Termite Clause

Definition of "Termite clause"

Written by

Olga Smirnoff

JPAR City & Beach

A broad definition of termite clause is a provision in a contract for the sale of real property that gives the purchaser the right, at his or her expense, to have the property inspected for the existence of termites. If, in fact, termites are determined to be present, the clause generally requires that the seller remedy the situation, that is, treat the property for the infestation. If the seller chooses not to exterminate the termites, the buyer has the right to cancel the sales contract.

Is the termite clause in real estate contracts still required? 

 Termites are no joke in real estate, that’s why in some contracts a termite clause used to be necessary in order to clarify who pays for the termite inspection and the treatment. In some states, like in California, a termite clause is no longer necessary since it must be dealt with just like with any other problem such as a crack in the roof, a burst pipe or a rugged flooring. So, disclosure in real estate weighs a lot these days and sellers’ honesty is a must to avoid any lawsuits after the sale. 

Most real estate agents would advise homebuyers to get a home inspection or at least a termite inspection before they buy, especially if the seller is not aware of their presence. If the homebuyers refuse to inspect the house, there will be a “waiver of right to home inspection” clause in their purchase contract and nobody can be held accountable later. Moreover, homeowners insurance doesn’t cover any financial losses incurred by these little insects either. So, unless you buy a house in the northern states of the US, it is highly recommended that you carried a termite inspection for your peace of mind.   

For example, real estate agents in Scottsdale or anywhere in Arizona, where the weather is warm and favorable to termite infestations, will insist on having a termite inspection. If sellers find termite damage before they list the house, they have two options: either to list their house and sell it “AS IS” or to make the repairments by hiring a structural engineer. 

Now, if termites are found during a home inspection before the closing day, the buyers may cancel the transaction and withdraw from the contract if the seller can’t pay for the cost of repairments or offer a significant discount. However, most buyers would feel uneasy about moving into a home affected by termites, no matter how good of a deal it’s been.

Get a termite bond

 You may wonder what options there are for homeowners who live in regions highly susceptible to termite attacks. Well, a termite bond is a kind of termite “protection program” that involves regular inspections and treatments, if necessary. The treatments are included in the termite bond package, but the repairments are not. Basically, a company specialized in pest-control will regularly come and check for termite presence.

How often will your house be inspected for termites under a termite bond? Every company sets different rules, but you can expect at least four visits per year. Most contracts are signed for one or two years at most. A termite bond may cost anywhere between $500 and $2,000. Fortunately, homebuyers can also assume an existing termite bond. 

Now, it is important to know that certain species of termites may not be included in a typical termite bond. For example, Formosan termites are more destructive and their inclusion may incur additional costs. The same applies to drywood termites. 

What does termite damage look like?

 There are several species of termites in our country and each one has its particularities. The most widespread are the subterranean termites, which can be found even in a few colder regions. Formosan termites are also subterranean termites and are found in Hawaii, North and South Carolina, Georgia, Texas, California, and other southern states. Subterranean termites can damage the wood in your house foundation and may lead to structural problems. Drywood termites also feast on wood but don’t be surprised if they eat cardboard, wallpaper or even plastic. They’ll do anything to get to their favorite food. However, they’ll only eat the softwood which is moist and softer than the outer layer. There are at least three signs that should set you on fire: termite droppings (look like small black grains or crumbs), hollow and brittle wood, or fallen wings. However, subterranean termites are not easy to detect and require more advanced technology. 

Did you know that most new constructions undergo a special termite pretreatment that keeps termites away? Insecticides are applied to the soil before any slab is poured. And we have just one more good news: certain green building materials are not on the menu of these little swarmings insects. For example, termites will never touch bamboo floors or any bamboo construction. This doesn’t mean that bamboo doesn’t have its enemies, but we will talk about them in another post.