What Everyone NEEDS to Know About Home Inspections

1. What Everyone NEEDS to Know About Home Inspections

2. What is a Home Inspection? • CA B&P Code 7195 (a) reads: • "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" includes any consultation regarding the property that is represented to be a home inspection or any confusingly similar term.

3. Pre-1984 Real Estate Transactions • “Buyer Beware” • Brokers only required to disclose “known” defects • Only 1 – 2 % of homes inspected

4. Easton v. Strassberger(upheld 5-31-84) • Realtors have an “affirmative duty to conduct a reasonably competent and diligent inspection of the residential property listed for sale and to disclose to prospective purchasers all facts materially affecting the value or desirability of the property that such an investigation would reveal.”

5. Easton Implications • More than a “casual” investigation • Agents/Brokers must look for “red flags” • Does not apply to commercial properties • “It does not require an expert to explain to the jury the relationship between uneven floors and the possibility of unstable soil…”

6. 1985 - SB 986 • Required disclosure of alterations or structural additions done without permits • Took effect 7-1-85

7. 1986 SB1406 • Led to Civil Code 1102: Transfer Disclosure Statement (TDS) • “Substituted Disclosures” could be made by: • Licensed Engineer • Land Surveyor • Geologist • Structural Pest Control Operator • Contractor • “Other expert”

8. Home Inspection Legislation • Bills introduced that would have affected the Home Inspection Industry but never passed: • 1987, 1994, 1999, 2002, 2003, 2004, 2005

9. Home Inspection - Like a Physical Check-Up • If problems or symptoms are discovered, the Inspector may recommend: • Repair • Replacement • Further evaluation by a Specialist • A Home Inspector is a “generalist”

10. Home Inspector - Like a General Practitioner • There may be differences in: • Training • Knowledge • Experience • Professionalism • Customer Service

11. The Home Inspector • Important Questions to Ask • How much experience does the Inspector have? • Has the Inspector been formally trained? • What professional memberships, designations, etc do they hold? • Do they have references?

12. Is your Home Inspector Insured? • Errors & Omissions • Not required by law • General Liability / Workers Comp • Residential Purchase Agreement • (C.A.R. Form RPA-CA, Revised 1/06) • Paragraph 11. Buyer Indemnity and Seller Protection: • Buyer shall carry, or Buyer shall require anyone acting on Buyer’s behalf to carry, policies of liability, workers’ compensation and other applicable insurance, defending and protecting Seller from liability for any injuries to persons or property occurring during any Buyers Investigations

13. Home Inspection Report • CA B&P 7195 (c) states: • 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.

14. Home Inspection Report • CREIA Standards of Practice states: • A real estate inspection report provides written documentation of material defects discovered in the inspected building’s systems and components which, in the opinion of the inspector, are safety hazards, are not functioning properly, or appear to be at the ends of their service lives. The report may include the inspector’s recommendations for correction or further evaluation.

15. Home Inspection Report • Narrative • Checklist • Combination • Computer-generated or handwritten • Hardcopy, email, or both

16. The 4 D’s • The Home Inspection and Report should include the 4 D’s: • Detect (discover) • Find reportable conditions through the inspection process • Describe • What is it, Where is it, Why you are reporting it? • Disclaim • Systems, components, or areas which were not visually accessible or otherwise not inspected • Defer • Recommend repair, correction, or further evaluation

17. The 4 D’s • Inspectors do not prescribe repairs. Corrections should be performed by an appropriate person. This usually means a qualified licensed contractor or technician. • Further evaluations and estimates for repairs should be completed during the inspection contingency. • Repairs should be completed within appropriate timelines.

18. Request for Repairs • CAR Residential Purchase Agreement • (C.A.R Form RPA-CA, Revised 1/06) • Paragraph 10. REPAIRS: • Repairs to be performed at Seller’s expense may be performed by Seller or through others, provided that the work complies with applicable Law, including governmental permit, inspection and (final) approval requirements.

19. Request for Repairs • 10. REPAIRS: (continued) • Repairs shall be performed in a good, skillful manner with materials of quality and appearance comparable to existing materials. • Seller shall obtain receipts for Repairs performed by others; prepare a written statement indicating the Repairs performed by Seller and the date of such Repairs; and provide Copies of receipts and statements to Buyer prior to final verification of condition.

20. California Law for Home Inspections • Found in Business & Professions Code sections 7195 et seq. • Originally created by Senate Bill 258, in the 1996 legislative session • In effect since January 1, 1997 • Defines Home Inspections & Home Inspector • Imposes certain duties and constraints

21. Section 1 (Preamble) • “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 HomeInspectors, or other nationally recognized professional home inspection associations.”

22. Code of Ethics • The law also contain provisions similar to those in the CREIA Code of Ethics, including prohibitions on: • Repairing properties on which an inspection was performed in the last 12 months • Accepting kickbacks • Payment of referral fees to agents

23. Statute of Limitations & Additional Info • The law has a statute of limitations on the inspector’s liability up to 4 years from the date of the inspection. • Additional information on inspection for energy efficiency, if requested by the client, was included in 2001 • The text of this law and others can be viewed at www.leginfo.ca.gov

24. California Licensing • The State of California currently has NO license available for home inspectors • Without such licensing, how do you choose a qualified inspector?

25. CREIA • California Real Estate Inspection Association • Is a voluntary, non-profit public benefit organization • Founded in 1976 • Chapters are located state-wide • Largest state home inspection association in the U.S. • Provides education, training and support services to its members and the real estate community • Find a CREIA inspector: • www.creia.org

26. CREIA’s Educational Mission • Is to expand the technical knowledge of its members through continuing education • All members must complete as minimum of 30 hours of continuing education annually through: • Monthly meetings • Seminars • Conferences • Mentoring programs

27. CREIA Members • Before any inspector is authorized to identify himself or herself as a CREIA Certified Inspector (CCI), they must pass a rigorous inspection knowledge exam and agree to abide by CREIA’s Standards of Practice and Code of Ethics in their business conduct • Exam has approximate 50% pass rate • More stringent testing & experience requirements for: • Master CREIA Inspector (MCI) • CREIA New Construction Specialist (CNCS)

28. CREIA Standards of Practice • For four or fewer units, were originally adopted by CREIA September 13, 1983, and have evolved over the years since then • Latest revision April 15, 2006 • Can be viewed at www.creia.org

29. CREIA Standards of Practice • Defines a real estate inspection as a survey and basic operation of the systems and components of a building which can be reach, entered, or viewed without difficulty, moving obstructions, or requiring any action which may result in damage to the property or personal injury to the inspector. • The purpose of the inspection is to provide the Client with information regarding the general condition of the building(s). • Cosmetic and aesthetic conditions shall not be considered

30. CREIA Standards of Practice • Specific areas and systems to be inspected, and certain exclusions with each: • 1 - Foundation, Basement, and under-floor Areas • 2 - Exterior • 3 - Roof Covering • 4 - Attic Areas and Roof Framing • 5 - Plumbing • 6 - Electrical • 7 - Heating and Cooling • 8 - Fireplaces and Chimneys • 9 - Building Interior

31. Look for the Logo

32. Look for the Badge