pan under the refrigerator, and under the sinks where there might be a water leak. If mold is present than a sample of the mold is taken by swabbing with an oversized Q-tip. Any time there is visible mold than an air sample is taken to determine if there is any airborne mold contaminates in the air.  These samples are then sent to a qualified laboratory to be analyzed.  The species of the mold can be identified and remediation methods determined.

 

Do not be confused when you see on the various government mold documents stating that there is no reason to test for mold if mold can be seen.  These documents are written for homeowners, NOT HOME BUYERS!!  When a Home Inspector discovers a potential mold infestation on a potential property than it must be considered very carefully.  While an area of two square feet of mold under the master bathroom vanity may not be considered important to the uneducated, it is a clue that there is probably more areas of infestation yet to be discovered.  Who will take responsibility for not conducting a whole house mold evaluation when additional mold is discovered under the dishwasher?    Agents should exercise extra caution and follow the Home Inspectors recommendations to the tee; and document everything.

 

I had asthma as a child before there was any significant understanding of indoor air quality.  My Dad used to smoke “Lucky Strike” cigarettes without the filter. I will believe to my dying day that second hand smoke greatly attributed if not was the only cause of my asthma.  Second hand smoke is definitely an important indoor allergen.  Once a youngster is exposed to an increased level of any irritant there is a higher probability of that kid developing a reaction to the environment, typically known as an allergy.  When there are multiple different irritants in the environment the child may well develop sensitivities to some or all of the irritants.  The irritants may combine to make the child’s allergy symptoms worse.  Determining how the environment affects a child quickly becomes very complicated and difficult to understand.  

 

Almost everybody is aware of the San Joaquin Air Quality Control Board and how they are trying to lower the particulate levels in our valley.  The EPA has rated the air in the San Joaquin Valley to be among the unhealthiest places to live in the nation.  We have days where you cannot use your fireplace, and the farmers must institute dust control measures in order to lower the PM 10 levels.  Particulate Matter of 10 microns is so small it can find its way into one’s lungs bypassing the filtering systems of the nose and lodge in the tiny little air sacs of the lungs causing all sorts of problems.  I can remember as a child one could see the Sierra Mountains crystal clear everyday from the school yard; now it is the exception to even see the outlines.  All one needs to do is drive to Yosemite and compare the air there to our valley air and it becomes clear that the residents of the valley need to understand our air is not as good as it could be and that some extra effort may be required to protect our families.

 

Individually there is very little a person can do for the outside environment but there is quite a bit you can do for your indoor environment.  If you have a child who has asthma or other respiratory problems it is important that you know about at least some of the more common irritants that can be found in the average home.

 

Dust mites are a little bug too small to see that is found everywhere.  All they need to grow is some dust (food) and a little humidity (water) and a safe place to grow (your pillow).  Dead dust mites and their fecal matter can become a significant portion of the weight of your pillows over time.  What you think is the little fluffy stuff inside the casing may not be so fluffy!  It is not the dust mite that is allergenic; it is the fecal matter that causes all the problems.  Their fecal matter (poop) is about the size as a grain of pollen and can float in the air the same way as does flower pollen.  When you drop your head on the pillow all the fecal matter is pushed into the air as a dust cloud where you breathe.  Many times a person will blame a sneezing or a coughing attack on laying horizontal on the bed allowing your lungs to fill with liquid, where the real blame lies with the dust mite fecal matter.  Yech!   My personal opinion is that the dead bodies of the dust mites will turn to dust and contribute to the problem much the same way a cockroach does but I cannot prove it.  It is virtually impossible to remove all the dust mites from your home, all you can do is try to control them by washing the bedding in hot water and detergent weekly, using the plastic covers over the pillows and mattresses and most importantly lowering the humidity level of your home to 50% or less.  Dust mites cannot live in anything less than about 50% humidity so installing a dehumidifier may be necessary in some situations.

 

Cockroaches are another important source of allergens.  It is estimated that 20% of all households that show no visible evidence of cockroaches do have them present and that the allergens can be measured in the air.  If you can see one it means there are a whole lot more present that are out of sight.  Cockroaches deserve their nasty reputation, their saliva, feces, and body parts are allergenic.  What is not commonly known is that when a cockroach dies the body will eventually become desiccated and become part of the environmental dust.  Now as I watch my daughters dust the house, (this only happens once in a blue moon) I wonder how much of it is regular dust, whatever that is, and cockroach dust.  Household dust is made up mostly of human skin cells that have naturally shed off the body. But the skin cells are a perfect food for the dust mites and for the cockroaches……

 

Anyway, another important source of allergens is your cat.  The saliva of the cat is the main source of allergens but the thing is that the cats are always licking their selves so that there is an extra amount of saliva that is available to be shed into the environment.  The saliva is sticky so that is stays on the shed hair and the carpet or anywhere where the cat may touch.  Because of this the allergen stays in the environment longer than some of there other allergens and can stay in your house for years after the cat is gone.  Cat allergens can be measured for years after the cat has been removed from the house.  Just taking the cat out of the room does virtually nothing to stop an allergenic response for a sensitive child.  I personally believe that the breath from a cat can actually cause an allergic reaction.  The water and salvia in the cat’s breath must become aerosolized when the cat breathes and can be breathed into a child’s lungs, and if it is sticky then it can become attached to the kid’s clothes to be an irritant after the kid goes home.  I am unaware of any research in this area but I bet you dollars to dough nuts it is true.

 

Dogs can be allergenic but not as much as cats.  Dog salvia is sometimes allergenic and their skin cells can cause some adverse reactions.  Dogs are much less allergenic than cats.  I knew there was a reason I was a dog lover.

 

Rats and mice allergens are found in their urine and feces.  It is especially important that these rodents be kept out of the heating and cooling duct systems because the urine and feces will turn to dust and spread through out the home. Not only is this dust allergenic it can also cause some serious diseases.  The Hanta virus is found in mouse feces and can be fatal if not diagnosed quickly.  Histoplasmosis is a fungal infection that can be found in bird and bat droppings. Sometimes these animals are found in attics and can find their way into the ductwork.

 

Mold is another important irritant that can range from sniffles to brain damage.  But the important thing to understand is the “dose” is what causes the damage, not just the presence.  A single aspirin can relieve a headache but 20 aspirins may well be fatal.  One cup of water can quench your thirst but you can drown in a swimming pool.  The same is true for mold.  The mold spores must be contained in an enclosed area so that the concentration becomes higher than what would naturally occur.  As the concentration increases the chance of some people being affected increases.  Some people react to lower concentrations and some people can withstand a higher concentration of mold.  It also depends on the type of mold present, or on the combination of different molds present.  It can also depend on whether the mold is in a non-stressful environment (happy) or in a stressful environment where they are competing with other molds for a food source (unhappy).  Molds will excrete mytcotoxins (thus the term toxic mold; the correct term is Toxiogenic Mold) as a defense mechanism against the other molds that can greatly contribute to an allergenic response.  These toxins can be very potent and have been used by the Russians to develop nerve gas.  How do you tell if a mold is happy?  Testing for these mycotoxins is extremely difficult.  I suspect that the odor from these toxins would chase you out of the room before anything could adverse could happen.  It is easy to see why molds are so misunderstood and unfairly blamed for so many problems. For most people these things are not a problem, but if you are allergenic then you will definitely benefit by understanding the allergens that can affect your health.  I have been toying with the idea of evaluating homes for families that have allergies or asthma.  This is an emerging science and there are no guidelines or protocols for this type of evaluation but I suspect there may be protocols in the future

 

Another interesting issue is on some of the older homes from the turn of the century may have lead water laterals from the main city water line to the property line.  The cities apparently do not make much effort to locate these lead water pipes but will replace them when they are discovered from road work or some other reason.  If one looks closely the lead water lateral can be found at the valve in the main turn off valve at the property line; sometimes.  If I suspect there may be a lead water pipe I recommend that a water test be performed to determine if lead is present in the drinking water.  Also the older solder that was used on the copper water lines contained lead.  Every soldered joint has the potential of some tiny amount of contamination.  This is another reason for obtaining a water test.  Remember, the municipal water supply is very strictly monitor for quality but there is no monitoring of the water after it reaches your home.

