House Detective: Making the Most of Home Inspection

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: We purchased our first home about two months ago, and we hired a home inspector to check it out. But two months after moving in we discovered black mold in the basement. The inspection report says there were no visible problems in the basement, but the mold is clearly visible. My concern is that there may be additional mold inside the walls. If the home inspector had simply alerted us to the problem, we could have resolved the issue with the sellers. Do we have any recourse against the inspection company for nondisclosure? Jim

Dear Jim: Recourse against the home inspection company depends on the inspection contract you signed and the laws that govern inspector liability in your state. The contract, for example, may specifically exclude mold from the inspection process. Mold is usually disclaimed in home inspection contracts because there is so much legal and financial liability associated with mold issues and because it takes special expertise to evaluate the severity of mold infection.

On the other hand, the basic imperative of a home inspection is to disclose conditions that are visible and accessible. If black mold is visible in a home, how can it serve the liability concerns of a home inspector to say nothing about it? There is more liability for the inspector who ignores visible mold than the one whose report says, “Black stains were noted on the basement walls. Further evaluation of this home by a qualified mold specialist is recommended.”

There are many home inspectors who firmly debate this position, who believe that home inspectors should make no mention of mold for fear of being held to a higher standard with regard to mold disclosure. But home inspectors are hired to provide pertinent information regarding property defects, not merely to dodge liability exposure. The avoidance of unreasonable liability is important to every inspector because many frivolous claims and lawsuits have been filed against good home inspectors. But regardless of such threats, home inspectors should remain focused on the essential reason they were hired: to serve the interest of the clients who hire them by disclosing apparent defects.

As for the mold in your basement: Keep in mind that mold is not always a serious problem. Mold is not always toxic, and mold removal is not always expensive. Before assuming the worst, notify the home inspection company of your concerns and request that they conduct a reinspection of the basement. Then, have a professional mold specialist evaluate and test the mold. Samples should be tested by an environmental lab to determine which kinds of mold are present, and bids from local mold removal contractors should be obtained. Again, not all forms of mold have adverse health effects, and the mold in your home may be limited to a small area. If the mold infection is small, mitigation may not be costly or involved. If it is large or involves hazardous mold, you can weigh the pros and cons of liability with the home inspector.

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.