Recently the Wisconsin legislation passed some significant changes to the Home Inspector Statute. Some of the changes require home inspectors to change their report layout as well as require the inspector use the term “defect” in a certain way. This legislation has muddied the waters in my opinion as to what a defect really is from a buyers perspective. So I will lay out what the current standards are for a “defect” (there are (2) of them). Keep in mind in the past the only person in the transaction that determined what a defect was the buyer/ inspection client.
What is a Defect?
From the home inspector statute: A defect, as defined in section 440.97 (2m), Wis. Stats., means a condition of any component of an improvement that a registered home inspector determines, on the basis of the home inspector’s judgment on the day of an inspection, would significantly impair the health or safety of occupants of a property or that, if not repaired, removed, or replaced, would significantly shorten or adversely affect the expected normal life of the component of the improvement.
In the real estate Purchase contract a Defect is defined this way: A condition that would have significant adverse effect on the value of the property, but such condition may not be labeled a defect in the inspection report unless it meets the definition in 440.97 (2m), Wis. Stats.
So as you can see there are really two definitions for the term defect.. Often times a condition will meet both definitions but on occasion the item in question may not and there may be differences in opinion on the matter. I should also note that home inspectors are not allowed to comment on value or reduction in the overall value of the home should a defect be found that decreases the value. So in the second definition buyers are at the mercy of their agent or attorney for that advice, this can be a conflict of interest in my opinion as the agent is directly compensated when the transaction is closed so if that defect only meets the second definition, there may not be an unbiased third party to make that determination.
My other reservation with these changes that took place on June 1, 2020 is that when I book a job with a client they expect me to tell them everything wrong with their home. Many items I regularly classified as defects in the past might not meet the definition of a defect as the items may be installed incorrectly but do not adversely effect the performance of the component. Do I not tell the clients about those items any longer? We as inspectors are also in the unenviable position of having to deal with all parties of the transaction based on our report findings (opinions). I oftentimes get push back from listing agents and homeowners based on my report findings.
One other change that took place is the report layout. Home inspectors are required to provide a summary page that lists all defects in the report organized in one area. Agents love this because they don’t have to read the entire report. You are probably thinking that this can be problematic. On one occasion I had an agent call me asking the age of the furnace. I was driving and told her it was in the report, she responded saying that it wasn’t. So I looked it up and said it’s on page 15 about half way down. She said, “Oh I was only looking in the summary.” It’s hard enough to get people to read their reports let alone agents. You might be surprised on how many complaints come in from people who never read their reports and the complaint item is actually in the report.
I include some other information in my reports that don’t rise to the level of defect or even the marginal category. I like to provide as much information in my reports as I can ascertain in the short time I am at the home. That is my duty to the client. I have always operated with he mindset of what’s best for the home with no regard for the transaction.
I’ll end this post here, but if you are buying a home, keep in mind the term “defect” may contractually mean something different than you think.
If you’re still reading, Thanks! I know this one was a bit dry.
-AZ
Aaron M. Zuehlke is the owner and inspector at Zuehlke Inspection Service, LLC, a full-service home inspection company serving Southern Wisconsin. Specializing in Home inspection, Radon Testing, Mold Testing/inspection, Residential Thermal Imaging, and Manufactured Home Foundation Certifications. He also manages several rental properties through Zuehlke Properties, LLC. He can be reached by email at Aaron@Zuehlkeinspections.com or by calling the office at 608-931-7485.