 

The Indoor Air Quality Association (IAQA.org) periodically allows qualified members to take a week long over view course with a 4 hour examination on the last afternoon.  The examination covers the primary systems that can affect a person’s comfort primarily in commercial buildings; but residential comfort is also covered.  Last week I just passed the exam to become a “Certified Indoor Environmentalist.”

 

In order to become a member of the IAQA the applicant must show a history of participation in some aspect of indoor environmental concerns.  To qualify for the exam one must show a heightened degree of experience and education in environmental issues.  It was interesting to note the different people who attended the course.  I generally feel fairly comfortable when associating with my peers but in this instance I felt somewhat inadequate.  There were two scientists involved in microbiology, one guy designed air purification systems for hospitals who performed bone marrow transplants, one engineer who ran a multi-million dollar remediation company, one lady who was the west coast sales manager for a major air conditioning manufacturer, one college professor who is studying indoor air quality, one graduate student who was studying for his master’s degree in Industrial Sanitation and a handful of mold remediators and one other home inspector. This diverse group of people was a very educated and experienced.  The IAQA apparently has a committee who determines on a case by case basis who is qualified to take their exam.  I felt grateful to be included in this group.

 

It was interesting to watch this group interact.  It was clear that every one of those guys knew their business and had very specific ideas on how various issues should be handled.  They all were knowledgeable in their area of expertise; they all knew their own areas but they did not know much about some of the other systems which they did not normally consider.  On the other hand as a home inspector I know a little bit about all the various systems.  Even some of the exotic topics that were brought up I could relate from past experience.  What was clear from all the discussion was that indoor environmental inspections are not covered by proper inspection protocol, i.e. standards of practice.  Every one of these guys had a different way of evaluating a concern.

 

A home inspection is a preliminary mold assessment; it covers proper air circulation, flickering lights, noises, smells, temperatures, humidity, water damage and maybe even allergens.  As the protocol for these various inspections was described it was clear that they were all the short version of a home inspection.  Maybe a really good home inspection but still all the same systems are evaluated.  The main difference is that there is no “Standards of Practice” for environmental issues where there are standards for a home inspection.  I just don’t understand why the more specialized the person is, the more they resist using any standards; they just don’t want anybody telling them how to do their job.   The problem is that without standards, unqualified people are free to conduct an investigation without any regard to proper protocol and the consumer may wind up being damaged.

 

Traditionally only “Industrial Hygienists” were considered qualified to comment on indoor environmental issues; in order to receive this designation they must have 4 year college degree with the proper background.  But what was pointed out at conference is that the college courses needed to become an Industrial Hygienist do not cover the indoor environmental issues, issues that have become so important in recent time.  According to the instructor only one chapter in one book required to become an Industrial Hygienist covers comfort issues in the average commercial building and virtually nothing for residential housing.  Because of this there is a lack of people who are trained to identify issues that may be making people uncomfortable or worse, ill in their buildings.  Accordingly there has an attempt by the various environmental associations to provide some type of certification designating qualified personal to help building owners identify issues that may negatively affecting the occupants.  This certification gives the consumer some assurance that they will receive valid advice.

 

In my opinion there will soon be a college degree in home inspections.  It will not be called a “B.S. in Home Inspections” but it will probably be some Industrial Technology designation that covers all the systems included in a home inspection; How about a “Residential Hygienist?”   Anyway it is interesting to watch

 

The California Mold Laws are included in the Appendix

 

 

 

 

 

 

 

Earthquakes and Floods

We find both in California

 

 

Earthquake and floods are well outside the scope of a home inspection.  Sometimes if there is a high ditch bank or a nearby stream bed I will prompt a client to investigate if the property is located in a flood zone.  Usually the local building department can provide the 100 year flood elevation for a particular property.

 

There are some earthquake requirements specific to different locations throughout the state.  Every inspector should be aware of these requirements for the areas they service.

 

Fire, Hazard and Other Insurance:

Don’t wait until it’s too late, confirm insurability now!

 

Be sure to confirm that the home or client can be insured.  This is a disaster when you are ready to close and you find out your client cannot obtain insurance.

 

Homeowner Insurance Claims

Think Before You Turn in That Claim!

 

Every Realtor should that insurance companies keep a secret history of your home.  I recently did an inspection where I discovered some suspicious water damage and recommended that my Clients ask the Sellers for the history and circumstances of the damage.  As it turns out the Sellers had had a leak in the water heater 2 years prior and had turned in a claim for over $5,000.00 for repairs.   The Seller did not disclose the insurance claim on the Transfer Disclosure Statement as required by California Real Estate Law.  In addition, the repairs were never fully repaired and the insurance money was apparently diverted to installing tile floors and other interior improvements rather than repairing the water damage as was intended by the insurance company.  The Sellers had the home in escrow, anticipating a very large proceeds check and now discover that their buyers cannot obtain any property insurance.  The buyers did finally find property insurance, but it was at a substantially higher rate.

 

What most people do not realize is that the insurance companies keep track of insurance claims on their insured properties and this information is apparently shared between the large companies.  I even had a Client who one time just called their insurance agent and asked about a leak in their roof and they had a rate increase on the next payment cycle.  There seems to be two ways the insurance companies keep track of any claims; the first is to keep track of the claims on any one particular property and the other is they keep track of any claims on the individual.  Before anyone turns in a claim on any damage they should first consider how it may affect their future ability to obtain insurance coverage. And in the case of a person who is considering selling their home they should be very

careful because it could affect their home’s marketability and final sales price.  Many people turn in frivolous claims which result in higher prices for the rest of us.  Non disclosure prior insurance claims will at least cause an unexpected delay in closing the escrow.

 

The Transfer Disclosure Statement or TDS as it is known by the agents is a very powerful document which requires the Sellers to disclose all the know issues with their home to the potential Buyer.  There is a section of the TDS specifically asking about any insurance claims in the past 5 YEARS!  If the Seller fails to disclose any past insurance claims and it becomes a problem for the new buyer, then the Seller can be held responsible for any damages caused by this non-disclosure.  It is very important that everyone involved with the purchase transaction be very aware of the importance of the TDS, if the Seller does not disclose what they know about the home then they can be held responsible for any damages caused by the non-disclosure. .One source of finding the insurance history of many properties is   WWW.choicetrust.com

 

What is Bonding? Fidelity vs. Completion Bonds.

No Its’ Not an Electrical Connection!

 

“Bonding? Bonding? We don’t need no stinking Bonding!”   Loosely quoted from the “Treasure of Sierra Madre” with Humprey Bogart, Walter Huston, and Tim Holt

 

Many times an agent will call and ask if I am bonded.  There is a misunderstanding regarding just what exactly what the term “bonding” really means.  Bonding or Fidelity Bonding is an insurance policy that guarantees a person will not steal personal property.  This is commonly confused with a contractor’s license bond. 

 

A contractor’ license bond is a job completion bond that is required by the Board of Consumer Affairs for contractor licensees.  This completion bond has nothing to do with a fidelity bond.  I am unaware of any inspector who carries fidelity bonding and I do not recommend that it be required. Be cautious of any home inspector who advertises that he is licensed and bonded.  He may be referring to his contractor’s license bond but remember home inspections are not covered by the Contractors License Board. The Contractors Board will not take any actions in regards to Home Inspections.  There are no requirements for bonding for Home Inspectors.

