Building Codes and the Informed Purchase Decision
By Brad Deal
Two Standards: Home
Inspectors are held accountable for two standards of practice. The first is the practical standard by which
a client will be provided the necessary information to make an informed purchase decision. This is the standard the client
expects the inspector to meet in order to compliment his purchase transaction. The second standard is the
one that is determined in a court of law. It is based on the B&P Code 7195-7199 and the standard of care for the home
inspection profession in that geographical area. There is significant conflict between the two standards that must be recognized
by the inspector so that he might provide useable information to his clients and still minimize his legal liability.
The standards of
practice provided by the various inspection organizations are very similar. After reviewing them carefully,
it becomes clear they are conflicted in that they are designed to speed up the inspection thereby increasing profit at the
expense of being thorough. While they raise the minimum standards above the B&P Code 7195, they still
are minimal and provide for only a basic inspection. In my opinion, there is a need for an escalating scale
of standards allowing for a more complete inspection could be performed and still be covered by a yet to be invented higher
standard. This would allow the more detailed and experienced inspectors to charge the appropriately higher
fees for the product they are already providing.
It takes me at least 3.5 hours per home for a very simple inspection, plus another two hours
of office time to complete the report. The required time increases significantly with the difficultly of
the property. Include with this a 1.5-hour walk through with the client, travel time and I can only perform
one inspection per day. I will never get rich this way, but I feel good about my job. Inspectors
who go through a home in 1.5 hours may somehow meet the minimum standards but they do not provide the necessary information
for an informed purchase decision.
Uncertainty: There
is some uncertainty in the inspection industry regarding the proper way to report a potential liability issue.
The difficulty for the inspector lies in how to determine the difference between the issues to which an inspector may
be held accountable in a court of law, i.e. an imminent hazard or code violation, and what is functionally safe.
While an inspector may choose not to report a seemingly insignificant code violation, that same code violation could
be presented in a court of law as negligence to a jury. The inspector is therefore forced to provide information
that will not only influence a purchase decision but also the information that could be interpreted in a court of law as a
safety hazard. Thus, for liability reasons both standards must be reported even though code inspections are clearly not included
both by contract, and by the standards of practice. Including these liability-reducing issues in the report
serves not only to increase the length of the reports but also irritates the real estate agents, and confuses the clients.
For example: “Mrs. Client, having both the neutral wire and the ground wire under
the same lug is a clear code violation but it is still functionally safe.” “Well Mr. Inspector, how can it be
both a code violation and still be safe? I am so confused.” Well, so am I.
This is a difficult
question but goes directly to the subject, how does this finding influence the client’s purchase decision?
The home inspection industry would be well advised to emulate the teachings of every real estate agent in this regard;
prepare every transaction (inspection report) as if it were going to be presented to a jury. Note:
Quoting building codes in a report is never recommended as that may be used by an attorney to suggest the entire report is
a code inspection. While this advice has been around for as long as I have been in the business, I have never seen any case
law to support this assertion. If anyone has any case law in this regard, please share it with us.
Applicability: The applicability of building codes
has a variable function of importance dependant on the age of the home. Codes are of a decreasing importance
as a home increases in age. It is impossible to rationally apply a building code to a home built in the
early 1900’s, as codes were not available to be adopted, much less enforced at that time. As the
age of the home approaches the mid 1970’s when the more modern codes were adopted, they become more important.
Moreover, as the age of the home approaches a new home, the codes importance proportionally increase until we reach
the new home inspection, (the new home walk through) where codes are of their highest importance. Even
at the new home walk through inspection the codes are not the only standard; the manufacturer recommendations, and building
practices must still be included. Thus, codes move through a spectrum of lower to higher importance
to the home inspector and homebuyer.
Conversely, the older the home, the more the inspector must rely on alternate sources
of information and training to determine whether a particular system is safe. The older homes require the
inspector to understand why a system is deficient rather than relying on the “cook book” building codes.
Only by understanding why a system is deficient or unsafe, can an inspector apply his knowledge and provide his customer
with the appropriate purchase information. Manufacturer’s installation instructions become more and
more important as the age increases. Ultimately, the inspector should report his findings in such a manner as to inform the
client of the basic reasons on which a finding was based. The inspector must never forget that codes are
not retroactive. They apply only to new construction.
