Termite Reports When Buying or Selling a South Bay Home: Section 1 vs. Section 2, Explained

Somewhere in the middle of escrow, a termite report shows up in your inbox. It has a diagram of the house, a list of findings with numbers next to them, and two headings that everyone in the transaction seems to understand except you: Section 1 and Section 2. Then someone asks who's paying for the Section 1 items, and you realize you should probably know what those are.

We're Dean and Dave, the co-founders of South Bay Pest Pros. Dean runs Cressida Capital, a commercial lending firm in Los Angeles, so he's spent plenty of time with due diligence reports, but commercial lending isn't residential mortgages, and nothing here is lending or legal advice.

Below we explain the two sections, how the report fits into escrow, and what the certification says, sticking to what the Structural Pest Control Board (SPCB), the Business and Professions Code, and the Board's regulations say.

Here's the short version. Section 1 items are where the inspector found visible evidence of active infestation or infection, or damage resulting from it. Section 2 items are conditions likely to lead to an infestation or infection, where no visible evidence of one was found. Who pays for either is decided by your purchase contract, not by the pest control law.

What a termite report actually is

In California, the formal name is a wood destroying pests or organisms (WDO) inspection report. Most people say "termite report," though it also covers things like fungus (wood rot) and wood-boring beetles.

A few rules from Business and Professions Code section 8516 shape what you receive:

• Who inspects. A company can't issue a report about wood-destroying pests until a licensed Branch 3 field representative or operator employed by a registered company has done the inspection.
• When you get it. The written report has to be delivered to the person who requested the inspection and the property owner, or the owner's designated agent, within 10 business days from the start of the inspection.
• What's in it. The report includes a diagram of the structure showing where infested or infected areas are, and where conditions exist that would usually invite attack. It also has to list areas that were inaccessible or not inspected, with a recommendation for further inspection where practical.
• A built-in reminder. Every report has to carry a bold notice that reports from different companies should list the same findings, but recommendations to correct them may vary, and that you have the right to seek a second opinion from another company.

Findings are what the inspector saw. Recommendations are how they'd fix it. Reasonable companies can disagree on the second.

Section 1 vs. Section 2

Section 1 and Section 2 come from what the law calls a separated report. Under section 8516(c), when you order a report, the company has to tell you a separated report is available. If you ask for it, each recommendation is identified as either the infestation or infection that's evident, or conditions present that are deemed likely to lead to infestation or infection.

The Board's regulations, at Title 16, section 1990 of the California Code of Regulations, require a standard definition just before the first finding on every separated report. In plain terms, Section I contains items with visible evidence of active infestation or infection, or conditions that resulted from it. Section II items are conditions deemed likely to lead to infestation or infection where no visible evidence was found.

The same paragraph defines a third category: further inspection items. These are recommendations to inspect areas the inspector couldn't access during the original inspection, which can't yet be called Section 1 or Section 2.

Side by side

The Section 2 examples in that table come straight from section 8516(b)(7), which lists conditions "usually deemed likely to lead to infestation or infection, such as earth-wood contacts, excessive cellulose debris, faulty grade levels, excessive moisture conditions, evidence of roof leaks, and insufficient ventilation."

Section 8516(e) adds an important limit. Conditions likely to lead to infestation can't be characterized as actual defects, as actual active infestations, or as needing correction before a company can issue a certification. In other words, Section 2 items alone shouldn't stand between a property and a certification that there's no active infestation.

What if nobody fixes an item?

Section 8516(d) covers that. If the owner or the owner's agent chooses not to correct a Section 1 or Section 2 condition, the pest control company isn't liable for damage resulting from that choice. The same subsection says this doesn't excuse a company's own negligence or fraud.

Escrow timing

The state doesn't require a pest inspection report before a sale. A Structural Pest Control Board consumer Q&A on inspections notes that many mortgage lenders do require one.

Inspect close to closing. The Board's Q&A points out that companies aren't responsible for conditions that develop or become visible after the inspection date. For that reason, it suggests buyers get a report as close as possible to the close of escrow.