 

Home Warranties

They’re Good If You Understand How They Work

 

The National Board of Realtors describes a home warranty as service contract, (not an insurance policy) typically lasting one year , that cover the repair or replacement of major home systems and appliances that brake down due to normal wear and tear.  Home warranties do not overlap or replace the home owner’s insurance policy.

 Typically the major appliances are covered

 

• Electrical System
• Central Heating
• Interior Plumbing
• Water Heater
• Ductwork
• Dishwasher
• Oven/Range/Cook top
• Garage Door Opener
• Trash Compactor
• Garbage Disposal

Optional Systems

• Air Conditioning System (Usually Optional)
• Pool Equipment
• Spa Equipment
• Washer Dryer
• Refrigerator
• Solar Heating Systems

 

Every company is has its own policies on what to cover.  It is important for the agents to become familiar with the differences in each company so that the appropriate company can be matched to the needs of the property, and the owner.

 

A Home Warranty can be a powerful tool for a home buyer.  The warranty covers the repair or replacement of the covered appliances or systems for a period of one year at a time. New homes and appliances that are still under manufacturer warranties generally are not eligible.  These policies can be extended for a year at a time to continue the coverage.  The warranties typically cost from $350 to $400 and should cover the unknown deficiencies in the home buying experience. The purchase contract usually determines who is to pay for the warranty; either the buyer or the seller can pay.  Many agents will pay for the warranty for their client as a marketing tool or to build good will with their clients.

 

Just as with all the other companies, home warranty companies take on the personality of the people who manage the business.  Some warranty companies will be more liberal others when a problem with a covered home does arise. Some companies are more likely to give high volume agents preferential treatment where a part time agent may not get the time of day.  It could be advantageous for smaller real estate offices for the broker to direct his agents to use only 2 or 3 of the best warranty companies in order to increase the office’s overall volume which will increase the flexibility in the warranty company and increase the likelihood of their client’s claims to be honored.

 

Each warranty company has a list of contractors or other service companies who are used to evaluate and possibly repair customer claims.  When a customer calls with a claim the warranty company sends out a service person that will evaluate the claim and determine if the issue is covered under the contract.  The home owner will be responsible to pay whoever arrives for the deductible stated in the contract. It is usually about $55.00.  (Ask the warranty for a coupon to pay for your client’s deductible. If they want the agent’s business bad enough they will give out the coupon for free). The most important issue to understand about home warranties is there is a built in conflict of interest between the property owner and the contractor who is hired by the warranty company. The owner should be aware of the terms of the contract so that he may intelligently communicate with the contactor about the claim and possibly head off conflict of interests issues.

 

If the claim is accepted by the contractor then he will receive the deductible from the homeowner and be contractually bound by the warranty company to perform the repairs at a substantially discounted rate.  The contractor will make up the difference between the market price and the discounted price through volume because the warranty company will have lots of work.  Conversely, if the claim is disallowed by the contractor he still receives his deductible from the home owner and can give a bid to the owner for repairing the problem at Market Rates.  Because the contractor is readily available to the owner there is a high probability that he will be hired to make the repairs.  In these cases the contractor makes more money and the warranty company does not have to spend the money for the repair.   But the property owner looses. Therein lays the conflict of interests.

 

What is not commonly known is that the property owner is entitled to a second opinion from another contractor; and if the second opinion is suspect then the owner can have their own contractor or even an expert to evaluate the issue to insure the warranty’s terms are enforced.  I suspect this built in conflict of interest is the source of many unhappy customers.

 

Typically pre-existing issues are disallowed from the policy but some companies will allow unknown preexisting issues. This is one reason why it is important to be knowledgeable about the different contracts.  If you think you have a legitimate claim do not be passive; get a second opinion and confirm whether it is valid is a valid claim!  If the contractor who is hired by the warranty company misdiagnoses a problem and it somehow escalates into a more serious problem then the warranty may be held liable for damages.  Complaints can be sent to:

 

California Department of Insurance
300 Capitol Mall, Suite 1500
Sacramento, CA 95814
916-492-3500
415-538-4010 (San Francisco)
213-897-8921 (Los Angeles)
Toll free in CA: 1-800-927-4357
Fax: 916-445-5280
www.insurance.ca.gov

 

The Home Warranty Association of California can be a source of information web site is www.warrantyassn.com

 

Insurance Inspections

Do Not Follow the Standards of Practices

 

There is an effort by the insurance industry to use Home Inspectors to complete "Inspection Reporting Forms" from various insurance companies in anticipation of obtaining Homeowner's Insurance.  These insurance company produced inspection forms do not meet the minimum requirements of the Standards of Practice and are considered by the most inspection associations as an extremely high liability service for Home Inspectors.  Insurance inspections are not covered by the Errors and Omission insurance that would normally cover the inspector and the broker.  By recommending to your Client to use a Home Inspector for this service may expose the Agent and Broker to unnecessary liability.  The prudent Agent should insist that the insurance company perform their own inspections or conform to the Standards of Practice.  I have included the Official Position Statement from CREIA.

 

I picked this conversation from an insurance broker off a message board on the internet.  I do not know who wrote it but it is interesting and brings a murky situation into stark relief:

QUESTION: As a mortgage broker, I‘m concerned that home inspection reports are never included with a loan application?

This risky pattern came into focus last week when I hired a home inspector.

As far as the original post, insurance companies in my area are using several guidelines in order to deny insurance coverage. Many companies have simply increased the amount of paperwork to try to make it so difficult that the prospective insured gives up out of frustration. That way the insurance company can still say that they provide insurance to 100% of the people who apply. Doesn't matter that thousands or millions started to apply and quit because the process was so frustrating.

The other specific hoops that I am aware of that are used by some insurance companies here:

built prior to 1950
active Knob & Tube wiring
fuses rather than breakers
lead water supply pipes
history of insurance claims on the house
water damage or mold claim within past three years
service capacity of less than 100 amps.

I do discuss insurance with my clients. I'm there to help in any way I can, as long as it is legal, ethical, in the best interest of my Client, does not cause financial harm to my company, and does not put me or my employees in unnecessary or extreme danger for a house I’m buying. My inspector found construction defects and safety violations in a home that is only three years old and appears in perfect condition.

When I consider how casually and routinely my company and other lenders approve home purchase loans without any disclosure of property defects, I realize that the mortgage profession is essentially “driving blind,” handing out six-figure loans on properties we know very little about.

What can be done to close this major liability gap?

ANSWER: The lack of apparent concern for property defects is a transparent oversight of the mortgage loan business. In the same way, it is a shortcoming consistently practiced by the homeowner’s insurance industry.

Mortgage loans and homeowners insurance policies are customarily written on residential properties, without any knowledge of or attention to conditions affecting foundations, site drainage, roofing, plumbing, heating, electrical violations, fire safety, and so on.

Lenders routinely secure purchase loans without knowing the general or specific conditions of the collateral which secures their money. Loans are based exclusively on market appraisals, without adjusting those evaluations for the costs of needed repairs.

Likewise, insurance companies underwrite the fire safety of these properties without any disclosures of building violations that could increase the likelihood of a fire or other costly mishap. Some insurance companies are beginning to show an interest in defect disclosure, but they are providing abbreviated report forms for home inspectors to fill out, rather than requesting copies of actual home inspection reports.

What can be done to close these liability gaps is a question that will be answered gradually, over a period of years, as the mortgage loan and homeowner insurance industries gradually recognize the benefits of accurate defect disclosure and its effect on their profitability.