Take for example the electric
panel on a mid 1970’s home. It has been suggested that only a code inspection can be performed in
this instance. I disagree. First, the inspector must look at the electrical system and
note if it has operated for the last 35 years without serious failure. Next, it is a Federal Pacific, or
a Zinsco panel, or some other manufacturer that has inherit design problem that may require replacement? Is
the outside of the panel badly deteriorated? Are the doors present? Are there holes in the panel allowing
children access to the energized components? Is this panel worn out? The insurance industry typically depreciates
an electric panel over 15 years. Is there sufficient access to the panel as required by code? Is there
reasonable access to the panel? Current codes do not allow the panel to be placed inside a closet but many older
homes have sub panels in all sorts of odd locations. Does the client really care where the panel is located?
Relocating these panels is costly and not necessary. These are not code issues per se but they are related to the manufacturer
recommendations, which supersede the code. These are issues that may be important to the client
but they require a combination of code and practical knowledge to provide useable information to the client.
Police Power: The
government enforces building codes by the use of “Police Power,” http://www.answers.com/topic/police-power?cat=biz-fin and as such are not subject to the usual democratic process to which U.S. citizens are accustomed.
Building Codes are imposed on the building industry through this process for good reason but it is a never-ending process
of review and application. These are quasi-governmental organizations subject to all the influences and pressures of lobbyists
and manufacturers and are not accountable to the voting public. Not every code is based on safety concerns,
sometimes they are based on other influences. In addition, the code organizations must update and revise their codes periodically
in order to justify their existence.
Imposing current codes on older homes would throw the entire
real estate industry into unnecessary chaos. Having said that, every experienced home inspector has seen
such poorly installed systems as to be negligent with absolutely no oversight that place the occupants at risk.
Unregulated flips, additions, and changes need to be more closely monitored not only to protect the occupants but also
to keep the nation’s housing stock healthy. In my opinion, only a licensed general contactor should
be allowed to “flip” a home, as there are far too many fraudulent flippers in the resale market. Also,
in my opinion, our tax system should be revised to promote long-term ownership of homes and penalize speculators who take
advantage of the industry for short-term profit. Many of our current industry problems are related to speculation and uncontrolled
greed. Whether this may seem right or wrong, this is the reality of the home inspections industry
Scare Tactics: The
new inspectors are subject to all sorts of influence and pressures from trade organizations, vendors, schools, and other inspectors
with a personal agenda. It takes years to understand the home inspection business and how it relates to
the real estate industry. There are people who will extol the importance of becoming “code certified”
and recommend joining the International Code Council. Others will tell you to pay your tuition
and go to school to learn to be a home inspector as if a true profession can be learned in two or three weeks, or even a year.
In addition, there are trade organizations who demand proctored testing prior to acceptance. All
these entities presume to have all the answers and will demand to be paid for their services. The new inspector must quickly
learn to differentiate between meaningful training or possibly go out of business. These pressures are
used to scare the hell out of the new inspector but if he stays in the business, he will realize that they use fear to induce
participation. In my opinion, the real and final answer is this: it does not take much training to meet
the minimum requirements of Business and Profession Code 7195-7199. A minimum home inspection does not require a “professional”
inspector but only a “tradesman” inspector. Any reasonably intelligent person can meet these standards with some
training and a few ride alongs.
The problem is that this minimum inspection does not provide the necessary information to
allow a client to make an informed purchase decision. A home inspection is the beginning inspection on
which every thing else is based. It is the first inspection in a long line of inspections and research
that instigate the fireplace inspection, the roof inspection, and HVAC systems, ultimately moving up to structural investigations,
environmental, mold, asbestos, and lead. Each one of these ancillary inspections can have a significant impact on the appraised
value of the home, thus home inspections are a form of an appraisal. If the inspection does not induce the client to move
forward with the “appropriate specialist,” then the client will be at risk for a poor investment i.e. unforeseen
expenses. When the inspection finally provides a truly informed purchase decision, the inspection then
meets the threshold for a “professional” designation. A professional home inspector is truly
a powerful tool for the homebuyer. I foresee the day when there will be a B.S. degree for a “residential
hygienist” that will encompass all the facets of home inspections.
