Who Pays for Termite Damage When Buying a Home?

Buying a home is an exciting time. After months of searching, you finally found your dream home. As you go through the buying process, the last thing on your mind is worrying about termites and termite damage. But before you close on your new home, it’s important to learn who is responsible for termite inspections, treatments, and repairs. This guide will walk you through everything you need to know about termites, termite inspections, and who pays for termite damage when buying a home

Should I Get a Termite Inspection When Buying a Home?

When purchasing a house, it is highly recommended that you get a professional inspection. According to the National Pest Management Association, termites are responsible for over $5 billion worth of property damage in the U.S. each year. Untreated termites can seriously damage the structure of your home.

Even if you don’t see outward signs of termite activity, termites could be hiding in walls, floorboards, or foundations—out of sight but still actively destroying wood. A thorough termite inspection by a licensed pest control company can detect termite infestations that may otherwise go unnoticed.

What Does a Termite Inspection Cover?

A standard termite inspection report checks both the interior and exterior of the home for any signs of termite activity. Some key areas the inspector examines include:

• Crawl spaces under the home
• Basements
• Attics
• Around doors and windows
• The foundation
• Wood framing
• Floorboards
• Ceilings
• The roof

The inspector looks for visible termite damage as well as hidden clues like mud tubes on foundation walls or termite droppings around wood framing. Tap tests are also commonly performed to check if wood sounds or feels hollow in areas damaged by termites.

Once completed, the inspection company provides a detailed termite inspection report indicating if there is any active termite infestation or signs of previous/repaired termite damage. Recommendations for treatment are also included.

Who Pays for the Termite Inspection?

When buying or selling a home, either the buyer or seller can pay for the termite and other pest inspections. However, it is generally the seller’s responsibility to provide an inspection report that shows the home is free from termites and termite damage.

Most buyers require a satisfactory “termite letter” before they will finalize the purchase. If the sellers do not provide an adequate inspection report, the buyer may opt to hire their own inspector.

Who Pays for Termite Treatment?

Who pays for termite treatments depends on whether the inspection turns up active termites or not. There are two scenarios:

Section 1: What the Seller Needs to Fix

Section 1 clearance refers to the part of FHA required termite and pest control inspections. Visible evidence of termite damage tends to mean there was a lack of termite prevention. active termite infestation or unrepaired termite damage. This must be addressed by the seller through professional termite treatments and repairs before selling. The seller pays all costs for Section 1 termite control services. 

Section 2: What the Buyer Needs to Pay For

If no termites or damage are found, the home qualifies for “Section 2 clearance.” Section 2 means preventative treatments are still recommended because the property is vulnerable to future termite attacks.

Unlike Section 1 issues, the buyer typically pays for preventative Section 2 treatments if they choose (although sellers sometimes agree to cover it in negotiations).

What if Termites or Damage are Found?

Discoveries of termites or termite damage during an inspection often lead to renegotiations. Both the buyer and seller typically have to make compromises on the purchase terms.

There are a few potential scenarios of who pays for treatments and repairs if termites or damage is uncovered:

• The seller pays for and completes professional termite treatments for active infestations prior to closing. Minor damage repairs may also be covered by the seller.
• Costs for treatment and repairs are split between the buyer and seller through credit allowances or other price adjustments.
• The buyer agrees to accept the home “as is” with termite issues, and the purchase price is reduced. The buyer takes responsibility for future treatments and repairs.

Termite Treatments and Repairs

Termite treatments by professional pest control companies are required if active termites are found during the inspection. Treatment options include soil fumigation, spot treatments, termite baits, and barriers/foam injections.

If structural damage from termites is discovered, repairs involve replacing damaged wood and framing. This stops further destruction and prevents safety issues. Spot treatments combined with damage repairs stop termite devastation.

When the Seller Covers Termite Treatment Costs

In many states, real estate laws require the seller to show proof that the property is termite free at the time of sale if requested. This prevents buyers from unknowingly purchasing a home with hidden termite hazards that could cost tens of thousands of dollars to fix.

If active termites or related damage is uncovered during a termite inspection (Section 1 items), the seller is usually financially responsible for paying a licensed pest control company to address the issues through treatments and repairs. Any termite damage repairs normally need to be fixed prior to a buyer taking ownership of the property.