In the meantime, you as an individual broker can request copies of inspection reports that are generated during real estate purchase transactions. With refinance loans, however, home inspections will generally not be performed. 

 

The only problem in all of this, of course, is that, in this litigious society in which we live, I can see a home inspector missing something which results in the house burning down. Not only does the Client sue the home inspector for their deductible, pain and suffering, etc., but now the insurance company, which has a copy of the home inspection report, sues the home inspector to recover their losses. I think it will become increasingly necessary to educate the mortgage and insurance industries that the inspection report is only valid for the date and time of the inspection, and that there are no implicit or implied warrant

 

Code Inspections

Do You Really Want a Code Inspection?

 

The First Building Code: Hammurabi's Code of Laws (1792-1750 BC)By far the most remarkable of the Hammurabi records is his code of laws, the earliest-known example of a ruler proclaiming publicly to his people an entire body of laws. Hammurabi’s Code of Laws where all-inclusive: Of the 282 codes, numbers 228 through 233 are those, which addressed the earliest know building codes.
· 228. If a builder has built a house for a man, and finished it, he shall pay him a fee of two shekels of silver, for each SAR built on.
· 229. If a builder has built a house for a man, and has not made his work sound, and the house he built has fallen, and caused the death of its owner, that builder shall be slain.
· 230. If it is the owner's son that is killed, the builder's son shall be slain.
· 231. If it is the slave of the owner that is killed, the builder shall give slave for slave to the owner of the house.
· 232. If he has caused the loss of goods, he shall render back whatever he has destroyed. Moreover, because he did not make sound the house he built, and it fell, at his own cost he shall rebuild the house that fell.
· 233. If a builder has built a house for a man, and has not keyed his work, and the wall has fallen, that builder shall make that wall firm at his own expense.

 

My First Building Permit

The Early 1970’s When Things Were Simple

 

When I was a child, I remember going on a trip with my father to pick up a permit in Mariposa, a small city in the foothills above Merced.  We dropped off the plans to the building department in the morning, had lunch and picked up the permits in the afternoon.  It was just that simple. The code was the Uniform Building Code but there is no way to know which sections were enforced. The code inspections were typically a “drive by.”  Later on when I was working with the Merced Building Department I learned that the City was laid back in their adoption of the current building codes. What is not commonly known is that the State apparently does not take much notice of cities with a population of less than 50,000 and do not pressure them to adopt the current code as required by California Law. As the City approached the 50,000-population size this changes and Code enforcement becomes more formal, but enforcement was still susceptible to the interpretation by the Senior Building Official.  So on some of the smaller cities there is no way to reasonably know which code was in force when the home was constructed.  In addition, I know from personal experience that the senior building official would choose which sections of the building code they would enforce, which sections to interpret to fit their needs, and which sections to ignore.  Subdivision Map Law allows for locking in the building codes that are to be used on that subdivision. When a tentative subdivision map is approved it locks in the codes that can be applied to that project, regardless of adoption of new codes.  So it is possible to have a subdivision built to codes from a previous code cycle. My point of this discussion is to point out how difficult it is to know the date of the code enforcement, and next to impossible to determine which codes were applied to the subject property.

 

There appears to be a considerable amount of pressure to change the basis of Home Inspections from a non-code inspection to a code based inspection. The California Real Estate Inspection Association (CREIA) now has the Candidate Member, Certified Inspector, Master Inspector and the New Construction Inspector.  Each classification has an increasing knowledge of the code but with little acknowledgment of alternate education protocol.  These exams for these classifications are based wholly on building codes.  If the ultimate test for a Home Inspection is to be determined in a court of law, and if the basis of education is based wholly on the codes, then any report from a CREIA member may ultimately be viewed as a code inspection. As the classifications and education become more building code based then at some point Home Inspections will become a code enforcement organization and incur all the liabilities of a code inspection.  Every attorney at the CREIA conferences I have attended has always recommended that the “Code” word never be used in a report, yet the code is the basis for these inspector classifications.  This may be a slippery slope down which the Home Inspection Industry is moving.

 

Section 818.6 of the California Code of Civil Procedure States:

 

A public entity is not liable for injury caused by its failure to make an inspection, or by reason of making an inadequate or negligent inspection, of any property…for the purpose of determining whether the property complies with or violates any enactment or contains or constitutes a hazard to health or safety.

 

You have to read this case to understand what the local jurisdictions have absolutely no inspection liability!  See Harshbarger v. City of Colton (1988) 197 Cal.App.3d 1335, 243 Cal.Rptr.463 in the Appendix.  Apparently the only way to control the action of incompetent code inspectors is by placing political pressure on their supervisors though the elected representatives.

 

Every Broker and Agent should know that Code Enforcement Officials are immune from virtually any accountability for improper code enforcement.  Code inspectors are immune from civil liability!  If a home inspector steps up to perform a code based home inspection than it would appear that the home inspector would take on the liability of the original code inspection, including mistakes, omissions, and intentional non-enforcement of the previous code inspectors. All the issues from which the original Code Inspector is specifically exempted the home inspector would now be liable.  The importance of this statute cannot be overstated!   When an Agent tries to use the “Code” as an argument for a disputed call from a Home Inspector the Agent may be taking on all the requirements of a code inspection on the property.  Talking about “Codes” during a Home Inspection is very risky and fraught with liability. 

 

A very large percentage of the building code is buried inside the structure and cannot be viewed during a regular Home Inspection.  If a home inspector finds an issue that is visible but also extend into the unviewable portions of the home would the recommendation be to change the entire system?  By extension would this require retro fitting the entire home and bringing it up to the current code?  What about issues that cannot be seen but would be expected to be known based on the date of construction?  Would every home built to the older codes be considered hazardous?

 

When a remodel is more than 51% of the value of the entire home the Uniform Building Code  (UBC) and the California Code require that then the entire home be required to be brought up to current code. When a homeowner obtains a permit to replace the roof, for example, the entire home is not required to be brought up to current code standards because a roof is substantially less than 51% of the structure’s value.  When an inspector finds an issue that is less than 51% of the value would it still be necessary to retro fit the issue?  Apparently not, and by extension, it would seem that the code does not require homes to be brought up to current code standards unless certain requests are made for another substantial building permit.  Accordingly existing homes appear to be exempt from the current code. If this is the case then are pre-existing code issues really a reportable issue?   In my opinion only if the issue is covered by the Standards of Practice and is considered a “material defect.”  Safety issues transcend the date of any building codes according to the Standards of Practice.  In my opinion, it is more important for the Home Inspector to understand the safe operation of the systems and base the report on deficiencies in the systems rather than on Codes.  The building codes themselves acknowledge they are not designed as a teaching tool. 

 

If it is impossible to know which codes were enforced when the home was constructed, and there is substantial liability included with code enforcement, then why should a Home Inspector perform a code inspection? And by extension, why would an Agent expect a code inspection.  Code inspections can only lead to increased liability for everybody involved.  In my opinion an Agent should never bring up the subject of code inspections during a home inspection.

 

To add another layer of confusion, as of this writing the state has adopted the NFPA 5000 building codes to be implemented in or about 2006.  The Uniform Building Code (UBC) or California codes are now antiquated and scheduled to be replaced. So are inspectors expected to know the all the older UBC codes and the new NFPA codes? And how will the new code impact recommendations of the older code?  But wait, we also have the International Residential Codes which appears to be a superior code with a reasonable probability of becoming the Building Code used in California.  CREIA is apparently endorsing the International Residential Code but this code does not have any legal bearing in the State unless specifically accepted on each home on a case by case basis.  The IRC can be used under the alternate methods clause in the UBC.  So the home may have been built based on virtually any code that the local building official accepted on that particular building.  There is no way to know what code was used during construction without researching the records at the building department.