Reports take up to 10 business days. That's the legal deadline from the start of the inspection under section 8516. Build it into your contingency dates.

Reinspections have a four-month window. If the company gave an estimate or bid with the original report, it has to reinspect on request. Under section 8516(b)(12), the reinspection costs no more than the original inspection price and must be completed within 10 business days after it's ordered. After four months, any new inspection is an original inspection.

Check the history. The SPCB's Wood Destroying Organism database lets you see if a property has had a WDO inspection report filed in the last two years. If one exists, you can request copies from the Board in writing.

Who pays is set by the purchase contract

This is the question everyone asks first. The pest control law doesn't answer it. The Board's consumer Q&A says it directly: whether the buyer or seller pays for the work depends on the sales contract.

So the place to look is your purchase agreement and any addenda or counteroffers your agents negotiated. The contract might allocate Section 1 work to one party, Section 2 work to another, or treat them differently. Lender requirements can also come into play. The Board's Q&A notes that some lenders care only about Section 1 items, while others may require Section 2 conditions to be corrected too. Ask your lender what they need, in writing, early.

The same Q&A adds that there's no law requiring the recommendations on a report to be completed before a sale, but many lenders require the inspection and the recommendations to be finished before escrow closes. Buyers should know which recommendations haven't been completed before escrow closes.

If you're unsure what your contract says or what it means for you, ask your real estate agent or a real estate attorney. This is general information, not legal advice.

Clearance and completion: what the paperwork says

Once the work is done, two documents matter.

The notice of work completed and not completed. Under section 8518, when a registered company completes work under a contract, it has to give the property owner or the owner's agent a notice of work completed and not completed within 10 business days. The notice includes the cost of the completed work and the estimated cost of work not completed. Compare it line by line with the original report.

The certification. This is what people in escrow often call the "clearance." Under section 8519, the company has to provide a certification if the person who ordered the report asks for one. The wording is set by law. When the report found no infestation or infection, it states that "no evidence of active infestation or infection was found in the visible and accessible areas." When infestation was found and all recommendations to remove it and repair the damage have been completed, it states that the property "is now free of evidence of active infestation or infection in the visible and accessible areas." If some of that work wasn't completed, the certification says so and lists the exceptions.

Notice the phrase that repeats: visible and accessible areas. A certification isn't a promise that there are no termites anywhere in the house. It speaks to what could be seen and reached.

A quick checklist for buyers and sellers

• Asked for a separated report (Section 1 / Section 2) when ordering
• Read the list of inaccessible areas and further inspection items
• Checked the SPCB WDO database for reports filed in the last two years
• Confirmed what the purchase contract says about who pays for which items
• Asked the lender what they require before closing
• Got the notice of work completed and not completed, and compared it to the report
• Got the certification, and read which areas it covers
• Verified every company's license on the SPCB license search

Our guide on how to verify a California pest control license shows you how to check that last item, including what Branch 1 and Branch 3 mean.

Where we fit, and where we don't

South Bay Pest Pros is a free referral service in the LA South Bay. We don't inspect homes, issue termite reports, or decide whether a buyer or seller pays for anything. We match you with one licensed, independent provider serving your city, and that provider inspects and quotes. Homeowners pay nothing for the match. Providers in our network pay us a monthly fee, and before they join, we look up their company registration with the Structural Pest Control Board and confirm it's current and covers the right branches.

Our termite page covers termite signs and typical LA-area ranges, and our FAQ answers the rest.

Note: South Bay Pest Pros (southbaypestpros.com) serves the LA South Bay and isn't affiliated with Pest Pros Pest Solutions.

Before you sign off on the report

A termite report is a short document with a lot riding on it. Read the findings, not just the totals. Know which items are Section 1, which are Section 2, and which areas nobody could see. Then let your contract, your lender, and your agent sort out who handles what.

If you need an inspection for a South Bay purchase or sale, request a free match and a licensed provider serving your city will follow up.