Real Estate NewsCanadian Report Rejects Mandatory Home Inspections
If you"re buying real estate, you"re thinking location, location, location. But for vendors and their real estate agents, the mantra is disclose, disclose, disclose.
As I"ve been reporting in recent Realty Times columns, a report suggests that despite various disclosure tools, buyers in British Columbia didn"t know that the condominiums they purchased had suffered serious water damage. Some of the buyers studied had professional home inspectors look at the properties before they bought them, but the buyers either didn"t understand the reports they received, or failed to get proper warnings from the inspectors.
In recent years, Canadian courts have dealt with many cases in which buyers sued vendors, real estate agents and home inspectors for not disclosing problems with properties. Increased pressure to protect consumers prompted Canada Mortgage and Housing Corp. to study whether mandatory home inspections should be required on all resale homes in the province of Ontario.
The survey consulted government officials, the home building industry, insurance companies, the real estate industry, lending institutions and assorted consumer associations.
The majority said that mandatory home inspections should not be implemented.
The study determined that about 55 per cent of sales are currently being inspected, and that "the relatively modest cost of an inspection is well worth the investment compared to the risk of paying more than necessary for a home with major problems and needing to invest in repairs." But legislating mandatory inspections would open up a number of regulatory and legal issues that those consulted for the study determined were unworkable.
The first problem is determining standards, for both the inspection and the inspectors. There are currently no licencing requirements for home inspectors in Canada; anyone can call themselves a home inspector. Some belong to a professional home inspection organization such as the Canadian Association of Home and Property Inspectors (CAHPI), which is working to set national standards, but legislating the standards would involve a long and costly consultation process.
AmeriSpec Inspection Services, a member of CAHPI, says that a technically exhaustive inspection that could uncover any potential problem in a home "would involve retaining several specialists to review the house. The inspection would likely take several days and cost several thousand dollars, which most home buyers would view as an unacceptable cost to assist in the overall condition of a home."
CAHPI standards determine that home inspections are "non-intrusive, visual examinations of accessible areas of the home at the time of inspection." That means the home inspector will not move furniture or personal items to inspect the house, and will not open up finished walls to see what"s inside.
With this kind of inspection, the home inspector cannot be expected to see something that isn"t visible, AmeriSpec says. "For example, if there is no evidence of active or past moisture in the basement of a home at the time of an inspection, it is unfair to assume an inspector should foresee a future flooding problem."
The CMHC study says the current voluntary system provides "a reasonable degree of consumer protection at a reasonable cost. The home inspection process also encourages upgrading of Canada"s housing stock to meet current requirements and expectations concerning health, safety, maintenance and use."
However, the study also sees room for improvement in the home inspection industry. "Inspection reports vary in their level of detail, with some providing insufficient information while others are far too detailed and complicated, resulting in confusion and even alarm for the purchaser," it says. "More standardized reporting would be helpful, and inspectors should ensure they discuss their reports with their clients."
But the report says the profession is maturing, and that "most practitioners entering the field are demonstrating a high level of commitment to their academic training."
It concludes: "Purchasers should be encouraged, not legislated, to use inspection services to get valuable information on the condition of their home."