                                             

So far as I can determine, building codes are being used as a teaching tool because it fills in for the lack of proper teaching protocol for building systems.  There are no accepted teaching guidelines of which I am aware available to teach candidate Home inspectors, so the code is used as a substitute to teach proper building practice.  Memorizing a list of requirements does not insure proper understanding of the intent of the code.  Learning the code without proper understanding of the underlying intent is not sufficient to provide for proper home inspections and is probably a disservice for the student who falsely believes he is properly educated.

 

So if we use the one of the many available building codes for the basis of Home Inspection education, and if a very large percentage of the code issues are buried in the structure, should the inspector learn all the codes, or just the codes that can be seen during a visual inspection? Should Home Inspectors apply the IRC, UBC, California Code, or the NFPA 5000?  I am most concerned with the uncertainty of which code to apply. Even if the codes are similar, there are differences, which an attorney can use to the inspectors disadvantage. Even if the codes are applied during the inspection, it does not really insure the Client will have accurate information on which to base his purchase decision.  While it is clear that codes are an important part of the education of home inspectors, they are not the only important part.  Any competent and experienced Home Inspector will have at least a working knowledge of Building Codes.  It is virtually impossible to be a qualified Home Inspector without including Building Code protocol but only as an adjunct to understanding how the various building systems are expected to operate. 

 

In my opinion, a qualified Home Inspector should have a superior knowledge of the building codes so that the appropriate codes can be intelligently integrated with industry standards and the manufacturer recommendations to provide useable information to the client.  The importance of this integration is directly proportional to the age of the building. 

 

www.ICCSafe.org is the website for the codes that will probably be used in California by 2011

 

Rental Property Restrictions

Check it out now

 

This is really outside of a home inspection but it should be determined especially if the client is going to use the property for a rental.

 

Security and Safety

Safety First!

 

The agents should be aware of the specific areas they service.  If there are specific requirements in an area the agent should inform the home inspector so he can be prepared.  A home inspection is a joint endeavor by the agent, client and inspector so that all the information can be collected and disclosed. 

 

Noise

This Noise is Driving Me Crazy!

 

 got my self into big trouble during one inspection some time ago.  I was called out to do an inspection on a very expensive house in an exclusive neighborhood.  My Clients met me at the property and proceeded to ask me some very some informed questions about the home and about my abilities to provide a proper inspection report.  It was obvious to me that this was an educated and intelligent buyer who knew exactly what they wanted.  It was clear that they expected a comprehensive report.  The last thing the Lady said to me before they drove away was "We want to know everything..." 

 

The home was complicated with almost every feature you could put in a home.  On the outside there was a pool, a spa and a shop.  Surprisingly there were every few issues on the home and it was very well maintained.  That is always good for the inspector to have a "clean" inspection.  That afternoon the Client arrived for their walk through at our agreed time.  They were pleasant and asked many questions about the house.  As we approached the side fence the neighbor's dog began barking.  It was a mid sized dog that was making a fuss as we walked along the fence.  Mrs. Client began a long discussion about a bad experience with a dog at a previous property where they had lived and stated "We would never have bought that property if we had known about the dog!"  My bells immediately began ringing so I snapped a picture of the dog and placed it in my report; especially after the recent reports of pit bull attacks in San Francisco.  I felt like I had done my job, the Clients were informed of the dog, the sellers were relieved of having to disclose the dog and the barking would never become an issue after the close of escrow.  My Clients were happy and this disclosure in no way affected the transaction.

 

About three weeks after this inspection I got a call from the buyer's Realtor.  He wanted to know why I had put this dog in my report.  He was obviously very angry with me and proceeded to explain to me that this type of information was none of my business and that it could "Blow his whole deal!"  He then hung up the phone on me.  I immediately called my Client to find out what had happened thinking something must have gone wrong with the escrow.  My Client was unaware of any problems and was very happy with the report.  I told him about his upset Realtor but the Client did not know anything about the matter and indicated the escrow was proceeding as planned. 

 

In order to resolve this matter I contacted the Realtor's Broker to have a meeting between myself the Realtor, the Broker, and the Client.  The Broker agreed to meet with me but declined to meet with the Client.  We had a very interesting discussion.  The Realtor pulled out my Standards of Practice and made a point of showing that there are no requirements for a home inspector including a barking dog in an inspection report.  That my job is to inspect the building only and not make remarks that can ruin his transaction.  The more the Realtor spoke the more upset he became and finally left the meeting in a huff.

 

When I finally had a chance to respond I indicated that my first and only responsibility is to my Client.  The fact that we had the same mutual Client does not imply that I had any responsibility to the Agent.  Next, I showed them a copy of my signed inspection contract with the Client.  Nowhere on the contract was the Agent mentioned.  Next, I reminded the Broker that while I had a written contract with the Client, the Broker and Agent also have an implied contract with the Client with a fiduciary responsibility which means they must “act in the benefit of their Client” as described in California Real Estate Law.  In addition, the real estate purchase contract specifically identifies the possibility of noise in the neighborhood and the buyer’s obligation to investigate.  Their fiduciary obligation exceeded my contractual responsibilities as a home inspector.   Next I told the broker that I included the dog in the report to eliminate any possibility of the Client from using the dog as a way to cause trouble after the escrow was closed, that by the Realtor not being present during the walkthrough the Realtor took the dog out of context and made an issue out of a non-issue.  And lastly, who is to determine what information is to be provided to my Client? 

 

Is it possible for a person to have too much information when making such a large purchase?  Is it up to the Realtor to determine what information is to be released to the Client?  Does this mean my reports must first be reviewed by the Realtor before delivery to the Client? While it would be business suicide to intentionally upset the Realtors by including frivolous conditions, industry surveys indicate about 70% of home inspections are originated from Realtors, I decide what to disclose to my Clients.   As the discussion ended the Broker indicated that he would only recommend inspectors who did not exceed the minimum inspection standards.  What other industry can say, “We do not exceed the minimum standards?”

 

This is an extreme example of a little tiny issue being blown completely out of focus.  But what I did learn from this experience is that the local Realtors are behind the learning curve on what can be expected in a Home Inspection.  Detailed Home Inspections are expected in the larger Californian Cities.  There will be friction between the Home Inspection Industry and the Realtors as inspectors are trained to these heightened standards. This is why there is continuing education in the Real Estate Industries to teach the involved parties on how to best serve their customers.  Always check the qualifications on any prospective home inspector you may be considering and be sure they do not have mixed loyalties.  This issue is what prompted this document.

 

See “Shapiro v. Sutherland in the Appendix for case law on neighborhood noise.

 

The Real Estate Transfer Disclosure Statement

When in Doubt, DISCLOSE!

 

The Real Estate Transfer Disclosure Statement (TDS) describes the condition of a property and, in the case of a sale, must be given to a prospective buyer as soon as practicable and before transfer of title. In the case of a transfer by a real property sales contract (as defined in Civil Code Section 2985) by a lease coupled with an option to purchase, or by a ground lease coupled with improvements, the TDS is to be delivered before the execution of any of the foregoing.

The seller and any broker(s)/agent(s) involved are to participate in the disclosures. If more than one broker/agent is involved, the broker/agent obtaining the offer is to deliver the disclosures to the prospective buyer unless the seller instructs otherwise.

Delivery to the prospective buyer of a report or opinion prepared by a licensed engineer, land surveyor, geologist, structural pest control operator, contractor, or other expert (dealing with matters within the scope of the professional’s license or expertise) may limit the liability of the seller and the real estate broker(s)/agent(s) when making required disclosures. The overall intention is to provide meaningful disclosures about the condition of the property being sold or transferred.