Conflicted Interests: Home inspectors have the least
amount of influence in the real estate industry. Accordingly, they do not receive the industry wide respect that a well-trained
and experienced inspector deserves. While inspectors may not have industry wide influence, they do have
a definite influence on the client. What is not commonly known is that the home inspection report is the
only document prepared specifically for the client during the purchase process. Every other document has
dual functions to benefit the other participants in the purchase transaction and only protects the client secondarily.
While the client is presented with mountains of agent disclosures, loan documents, transfer disclosure statements,
etc. virtually all of these documents are designed to protect the agent from litigation. It is interesting
to note our clients, (the typical homebuyer) do not have representation at a legislative level that they deserve.
They are left to the conflicted interests of their agents. Lobbyists represent the lenders, title
companies etc; virtually every real estate related business is represented. In addition, one of the most powerful lobbies
in the nation represents the real estate industry. Even the lowly home inspection industry is represented,
barely, but the homebuyer has no lobbyists to protect their interests.
The basic precept
in a capitalistic society is that everyone acts in his or her own best interests. While real estate law
says that an agent must use fiduciary duty when dealing with their clients, it is rare that this is the case.
Agents are salespersons in the business of selling property. Anything that interferes with this
process is eliminated. Accordingly, the more detailed an inspector, the less likely he is to receive referrals
from the agents, particularly the higher volume agents with their salesperson personality need to close the deal ASAP. High
volume agents need to have easy home inspections in order to close the transactions and make their money. The
high volume agents require an inspection that is just enough to convince their clients that an inspection has taken place,
but not so much as to jeopardize the close of escrow. Conversely, the lower volume agents tend to have
a more personal tie to their clients and are a little more concerned with their client’s welfare. These
agents usually use a more detailed inspector. This is probably part of the reason why these agents are not higher producers.
Safe Enough: How safe is safe enough?
Somewhere between living in a cardboard box and living in a padded cell, there must be a reasonable acceptable level
of safety. In my opinion, every citizen must take responsibility for their own actions. Our homes in California
are among the safest places in the world to live. There are people living in cardboard boxes in third world
countries who would gladly trade places with the worst home in California. Our legal system is designed
to protect the most uneducated and irresponsible citizens from performing the most dangerous acts. Citizenship
in our democracy requires a certain level of education and self-reliance in order for our society to stay healthy.
Some people refuse to act in a responsible manner and expect the government to assist them in every stupid act, regardless
of the circumstances. It is impossible to protect people from harming themselves. Defense attorneys will always take advantage
of the legal system to extort money from the insurance carriers and the inspector. There is little chance
for reform so long as attorneys dominate the legislature. This is a classic “Conflict of Interest.”
No matter what, some consumer will stick a knife in a toaster and blame it on the home inspector and there
will be an attorney eager to take the case. In my opinion, there should be a minimum threshold of damage
a person must meet before they can file a lawsuit. That is a topic for another day.
Questions and comments are appreciated
and may be addressed to HomeInspect2020@aol.com
Brad Deal
20/20 Home Inspections
CalNachi Board of
Directors and Chairman of the Standards of Practice Committee
Certified Inspector Member California Real Estate Inspection Association
1999 to 2007
"Board Certified" Council of Engineering and Scientific Specialty Boards
American Indoor Air Quality Council-certified
Indoor Environmental Consultant #CIEC 0607094
"Board Certified" Council of Engineering and Scientific Specialty Boards
American Indoor Air
Quality Council-certified Microbial Consultant CMC #0701024
American Indoor Air Quality Council-certified Microbial Remediator
#CMR 03807
American
Institute of Inspectors Certified Mobile Home Inspector #M-3090
Fireplace Investigation, Research & Education Service
F.I.R.E. Certified Fireplace Inspector #66
FEMA / PaRR Disaster Inspector #19250
FHA 203 K Consulting #S0338
Real Estate Brokers License #01149536
Contractors License
General Contracting, General Engineering, Concrete #408258 Inactive
Bachelor of Science Construction Management 1978 Fresno State University.