Featuring America's Home Inspector: Nationally Syndicated Columnist, Barry Stone

Bankers Need Not Disclose

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: As a new Realtor, I have a question about disclosure. Today, I showed a bank-owned property to an investor. As we walked through the home, we observed obvious problems involving mold. There were black stains on some of the walls, the subarea was wet, and the place smelled from bleach. When I asked the listing agent about this, I was told that the home is being treated for mold but that there are no disclosure requirements for bank-owned property. This is puzzling. I understand that the banks are exempt from disclosure requirements because they are unfamiliar with homes they acquire through foreclosure. But shouldn’t they and their agents disclose conditions that are discovered once they are in possession of the property? Bill

Dear Bill: Your question gets right to the cutting edge of ethical responsibility. How do we define the ethics of professional conduct? Is it defined by state laws that exempt banks and their agents from disclosing what they know about a property, or is it a question of essential right or wrong, as we would teach it to our children? To most 10-year-olds, the answer would be obvious and unquestionable. As we get older, questions of moral conduct can be obscured by the fog of drifting legalities.

The specific requirements of real estate disclosure vary from state to state, but regardless of the fine print, any agent who is aware of a significant defect and withholds disclosure on the basis of a legal loophole is morally confused.

In the absence of ethical consensus, the best way to protect buyers of bank-owned property is to hire a qualified home inspector. Those who buy foreclosed homes often forego an inspection because the property is being sold as-is. They assume that since the seller (the bank) won’t fix anything, there is no need for an inspection. What they fail to understand is that the purpose of an inspection is not to compile a repair list for the seller: It is to be informed about what they are buying before they buy it.

Regardless of what the listing agent is willing to disclose, be sure to advise your client of the importance of a home inspection when buying property from a bank.

Dear Barry: We’re getting ready to sell our home but are worried about the large cracks in our patio. We think they were caused by tree roots, but the trees have been removed. My husband says the only way we can pass a home inspection is to replace the whole patio. I’m hoping there is a less expensive way to pass the inspection. What do you advise? Farzy

Dear Farzy: A home inspection is not a final exam that must be passed in order to sell a property. Its purpose is simply to provide disclosure of defects. Your husband is correct that large patio cracks can only be eliminated by replacing the patio, but homebuyers are mainly concerned about the condition of the house, not the pavement. As long as there are no major cracks in the building, the patio condition is a peripheral issue.

There are very few people who would decline to buy a home because of patio cracks. Otherwise, there would be a lot of unmarketable homes. My advice is to list the patio cracks on your disclosure statement and sell the property as is.

Bank repossession for red tagged water heater

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: We purchased a home that was repossessed by the bank, and we hired a home inspector to check it out. After moving in, the gas company red-tagged the water heater because of improper exhaust venting. The gasman said this should have been disclosed by our home inspector, and according to our plumber, a new vent pipe will cost $629. Is the home inspector liable for this costly repair? Lillian

Dear Lillian: Without knowing the specifics of the vent violation, I cannot comment on whether the home inspector should have disclosed it. The most surprising aspect of your situation, however, is the incredible cost for a new vent pipe. For $629, you could have a new water heater installed.

As for the home inspector’s liability: If you have not already replaced the vent pipe, you should notify your inspector about the problem and request that it be reinspected. That call should have been made as soon as the gas company pointed out the problem. Many home inspection contracts specify that the inspector must be given the opportunity to view the defect before it is repaired. Otherwise, the home inspector may be relieved of liability.

If the vent pipe has already been replaced, you have two separate issues: 1) You may have been grossly overcharged for the repairs; and 2) The home inspector may no longer be liable. If the repairs have not yet been done, call the home inspector and get two more bids for the cost of repairs. The House Detective

Safety Concerns in Electrical Panel

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: We recently purchased a home. During the negotiations, we asked the sellers to replace the electrical panel due to safety concerns disclosed by our home inspector. The sellers agreed to have this work done. On the day that the escrow closed, the escrow officer told us that the new panel had been installed without a permit. After moving in, we applied for our own permit at the building department. But the new panel did not pass inspection. We emailed copies of the failed inspection notice to the sellers, their agent, and our agent, but no one has responded. What should we do? Niki

Dear Niki: According to the National Electrical Code and the International Residential Code, it is illegal to perform electrical installations without a permit. It was the responsibility of the sellers to have this work done according to safety code requirements and with the approval of the local building department. Likewise, it was the responsibility of the agents to inform you of the status of the work before the close of escrow, not after.

If the sellers and agents are unwilling to address your concerns, a wake-up letter from a real estate attorney may be needed. Certified mail on legal stationary tends to be more stimulating than common email. Of similar effect would an ethics complaint at the local Board of Realtors office.

Does Window Replacement Require a Permit?

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: I recently bought a 1944 home that needed many repairs. Before buying it, I hired a home inspector, but he missed many of the problems, including windows that won’t open. I’m planning to replace all the windows in the house and have three questions: 1) Shouldn’t my home inspector have reported the faulty windows? 2) Is a building permit required for window replacement? 3) Can they really deny my right to occupy the house until the window replacement is approved? According to the permit application form from the building department, a Certificate of Occupancy cannot be issued until the permit is signed off. Delbert

Dear Delbert: Here are three answers to your three questions:

  1. Home inspectors typically test a random sample of windows to ensure that they function properly. When windows are not tested, it is usually because furniture or window coverings restrict access. Ensuring that windows are functional is particularly important in bedrooms and bathrooms. Bedroom windows must be openable and must meet minimum dimension requirements to enable emergency escape by occupants. Bathroom windows must be openable in order to provide ventilation, unless an operable exhaust fan in installed.
  2. The building code does not specifically require a permit for window replacements, but it does require permits if you “alter” a building. Some building departments interpret this code to include window replacements, while others do not. However, when window replacements include changes in the wall framing, a permit is more likely to be required.
  3. The requirement for a Certificate of Occupancy typically applies to buildings that are under construction, not homes where windows are being replaced.

Before commencing work on your home, check with the local building department for clarification of their requirements.

Buyer Beware in Virginia

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: You often stress the importance of defect disclosure for sellers. But here in the commonwealth of Virginia, sellers do not have to disclose. They can simply disclaim or disclose defects in their homes, as they choose. Most sellers sign disclaimers stating that they are selling their house “as is” without having to divulge anything they know to be defective. It’s “buyer beware” in this state, and only the foolish buyers forego home inspections! Diana

Dear Diana: Thanks for calling attention to this legal circumstance in your state. Something should be done in Virginia to rectify an inexcusably out-of-date position with regard to real estate disclosure. Setting aside the opposing legal arguments, it is a matter of common decency and honest ethical behavior to inform a buyer of defects before selling a costly commodity. This is particularly true with a home because of the financial hardship that can result from undisclosed defects. Those who support limited disclosure could use some basic instruction in the differences between right and wrong. Until then, the absence of seller disclosure increases the need for qualified home inspectors in Virginia.