 

1102.3.  The transferor of any real property subject to this article

shall deliver to the prospective transferee the written statement

required by this article, as follows:

   (a) In the case of a sale, as soon as practicable before transfer

of title.

   (b) In the case of transfer by a real property sales contract, as

defined in Section 2985, or by a lease together with an option to

purchase, or a ground lease coupled with improvements, as soon as

practicable before execution of the contract.  For the purpose of

this subdivision, "execution" means the making or acceptance of an

offer.

   With respect to any transfer subject to subdivision (a) or (b),

the transferor shall indicate compliance with this article either on

the receipt for deposit, the real property sales contract, the lease,

or any addendum attached thereto or on a separate document.

   If any disclosure, or any material amendment of any disclosure,

required to be made by this article, is delivered after the execution

of an offer to purchase, the transferee shall have three days after

delivery in person or five days after delivery by deposit in the

mail, to terminate his or her offer by delivery of a written notice

of termination to the transferor or the transferor's agent.

 

 

 

 

 

Agent’s Duty to Inspect

There are no standards for this inspection

C.C. 2079.  (a) It is the duty of a real estate broker or salesperson, licensed under Division 4 (commencing with Section 10000) of the Business and Professions Code, to a prospective purchaser of residential real property comprising one to four dwelling units, or a manufactured home as defined in Section 18007 of the Health and Safety Code, to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer.

Almost all agents perform their required property inspection either when the listing is signed or during the buyer’s inspection period.  The Transfer Disclosure Statement has space allocated for the agent in this regard.  There is little if any training provided to the agents to teach them how to perform this inspection.  Does the inspection include any neighborhood issues?  Does it include Megan’s Law or investigations at the local police department?  What about in process community re zoning of the area for other uses?  These peripheral issues are probably not required by this statute but the agents are expected to know this information and it should be disclosed to the client as part of the fiduciary relationship.  I suspect this type of information is rarely disclosed but it is all important information for the client

SELLER’S AGENT

 

A Seller’s agent under a listing agreement with the Seller acts as the agent for the Seller only. A Seller’s agent or a subagent of that agent has the following affirmative obligations:

To the Seller:

(a)        A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.

To the Buyer and the Seller:

(a)        Diligent exercise of reasonable skill and care in performance of the agent’s duties.

(b)        A duty of honest and fair dealing and good faith.

(c)        A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information obtained from the other party which does not involve the affirmative duties set forth above.

 

BUYER’S AGENT

 

A selling agent can, with a Buyer’s consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Seller’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations:

To the Buyer:

(a)        A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer.

To the Buyer and the Seller:

(a)        Diligent exercise of reasonable skill and care in performance of the agent’s duties.

(b)        A duty of honest and fair dealing and good faith.

(c)        A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties. An agent is not obligated to reveal to either party any confidential information obtained from the other party which does not involve the affirmative duties set forth above.

Dual Agency

 

A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.

In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer:

(a)        A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the Buyer.

(b)        Other duties to the Seller and the Buyer as stated above in their respective sections.

In representing both Seller and Buyer, the agent may not, without the express permission of the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered.

The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.

Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with this disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.

 

Document History

Home Inspections are a Legal Document That Stays with the Home

 

A Home Inspection becomes a part of the history of the home.  A Home Inspection is not to be taken lightly.  If for any reason the transaction fails to close, the Seller has been informed of the various issues in the home inspection report and any other report that was prepared for that transaction.  The Seller now has knowledge of a multitude of issues that must be disclosed to subsequent buyers.  The Seller must disclose all these newly discovered issues on the transfer disclosure statement and the existence of any previous reports for the property.  The inevitable result is that the Seller can either deal with the issues on the current transaction, or they can deal with the issues on the next transaction, but they will need to address the disclosed issues at some point in time, or accept the responsibility of non-disclosure.  There is no escape for the seller.  The seller is contractually bound to allow the inspections, and must disclose the inspections to any subsequent buyers.  The Listing Agent is obligated to inform the seller of the consequences of a home inspection and their duty to disclose their existence to subsequent buyers and to disclose any issues of which there were previously not informed.  They can no longer use the lesser standard of homeowner’s limited expertise if they have knowledge of the reports. The Listing Agents should be aware of this consequence and counsel their Sellers to successfully negotiate with the Buyers for a successful closing in order to avoid subsequent efforts to resolve the same issues.  CC 1102.7 Requires “Good Faith” in all disclosures.  CC 1102.8 “does not limit or abridge any obligation for disclosure.”   I recommend that the Listing Agent ask the seller in writing if there are any previous reports on the property in order to limit their liability. I recommend that the Buyers ask in writing if there are any previous reports on the property in order to help make a properly informed purchase decision.  I am unaware of any time limit or expiration date for any previous reports in this regard.  I would err on the side of safety and disclose every report regardless of the age to limit the Listing Agents and Sellers liability and to provide the best service to their Clients.

 

In the case of a out of town owner who has had a home inspection in his possession can no longer say he has little or no knowledge of the property.  The Home Inspections must be disclosed or the risk of non disclosure if any subsequent buyer gains possession of the Home Inspection.

 

Every Agent should be aware of the tremendous liability for suppressing a previous Home Inspection.  A short while ago I had a repeat customer.  I had performed a Home Inspection for her on a prospective purchase which had failed to close escrow.  My report discovered issues worth about $20,000.00 in repairs which were not disclosed by the Seller.  My client had agreed to a high purchase price in the belief that the home was in excellent condition.  When the issues in my report were communicated to the Seller, the Seller refused to renegotiate the sales price.  My Client was furious.  She went on and on about be treated poorly and then stated that the Seller had reduced the sales price after she had cancelled her contract.  She paused and then asked me what would happen if she sent a copy of my report to any new buyer after any subsequent escrow had closed?  I stammered and quickly changed the subject, but the consequences of a disgruntled buyer sending a Home Inspection to any subsequent Buyer must be considered. 

 

If the Home Inspection was not disclosed to the subsequent Buyer by the Seller or the Seller’s Agent, then the Seller and the Seller’s Agent could be liable for everything disclosed in the report.  I cannot think of any defense of this circumstance.  I am not even sure if the 2 year limitation of liability for Agents would apply due to gross negligence or an attempt to deceive.  I doubt if the Agents Errors and Omissions insurance would cover this issue.  If this practice becomes known to the buying public it could result in some major actions against the Realtors.  Disclose Everything! 

 

The Legislature should institute a method of keeping track of Home Inspection reports much like Pest Inspections in order to eliminate this exposure.

 

California Coalition of Home Inspectors

A Voice in the Wilderness

 

The California Coalition of Home Inspectors is the lobbying organization that represents the Home Inspection Industry at the State Legislature. Their website is www.CCHI.org.  The CCHI actively lobbies the legislature to upgrade the current Home Inspection regulations to acknowledge the importance of this service industry.  I would urge the California Association of Realtors to acknowledge the importance of home inspections and lobby for proper regulatory legislation.  The home inspection is the only document that represents the best’s interests of the Buyer. Make no mistake; The Home Inspection Report is the Home Buyer’s most important disclosure document.

 

California Real Estate Inspection Law

At Least it is Something

 

Here is the complete text of the California Law regarding Home Inspections with my comments after each section.

The people of the State of California do enact as follows:

      SECTION 1.  It is the intent of the Legislature in enacting this act to assure that consumers of home inspection services can rely upon the competence of home inspectors.  It is the intent of the Legislature that, in ascertaining the degree of care that would be exercised by a reasonably prudent home inspector pursuant to Section 7196 of the Business and Professions Code, the court may consider the standards of practice and code of ethics of the California Real Estate Inspection Association, the American Society of Home Inspectors, or other nationally recognized professional home inspection associations.

