The Great Termite Debate

Every home in the United States is in peril of termite and other wood destroying insect damage, and just about every lender requires a clear termite as a condition of making a loan. Real estate contracts typically have a separate termite provision that allows for the purchaser to make a termite inspection and, in Maryland at least, requires the seller to do treatments where recommended and repair damage (up to a limit of 2% of the selling price).

This has become a real problem in some cases. If the buyer's termite inspector reports no visible wood destroying insect activity but recommends a treatment as a condition of offering a warranty guess what? The seller is required to do the treatment, and this typically ranges from $750-$1500. There are some termite companies that seem to always recommend a treatment, whether they see signs of damage, previous treatments or not.

How can you avoid costly treatments and unnecessary treatments as a seller? GET A PRE-TERMITE INSPECTION AND WARRANTY! When we sign listing paperwork with sellers, we always suggest this (along with a pre-inspection which will be addressed separately). A termite company we recommend charges $60 for the inspection and gives a full one year warranty if there are no signs of wood destroying insects. When a contract comes in, we make sure the potential buyers are given a copy of this termite certification and warranty which is transferrable to them. Most often that precludes the buyer from even doing a termite, at the very least we have a basis for NOT doing treatment if they call in their own company who recommends treatment as a condition for warranty. If termites are found, it gives the seller the opportunity to shop around for the most economical treatment - a luxury they may not have if the buyer who has identified a problem insists on their own company doing the treatment. Sellers are under no obligation to use the buyer's company, but we've seen deals fall apart over disputes like this.

If there is termite damage found, again, the seller has the opportunity to get quotes and fix the problems economically, or in the case of minor cosmetic damage, fix it themselves as opposed to the licensed contractors the buyer will most certainly insist on.

Even if you have a contract with a pest control person, check before hand if the contract is transferrable to the new owner with no charge. Let me give you a nightmare termite scenario that might put things in perspective.

The owner of the home for sale had the home treated when purchased about five years ago as there were termites found along with minor termite damage to some paneling and woodwork in the basement which was minor and cosmetic and was left as is. They maintained the contract over the five year period at a cost of slightly over $350 per year and had the house inspected every year. The purchaser, as is their right, called their own termite company who did not find any active termites, but did call the old damage to their attention - even stating in the report that it was old damage. In order for them to write a new warranty they wanted $785 to do their own treatment. The seller immediately contacted the company through whom they were under contract who came out and did an inspection. They would NOT treat as there was no evidence of termites - that's their right as well. They would NOT transfer the warranty to the new owner without an additional payment of $375 even though it had been continually under warranty for five years. In the end, the seller wound up paying the $785 for the treatment (the settlement attorney took the buyer's side).

So, the next word to the wise, if you have a contract, make sure it is transferrable at no additional charge and get it in writing.

AGAIN, BE INFORMED AND CHECK BACK HERE OFTEN!