However, state disclosure laws related to “latent defects” (problems not apparent through a normal inspection) may still leave buyers vulnerable for undetected termite damage that emerges after purchase.

Options for the Buyer if Termites are Found

Finding termites or rot damage from past/inactive termite infestations often presents dilemmas for home buyers. While significant structural damage usually must be repaired before selling, other termite discoveries may lead buyers to reconsider or attempt to negotiate the home purchase terms.

If termites are uncovered, some options buyers can consider include:

• Ask the seller to pay closing costs equal to termite treatment estimates
• Request the seller repair any damage or pay for treatments through credits or price reductions
• Accept existing termite conditions if minor, but adjust offer price downward to cover future treatment/repair costs
• Walk away from the purchase if the seller does not agree to fair requests forfinancial concessions

Buyers should carefully weigh the potential costs to eliminate termites against the benefits of the home and location. Minor issues may not be dealbreakers if the seller contributes financially. But in some cases, extensive problems could be red flags indicating that purchasing a different property may be wiser.

Estimated Costs of Termite Damage Repairs

The costs to fix termite damage can vary greatly depending on factors like:

• The severity of destruction
• The types of termites (different species target different materials)
• The square footage and other attributes of the home
• The extent of damage to the structure versus surface elements
• Construction materials used and needed repairs
• The contractor performing the repairs

Minor surface damage may cost anywhere from $500 to $5,000+. But if underlying walls, beams, floor joists or other critical structural components are compromised, repair bills can easily exceed $10,000 to $25,000+. In worst-case scenarios, the damage is so extreme that major renovations are needed, raising costs to over $50,000.

How Much Financial Damage Can Termites Cause?

Termites cause approximately $5 billion in property damages every year in the U.S. They destroy items primarily made of cellulose like wood beams and trim. If left unchecked, whole homes can be gutted by termite activities.

The key danger posed by termites is that theyhollow out structural wood from the inside without it being visible on the surface right away. So while tiny holes in siding or sawdust piles signal surface damage, far more destruction is often concealed inside walls, floors, etc. until wood collapses under pressure. This can severely compromise load-bearing elements and the safety of a home.

Another frustrating aspect is that termite infestations often last for years before being detected. It’s common for home buyers to uncover previous termite infiltration that sellers were unaware of or failed to disclose. This “hidden” destruction from past invasions can still necessitate expensive repairs to restore structural integrity.

Negotiating Termite Treatment and Repairs

The buyer typically has the most leverage when negotiating over termite issues uncovered in a property. If treatments or repairs exceed a few thousand dollars, buyers can justifiably ask sellers for significant credits or price drops. However, minor problems may not offer much room for bartering if the home is fairly priced.

When termites surface, wise buyers get repair quotes from pest control pros early on rather than after sealing the deal. Presenting the seller clear evidence of projected treatment/repair costs allows buyers to make precise requests for credits.

What if the House Fails Termite Inspection?

It’s worrisome if a home inspection turns up signs of an active termite infestation or unrepaired termite damage. This situation where a property “fails” termite inspection means costly treatments and repairs will be necessary before completing the sale.

If a seller was unaware of the extent of the termite problem, they may initially resist taking responsibility for correction costs. But ultimately, the law obligates sellers to adequately fix Section 1 clearance issues so the home meets quality standards for property transfers.

From the buyer’s perspective, the termite problems could still make them nervous about hidden damage even after the seller remedies the known issues. This may lead buyers to try to negotiate the price down or walk away if the infestation seems severe. Open communication is key for finding a solution fair to both parties.

How to Pay for Termite Damage

There are several potential options to cover the costs of fixing termite damage, including:

• The seller pays entirely out of pocket prior to closing
• The buyer and seller split costs through credits or purchase price adjustments
• The mortgage lender provides funds through the mortgage loan amount (subject to appraisal support)
• Home equity loans or lines of credit fund repairs after purchase
• Insurance claims, if applicable, must be made by the homeowner depending on the type of damage, such as drywood termite damage.
• Out of pocket by the buyer after closing

If repairs exceed $1,000+, it’s reasonable for buyers to negotiate with sellers to share expenses through louder mortgage amounts, for example. Sellers reap benefits by preventing deal cancellations.

Who Pays for Termite Inspection in California?