The legislature has enacted this section to allow the standards of practice of CREIA or ASHI or other nationally recognized home inspection associations to be recognized by the court. To my knowledge no court has refused to acknowledge and accept these standards of practice when litigating an inspection report.  Many home inspection franchises purport to be nationally recognized, and insinuate that they have required continuing education required for membership.  These association are in fact are a school for profit provided by the franchise and do not belong to a recognized association. Agents should be skeptical of so called “industry standards” (whatever they are} used by these operations.  In addition, the continuing education is usually non-verified and obtained over the internet.  Some of these franchises only require a yearly check to maintain membership.  Using an inspector who is not a member of a recognized association will increase the Agent and the Agent’s broker exposure to possible litigation.

  EC. 2.  Chapter 9.3 (commencing with section 7195) is added to Division 3 of the Business and Professions Code, to read:  

Chapter 9.3.  HOME INSPECTORS

    7195.  For purposes of this chapter, the following definitions apply:

   (a) “Home inspection” is a noninvasive, physical examination, performed for a fee in connection with a transfer, as defined in subdivision (e), of real property, of the mechanical, electrical, or plumbing systems or the structural and essential components of a residential dwelling of one to four units designed to identify material defects in those systems, structures and components.  “Home inspection” also includes any consultation regarding the property that is represented to be a home inspection or any confusingly similar term.

A home inspection is a “noninvasive, physical examination” of the property.    This means the inspector makes a visual inspection of the property only.  There are a few exceptions where an inspector may take off  certain inspection panels or may take some extra effort if there is sufficient cause but the inspector is not require to probe with a screw driver or take every single piece of equipment apart in the home.  This would increase the time of the inspection from about 3-5 hours to several days.  Such an inspection would be classified as something other than visual inspection i.e. a Home Inspection.

The law vaguely outlines the systems to be included in a report; the standards of practice are precise and tie down exactly what is to be examined and what is excluded. The association standards of practice are specific to the requirements and are the basis on which a home inspection is performed.

Single family residences from 1 to 4 units are included in this law.  Rental properties of 5 or more are not include under these standards but I recommend that the standards be followed for five or more units anyway.  It would be difficult to explain to a jury why an inspector used the standards for a 4 unit complex and not for a 5 unit complex.  Agents should know that mobile homes on leased lots are not included in this law but they are covered in the CREIA Standards of Practice.  Again I recommend following the Standards, to limit one’s liability on mobile homes.  The standards of practice include special requirements to be included for mobile homes due to their special systems.  There is special education and certifications available to home inspectors who want to inspect mobile homes.  It would be wise to use inspectors who have had training specific to mobile homes due to different construction techniques and laws.

   (b) A “material defect” is a condition that significantly affects the value, desirability, habitability, or safety of the dwelling.  Style or aesthetics shall not be considered in determining whether a system, structure, or component is defective.

A “material defect” that significantly affects the value is somewhat subjective.  Everybody would agree a hole in the roof is significant, but what about a fist hole (impact damage) in a door.  Every home inspector has differing opinions on what constitutes a significant defect.  Some inspectors try to limit significant defects to anything over $500.00.  Other inspectors report what they believe their client would want to know.  Herein lays a conflict for the agent. The more detailed the inspector, the more issues the agent will have to negotiate between their client and the seller. The more issues that are reported the higher the probability of a failed transaction.  Conversely, the less detailed report the higher the probability of an unhappy customer and possible litigation.  I have never had a customer complain about receiving too much information.  My recommendation is to report everything, even if it is not required by law. This will keep the agents out of trouble and keep happy customers who will remember their agents when the next property is purchased.  One in four Home Inspector will be sued this year.

   (c) A “home inspection report” is a written report prepared for a fee and issued after a home inspection.  The report clearly describes and identifies the inspected systems, structures, or components of the dwelling, any material defects identified, and any recommendations regarding the conditions observed or recommendations for evaluation by appropriate persons.

Technically a Home Inspection is a verbal report, and a Home Inspection Report is the written portion of the inspection.  Many inspectors will provide a walk through with the client as part of their service.  While the verbal walk through is very important to the client to understand the home technically it is not a home inspection report.  The written report is the home inspection and during the walk through the inspector will explain what will be included in the report.  All the systems required by the standards of practice must be included unless there is a written agreement between the inspector and the client to omit certain systems.  If there is no written agreement to exclude a system then that system must be included in the report.  Typically an agent will state, “We already have a roof inspection, you don’t need to do that part.”  Refusing to allow an inspector to properly complete the report as per the standards would be inappropriate and expose the agent to litigation should something not be properly reported.  That is to say the agent accepts responsibility of the omitted portion of the inspection.

Proper Report Writing

There is a reason the reports are written this way!

One of the most important topics taught through the inspection associations is how to manage the inspector’s legal liability.  Identify, Describe, Disclaim and Defer, the “four D’s” of inspecting, are the typical report writing techniques taught by the association lawyers.  Virtually everything the inspector identified is in some way deferred to the appropriate specialist in an attempt to defer the liability on to the specialist next in line.  A home inspection is not a list of repairs for a home.  It reports only the obvious issues and is in no way comprehensive.  A home inspector is under no obligation to offer advice or comprehensive list of repairs.  The agents need to understand this important issue and accept this as proper report writing.  

The four D’s of report writing are not understood by most agents.  The agents mistakenly try to use the report as a guide for a handyman to perform the repairs.  Using a handyman to perform repairs that the home inspector deferred to a qualified specialist exposes the agent to liability for any defective repairs or other items that may have been missed that would have been discovered by the specialist.  Even if no subsequent repairs were made the specialist the buyer would have at least been informed of any further unknown issues and had the opportunity to budget for those repairs in the future.  Using handymen to perform these repairs exposes both the listing agent and the buyer’s agent to negligent referral and is a breech of their fiduciary duty.

 

What Does Defer Mean?

When the Client is Informed, He IS informed.

 

When a client is informed of a problem or condition in a home, it does not matter how he was informed.  If the home inspector recommends a pest inspection to review water damage an eave and the pest inspector finds an additional problem with the wall that was not reported in the home inspection, or any other inspection, the client cannot go back and say the home inspector missed the problem in the wall.  The whole idea of a general inspection is the recommend evaluations by specialists. 

   (d) A “home inspector” is any individual who performs a home inspection.

There is no licensing requirement for a home inspector in the State of California.  Any person who prints up a business card can be home inspector.  To the uninformed the home inspection business appears to be easy money.  Accordingly, it attracts persons from every sector of society looking for a low stress, high income living.  As an agent you should ask yourself, would you choose a retired bookkeeper to inspector your homes or would you choose somebody with a varied background in the building industry?  Just as it is in real estate, a good home inspector earns his money. I can tell you from personal experience inspecting is a physical job. An agent should be aware of the physical abilities of the inspector.  Obesity or some other deficiency will make it difficult or impossible for the inspector to access all the areas required by the Standards of Practice. Always keep in mind what a jury would say if you have a choice between an experienced inspector and a beginner.

   (e) “Transfer” is a transfer by sale, exchange, installment land sale contract, as defined in Section 2985 of the Civil Code, lease with an option to purchase, any other option to purchase, or ground lease coupled with improvements, of real property or residential stock cooperative, improved with or consisting of not less than one nor more than four dwelling units.

The mobile home on a leased lot falls through the “cracks” and is not specifically covered by the law.  I recommend that any mobile home be inspected according to the standards to limit liability.  Mobile homes on leased lots are considered personal property and are exempted from the law, maybe.  Do not expose yourself to unneeded liability and treat a mobile home the same at a home.

