California does not have a law requiring a termite inspection every time a home changes hands. The California termite inspection requirements you actually have to meet come from two other places: the lender financing the purchase, and any contingency the buyer writes into the purchase agreement. The California Structural Pest Control Board licenses inspectors and sets professional standards, but it does not decide whether an inspection happens on a given sale.1Structural Pest Control Board. Mission, Vision, and Values
When an Inspection Is Actually Required
The trigger is almost always the loan. Government-backed mortgages effectively force the issue. The VA requires a wood-destroying insect report for every home purchase in California, and the inspection must be completed before the VA issues its notice of value.2Veterans Benefits Administration. VA Home Loans – Local Requirements FHA loans work similarly. The lender must confirm the property is free of wood-destroying insects and organisms, and when the appraiser flags potential pest issues, a qualified specialist’s inspection and evidence of treatment are required before closing.3U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1
Conventional loans are looser. The lender decides case by case, and many skip the requirement unless the appraiser sees visible damage.
Buyer Contingencies in the Purchase Contract
Even without a lender demand, a buyer can insist on an inspection by adding a pest inspection contingency to the offer. The standard California residential purchase contract has language for exactly this. If the report turns up serious problems, the buyer can negotiate repairs, ask for a price reduction, or walk away. It is one of the most common contingencies in California transactions, and sellers should expect to see it in any reasonable offer.
Reading the WDO Report
When an inspection does happen, the inspector produces a Wood Destroying Pests and Organisms Inspection Report, usually called the WDO report.4Structural Pest Control Board. Wood Destroying Pests and Organisms Inspection Report It covers termites, wood-boring beetles, fungus, and dry rot. The findings are sorted into two sections, and the distinction drives most of what happens next in escrow.
Section 1: Active Problems
Section 1 items are active infestations or infections and the damage they have already caused. Live termites in a wall, visible dry rot in a subfloor, fungus growth on framing. These are current problems that need treatment or repair now. Section 1 findings are what usually drive urgent negotiations, because lenders backing government loans often will not fund the purchase until those items are cleared.
Section 2: Conditions Likely to Cause Problems
Section 2 items are conditions that will probably lead to an infestation or infection later, even though nothing is active yet. Soil touching a wood beam, a slow plumbing leak creating moisture behind a wall, or inadequate crawl space ventilation. Section 2 findings do not usually block a loan. Ignoring them is how today’s Section 2 item becomes next year’s Section 1 problem.
Who Pays for the Inspection and Repairs
California law does not assign either cost to a specific party. Everything is negotiable in the purchase agreement. The inspection itself typically costs somewhere between $75 and $300, and the buyer usually picks it up as part of due diligence.
Repairs are where the real money moves. The most common arrangement is for the seller to handle Section 1 items, since those represent damage that existed on their watch, and for the buyer to accept Section 2 items as future maintenance. Nothing forces that split. Some sellers offer a credit against the purchase price instead of doing the work, giving the buyer cash at closing to handle repairs themselves. That approach is common when the seller does not want to manage contractors during escrow.
VA buyers should look closely at who the contract says will pay for the inspection. VA rules prohibit the buyer from paying for the wood-destroying insect report in some circumstances, which means the seller or the real estate agent may need to absorb it. Your lender can confirm the specifics for your loan.
Seller Disclosure Obligations
The disclosure duty exists whether or not anyone orders a new inspection. California Civil Code Section 1102 requires sellers of most single-family homes to complete a Real Estate Transfer Disclosure Statement, and it applies to sales, exchanges, lease-option transactions, and similar transfers.5California Legislative Information. California Civil Code CIV 1102 Any waiver of these disclosure requirements is void as against public policy.
If you are selling a home and you know about a past termite infestation, prior treatment, existing damage, or an old inspection report sitting in a drawer, it goes on the disclosure form. The Transfer Disclosure Statement asks about pest-related issues specifically and requires the seller to provide copies of any prior inspection reports to the buyer. Ordering or skipping a new inspection does not change what you already know and have to reveal.
What Happens if a Seller Hides a Termite Problem
Concealing known termite damage exposes a seller to real legal risk. A buyer who discovers the problem after closing has three years from the date of discovery to file a fraud claim under the California Code of Civil Procedure. The clock starts when the buyer actually finds the concealment, not when the sale closed.6California Legislative Information. California Code of Civil Procedure 338
The exposure is not limited to repair costs. If a court finds the seller intentionally concealed a material fact, the buyer can pursue punitive damages on top of actual losses. Civil Code Section 3294 authorizes punitive damages when a defendant acted with fraud, oppression, or malice, and it defines fraud to include the deliberate concealment of a material fact intended to deprive someone of property or legal rights.7California Legislative Information. California Civil Code CIV 3294 A seller who knew about termite damage and hid it can end up paying far more in litigation than the repairs would have cost.
Condos, Townhomes, and HOA Buildings
Termite issues in common interest developments get more complicated because the structure is shared. California Civil Code Section 4775 sets the baseline rule: the HOA is responsible for repairing and maintaining common areas, and individual owners handle their own separate interest units.8California Legislative Information. California Civil Code 4775 For exclusive-use common areas like a patio or balcony, the owner handles day-to-day maintenance while the HOA covers repair and replacement.
The governing documents can override these defaults. Many CC&Rs push more repair responsibility onto individual owners or define “common area” narrowly. Before buying a condo, read the declaration to see who would pay if termites are found in the building’s framing. Even when the HOA is responsible for fumigation, individual owners may still cover the cost of relocating during treatment, since Section 4775 places relocation expenses on the owner of the affected unit. Renters displaced by fumigation are generally entitled to reasonable compensation from the landlord for lodging and related costs during the displacement, often handled through prorated rent or direct reimbursement.