California state law under the Real Estate Transfer Disclosure Statement (TDS report) requires sellers to disclose any property defects, including wood destroying pests and organisms. Sellers must indicate knowledge of any termite issues.

If requested by buyers, California sellers are also obligated under Section 1 standards to order and pay for an inspection proving the home is free of termites and substantial damage prior to a title transfer.

So the onus is on California sellers to cover initial inspection costs as part of marketing the home. Buyers may opt for extra inspections at their own expense.

Who Pays for Termite Inspection on VA Loans?

A termite inspection is mandated on most VA Loans to ensure termite hazards don’t compromise safety and livability standards. Treatment is required if active infestations are present.

For VA loans, the lender often orders the inspection when the home purchase contract is signed. But the buyer typically pays for the inspection report upfront at closing along with other closing costs.

If treatment is prescribed, VA loans may roll treatment costs into the mortgage amount, subject to the home’s appraised value supporting loan limits. So responsibility for termite costs on VA loans depends on the specifics.

What is Section 2 Termite Clearance?

Section 2 is a category in the official termite inspection report paperwork. Section 2 clearance indicates:

• No visible evidence of wood destroying insects was found inside the home
• No visible damage from termites or fungi are present
• Preventative treatment is still recommended due to conditions conducive for future infestations

Examples of preventative Section 2 treatments include:

• Treating the soil around the home’s foundation
• Installing termite bait stations
• Fumigating crawl spaces as a barrier

Section 1 clearance is more serious, indicating corrections are mandatory to fix active infestations or unrepaired damage before selling the property.

With a Section 2 clearance, buyers pay for suggested preventative care if they choose to have it done to minimize future termite risks. But the home itself meets basic quality guidelines for real estate transactions without these optional add-ons.

Section 1 Termite Clearance Costs

If a property has Section 1 (active infestations or unrepaired damage) termite clearance issues, the law obligates sellers to address these prior to closing. Costs vary based on factors like:

• Scope of damage
• Type of termites
• Size of home can impact how comprehensive a termite prevention plan needs to be.
• Extensiveness of repairs
• Choice of treatment methods

Minor Section 1 termite corrections may range from $500 to $2,500+. More involved repairs tackling structural damage can cost $10,000 to $25,000+ in severe cases.

Sellers sometimes negotiate sharing major expenses if very high. But ultimately, the onus is on the home seller to meet minimum property condition standards set by state laws before transferring ownership.

Who Pays for Termite Inspection in Illinois?

In Illinois, real estate laws don’t establish definitive rules over termite inspection responsibility. Illinois only mandates sellers disclose any material property defects they are aware of. Termites may or may not be disclosed by law depending on sellers’ knowledge.

The purchase contract drives who pays for a termite inspection when you buy a house. By default, buyers often cover inspection fees. But sellers may choose to provide an inspection report upfront to affirm the home’s marketability. This is more common if previous treatments occurred or conditions warrant concern. In other cases, sellers may concede to credits or concessions to balance responsibility.

Using the Termite and WDO Inspection During Negotiations

Since termite infestations and damage repairs can be expensive, inspection results provide leverage for buyers negotiating purchase terms if problems exist. Based on the cost estimates to treat termites and fix any destruction, buyers can justifiably:

• Request credits from the seller to help fund corrective treatments and damage repairs
• Ask sellers to fix termite damage and other issues before closing the home sale, or allow price reductions if not addressing problems.
• Walk away if sellers refuse reasonable requests for mediations over extensive issues

Even minor signs of termites make buyers understandably uneasy about hidden damage. Reasonable concessions by sellers help appease worries that surface when problems arise. Good faith negotiations by both parties typically enable deals to still move forward successfully in these situations.

Key Takeaways

Protecting your home investment against termite damage involves getting educated on proper inspections and paying attention during property transfers. By understanding common termite hazards, inspection procedures, where problems hide, and the repair costs termites inflict, you can make informed decisions while buying or selling. Key tips include:

• Inspect annually for termites and other wood destroying insects
• Inspect during ownership transfers for hidden damage
• Get all termite issues corrected before finalizing purchases
• Negotiate fair cost sharing if problems exist
• Address critical structural damage promptly
• Implement preventative treatments

Knowing who pays for termite-related expenses during a home purchase or sale protects your financial interests. Make termite awareness and thorough inspections priorities to safeguard your valuable real estate investment against these destructive pests long-term.