All termite inspection reports in the state of California must follow the same general formatting guidelines. You will notice that findings and recommendations are lumped into two sections, Section I and Section II.
So, what’s the difference between Section I and II?
Section I items are findings during an inspection of active Wood Destroying Organisms or WDOs. For example, let’s say a window jamb has evidence of a live termite infestation at the time of inspection.
That finding of a Drywood Termite infestation in a window jamb would be noted ‘2A’ (see how to read a termite inspection report) under Section I since it is an active WDO issue.
If the drywood termite infestation in the window jamb has grown enough to cause damage, the damage caused to the jamb may also be noted as ‘2B’ along with a recommendation for repair under Section I since this is a finding of damage caused by an active WDO issue.
In that same example, let’s say the inspector finds earth-to-wood contact, meaning there are places where dirt is literally touching wood members. Upon close inspection, the inspector notes that there are no current WDO issues in the lumber affected.
He would note this in his report as ‘4A’. Though there is no active WDO present, earth-to-wood contact can be conducive to fungus/rot developing in the wood, and can also attract subterranean termites to infest the wood member.
This becomes a Section II item because it is not an active WDO issue, but are conditions conducive to a possible WDO issue.
When Section I vs Section II Matters
In California, it is not a legal requirement, but it is common to have properties in escrow inspected for Wood Destroying Organisms.
Having a thorough WDO inspection in addition to a generic home inspection helps protect buyers from surprise costs associated with structural damage caused by WDOs such as termites or fungus/rot.
Most lenders will require that a property for sale have a thorough WDO inspection before approving a loan on the property to be purchased.
It is a common practice of the lending industry to protect their investments and loans on properties to not repeat wreckless and irresponsible loaning practices of the past.
Government-backed loans such as FHA or VA loans will always require all work related to WDO issues be completed as a condition to funding a loan on the property.
This protects the lender’s investment and secures the value of the property for which they are issuing a loan.
For that reason, be prepared to have a lender require that all Section I items be addressed and remediated as part of a condition to funding a loan.
Again, they want to be sure they are investing responsibly on a structurally sound property.
Some lenders will require that all items, Section I and Section II, be addressed and remediated as a major condition before funding a loan on that property (see letters of intent).
Again, there is no legal requirement to even have a WDO inspection done much less a regulation to require any work be done before the close of escrow.
Each lender, each underwriter, and each loan is unique. It is possible that one lender will have more stringent requirements than another lender on the exact same property.
What lenders require as conditions to funding loans is entirely up to them.
To avoid a possible hiccup and delays in the escrow process, be prepared to have at least Section I items addressed as part of the lenders’ conditions.
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