Critics Fault ‘Hype’ on Home Inspections
Many California homeowners may be paying hundreds of dollars for inspections they don’t need, in part because the requirements of a new disclosure law are being misrepresented by some contractors and home inspectors, some real estate experts say.
The law went into effect Jan. 1. It requires an owner to disclose to a potential buyer detailed information that the seller may have about several aspects of the property, ranging from the condition of the roof to levels of neighborhood noise.
The legislation also establishes a uniform disclosure form and procedures for filling it out. Importantly, a buyer who isn’t given the completed form before making an offer on the property has three days to cancel the deal after he receives the form.
Sellers who have a professional inspect their home--a service that usually costs between $150 and $250--may be able to reduce their liability if they’re later sued by the buyer.
Unfortunately, an attorney for the California Assn. of Realtors says, some home inspectors, contractors and others involved in the real estate industry are “hyping” the new law in an effort to drum up extra home-inspection business.
“I think the new law is being blown out of proportion by some opportunists--by people who are unfairly taking advantage of homeowners,” says Stephen A. Groome, CAR’s managing senior counsel.
Groome says some individuals are wrongfully implying that the new law mandates an inspection of any home that’s for sale. Others, he says, are misleading homeowners by suggesting that sellers will likely be sued by buyers unless the owner is “some sort of a construction expert.”
The attorney adds that those “opportunists” are either misrepresenting the effects of the new law, or that they don’t fully understand it.
Published Statement
Particularly irking Groome is a wire service story recently published in several of the state’s newspapers.
The story quoted Ben Vitcov, president of San Jose-based Property Inspection Service, as saying that “the difficulty (with the new law) is that the responsibility is not being placed in the proper hands. The state is asking someone without the proper knowledge (the seller) to make serious judgments and be liable for those comments.”
Vitcov’s statement, says attorney Groome, “is just totally false. The new law isn’t requiring anybody to make judgments . It’s just requiring sellers to disclose what they already know “ about their home.
In an interview, Vitcov told The Times that the wire service reporter had quoted him accurately. However, he said, he didn’t want to “argue over the semantics” of the new law, and denied that he is trying to mislead the public.
‘Going to Be the Benefactor’
“I’m ‘hyping’ this new law to create a consumer awareness . . . I’m going to be the benefactor, yes, there’s no denying that. But I’m also bringing attention to buyers that they are entitled to a higher level of disclosure.”
Vitcov--who says his firm is the largest inspection outfit in Northern California--is also the director of consumer information for the American Society of Home Inspectors.
Even some inspectors are worried that homeowners are being misled into thinking that the new law requires sellers to have an inspection of their home.
“Despite what some people are saying, you don’t have to have a home inspection if you’re selling your house--period,” says Ed Eggling, president of Proscan Inc., a Thousand Oaks-based inspection firm.
Not Licensed by State
Unfortunately, Eggling says, it’s difficult to “crack down” on disreputable individuals and firms because home inspectors aren’t licensed by the state. “All you need is a scratch pad, a pencil and a sign that says you’re a home inspector, and you’re in business,” he complains.
Sellers and buyers who decide to pay for an inspection should make sure the inspector is bonded and has errors-and-omissions insurance in case something goes wrong, Eggling says.
He also says the inspector should belong to the California Real Estate Inspection Assn., a trade group whose members use standardized inspection forms and attend ongoing educational seminars.
Even if a few inspectors and contractors are using the new law to generate extra business, most real estate experts are happy the measure was passed.
“I think it’s a good law because it focuses a seller’s and buyer’s attention on areas that they might not otherwise focus on,” says Lawrence Teplin, partner in charge of litigation for Cox, Castle & Nicholson, a Los Angeles-based law firm specializing in real estate.
Prior Knowledge
“Instead of people focusing on the paint and the size of the rooms, they’re focusing on areas they might have ignored before the law was passed,” the attorney adds.
For example, Teplin says, buyers will find out that the smoke detectors don’t work or that electrical wiring in the garage needs improving before the deal closes instead of afterwards.
“Those are the types of things neither the buyer nor the seller paid much attention to before,” he says. The new legislation could benefit sellers just as much as buyers, Teplin adds, because sellers are more likely to discover minor defects and correct them instead of facing a large repair bill--or even a lawsuit--once the deal has been finalized.
State Sen. John Seymour (R-Anaheim), who played a key role in forming the new legislation, says he is “very concerned” by the possibility that some real estate professionals may be misrepresenting the new law in order to increase home inspection revenues. An inquiry by The Times, he said, was “the first I heard” about possible problems.
Emergency Legislation
Seymour, a former CAR president, said his office will contact realtors, the state Department of Consumer Affairs, and others who might have knowledge of possibly fraudulent activities to determine whether the new law needs some fine-tuning.
“It may be that we need to go back and spell out the legislation more clearly,” Seymour said. If minor changes need to be made, the senator added, emergency legislation could be passed within a few months and become law as soon as it’s signed by the governor.
