What is the difference between a Termite Clearance Letter & A Bond? : Let's Talk Real Estate
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What is the difference between a Termite Clearance Letter & A Bond?

by Jenna Dixon, Associate Broker. DRA Homes on 02/23/16

What is the difference between a Termite Clearance Letter and a Termite Bond?Do I need a termite clearance letter?

When it comes to real estate in Georgia there are two types of homes:

1.  Houses that HAVE TERMITES.

2. Houses that WILL HAVE TERMITES.

It used to be a requirement by mortgage lenders that every property had to be inspected for termites and issued a Termite Clearance Letter prior to closing.

The lender "requirement" has changed or fallen by the wayside but the TRADITION OF THE INSPECTION CONTINUES.

Nearly every real estate contract written in Georgia stipulates a request that the SELLER PROVIDE, AT NO COST TO THE BUYER, A TERMITE CLEARANCE LETTER PRIOR TO CLOSING.

Many times that request will go on to request a TRANSFERRABLE TERMITE BOND for one year at no cost to the buyer.

Understanding the distinction between a clearance letter and a bond is very important.

TERMITE CLEARANCE LETTER indicates that the property has been inspected by a certified, licensed professional pest control company and they found NO ACTIVE INFESTATION OF TERMITES.  That may not mean that there were never termites or that there will never be termites only that on the day of the inspection, they found no evidence of active, live termites.

TRANSFERRABLE TERMITE BOND indicates that the property has previously been treated for termites and is under warranty with the pest control company.  

Bonds are common in new constructions, builders pre-emptively treat new builds to prevent termites.  The bond will be transferred to the new owner at closing and will be good for 1 year.  Subsequent years are the responsibility of the new owner to renew.

Bonds are also common in existing home sales but it is an important distinction to understand the difference between asking for a clearance letter and a transferrable bond.

Keep in mind that, in the rare instance, an existing home has never been treated for termites or a previous bond has lapsed, negotiating the terms of an agreement can be very important to the transaction.

Having adequate representation in your real estate transaction is imperative to protecting your interests...even when it comes to termites!

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