A frequent source of controversy among licensees and parties is the issue of what is and is not subject to a home inspection and request for repairs under most standard Offers to Purchase and Contract.

One of several recommendations which emerged from a special Home Inspection Advisory Committee convened during the summer and fall of 2000 was that the Commission develop a course to enhance licensees' understanding of the requirements, obligations and duties of both real estate licensees and home inspectors in the home inspection process. The lengthiest section of this year's Update materials is devoted to the issue of home inspections, to which instructors may devote up to 100 minutes of class time.

The Home Inspection section of the Update materials attempts first to acquaint real estate licensees with the statutes and rules creating and governing the North Carolina Home Inspector Licensure Board, the agency which licenses and regulates home inspectors. The home inspector licensure rules are reprinted as an appendix to the materials and several terms, such as "home inspector," "home inspection," and "residential building," are defined in the initial pages.

The materials summarize a home inspectors' duties under their governing rules, the purpose and scope of home inspections, items or matters on which home inspectors are not required to report, actions they are not required to take, items and systems which they are required to inspect and what they must report thereon, the standard or test utilized by home inspectors, and comments concerning their code of ethics.

Having reviewed what home inspectors are and are not required to do under their rules, the focus then shifts to a discussion of inspection and repair clauses in Offers to Purchase. The language of Paragraph 12 of the standard Offer to Purchase and Contract formulated by the North Carolina Association of REALTORS® in conjunction with the North Carolina Bar Association is utilized.

What is and is not included in and/or meant by the provisions of Paragraph 12(b), (c), (d), and (e) is briefly discussed, as well as whether one should expect the various Paragraph 12 conditions to be revealed by a home inspection.

Licensees also are reminded that while Paragraph 12(b) allows a buyer to request that the seller repair conditions which fall within Paragraphs 12(b) or (c), under Paragraph 12(d) the seller either may agree or refuse to make any repairs, at which point the ball returns to the buyer's court and the buyer must decide whether to accept the property "as is" or terminate the transaction. Of course the parties, after following the procedure set forth in Paragraphs (b) and (d), may then negotiate other terms as to what each is willing to do, if they wish, rather than the pure "yes" or "no" contemplated by Paragraph 12(b) and (d).

A discussion of the source of potential problems follows the review of the contract inspection/repair clauses. These sources include the different standards mandated by the home inspector licensure rules versus the sales contract standard (which is not as broad as the home inspector standard), and variance in the quality and detail of home inspection reports (there is no standard reporting form at this time).

Failure to understand both a home inspector's duties as to what they must inspect and report under their rules, and what legitimately is encompassed within the inspection/repair clause of the applicable sales contract (Paragraph 12 in our example) renders a licensee ill-equipped to adequately prepare his or her client, particularly buyers, for the results of the home inspection and may well lead to unreasonable expectations on the client's part.

For example, rarely, if ever, would it be appropriate for a buyer to demand that a seller repair everything noted in the home inspection report.

Conversely, there may be aspects of a property in which a buyer is interested, such as the condition of outbuildings or in-ground swimming pools, on which home inspectors under their rules are not required to inspect or report. These may be omitted from their home inspection report unless specifically agreed to in the employment contract with the buyer-client.

Additionally, these items may not be covered by the standard language of Paragraph 12 and thus may not be subject to a legitimate repair demand by the buyer, unless somehow brought within the Paragraph 12 provisions in the Offer to Purchase prior to its being tendered to the seller.

The Home Inspection section ends with a discussion of three hypothetical home inspection reports, each containing five noted defects. Licensees are asked to decide which of the five defects in each hypothetical report would fall within the scope of Paragraph 12 and which fall outside its scope.