Form-of-the-Week: Authorization to Structural Pest Control Operator – Form 132

An agent of a seller of a one-to-four unit residential property asks the seller to grant them authority to order a structural pest control (SPC) inspection and report on the seller’s behalf. The seller’s agent explains the report, or notice of clearance after completion of the recommended repairs is to be included in the marketing package. [See first tuesday Form 132]

Upfront disclosure before the seller accepts an offer promotes transparency in real estate transactions. Transparency avoids personal liability for withholding information about a material fact known to the seller or the seller’s agent before acceptance of an offer from a prospective buyer – conduct called deceit.

In addition, later renegotiations of the sales price due to a delayed, in-escrow disclosure of previously discoverable material defects are avoided.

The existence of pests such as termites adversely affects the value of property. Since these facts relate to value, disclosure is compelled before the buyer sets the price and closing conditions in an offer submitted to the seller.

In a transparent real estate market, the report and clearance are part of the marketing package a prudent seller’s agent gives to prospective buyers. A request for further information by a prospective buyer constitutes the commencement of negotiations for the purchase of a property. Property disclosures are mandated to be made on commencement of negotiations.

To best comply with pest control disclosure, a copy of the SPC report is delivered to the prospective buyer or buyer’s agent by the seller or their agent as soon as practicable (ASAP). If the SPC report is available, ASAP means the SPC report is to be provided after the buyer inquires further into the property but prior to the seller entering into a purchase agreement. Delivery of the SPC report only after acceptance of the offer is deficient. Not only is this delivery after the “ASAP” guideline, but the price has been set without the buyer’s full knowledge of the facts adverse to value.

However, if the SPC report is not available and cannot be handed to the prospective buyer until after the seller’s acceptance of the purchase offer, closing is automatically contingent on the buyer’s right to cancel the purchase transaction. [Calif. Civil Code §1099(a)]

Editor’s note – A prudent buyer’s agents alert to the fact they are duty-bound to act in the best interests of their buyers. Thus, as a matter of best practice, buyer’s agents demand an SPC inspection, report and certification by placing an SPC contingency provision in the purchase agreement, regardless of the nature of the buyer’s purchase-assist financing. [See first tuesday Form 150 §11.1(a)]

Related article:

Brokerage Reminder: Timely termite inspections – eliminate the risk

first tuesday’s Authorization to Structural Pest Control Operator is used by a seller’s agent to request an SPC inspection and report. It authorizes the selected SPC company to conduct an inspection and prepare a report on behalf of the seller. [See first tuesday Form 132]

The Authorization to Structural Pest Control Operator gives the SPC company specific information regarding the requested inspection, including:

  • the agent’s contact information;
  • the property address;
  • the owner’s name and phone number;
  • the request to inspect and deliver their report or Certificate of Corrective Conditions (if applicable) to the agent;
  • who to contact for access to the property;
  • who is to pay the fee to the SPC company for their services (owner, buyer or agent);
  • where to send the bill; and
  • the anticipated fee to be paid for their services. [See first tuesday Form 132]

The form also includes instructions to the SPC company to reinspect the property on completion of corrective work by a third party contractor and issue a Certificate of Corrective Conditions. This situation arises when the original SPC company bids to undertake corrective measures and the owner elects to hire someone else to do the work.

Here, the original SPC company must return and reinspect the property before issuing a certification. The original SPC company will not certify treatments performed by another SPC company without reinspection. [Calif. Business and Professions Code §8516(b); see first tuesday Form 132 §4]