What do Section 1 and Section 2 mean on a California termite report? Who pays to clear them? What happens if you don't? Everything buyers, sellers, and homeowners need to know.
What Is a California Structural Pest Control Inspection Report?
When a California-licensed structural pest control company inspects a property, they produce a standardized report — formally called a Structural Pest Control Inspection Report — that documents findings by type and severity.
This report is the backbone of most Southern California real estate transactions involving termites. Lenders, escrow companies, and agents refer to it by its section designations. Understanding what Section 1 and Section 2 mean is essential for anyone buying, selling, or maintaining a California home.
Section 1: Active Infestation and Existing Damage
Section 1 covers:
- Evidence of active wood-destroying organisms (live termites, active mud tubes, active frass production)
- Existing damage caused by wood-destroying organisms (damaged framing, hollowed wood)
- Active fungal wood decay
The key word is "active." Section 1 findings are present conditions that are happening now or damage that has already occurred as a direct result of infestation.
Why Section 1 matters in real estate: Most lenders — and especially VA loans — require all Section 1 items to be cleared (treated and re-inspected) before the loan can close. Escrow cannot typically close with outstanding Section 1 items on a VA or most FHA loans.
Who pays: SoCal custom (though not legally mandated) is that the seller pays to clear Section 1. This is so established that most purchase contracts reference it explicitly.
Section 2: Conditions Likely to Lead to Infestation
Section 2 covers:
- Wood-to-soil contact (framing or siding touching the ground — the #1 entry point for subterranean termites)
- Excessive moisture near the foundation (leaking gutters, irrigation spraying the siding)
- Earth-filled porches or planter boxes against the structure
- Damaged weather stripping or vent screens that allow pest entry
- Areas with conditions favorable to future infestation but no active evidence yet
Section 2 items are NOT required to be corrected for a real estate transaction to close. They are reported because they represent risk, not current infestation.
Negotiating Section 2: Buyers often use Section 2 findings to negotiate repairs or credits. Sellers aren't obligated to address them, but many do in competitive-market situations to avoid the buyer walking. Whether Section 2 items are addressed is purely a negotiation between parties.
Section 3: Inaccessible Areas
Section 3 notes areas the inspector could not access and therefore could not fully evaluate. Common examples:
- Subfloor void sealed without access panel
- Attic spaces blocked by insulation or insufficient clearance
- Built-in furniture, cabinetry, or finished walls concealing framing
- Locked or sealed outbuildings
Section 3 is not a finding — it's a disclosure. It tells all parties that those areas remain uninspected and that conditions there are unknown.
What "Clearance" Means
After Section 1 items are treated, the same company performs a follow-up inspection — called a clearance inspection — to confirm all active infestation is eliminated and the conditions that caused the Section 1 findings have been remediated.
A clearance letter (issued on company letterhead) confirms:
- Treatment was completed on [date]
- Re-inspection was performed on [date]
- All Section 1 items have been cleared
- The property now shows no evidence of active wood-destroying organisms (for the inspected areas)
This clearance letter is what lenders and escrow need to proceed with closing.
Report Validity
A California structural pest control inspection report is generally considered valid for 90 days from the date of inspection. After 90 days, most lenders and escrow companies require a fresh inspection.
When Sellers Should Get a Report Before Listing
Proactive sellers who order a termite report before listing avoid several problems:
- No surprise Section 1 findings when the buyer's inspector arrives
- More time to schedule treatment and clearance without escrow pressure
- Ability to select their own pest control company rather than using a buyer-selected company
- Credibility with buyers — a pre-listing clearance report signals a well-maintained property
At Ultimate Termite, our inspection is free. There's no reason to go into escrow without knowing what the report will say.
Related: Real Estate Termite Inspections · Buying a Home in California — Termite Guide · Termite Damage