Termite Letter vs. Termite Bond: The Billion Dollar Question

Termites cause about $2.5 billion worth of property damage to American homes every year. And there certainly are termites in Georgia!

Termite Letter vs. Termite Bond

Inspection vs. Insurance

One-time fee vs. Annual renewal fees


Statetermites-2 of Georgia

Termite Letter, Clearance Letter, Inspection, Wood Infestation Report

The termite letter is a valuable part of any real estate transaction. Whether you are the buyer or the seller, it is recommended to have the home inspected by licensed professionals.

A Termite Letter, or the Official Georgia Wood Infestation Inspection Report, is a report of visible infestation and damage caused by insects (e.g., termites and beetles) and decay in accessible areas of the structure, with the inspection for decay fungi limited to the portion of the structure below the level of the first main floor. Commonly referred to as a termite letter, its purpose is to inform the lending institution and buyer of the results of an inspection by a Pest Control Operator. As a protective measure, many banks and lending institutions require that homes be inspected for damage from termites and other wood-destroying organisms before they will loan money on the home.

The Wood Infestation Inspection Report provides basic information about the inspection, such as the address of the property, and it answers such general questions as:
1) Where was the damage found?
2) What caused the damage?
3) Is there any visible evidence of infestation or previous treatment?
4) Are there any obstructions or inaccessible areas which cannot be inspected?

Your buyer can get a Termite Letter / Inspection approximately $50-$100 dollars.

Termite Bond or Insurance

termite-bond-agreement A termite bond is a contract or “insurance” policy that a homeowner has with a termite control or an exterminating company. Just like with other types of contracts, termite bonds differ in cost and what they provide. The bond allows the homeowner to pay what is essentially a retainer fee to a pest control company. Termite bonds are usually transferrable to a new homeowner. The new homeowner may request an inspection prior to the transfer, there may be transfer fees. Typically, homeowners pay annual installments for termite bonds.

One time cost, treatment, set up – $600-900, annual fees of $200-400 to maintain insurance

There are two main types of termite bonds:

  1. Treatment bonds: Let’s say X Company successfully treated your home for termites. However, two years later, another termite colony has moved in. If you have a treatment bond with X Company, then your home will get another treatment for free. Usually with treatment bonds, you will have to pay for termite damages.
  2. Repair bonds: This type of bond will have the company pay for damages caused by termites. If you live in an area prone to termites, then this type of bond is the safest, and most expensive, for homeowners to purchase.

House TermitesCommon Q&A

Does a Termite Letter guarantee the absence of termites?
A. No. This report is simply a description of any visible activity or damage caused by termites or other wood-destroying organisms. The inspection is based on a careful visual inspection of readily accessible areas and by sounding or probing. A qualified building expert should be consulted to determine the extent of damage and whether repairs are necessary. Most Pest Control Operators are not licensed builders.

Isn’t the Pest Control Operator responsible for reporting all types of structural damage?
A. No. Often, a Pest Control Operator is the only individual who goes beneath the house or in the attic. Because of this, the Pest Control Operator is often considered responsible for inspecting and reporting anything that may be wrong with the structure. This is not true. Structural and electrical problems, plumbing, roof leaks, etc., are not normally their areas of expertise. Building Inspectors/Home Inspectors and contractors who are licensed or registered are the appropriate people to call to inspect these problems.

Who is responsible for treating or repairing the damage found?
A. When Pest Control Operators find wood-destroying organism activity or damage, they are required BY LAW to report it on the Wood Infestation Inspection Report. If they do not, the Department of Agriculture will take appropriate enforcement action. Any company can treat or repair, but the licensed PCO is required to issue the report regardless of whether they perform the repairs or treatment.

Does a termite letter provide insurance on my new home?
A. No. A termite letter is a literal inspection of your home that pertains to wood destroying insects, water damage, and moisture conditions. It reflects the general conditions of the home at the time of inspection. There is no warranty or guarantee for any pre-existing or future conditions of the home.

What is a “clear” Termite Letter?
A
. A “clear” Official Georgia Wood Infestation report is obtained after a thorough inspection of the structure reveals no visible evidence of current infestation by any of the five organisms listed on the report.

What if my termite letter is not “clear”?
A. Many Wood Infestation Inspection Reports do not come back as many refer to as “clear.” However, damage that has been properly repaired or judged to be not structurally significant should not interfere with the sale of the house. Just as most used cars have a dent here and there, most Georgia homes that are over 10 years-old can reasonably be expected to have some wood- destroying organism damage. If a “clear” letter is required by the lender, or specified in the sales contract of the home, then estimates should be produced for any repair, corrective action, and/or treatments needed to correct the issues on the termite letter. Necessary actions should then proceed. Some loans and situations do not require a “clear” termite letter, and you should seek advice from your company representative as to the best course of action to pursue.

Who pays for the Termite Letter?
A.
Typically the Buyer. On a VA Loan purchase, the seller is required to pay for the termite inspection (buyer isn’t allowed to cover cost for this and if the buyer has paid for it, then they must be reimbursed at closing).

posted: Feb 1, 2017 | No Responses

Posted by:  Kate Furukawa

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