  7196.  It is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise.

This section leaves open the possibility of holding a general contractor, structural pest control operator, architect, or engineer to a higher standard than everyone else.  A higher standard of care would have to include some type of intrusive inspections using sophisticated equipment that would take several days with excessive costs.  Such an inspection would no longer be classified as a home inspection.  If the courts were to require inspectors who have an increased knowledge of the building systems to some unknown higher standard they would in effect prohibit home inspections.  Accordingly, the more education the inspector has the more exposure he would have to being sued for issues that are impossible to discover. The best and brightest in the industry would not participate due to unmanageable liability issues.  To my knowledge none of these professions have been held to a higher standard if the Standards of Practice was identified and followed in the inspection report.

The Standards of Practice must be identified in the main body of the report to limit the inspection to visible issues.  The standards must be followed in order to qualify to be a home inspection.  Any person who does not identify and follow the standards of practice could be held responsible for issues that are impossible to discover.

   7196.1. (a) Nothing in this chapter shall be construed to allow home inspectors who are not registered engineers to perform any analysis of the systems, components, or structural integrity of a dwelling that would constitute the practice of civil, electrical, or mechanical engineering, or to exempt a home inspector from chapter 3 (commencing with Section 5500), Chapter 7 (commencing with Section 6700), Chapter 9  (commencing with Section 7000), or Chapter 14 (commencing with Section 8500) of Division 3.

This section eliminates any possibility of some home inspector being confused or offering engineering services for which he is not licensed.

   (b) This chapter does not apply to a registered engineer, licensed land surveyor, or licensed architect acting pursuant to his or her professional registration or license, nor does it affect the obligations of a real estate licensee or transferor under Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 3 of Division 2 of, or Article 2 (commencing with Section 2079) of Chapter 3 of Title 6 of Part 4 of Division 3 of, the Civil Code.

This section reaffirms the obligation for agents to make their own visual inspection as is required by Real Estate Law.  Even if the inspection report is used for a substitute disclosure the agents are still required to perform their inspection.  Agents should know the home inspector must agree to allow the report to be used as a substitute disclosure.  Most inspection contracts prohibit substitute disclosure without a written agreement.

   7197.  It is an unfair business practice for a home inspector, a company that employs the inspector, or a company that is controlled by a company that also has a financial interest in a company employing a home inspector, to do any of the following:

  (a) To perform or offer to perform, for an additional fee, any repairs to a structure on which the inspector, or the inspector’s company, has prepared a home inspection report in the past 12 months.

Personally I believe this to be unfair to prohibit a home inspector from making repairs on a property that he has inspected.  Structural pest inspection companies routinely make repairs on home they have inspected.  The difference is the pest inspectors are working for the lenders where the home inspectors are working for the buyers.  There is an important lack of buyer representation at the legislative level.  Who is better qualified to make professional repairs on a property than a home inspector?  With proper licensing and regulation this could be an important service for the client and the agents.  Allowing home inspectors to repair homes could actually begin to bring the existing housing stocks up to safe standards.

   (b) Inspect for a fee any property in which the inspector, or the inspector’s company, has any financial interest or any interest in the transfer of the property.

This section clearly addresses conflict of interests and prohibits an inspector from inspecting properties in which he has a financial interest.  This issue is also covered by the Code of Ethics that is included with the standards of practice to which an inspector is bound.

  (c) To offer or deliver any compensation, inducement, or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company.

Some real estate companies have a “preferred list” of venders who provided to each customer.  There is a fee to the vender to be included in this “list.”  “And now Mr. Agent, why did you recommend this inspector to your client? Was it because he outbid the other inspectors to be included on your vender list….?”  This circumstance could be devastating when presented to a jury.  Another important issue is that if one agent routinely uses one inspector.  This could imply some type of kick back.  Agents should rotate their use of home inspections to various companies to guard against this possibility.  Agents should advise their clients to contact the inspector directly to inquire about their services and qualifications.  In instances where the escrow coordinators are paid a set fee for each successful transaction and no compensation if the escrow fails may have to have some type of agency disclosure signed by the client prior to ordering an inspection.  In these instances escrow coordinators are only motivated to close the transaction.  The result is for the coordinator will inevitably choose an inspector who will perform the easiest inspection and not necessarily for the best interest of the client.  There is a built in conflict of interest for escrow coordinators and possibly some of the other assistants for the agents and there is the potential for negligent referral.  I am concerned that there are no agency disclosures regarding the escrow coordinators.

 

 

   (d) Accept an engagement to make an inspection or to prepare a report in which the employment itself or the fee payable for the inspection is contingent upon the conclusions in the report, pre-established findings, or the close of escrow.

Clearly this is to limit conflicts of interest.  It is inappropriate to offer money to an inspector to make a specific finding in a report.  This is called a bribe.  Many inspectors will allow payment through escrow, usually for an increased fee.  But the fee is still due if the escrow fails.  Inspectors are not allowed to refund a fee or not charge a fee if the escrow does not close.  Any agent who offers or accepts this arrangement could be liable for damages.

   (e) A home protection company that is affiliated with or that retains the home inspector does not violate this section if it performs repairs pursuant to claims made under the home protection contract.

Home warranty companies can use a qualified home inspector to discover “pre existing conditions” prior to issuing a warranty can perform repairs covered by the warranty within the one year period.

   7198.  Contractual provisions that purport to waive the duty owed pursuant to Section 7196, or limit the liability of the home inspector to the cost of the home inspection report, are contrary to public policy and invalid.

A home inspector may not change the duty owed under Section 7196 by written contract.  In addition a home inspector may not limit the amount of liability to the cost of the report.  Limiting the amount of damages is accepted in many other states.

In my opinion it is unfair for the inspector to have unlimited liability.  This invites frivolous lawsuits and outrageous insurance premiums.  While a few law suits are legitimate the vast majority are not warranted.  A typical home inspection costs around $350.00 and the potential liability could easily exceed the cost of the home.  Some clients have been known to actually look for inspectors with high insurance limits.  These clients intend to sue the inspector for frivolous reasons knowing the insurance company will settle rather than litigate.  Remember, when the inspector is sued every person who set foot on the property will also be named in the suit.  The agent’s can be sued for any reason by an unscrupulous client regardless of the agent’s actions.  Proper legislation is required to mend this outrageous circumstance.  When I am asked about insurance from a prospective client I automatically raise my rates.  One in four Home Inspectors are sued each year.

7199. The time for commencement of a legal action for breach of duty arising from a home inspection report shall not exceed four years from the date of the inspection.

A home inspector is liable for his inspection for 4 years after the date of the report.  A real estate agent is responsible to his client for 2 years after the close of escrow and a Structural Pest Inspection Report expires after only 4 months.  In my opinion, no person can reasonably remember a half day job after 4 years.  The typical home inspection expires after 30 days but the liability extends long after the useful date of the report.  As time goes forward the condition of the home will change making it more and more difficult to relate the condition of the home back to the report.  This is why pest expire after 4 months.

The 4 year time limit is too long and should be limited to 2 years as with the real estate agents.  This long time period promotes frivolous lawsuits and increases insurance costs.  This issue needs to be addressed by the legislature.  Recent case law has held that contracts that limit the time to one year are not enforceable but has left open the possibility of  a longer time limit of perhaps 2 years may be enforceable.  See (Moreno v Sanchez in the Appendix) for law regarding time limits on Home Inspections. There is a significant lack of representation for the home buyer in regards to the home buyer’s most important disclosure document. 

This is all the law for the most important disclosure document prepared for the buyer in California Real Estate; two whole pages.

Recommended Negotiation Process

Expectation Management

 

It has become painfully apparent that the typical agent has no idea how to properly use a report to negotiate with the Seller.  In order the use the inspection report one must have a working