Everything California homebuyers need to know about termite inspections — Section 1 vs Section 2 items, WDO reports, who pays, VA/FHA requirements, and how to read the report.
Do You Need a Termite Inspection When Buying in California?
California law does not mandate a termite inspection for all home purchases — but lenders often do, and any prudent buyer should insist on one regardless of lender requirements. Termite damage is not covered by homeowners insurance, repairs can cost tens of thousands of dollars, and damage is frequently invisible without a professional inspection.
When Lenders Require a Termite Inspection
VA loans always require a clear termite report before the loan can close. This is federal VA policy, not lender preference — there are no exceptions. The property must receive a clearance letter from a licensed structural pest control company showing no active infestation.
FHA loans require a termite inspection when the appraiser notes visible evidence of active infestation or termite damage during their walkthrough. If the appraiser doesn't flag anything, FHA doesn't automatically require it — but many FHA lenders request one anyway as a condition of approval.
Conventional loans (Fannie Mae/Freddie Mac) don't universally require termite inspections, but individual lenders can impose their own requirements. In Southern California, many conventional lenders request one as standard practice.
Cash purchases have no lender requirement, but a termite inspection is strongly recommended. Cash buyers have no post-close recourse through lenders if undisclosed termite damage is discovered.
What a WDO Inspection Actually Covers
A WDO (Wood Destroying Organism) inspection is broader than just termites. A licensed California structural pest control inspector examines for:
- Drywood termites (Incisitermes minor and Cryptotermes species)
- Subterranean termites (Reticulitermes and Coptotermes species)
- Wood-boring beetles
- Carpenter ants
- Fungal wood decay (wood rot caused by moisture)
The inspection covers all accessible areas: attic, subfloor/crawlspace, garage, all exterior, and all visible interior surfaces. The inspector uses visual assessment, sounding (tapping wood to detect hollow areas), and probe tools.
Section 1 vs Section 2 — The Critical Distinction
California WDO reports use a standardized three-section format:
Section 1 — Evidence of active wood-destroying organisms or damage they caused. This includes live termites, active mud tubes, active frass production, and existing structural damage from infestation. Section 1 items must be cleared (treated and re-inspected) before most real estate transactions can close. This is what lenders care about.
Section 2 — Conditions that are likely to lead to infestation if left unaddressed. Examples: wood-to-soil contact, excessive moisture near the foundation, damaged weather stripping that allows pest entry. Section 2 items are reported but are NOT required to be corrected for close. They are negotiating points.
Section 3 — Inaccessible areas the inspector could not fully examine (sealed subfloor void, attic blocked by insulation, built-in furniture over the floor). These are noted so all parties understand the limits of the inspection.
Who Pays for the Inspection and Clearance in SoCal
In Southern California, the established custom (though not legally required) is:
- Seller pays for the WDO inspection
- Seller pays for Section 1 clearance (treatment + re-inspection clearance letter)
- Section 2 items are negotiable — buyer may request correction, or it may be credited in escrow, or left as-is
This custom is so established that purchase contracts in Southern California typically include language about it. Deviations happen but are negotiated explicitly.
How to Read the Inspection Report
The report includes a diagram of the property with findings marked by coded symbols. Key elements:
- Property sketch — floor plan with exterior and interior elevations marked
- Finding codes — each type of finding has a standardized symbol (e.g., DT for drywood termite, ST for subterranean, FD for fungal decay)
- Written findings — each marked area described in plain text
- Recommendation — treatment recommended for each Section 1 finding
Your agent or escrow officer can help you interpret the report. If anything is unclear, call the inspector directly — they are required to explain their findings.
What Happens in Escrow If Section 1 Items Are Found
The typical escrow timeline when Section 1 items are found:
1. Report delivered to buyer and seller (usually within 24 hours of inspection)
2. Seller authorizes treatment with a licensed pest control company (often the same company that did the inspection)
3. Treatment performed (fumigation, Termidor, spot treatment depending on findings)
4. Re-inspection and clearance letter issued — typically 7–21 days after treatment depending on method
5. Clearance letter sent to lender and escrow — close can proceed
Fumigation adds the most time (2–3 days for the fumigation itself, plus scheduling). Spot treatment and Termidor can usually be cleared within a week.
Related: Real Estate Termite Inspections · Section 1 and Section 2 Explained · Termite Treatment Cost